In June 2006, we wrote about Chicago entrepreneur Larry Cohen, who gave his nephew 90 days to save the family business.
The Problem For more than 20 years, Accurate Perforating, which manufactures perforated sheet metal, had seen costs climb while revenue hovered at around $15 million. The company stayed afloat through hard-line budgeting. In 2001, owner Larry Cohen put his nephew, Aaron Kamins, in charge of day-to-day operations. But Kamins, who had little prior management experience, was floundering. In 2003, the company lost $500,000 and its bank refused to lend more money. Cohen was reluctant to fire Kamins. Instead, he gave his nephew 90 days to turn the company around. Kamins instituted salary cuts of as much as 50 percent, invested in new technology, and increased the sales and marketing budgets. By the end of 2005, revenue was up 70 percent, to $25.5 million.
What the Experts Said Steve Wiel, vice president at Rockmount Ranch Wear, a Denver-based family-owned clothing manufacturer, felt it was the right move to give Kamins a clear leadership mandate. Ann Kinkade, director of the Family Business Center at the University of Wisconsin, said Cohen should have been grooming a qualified successor long before. Ron Castor, partner at the Rochester, New York, management advisory JC Jones & Associates, said, "It is exceptional that Kamins was able to reinvent the company."
What's Happened Since Cohen says Kamins has professionalized the sales staff by adding formal training procedures and concrete sales goals. Kamins has helped move the company out of commodity metals and into the higher-margin business of producing fabricated products, such as ceiling tiles and custom speaker grilles. Now 40 percent of Accurate Perforating's business comes from fabricated products, up from 20 percent in 2005. In 2006, revenue grew to $30 million. "Aaron has succeeded in changing the culture from a seat-of-the-pants family business to a more professional operation," says Cohen.
What's Next In January, Accurate Perforating acquired one of its subcontractors, Advanced Display, for an undisclosed amount. The acquired company manufactures items such as cigarette displays for the tobacco industry, and Cohen expects revenue of the combined businesses to hit $40 million this year. The architectural market for such materials has "exploded," says Cohen, partly because European design trends, which often incorporate perforated metal, have gained in popularity. Kamins will be rewarded when the owners sell him about 30 percent of the company this year, Cohen says.