Tireless. Kim Lorenz
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this at length. John knew I was carrying the lion’s share of the workload as we still had not moved into a space for the new plant that was sitting in storage. We were both in the office and he said, “I know you are working a lot more than I am, Kim. When we are able to build the plant, I promise I will more than make up for this.” There really was not much I could say; I was pleased he acknowledged my work and really hoping he would contribute his share when he could.
Although I still had some reservations, I was smart enough to keep them to myself. More importantly, I did not share any of my thoughts or reservations with Jill, who could never fully see the other side of this story—at least not yet.
A few months later, we finally secured a lease and moved into our first building. We were still in the industrial area of South Seattle, and thus were close to many trucking companies and industrial firms. As promised, John built the retread manufacturing plant we had purchased to start the business. He was in the plant around 5:00 AM every day, working weekends and late evenings as well. John more than made up for his share of the work, and to this day, we have both kept up our sides of the bargain. Nobody worked any harder than John did, and thankfully, we can look back and laugh at Jill’s frustration. After a number of years, Jill and I shared that story with John and his wife, Sharon. While it may be funny now, it is a good lesson on humility, holding back your immediate thoughts, and not bringing home any one-sided stories, especially if the outcomes are still unknown.
Our different skill sets, when combined, added up to a successful partnership. I had knowledge, education, and skills John did not have. John had manufacturing skills, an education, and knowledge I did not have. We combined our strengths and weaknesses, had open communication, pushed through conflict, and watched our company succeed. Of course, as I mentioned in the last chapter, we grew way too fast for a small, privately-funded enterprise. We funded the company 100% on our own, with no outside investors, family funding, or gifts. We didn’t have a glamorous startup or enormous profit at the beginning. We were just a legacy-type business with knowledge and insight that our competitors did not have.
The process of starting up our business provided several opportunities to test the mettle of each of us. These hardships are worth reviewing, as these instances are yet another area not covered in depth by schools or books as mentioned already. In school, we aren’t taught why partnerships fail, or why partnerships succeed. Perhaps because every story on success or failure has so many variations and twists. What makes a business fail or succeed is a different scenario in every case. Our story is a basic example that can go very deep and needs to be understood. If you only concentrate on how much each person is working, you can fail to see that the success might not be possible unless one person works more. The sum of the inputs can be a great success, while they do not need to be equal inputs. Together, you can accomplish much more than by yourself.
Even though this new company was a corporation, we were still two individuals running it equally. We each owned 50% of the shares of stock issued. We paid ourselves the same amount of money each month, shared equally in any gains or losses, and vowed to always be fair with each other. We shared equally in the risk and invested the same resources, time, money, and talent. But the number of hours needed each day was not equally divided, and could not be. Each partner needed a perspective on this fact in order to succeed. Our skills balanced each other out, but the workload required would never be equal, and it varied at times. One partner always worked more than the other, but the sum of the whole was far greater than it ever could have been individually. I could have never succeeded without John, and vice versa.
One last comment on how decisions can be made when the two owners are equal partners: today, John and I are still partners, now in several LLCs. After 40 years of being partners, we still have never had a serious disagreement between us. That is not saying we always agreed; in fact, that is far from it. But we did develop a process from day one on dealing with situations. This way of working through a decision still works successfully today as it did when we started and can be used in any business.
We agreed on a way to communicate up front, explaining our thoughts and how strongly we felt about any major decision, a process that would serve us well over the years. It was John’s idea that whenever we needed to make any important decision, if either felt strongly against the idea, then we would not do it. Think this through: one partner might not agree but still voice that opinion and let the decision be made to proceed. But unless either partner strongly objected, they could still move forward. An example later in the book relates to a large real estate acquisition I wanted to do. We needed to expand, and I wanted to buy a large piece of land and develop a 60,000 SF building for manufacturing, warehouse, and offices. It would cost millions and consume a lot of time. John felt it too big a risk, but said, “I am not comfortable taking this big a risk, but I trust you and believe you have researched this well. If you feel strongly, that this is a good decision and will work, I will agree to move forward.”
Fortunately, that investment did pay off in huge ways, but had John said no, we would have chosen some other alternative. Either way, we would have kept growing and would have continued to work together. All decisions were important, and we agreed upfront on a process, communicated, talked things through, and provided valuable insight to each other in order to make good decisions.
Chapter 6
It’s All About the Customer
Over the following two years, our company continued to grow rapidly. Sales revenue was still increasing at 50% a year! We knew we could not sustain that kind of growth, yet we were trying to manage it as best we could. Keep in mind, we had no outside investors, no bonds to sell to raise capital to buy equipment, and no stock offerings to maintain adequate cash flows and expansion. All this growth had to be financed by John and me, using our available bank credit lines and debt, which added interest expense. Our valued suppliers also participated by allowing us attractive purchase terms on inventory.
Why were we growing so fast? Why were we able to capture so much market share from large international competitors as well as long-established local competitors? What were we doing differently? Well, for starters, we were not selling our products at reduced prices as so many competitors were doing. We were following the plans that we laid out at the beginning of our business: focusing on what the customer really needed. We were passionate about the business of showing customers how we could save them money in their operations. That passion was a proven belief that all customers wanted to spend less money on tires, and we could show how changes in operations could accomplish the savings. By educating the customer on several aspects of their operations as they relate to tires, we could save the customer money on labor cost and related expenses in addition to having to buy fewer tires by making our recommended changes.
Think about that last sentence. If you or your company can show a customer a better way to operate their business that saves them money, you become a trusted and favored supplier. Even if the customer might have to pay more for your service or product, if you can show them how to operate their business more cost-effectively, it would only be logical to choose you to supply the products they need.
Implementing this sort of model requires knowledge and training that exceeds that of the competition—training in understanding the customer’s operations and needs. While John had the knowledge and technical expertise to build and successfully run the retread manufacturing plant, I had the expertise and knowledge of the trucking industry and how we could improve operations for our customers as it pertained to tire applications. It was a perfect example of a great partnership as laid out in the previous chapter, a division of responsibility and complementary skillsets.
We had an employee base of individuals from outside the marketplace with little experience in tires. As I mentioned before, most sales and service people already working in the industry had some less than stellar habits and were not trained the way we desired. The salespeople we were looking for had to be professional, able to learn technical skills we would teach, and keep excellent records. We would train our truck service personnel in customer fleet operations so they understood what the customers needed.
The ideal service person had to be able to work with the customer as if they were running this aspect of their business for them, almost as if they were an employee of the customer.