I have to admit that this is one of the most enjoyable times in my life. Our business—Quality Float Works Inc. of Schaumburg, Ill.—is experiencing rec-ord growth, and my peers have elected me to serve on the board of directors of two major public policy organizations, the National Association of Manufacturers and the Tooling & Manufacturing Association. These achievements are even more rewarding in light of the tremendous challenges I faced when I took the reins of the business in 1995.
In 1915, my grandfather Louis Yablin founded our business in his southwest-side home in Chicago. The company manufactures spherical metal floats for use in hydraulic pumps and complex machinery. Born out of metal spinning, this technology would become the foundation for leveling liquids in products used in a variety of industries every day. After college, I started working at the company as an administrative assistant, helping my father with processing payroll and serving as a liaison from the office to the factory. Over the years, I learned the ropes in the marketing and sales department, even joining my father on sales calls around the country. The opportunity to learn every aspect of the company was extremely valuable in preparing me to assume the leadership role. Unfortunately, our biggest failure was not having a succession plan in place.
In 1994, when my father, Allan Yablin, passed away, I was poised to take control of the family business. As someone who is “forever 21,” I’ll just say that youth had nothing to do with the challenges I was facing. The company was a successful business. The last thing I expected was a tumultuous battle to keep our business alive. But that’s exactly what happened. As a surviving family member, I was faced with grieving; running a business; reassuring customers, suppliers and employees; and learning complex tax and estate law.
Emotional and financial struggles
My father had failed to fully understand the language and process related to how the business would pass through his estate. Upon his death, the company’s assets and liablities remained in his living trust. Financial institutions would not provide me with the loans I needed to purchase my father’s assets; they viewed me as a start-up with no customer base. The door was closed on me at least five times, and I was forced to liquidate my assets and use my personal cash to purchase my father’s assets—assets accumulated from a business that had been operating successfully for 80 years. Furthermore, investments in technology were also left on my shoulders to finance. Publicly, these lenders used the lack of a smooth transition as one of the main reasons why I was denied assistance. The new leadership and face of the company probably didn’t fit into the “sure thing” model of lending. Privately, I believe the fact that I was a woman in a male-dominated industry with male-dominated lenders was a main reason for this cautious attitude.
In order to put every penny back into the business, I chose to forgo a salary for nearly five years and opted to pay employees out of my own pocket, including overtime, to grow the company. Although the business faced difficult times, our employees stayed because I brought them into the process and rewarded their loyalties. I shared our struggles as well as our vision, but I also made sure they had ample work, and I provided good benefits. Another important reason behind our ability to retain employees is that I had worked alongside them for years.
During this time, I personally struggled emotionally and financially. I lived off and burned through my savings, sold my stocks and maintained a “week to week” mentality in my own head. I sacrificed vacations and personal purchases, and this took a major toll on my well-being. Providing a sense of security to our employees is very rewarding, but knowing I was operating in a negative cash flow environment was unbearable.
It takes a lot of raw materials to run a successful manufacturing business. But once I took the helm of the company, suppliers who had taken my father’s word on payment suddenly required me to pay cash on delivery. In some cases, our lack of a smooth transition meant we didn’t have the liquidity to pay our bills on time. This was a very difficult time for our company; we had to clear some hurdles that we hadn’t faced under my father’s leadership. In retrospect, these hardships gave me a greater sense of discipline and contributed more to our growth and success than I realized at the time.
Our customer base was affected during this transition time as well. Some customers left because the transition was not as smooth as I had hoped. Our financial hardships had a domino effect on our customers because we maintained a lower level of inventory, which meant delivery of their floats was delayed. Our floats are integral to the operation of our customers’ equipment, and our delays in delivery caused them to experience production slowdowns, which resulted in our losing some business along the way.
A new way of thinking
At this point, I had two choices. I could either be upset and complain or work even harder to earn the respect of our lenders, suppliers and customers. Over time, I did earn their respect. My expertise in mechanical engineering and design allowed us to expand our customer base.
My father always said, “Do one thing and do it well.” Well, I brought a new way of thinking to our business. While our competitors sold from a catalog and refused to customize products, we began customizing floats for customers, and we capitalized on this market share. By rolling up our sleeves, we met customers’ needs and began to see repeat business. Our reputation for customizing floats of all shapes and sizes led to our floats being sought after by businesses around the world. Although this process took several years, the fact that our shop was busy and our employees were compensated for their work went a long way in earning the respect that I have today. In fact, some customers had to come out to the office to make sure we were alive and kicking. I wasn’t about to let my father and grandfather’s legacy fall apart.
Our business has flourished because we grew out of adversity and we evolved. We continued to inspect our products at every level of production to ensure the quality of our floats and adopted lean manufacturing to maximize our resources. We refused to lay off employees, but instituted measures such as keeping a fluid level of inventory and cutting expenses related to trade groups. We also diversified the company by entering into global markets in a rather inexpensive fashion, resulting in high levels of revenue growth. Since I took over in 1995, the company has grown into a global competitor, with exports to China, Vietnam, Singapore and many European countries.
Today, most of our business has returned to us because we manufacture a quality product, we take pride in our workmanship and are willing to roll up our sleeves and customize products to meet our customers’ needs. We are one of only three metal float manufacturing companies operating in the U.S. In 2006, we experienced record growth and profitability even though the cost of doing business had risen.
The next generation
I relied on my family during this period. When I took over the company, I asked my son, Jason Speer, to return home from traveling abroad to join the business. At 19 years old, he didn’t waltz into a lofty salary and job, which is a great lesson I learned from my father. Jason followed the same path I did, working in every component of the business, and he excelled at managing our shop room floor. He became a strong advocate for our global expansion and helped develop our float assemblies, which have taken us to new heights.
In 2004, Jason assumed the role of vice president and general manager, and he continues to contribute innovative ideas to grow our business. And, yes, we have a very detailed succession plan that deals with the estate tax so Jason won’t have to deal with the pain I had to endure more than a decade ago. I would strongly urge every family-owned business—big and small—to develop a succession plan.
Over the last ten years, there have been some ups and downs, but we persevered. I felt as if I was rescuing my grandfather’s heart and soul from the auction block. I believe in the entrepreneurial spirit, and our success today shows that I’m living proof.
Sandra Westlund-Deenihan is president of Quality Float Works Inc. in Schaumburg, Ill. (www.metalfloat.com). Recently, Quality Float Works received a Small Business Blue Ribbon Award from the U.S. Chamber of Commerce.