Sarah Lehman became CEO of a nearly bankrupt carbon fiber bike parts manufacturer in January 2010. The Utah company, then called Edge Composites, had 78 employees, $2.8 million in revenue, high product-development costs, and a trademark dispute in Europe. Faced with a cease-and-desist order, Lehman renamed the company Enve Composites. But her hard ride as CEO had just begun. Joined by two investors, she and her husband "put everything we owned into the company," she says. "We stood around each week and looked at each other and said, 'Who's gonna sell what this week to meet payroll?' "
Lehman had worked in the pharmaceutical and automotive industries, but not in cycling. So she focused her initial efforts on instituting sound business practices. "Sometimes entrepreneurs get stuck," she says. "When you try to pursue everything, nothing is a priority. At some point, you have to choose a few ideas and make them happen." Lehman shares tips for executing a plan.
As told to Robin D. Schatz.
1. Make Cash King
To save cash, Lehman reduced inventory, stocking products in only one color. She and the other owners took no salary for more than two years. Bike shops were moved from extended payment terms to prepayment. There was no holiday party that first year, no new office furniture, and no marketing sponsorships. Eleven months after Lehman became CEO, Enve booked its first profit. Profits have flowed ever since, and 2013 sales hit $21 million. "I never doubted we were going to succeed," she says. "Our founder [Jason Shiers] believed in it, the employees believed in it, and we worked together as a team."
2. Keep a Sharp Eye on Quality
Lehman hired a new director of manufacturing after learning that half the wheels Enve made in its Utah facility had to be scrapped for not meeting quality standards. This made it impossible for the company to ramp up economically and boost its top line. Enve moved operations to a clean room, standardized training, created new supplier quality standards, and instituted a maintenance schedule for tools. Scrap rates dropped to single digits. Revenue grew. "It's easy to make one of anything," Lehman says. "The true test of manufacturing is to make hundreds or thousands of something consistently and reliably."
3. Launch New Products Quickly
When Lehman took over, many products languished in the development pipeline. She and her team decided to develop only the most promising ideas. She also worked to keep head count lean and the organizational structure flat as the company grew. This, she says, lets her team "make decisions very quickly, and people are empowered to execute." So empowered, in fact, that they sometimes countermand her. When the team proposed a new downhill wheel, Lehman back-burnered it as a low priority. She went away for a week. When she returned, the new wheel had been built and tested and was on her desk.