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Rich Armstrong, right, and Todd Linton agree keeping employees focused is a top priority when growing quickly.
Rich Armstrong, right, and Todd Linton agree keeping employees focused is a top priority when growing quickly.

CEO Roundtable: Fast Growth

Posted online
With fast growth comes the potential for fast profits. But what about the growing pains? To find out, Springfield Business Journal Editor Eric Olson sat down with leaders of local companies named to the annual Inc. 5000 fast-growth list: Rich Armstrong with Great Game of Business Inc.; Brad Erwin of Paragon Architecture Inc.; Jennifer Johnmeyer with Sun Solar and Todd Linton of The Payroll Co.

Eric Olson: Describe the reason behind your company’s fast growth in one word.
Jennifer Johnmeyer: I’m going to go with luck. I find the biggest successes aren’t just working hard, but like this crazy combination of timing and luck.
Todd Linton: I would say service.
Rich Armstrong: Focus. We’re in the business consulting industry, and it’s very crowded.
Brad Erwin: Ours is people, people and timing. Making sure we have the right people in the right place doing the right thing.

Olson: You all made the Inc. 5000 fast growth list. What opportunities has growth given you?
Johnmeyer: We’ve been able to expand to other markets. We’ve done well here. Now, we have opened up offices in pretty rapid succession in Kansas City, St. Louis and Columbia. We cover the whole state and then in March we were fortunate enough to branch out into South Carolina.

Olson: Is that part of why the name changed from Missouri Sun Solar to Sun Solar?
Johnmeyer: We didn’t want to offend South Carolina people.
Erwin: Ours was to just really be able to give our team more challenging opportunities and different project types. It’s provided us with the financial stability to take calculated risks. In approaching new project types and new market segments, we were able to open up our Joplin office at the end of 2012 and now we have a presence in St. Louis. We can cover the entire state.
Linton: We’ve also been able to offer more powerful solutions to our clients, so we now have an office in Little Rock [Arkansas], one in Bentonville, and we have clients in all 50 states.
Armstrong: Our business is really tied to our ability to bring on coaches and consultants and really go out and sell and deliver. With our growth, it gets those folks excited to approach us on what opportunities they may have with our business and our methodology. I also think we’ve been able to provide some more opportunities for our people.
Erwin: We’ve continued to develop our team and provide more opportunities, better benefits, and watching our team grow and evolve.

Olson: What are some examples of new project types outside of the designs you were originally doing?
Erwin: Well, our tornado safe room projects and our expertise in that has really allowed us to be ingrained with school districts across the state. We also had a really good resume of corporate office projects.
Olson: Any other examples from you guys on what those opportunities were?
Johnmeyer: That’s our challenge; the [solar] rebates are disappearing. Even though the prices dropped, it’s going to be a little more for people once they’re gone. It’s just convincing them. It’s just making people understand this is an option and it’s not as scary as it seems and it’s not just for the extremely wealthy.
Linton: For us, I would say we started out as the payroll company but really expanded out because our client base needed more human resources functions due to regulatory changes. There’s a whole lot more compliance issues for businesses, and the HR side of those things are really driving decisions by CEOs.

Olson: What are some of the pitfalls and challenges of fast growth, and how do you adjust to them?
Johnmeyer: I kind of have a different perspective from you guys because I’m not the CEO. I’ve been with the company for 11 months and when I started they didn’t have any kind of public relations or community relations. I want every one of our employees to still experience that family atmosphere that we started with our CEO Caleb (Arthur), but it is easy for people to feel left out. When we did grow so quickly, that was a big concern for us.
Armstrong: I love that. I think that is probably the biggest challenge, to keep people aligned, keep people bought in and have a strong belief in where we’re going and what we want to do in terms of growth. I think your culture can change relatively quick when you’re growing and you have this really tight-knit culture where everybody understands each other, but as the business grows that starts to change. People start having trouble figuring out where they fit and what that looks like in the future.
Erwin: Keeping our core strong and figuring out really why we want to grow, so we’re making those right decisions and looking at ways to constantly improve.
Linton: It can be easy to lose focus when you’re growing rapidly. We doubled in size from 2008 to 2010 during the recession as well, but you can kind of lose focus and that’s where we really had to dial it back down to make sure we had the right people in place.

Olson: In the process of finding the right people, there’s going to be turnover and job loss, right?
Linton: There can be, but in our case there really wasn’t. We opened up so many other areas for people to move into, so someone might have some expertise in another area we could really take advantage of. We were very fortunate.
Armstrong: Alignment is key. If you’re growing rapidly, sometimes the people aren’t there yet. We’ve had to bring some people from the outside into key positions to make sure we can take advantage of the growth where we haven’t been able to develop quickly enough. Tough decisions can also be tough on the culture.

Olson: Are there any experiences you would want to redo when you look back on your growth?
Johnmeyer: Caleb was a cop. He suffered an unfortunate situation at work trying to get some kids out of a meth lab and ended up in bed for eight months. That just turned his whole life around and he started this company with no experience. He just started out by building a solar-powered water heater for himself. He tried to do everything right, but he was 26 years old. He did the best he could, but there were a lot of things he didn’t know and he didn’t have that money in his back pocket to spend on consultants or experts. I think it’s worked out for him pretty well, but there definitely are some things. We had to lay people off earlier in the summer because we had hired a lot of installers and electricians when we were getting backed up. We had to lay them off when that tapered back and rebates started cutting back.
Linton: I wouldn’t say any redos, but we have to stay balanced. We can grow even faster, but we have to be able to follow through on what we say we can do for our clients.

Olson: Are you turning away clients in order to do that?
Linton: Not necessarily turning away clients, but just dialing it back a little.
Armstrong: I don’t know if it’s related to a redo, but one thing I’m pretty proud of is that we’ve maintained quality. That was probably our biggest concern that maybe the demand’s there, maybe we can go out there and oversell, but we needed to make sure we were delivering at the same time. We’re pretty spread out and everybody has their own way of delivering on what we do and maintaining that quality across all aspects.

Olson: What financial tools have you put in place to facilitate your growth and plan for the future?
Erwin: We’re putting it back into training of our staff, continuing education, upgrading our technology. We utilize building information modeling software and that’s actually been a good talent attraction piece as well.

Olson: Even if that means taking on some debt to enable that?
Erwin: If needed, yeah. We did early on, but we’ve been OK after that.
Johnmeyer: Same. We did that early on, but we’re doing better. We’re branching out in that we’re trying to get our branding to a consistent message across all markets, which is tricky. We were all over the place before because we didn’t have the budget. We were just shooting, hoping we would hit the mark, but now we’re able to focus.
Armstrong: I ask our team, “What do you need to keep up this growth?” It’s always been resources. Investing back into people, back into key positions that need to be filled in order to achieve the goal.

Olson: Does fast growth automatically mean profits? Is that a myth?
Johnmeyer: Not in our case. A lot of balance, it keeps coming back to that balance. You have a lot of jobs, but nobody gets paid until the jobs are done. So, it’s that issue of the money not being there yet, but you have to keep the people so they can keep working and get those jobs completed. It’s been hit and miss. It’s pretty even, but fast growth was kind of detrimental to us for a while.

Olson: Does that mean sometimes you have to be OK with the cash flow ebb and flow?
Erwin: It goes back to making that decision as to why you want to grow because the growth percentage doesn’t always line up with that profit increase. Hopefully, at some point, it will catch up. We want to grow because we want to continue to provide our staff with additional opportunities and different project types. We want to continue to be able to work with our current clients and the people they refer us to and continue providing the highest service we can.
Armstrong: We’re very open book, so our people really look at where we’re spending the money and if we’re growing and if we’re taking engagements that are helping the company. Our profits have actually grown much faster than our top line. We’re in a service industry, so our formula is much easier to work.
Linton: That ebb and flow is definitely how it is for us. Talking about that balancing act, adding more people to grow, moving into those new markets, but obviously not growing too fast. In the long term, it’s definitely more profitable, but not necessarily in the short term for us.

Olson: It’s been said entrepreneurs are continual students. What did you all learn about business last week or last month?
Johnmeyer: Caleb’s not only the CEO, he also works very hard on the legislative side to make sure that advantages are there for larger businesses in Missouri. They’re capped out at how much solar they can have, little things like that people don’t know about. He’s the president of the Missouri Solar Energy Industry Association, so he’s constantly going. He’s constantly learning and getting out there and seeing what the situation is and figuring out how he can help. There is never an hour where he is not learning more to see how he can help the industry overall.
Armstrong: We had 60 CEOs in last week. Talking to these guys who are really successful CEOs, it reminded me culture will always trump strategy. We tend to focus more on the strategy, operations, investments and all that sort of thing.
Linton: One thing I say is that there are companies all across the board out there that do what we do and have software. Everyone has software that has functionality in it. So really it all comes back to the people. When you have the right people, you can provide the right service.

Olson: When looking at your growth sheet, you’re all carrying hockey sticks. What are you planning to see on that chart?
Linton: It’s making sure we don’t fall off the hockey stick. It’s a fun ride.
Johnmeyer: We’re just trying to grow into those new markets. We just need to get those off the ground before we think about anything else.
Erwin: The thing about the hockey stick is that what’s important is the base, so I think it’s keeping that base strong that will keep that trajectory going. Our trajectory is going to be lower than it has been in the past, but it’s going to be strong and linear in the upward fashion.
Armstrong: With all this constant open-book management, it makes me feel kind of like the solar. Open-book management right now is a hot topic, and it’s getting more awareness. It’s a methodology and a practice that more organizations are looking at and bringing in. We’re at this tipping point, so we need to take advantage of it while it’s hot.

Interview excerpts by Features Editor Emily Letterman, eletterman@sbj.net, and editorial assistant Barrett Young, sbj@sbj.net.

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