Alan Mittleman and Jeff Golumbuk met as four-year-olds on a Rhode Island country school bus. From the start, buying a business had been, more or less, in the works. “Our dream from a very, very young age was to maybe have our own business,” Mittleman says.
Maybe not as preschoolers, perhaps. But, as they grew up together, the idea grew with them, to the point where, after college, “wherever we went, we looked at businesses and talked to people,” who owned small businesses they might be willing to sell, Mittleman says.
Eventually the two moved to different towns, but agreed that if one ever found the ideal company to buy, the other would move to that person’s town and become co-owner in the venture.
Nothing panned out until one day in the late 1980s when Golumbuk, in San Diego and getting married, walked into a T-shirt shop to order imprinted shirts as groomsmen gifts. Noticing that business was brisk and the phones incessantly ringing, Golumbuk jokingly asked the owner if he wanted to sell his shop. Well, he did. Golumbuk immediately called Mittleman. “He calls me up and says, ‘I found the business and you’re going to have to move,’” Mittleman recalls. “He said, ‘It’s a T-shirt shop.’ I said, ‘I don’t think so,’” content at the time in his job leasing large-scale rental equipment in multimillion-dollar deals.
Still, Mittleman went to San Diego for Golumbuk’s wedding and agreed to visit the shop. With Golumbuk’s father, an owner of companies large and small over the years, they kicked the proverbial tires, asking the owner about business. The shop’s financial statements were so woefully lacking that gauging their potential income was difficult. In the end, they decided in 1989 to take the plunge, and plunked down $100,000 for the business, Custom Logos (asi/173183).
The lifelong friends have been business partners ever since. Here, they each give their own background on the company and their partnership in managing the operation. Then, we turn the whole situation over to a business expert, who offers Golumbuk and Mittleman some advice on what they can do to maximize their partnership and reach their goals.
Alan Mittleman’s Viewpoint
It was a bit of a crapshoot, to be sure. After years in operation, with only $200,000 a year in sales to show for it, their newly purchased business venture came with no guarantees that it was going anywhere. Still, there was something intriguing about taking ownership of a struggling shop and making it your own. Leaving Boston, where he was living at the time, Mittleman remembers being somewhat hesitant about the brand-new venture. “I got on an airplane with 12 bags of luggage and left my car, condo, friends, family and everything, and got out there by midnight.”
From the start, entrepreneurship was an eye-opener. “When we bought the business, it was making $200,000 a year, and by the first year we were making over $1 million,” Mittleman says. “I thought, if we can do over $1 million, we’ll be
rich. That wasn’t true. But we had a great foundation.”
Their business strategy consisted of two sales methods: Golumbuk would work outside sales in the field, while Mittleman would handle inside sales, bringing clients and prospects into the company’s showroom.
Quickly they realized they had a few things to learn, despite their initial success. For starters, they needed to diversify their product line, which was made up almost exclusively of T-shirts. They had lessons to learn as executives, as well. “At 5 p.m. we locked the doors and went to our second job processing paperwork, [screen printing], ordering goods,” Mittleman says. They essentially ate, slept and breathed the business for the first few months.
Over time, the company grew from three employees to the current 44 (they topped out at 49 before making the company more lean) and grew sales from $1 million their first year to $9.5 million today. During that time, the two owners continued to sell regularly.
Sensing they needed to streamline their company, the partners hired a business consultant to advise them on making Custom Logos more efficient. His first directive? Get out of the field and into the office. “He said, ‘You can’t run a business if you’re out on the road all day,’” Mittleman says. “We didn’t like it much at the time, but we agreed to do it.”
What followed, Mittleman says, were a few awkward months, while the two were “trying to figure out how to do it”—run a business from an executive desk, that is. “It took three months to kind of figure out what to do.”
But as they became comfortable in the office, they realized certain facts about a growing business that all entrepreneurs have to learn at some point in their company’s lifetime. “You can get a better sense of your staff when you have them around you all day,” Mittleman says. “You can see things before they happen.”
The owners started making keener observations about their production facility, for example, and realized they needed a new computer, a new network, new software. In hindsight, Mittleman says, “You can’t manage if you’re not here.”
At the same time, Mittleman says, he and Golumbuk began to feel the differences in their personalities. “I have more of an accounting background, which makes me more numbers oriented,” Mittleman says. “I would say he’s more people-oriented. It’s a nice complement,” in their work environment, but it does mean they don’t always see eye-to-eye. Receivables, for example, are one area they tend to approach with a different mindset. “Jeff being the sales guy is all about, ‘sell, sell, sell, don’t worry about the receivables,’” Mittleman says. “I’m big on growth, but know we’ve got to get paid on our work.”
Jeff Golumbuk’s Viewpoint
“We’ve been together for 42 years. We have a common philosophy about life and business,” says Golumbuk, the company’s president and CEO. Still, when Golumbuk felt strongly that he and Mittleman should buy Custom Logos back in 1989, he was put off by the state of the company before he took it over: “This was a guy in 1,800 square feet of space that could have been doing business out of 500 square feet,” Golumbuk says. “He was doing business out of his pocket, with no records, no nothing to analyze, and it’s all by feel.”
Golumbuk and Mittleman had looked at more traditional franchise opportunities, like Subway and Dunkin’ Donuts, but “nothing fit,” Golumbuk says. “It seemed like this business was still a cottage industry. We both came from big business and thought we could apply what we learned to this small business.”
But not everything stuck. Before they knew it, the two owners were “doing a 180,” as Golumbuk calls it, on every standard known to the industry. For example, “our salespeople are full-time employees,” he says. “They get benefits and a different commission structure than the rest of the industry,” he adds.
Plenty of distributors hire full-time sellers and pay them handsomely in benefits and commissions, but the two did bring an outsider’s perspective when they first started in the industry. Both say that their viewpoints, as well as their complementary work styles, have helped to build the company into the growing operation that it is today.
The question for both is whether they can keep it up and take the company to new heights – past the $10 million mark and into a position in the ad specialty industry that not many independent distributors can get to. That’s the challenge that this partnership has moving forward – moving out of the small company operation mode into a large industry business mindset.
Betsy Cummings is senior writer for Counselor.
|Partners At A Glance
Company: Custom Logos (asi/173183)
Partners: Alan Mittleman and Jeff Golumbuk
Location: San Diego, CA.
How’d The Partners Meet? On a Rhode Island nursery school bus when both were four years old.
Annual Revenue: Company had about $200,000 in revenues when the pair bought the business in 1989. It now has more than $9.5 million in annual revenues.
Number of Employees: 44
Top Partnership Challenges:
• Differing work styles. Mittleman is more of a finance guy, while Golumbuk is the sales-oriented people person.
• Increasing revenue further. The partners admit to stagnating sales just below the $10 million mark.
|The Expert’s Viewpoint
How to take this partnership to the next level.
What these two have set up is a strong company with a solid foundation. That’s obvious, says business speaker and consultant Michael Hart, head of Michael Hart Speaks LLC, based in Birmingham, AL. According to Hart, the two may soon be facing a harsh reality. To date, they’ve done a masterful job of growing the company’s yearly sales. But, as the two owners admit themselves, they’re currently stuck and are having a hard time driving yearly revenue above $10 million. “If they want to double in size,” or even add to their bottom line by just a few million, “they will have to abandon their current way of interacting and their current business model,” Hart says.
As they continue to grow, he says, capitalization is likely to be their biggest concern. And finding it – particularly in this economy – might be a problem, given their management setup. In this climate, banks, and particularly venture capital firms, “will be reluctant to loan large sums of money to two principals with no tiebreakers in the mix,” Hart says.
They may think they agree on everything now, but differences about business decisions crop up in even the healthiest of partnerships, Hart says. The key to keeping the company on track and without decision-making stalemates is to bring on either a silent partner or a group of people that the two of them can trust to help make decisions when they are stuck. It doesn’t have to be formal, Hart says.
In addition, to promote growth, Hart suggests that Mittleman and Golumbuk create a separate account to make that happen. Each month, they should deposit an agreed-upon amount (5% of their gross or even $100 a month, for example) that they would be comfortable losing, then dedicate that money to projects, marketing, research and development, or any other business strategy they deem fit, when the time arises.
In general the two will need to start assembling their company and making more calculated but aggressive moves to ensure steady growth. That holds true in management as well, Hart says. The two owners, he says, should start creating a layer of middle management between them and their staff, if they haven’t done so already.
The owners admit they’re prone to play good cop/bad cop on occasion with staff, clients, vendors or anyone else they interact with. That’s fine at times, Hart says, but it tends to be the personal approach of younger executives. “A company doing $9 million to $10 million a year, from a business perspective, is a teenager,” Hart says. “When you’re making $25 million to $30 million a year, you’re a young adult, and it’s time to start acting like one.”
That size firm often calls for a much more straightforward approach to everyone the owners deal with. It also calls for the partners reassessing their own value and roles in the organization. While they both pitch in now, contributing their skills from a left-brain/right-brain perspective, those differences will lose balance over time. “As the company grows, the influence of the right-brain partner on the market and funding aspects begins to diminish,” says Hart. As a result, “the right-brain person needs to assume more left-brain tasks,” and take on more of an executive position.
Their long-standing friendship, Hart adds, should carry them far. “The fact that they’re able to communicate and be open and honest with each other is very, very much a plus,” Hart says. “There’s a trust factor here. That’s the most powerful thing that comes out of it.”