At the age of 26, I was named President of a converting business - a company about to lose 90 percent of its revenue. Here’s the story of how I came out on the other side a more enlightened, innovative business owner.
(This is part two of a three-part series about my personal experience building and selling a profitable business. Click here to read Part 1.)
I took over Vomela Company under tumultuous circumstances. Carlo LaManna, my father and a trailblazer who led the company for 30 successful years, sold me the company to begin his retirement.
Lucky me, right? Wrong. 3M Company, who comprised 90 percent of our sales, decided to transition their print operations team and converting in-house, and planned to transition us out over the next three years. When they asked our family to consider a merger, I had a tough decision to make.
I consulted my father who said the choice was entirely mine - new territory for me. But once you’ve entered the market, you really only have two choices: Expand or exit. Being ambitious, naive and ready for a challenge, I decided Vomela would expand as an independent company. The next step was getting other people to believe in me.
Looking back, I realize what a mistake I made. I was young, inexperienced, and didn’t really know what it took to reshape or reinvent a business. However, my decision, misguided as it may have been, helped shape my ability to think long-term and strategically.
Restructuring, Repositioning and Revamping Vomela
When 3M announced they were going to phase us out, they presented us with a three-year strategic business plan. What they didn’t know was that in response, we developed a plan of our own, which would require Vomela to undergo serious restructuring.
Reinventing a company doesn’t come cheap. Fortunately, my father believed in my abilities, which he showed by investing $3 million into Vomela’s future. Now, the question was how to allocate that money.
I knew I couldn’t accomplish this enormous task by myself, so the first thing I did was hire outside consultants for help. I still hadn’t determined our exact direction, but at least I had some money and intelligent people backing me.
So, armed with my outside team of experts, we dug deep and began formulating a three-pronged strategy for a profitable future. Here’s the five-year plan we developed:
1. Rightsizing - With sales strategically planned to decline by 35 percent annually, I knew a staff restructure was in order. That meant downsizing from 150 employees to 32.
We needed to be selective in the talent we retained, choosing skilled workers who could help shape Vomela’s changing platform. We also hired new, enthusiastic managers eager to earn valuable experience with a young company.
As you can imagine, downsizing wasn’t a popular decision among my family and staff. Their bitterness was compounded by the fact that my father had never laid off a single person - he only understood growth and profit. Now, here I was laying off 30 at a time.
In a lot of ways, the process felt like a divorce. I watched our team undergo the five stages of loss and grief, from denial, anger, bargaining, and sadness to acceptance. I took solace knowing that this was the right move for my company (not to mention the departed were leaving with a nice pension plan).
2. Strategic Investing - Vomela had a history of innovation, which I wanted to continue under my tutelage. To understand the printing industry’s future, we conducted extensive market research, something that far too few businesses do.
The only way to safeguard a successful future is to strategically plan for it, which can only occur through research and action. It may have been the 1980’s, but our sights were set well into the 90’s!
Drawing on our findings, we invested in cutting-edge, previously unknown CAD-CAM technology worldwide, and divested from yesterday’s machinery. It was out with the old, in with the new.
Suddenly, we found ourselves with new capabilities that our competition lacked, especially for prototypes, short-run orders and quick turns. At that time, most printing and converting companies were structured for large run orders. By focusing on exceptional quality, speed and short-runs, we carved our own niche, rising as industry leader and setting our own prices.
Perhaps more important than acquiring this new intellectual property was hiding it. We knew the longer we kept our new toys secret, the longer we’d persist without any competition.
Then, we took it one step further by hiring specialists in protecting our intellectual property. The days where you could depend on a firm handshake and trusted words were over. In this climate, legal protection was a must.
The strategy worked. With our new structure in place, customers began flocking. Even 3M Company returned for a piece of the action.
3. Diversifying and Partnering - Our ultimate goal was to brand ourselves as the worldwide leader in printing and converting technology. But we couldn’t do it alone. The final piece of the puzzle was developing partnerships to help fill the gaps in our remodeled company.
One of the first places I turned was 3M. We knew that they - and their customers - lacked our new technology and updated processes. So, we formed a strategic partnership: They referred their customers to Vomela, and in return, we began joint ventures, sales calls and marketing strategies.
At this point, Vomela began a dramatic shift in branding. We were always known as manufacturers and industrial leaders, but now we gained recognition in the sales and marketing fronts, just like 3M.
With the proper gears in place, our wheels began to turn. This was a new chapter for Vomela. We were more professional, strategic and organized than we’d ever been. And though our revenue wasn’t as high, our gross margins and profits were off the charts, and I was loving the ride.
In retrospect, the key to getting from A to B was looking well into the future. Restructuring an entire company takes at least 3 to 5 years, if not more! If you find yourself in a similar position, solicit the right people, research and technology to get you where you need to be.