Few business owners ever succeed in landing their company on the Inc. 5000 list. Even fewer do it twice for different startups.
Meet Farsheed Ferdowsi. After growing human resources company, PayMaxx, into one of the largest payroll service providers in the country (which was recognized on the Inc. 500 list four consecutive times), he's returned from semi-retirement to do it all over again with his latest venture, Inova Payroll. Full disclosure: Farsheed is actually this author's father-in-law. And his success building two companies from the ground up has given me a ringside seat to learn, effective executive leadership.
Ferdowsi launched Inova Payroll in 2011. Already, the company is knocking at the door of $10 million in annual revenues. It offers payroll and human capital management outsourcing services across the nation, and was recently recognized on the 2016 Inc. 5000 list. These achievements have arisen from Ferdowsi's mission to provide a superior quality product and service, as well as offer lower prices than any of his competitors.
Ferdowsi makes it all look effortlessness. But in truth, his latest company has succeeded not because it lacked challenges, but in spite of them.
The Challenges of Rapid Growth
For starters, there are the challenges inherent to working in the payroll industry. "Most people think the payroll industry consists of entering the hours worked, calculating taxes, printing the checks, and you're done. But that's a caricature of the complexity involved," says Ferdowsi. And the consequences of a payroll error are major. If a manager misses their payroll deadline, people don't get paid on time, which is devastating to employee morale.
In addition to helping companies sort out the complexities of payroll, Inova must also navigate a stifling regulatory environment while constantly adapting to changes in the industry. When Ferdowsi started the company five years ago, many functions of HR remained the manual work of HR employees. Today, companies expect functionalities such as HR information, new hire onboarding, performance management, and benefit enrollment to be fully automated and integrated with payroll.
"As the market demands additional functionality, we deliver it," says Ferdowsi. "Five years ago, Inova was a payroll and tax payment outsourcing company. Now we're a human capital management company." To that end, the company has gradually expanded its suite of services to include anything companies might need to manage their employees from the point of hire to retirement.
Then there are the challenges associated with growing any business, such as finding qualified and experienced employees, establishing a constructive work environment, and staying true to the company's mission while executing an aggressive growth strategy. Any one of these hurdles could stagnate, even cripple, a company. But Inova has successfully met these challenges head on--and continued to grow beyond them.
How Inova Payroll Is Meeting Those Challenges Head-On
Having grown PayMaxx into a $14 million business before it was acquired by CompuPay in 2005, Ferdowsi was well prepared to navigate Inova's rapid growth. Here are some of the strategies that have allowed Inova to successfully adapt to and leverage its ongoing success.
True dedication to customer service
Above all else, Inova remains focused on providing superior customer service by selling real value--and nothing else. "If something is included in our services, we tell potential clients," says Ferdowsi. "If it costs extra, we don't hide that. We're basically on full disclosure."
Ferdowsi rarely goes on sales calls these days, but when he does he always offers potential customers one guarantee: "Something will go wrong." Then he goes on. "But when that happens, if it's our fault, we take ownership and we fix it. And if it's your fault, we train you to make sure it does not happen again and then we help you fix it."
Ferdowsi also won't sell to a company if he feels their present service provider is doing a good job. "I want to be able to improve a client's situation," says Ferdowsi. "To bring value, better quality, and better service, at a lower price. If I can't do those things, I have to walk away."
These are counterintuitive sales strategies--to acknowledge imperfection, to tell a potential client your company's services aren't needed--but this commitment to transparency consistently wins over prospective customers.
Inova further dedicates itself to quality service by building policies into its business plan that are designed to benefit its customers--such as providing dedicated customer service reps and avoiding annual price hikes.
Of course, the foundation for all of this is providing exceptional payroll processing and tax filing services. "That's the entrée," says Ferdowsi. "If you don't have that, appetizers, drinks, and desserts don't matter. You have to do that well. After that, everything else follows."
Hiring the right team
"I surround myself with competent and trustworthy people," says Ferdowsi. His team includes a number of experienced managers and executives who formerly worked with Ferdowsi at PayMaxx. "Then I delegate to them with a great deal of leeway. Because of the high level of trust between me and my senior staff, they are not afraid of making decisions and making mistakes."
Ferdowsi can't stress enough how critical it is to hire employees who are a cultural fit and who welcome delegation, trust, and interdependence between coworkers. "We have created a positive culture that enables us to attract and retain good employees," says Ferdowsi. "As I am fond of saying, 'Culture eats strategy for breakfast every day.' We have a great culture and that helps us meet any challenge that the market throws at us."
Cultivating referral channels
"At PayMaxx, we started developing a referral channel of accountants, CPAs, community banks, brokers, and franchisors," says Ferdowsi. "It was a very effective strategy. When I started Inova, I remembered that."
So, from day one--even before he landed his first customer--Ferdowsi hired someone to focus on building relationships full-time. And it's been hugely effective. "We get a tremendous amount of warm referrals from our channel partners as well as existing customers," says Ferdowsi. "That has definitely accelerated our growth rate."
Running an exceptionally lean organization
"Size is at once an asset but it can soon become a liability," says Ferdowsi. "The industry giants suffer due to the inertia of their size."
In contrast, Inova remains agile largely as a result of a commitment to leanness at every level of the company, from outsourcing its platform software development to relying more on referrals than expensive ad campaigns.
Ferdowsi also practices less conventional approaches to leanness. For example, nobody in the company--including Ferdowsi himself--has an executive assistant. "In 35 years of being chief executive of companies, I've never had somebody bring me coffee," says Ferdowsi. He books his own flights and lodging, packs his own carry-on, writes his own letters, and drives a personal (not a company) vehicle.
"There's a certain level of arrogance that goes on with executive teams at a lot of companies that I despise," says Ferdowsi. "All these perks that everybody gives to themselves, I don't. And if I don't, my senior staff doesn't either. And that's how we stay lean."
This top-to-bottom commitment to lean operations also enables Inova to keep its prices low relative to larger competitors. And it allows the company to deliver high-quality service to its customer base at affordable prices. "We're agile, we can respond quickly, and each of our clients has a dedicated customer service rep.," says Ferdowsi. "This is what superior service looks like."
By all accounts, Inova is already a successful company. So where does it go from here?
Upon reaching scale ($10 million in profitable revenues), Ferdowsi wants to continue growing profitably using organic growth and strategic acquisitions--with the goal of doubling in size over the next three to five years. He'd also like for Inova to also make it into the Inc. 5000 at least four years in a row.
"I'd like Inova Payroll to be in the top-10 private companies in our space in the USA--exactly what I achieved with PayMaxx," says Ferdowsi. "If I succeed in realizing this ambition, I might be the only one or one of the very few executives who has done it twice!"