Building A Successful Small Business Leads To The Obvious Question: What's Next?
It’s a summer morning and SoliderFit owner Danny Farrar is asked how he was doing on this day. “I’m living my best life,” he responds. “How about yourself?” It is noted that his answer is different than the standard “fine” most people rattle off when asked the same question. “If you are not living the dream, that is on you,” he says. “You’ve got to figure out a way to get there.”
Farrar had struggled with his weight his whole life even reaching nearly 300 pounds at one point. He joined the U.S. Army for nine years, which included a combat tour in Iraq. Being in the military made him work out, so after he was discharged doing personal training as a side hustle while being a career firefighter seemed like a natural fit for him.
Looking at big box gyms, he noticed many have high-overhead, unused, expensive pieces of fitness equipment, low monthly rates and most members just took classes. So, Farrar decided to create a gym strictly devoted to classes with a low monthly rate.
“When I started doing this, when I tell you I was the laughingstock of Montgomery County, I am not exaggerating,” he says. “I was literally laughed at to my face and told [by a gym owner], ‘This is a stupid idea and it won’t work.’ Here we are, 12 gyms later, about ready to open three to four more depending on how the year plays out, and that gentleman still owns one gym. You have to be smart enough to trust that you see what other people don’t or dumb enough to believe that you can see something that other people don’t.”
With a strong economy, many small area businesses are growing or exploring the possibility of expanding. But the next step is not as easy as it sounds. The timing and scale need to be proportioned realistically so the risk is lessened. It can require expertise in various disciplines—legal, accounting, strategic planning, etc.—in which the average small business owner might not be familiar. “When you are a Fortune 500 company or a Fortune 100 company, you’ve actually got teams of lawyers and accountants and business evaluators that do that work for you,” says Rick Weldon, president and CEO of the Frederick County Chamber of Commerce.
“When you are a small business, you are sitting at your kitchen table running those numbers yourself and you are talking to your local lenders and your clients and your customers to try to get a sense of that. I think it is a really complicated thing that falls on the shoulders in the case of a small business on the owner or the CEO,” he says.
Weldon notes when business growth was discussed in 2007, the outlook looked solid, the economy was vibrant and indicators were positive. The next year, the housing bubble burst, which lead to sharp declines in consumer spending and loss of jobs.
“If you and I were having that [growth] conversation back then and we were talking about business evaluation and risk and scalability, and then we moved into 2008, it would be like, ‘What in the heck happened and how did it happen?’” he says. “So, there is the risk. The risk is, we look at all these indicators and we think things are really well, but are they really? Are the underpinnings of the market really that strong and is it a time that you want to take on additional debt in a company in order to scale up and those kinds of things. … You really want to make sure you’ve done the due diligence to make sure that this is going to be a growth pattern that is going to last and carry you through where that risk lies.”
Weldon says the Chamber can assist area business owners that are considering expanding but don’t know where to start. Staff can dip into the Chamber membership to suggest those who do hands-on business evaluations, prepare legal documents and put together partnership agreements.
Ryan Safner, a visiting assistant professor of economics at Hood College, notes small business growth depends on the objectives and goals of its owners and varies by industry. “If you are opening multiple locations, you have to search for real estate,” Safner says. “You may run into financing issues, particularly if you are trying to open additional factories or additional store fronts. It is certainly going to be easier for a software company or something that has a much more online presence than a brick-and-mortar presence. That’s probably much easier to expand.”
Businesses may face legal hurdles, real estate zoning issues and the possibility of different licensing requirements if state lines are crossed. “Getting larger raises your profile which can be great if you are looking for more customers, but it also can attract attention from competitors once they start seeing what you are doing and what your business model is,” Safner says.
With increasing size comes rising costs for staffing, including hiring additional managers to oversee staff. “That is one of the most difficult things and probably one of the largest areas that sinks growing businesses more than any other—it’s worrying about having the cash on hand to pay that increased amount of workers and suppliers,” Safner says.
Weldon encourages business owners to make sure they are aligned deeply with the most dedicated customers before trying to find new ones. “Every business, even the smallest business, has a committed core of customers,” he says. “Communicate with those customers before you embark on a scaling-up strategy. Have a real heart-to-heart with the customers that matter most to you. Make sure you are right with them. Put your finger on that pulse and make sure that you are delivering what they expect in a way they expect it and your value proposition is solid because if they are your committed customer, they are going to be very honest with you and they are going to say the things they think you need to hear as opposed to the things they think you want to hear.”
AMBITION WITH PRACTICALITY
Over the summer, SoliderFit opened new locations in Bethesda and Ohio. Branches in Clarksburg and Wisconsin will open this month. Hagerstown will see one open before the end of the year. Before this growth, the gym brand had over 4,000 members; that number will likely soar.
“I don’t do what I do for money,” Farrar says. “That is the plain and simple truth of the matter. … The main reason I want to have that many gyms and more is because I want to be able to show people who were where I was that you can still be whatever you want to be in this country if you are willing to work hard and surround yourself with the right people. For me, us being able to increase that message, that footprint is extremely important to me. It is a win and a benefit that there is really not a monetary value I can attach to it.”
There have been roadblocks along the way. Farrar notes from signing the lease to opening, “babies were conceived and born in the time it took me to open” in Gaithersburg several years ago and Bethesda in August due to dealing with government hurdles. As the company expands, he also wants to maintain brand consistency as well as provide more training to staff.
“When you start looking to try and grow, there are so many unexpected things that come with an expansion that you are not going to see,” he says. “You can plan, and you can plan, and stuff just comes up that you just have no way of anticipating. That is such a drain on the revenue resources. … That is the part to me that makes expansion scary.”
Farrar notes one of the quotes he hates the most is, “If you don’t build your dreams, someone else will pay you to build theirs.” “It is such a misleading quote,” he says. “Everybody acts like everybody should be a business owner. Everybody shouldn’t be a business owner and that is not an insult.”
At 40 years old with a bad back and knees, Farrar asked what people would say if he announced he was going to try out to be an offensive guard for the New England Patriots. “People would laugh me,” he says. “I don’t have the tools in my toolbox to do that. It doesn’t make me less of a person than that guard. We have different skill sets. Being a business owner, it requires different skill sets and what I am learning going through this process of growth is that becoming a medium-size business requires different skill sets [and] going to a large-size business requires different skill sets. There is nothing wrong with being an employee. There is nothing wrong with being a mom-and-pop or small business. There is nothing wrong with being a medium or large business. It is a personal choice but whatever choice you end up making, you have to be willing to do the additional work that comes with it. You have to look at it as an end goal.”
He thinks many times people get pressured into going into business or into an expansion when it’s not really what they want. “There is just so much work that has to go into that. [There is not] that instant gratification of, ‘Oh, I am going to make a lot more money right off the bat.’ They find themselves miserable and they become slaves to what used to be their passion. … Grow because you really want to, not because you feel like it’s what you are supposed to.”
FOCUSING ON STRENGTH
ALL-SHRED founder and president Mary Pat Kulina started her mobile document shredding and recycling business in the 1990s with one truck. In the years since, the company has purchased 15 trucks and services six states with headquarters in Frederick. Kulina notes the company was able to grow by top-notch customer service and communication. “There is no phone tree when you call ALL-SHRED.”
Kulina gets calls from all over the country for business consultations and the biggest theme is finding quality employees. She notes some people take a shower and show up and consider that good enough; her employees sign a contract outlining company expectations for coming to work, communicating, looking professional from head to toe (which includes being clean shaven). Eighty percent of her employees have been with the company six years or longer.
“If you don’t have a good quality team, you don’t have a team, and if you don’t have a team, you can’t answer the need, and if you can’t answer the need, you don’t have a business,” she says. “I am only as good as my team. I can only meet the need if my team backs my vision and are accountable to themselves.”
This year, Jason Lee marks 20 years in the cleaning industry. He founded Top Quality Janitorial Services and then Lee Building Maintenance, where he has served as CEO since 2015. A member of the executive board for the Frederick County Chamber of Commerce, he recently hosted a program on what entrepreneurs/owners need to know in order to scale their business. He says one of the most important questions a person needs to ask is if their business is ready for growth.
He encourages owners to look at their sales growth forecast in an honest and realistic way and get creative with cash restraints including potentially crowdfunding or entering small business contests. Businesses should also check their existing systems and invest in technology.
Expansion has been good for Lee’s business as he aims to grow the company as much as possible. “The key for me in this business is you have to commit to what it is that you really want,” he says. “Not everybody wants to have a big company which is fine. Some people, at the end of the day, they know what their lifestyle wants to be and what they are passionate about.”
For those considering growth, Lee notes owners need to do their homework. “We all have to do our due diligence,” he says. “You have to be agile. You have to be flexible. Things will change even in the best of times, or when you feel you are doing well there will be a curveball. … You’ve got to be focused. There are so many things coming at us all the time. I think the key is having a strategic focus. Know where you are going and just focus on that. When you complete that task, try to bring on something else.”
Whitney Hahn had been a television and radio host for years before she decided to co-found the video production and marketing business Digital Bard in 2004. “The starting is easy,” she says. “The running and becoming profitable and healthy—that’s the hard part.”
Predating YouTube, her company initially focused on broadcasts, television commercials and programs for local cable companies. In the years since, the company has had to navigate numerous industry changes including streaming services and smartphones where everyone carries around a camera and video recorder.
“Our workforce and our business model demands have changed to actually reflect what a lot of larger companies do, where they have a few core staff and everybody else are contract specialists,” Hahn says. “It is on-demand workforce and that is really what I see trending, not just for our industry but for a lot of industries. Almost every industry, I would say. Our gig economy gives us the opportunity to have an on-demand workforce. We have contractors or specialists or freelancers that we bring in for a particular period of time or for a particular need. We inhale those needs and those talents in and when that need from the client perspective is over, we can exhale, bless and release them back into the workforce and not have to maintain that overhead all the time.”
Hahn notes that entrepreneurship is often romanticized and involves a different skill set than just the focus of the business. She knew she was great at creating videos, but it was a hard lesson for her to learn that running a business involved other aspects, including invoicing, time management, employees, insurance, having an office and rent. “I had to learn so much other stuff that didn’t have to do with the technical craft of what I was trying to deliver and not everybody is prepared for that,” she says.
One of the qualities Hahn believes anyone who wants to start or expand a business must have is to be optimistic but cautious. “You have to be prepared to assess and change far more often and at far shorter intervals than you might imagine. That has allowed us to be resilient, to head off some issues before they become terminal and to change with market needs.”
As an owner, Hahn’s job is less about conceiving videos and more about building jobs. “I am creating revenue for the company and opportunities for people who work for the company to help us deliver what we deliver,” she says. “We are just doing that through different mechanisms now and that is actually exciting for me.”