Against the Wind
FSB helps a family-run motorcycle-accessory business shift into high gear.
(FORTUNE Small Business) – Motorcycle windshields were once big, ugly, and uncool. But all that changed when Norm Dober started manufacturing small, aerodynamic windscreens at a factory in Silicon Valley. Now WindVest Motorcycle Products sells thousands of windscreens every year. The company says sales have been growing 10% a year over the past six years and should hit $1.4 million in 2005. Why use a WindVest? It's obvious, says Dober, 62, a slender, serious man with thinning hair and a goatee: "You drive all day without one, the wind knocks the beans out of you, you're covered with bugs, and you're too tired to party." In case it's still not obvious, his son, Doug, 35, elaborates: "Parties are good for your sex life." Business is good. "The IRS loves us," says Norm's wife, Marilyn, making a sour face. But the Dobers want to boost their margins while maintaining the current growth rate. Most of their sales are in California, Florida, and Texas. They dream of reaching new markets in the South and the Northeast. They also hope to increase their manufacturing efficiency by finding new suppliers closer to WindVest's headquarters in Campbell, Calif. And family conflicts often get in the way of business. Doug is supposed to run manufacturing and marketing, but he's a self-confessed micromanager who takes on more tasks than he can handle effectively. His sister, Tami, 38, wants to do more than just help her mother keep the books. "We're all on top of each other here, stepping on each other's toes," says Doug. FSB brought three seasoned consultants to WindVest's offices. Gordon von Bretten of AlixPartners is a Detroit-based supply-chain expert who specializes in the automotive industry. Rolanda Pollard is an organizational psychologist and professor at San Jose State University. And Melanie Schmidt is a marketing specialist with the San Francisco office of A.T. Kearney. Despite his impeccable suit, German accent, and formal diction, von Bretten, 32, is perfectly at ease in WindVest's factory space, a warren of rooms where casually dressed workers inspect parts, bundle them into kits, and stuff them into boxes for shipping. The Dobers proudly show off their massive Harley-Davidson hogs--one for each family member. All the Dober bikes carry a WindVest windshield, of course. It's a rigid piece of transparent plastic that mounts to the handlebars with a crosspiece and two simple clamps. Despite its small size--just 14 to 18 inches high--the screen deflects wind and bugs from a much larger area around the driver. Sitting with the Dobers at a marble-topped table, von Bretten asks Doug to describe every part in the windscreen, where and how it is made, and how it travels to WindVest's assembly area. The consultant wonders why the Dobers are looking for new suppliers in Silicon Valley, where land and labor costs are exorbitant. Their cost of parts, especially the molded plastic and the chrome plating, are already high. "You can get away with that if you have huge margins," he says. "But if someone else comes out with a product like yours, the price pressure will start, and you will need to have the lowest cost structure." So far WindVest has a unique product. (Harley-Davidson also makes a quick-release windshield, but its design is very different.) WindVest can stay ahead of any future copycats by having the labor-intensive parts made in Mexico, where labor costs are a fraction of those in the U.S. When the Dobers express doubt about negotiating in a foreign land and language, von Bretten advises them to do business with quality American companies that have plants in Mexico. It soon becomes apparent that the Dobers mostly want better prices and service from their current suppliers but don't know how to negotiate for them. "I'm afraid of them telling me to get lost," admits Doug. Be tough, advises von Bretten. "A lot of small companies underestimate their negotiating power with suppliers," he says. Many American auto-parts manufacturers are losing work to overseas suppliers and should be eager to keep a growing client like WindVest. To boost bargaining power with existing suppliers, the Dobers should arm themselves with lower bids from other companies. "If you have a credible lower bid in your hand, they'll come around," the consultant concludes. Rolanda Pollard, 36, grew up riding dirt bikes on a ranch but currently earns her living as an organizational psychologist. "I'd go riding in a minute if I could," she announces. Smiles all around. But the conversation soon takes a serious turn. Norm Dober turned over most daily operations to Doug years ago. But Doug, who has worked at the company for seven years, is loath to delegate. Although WindVest has ten employees, Doug still handles all complaints and returns from customers--a complex and time-consuming chore. "I'm married to this business. It's my heart and soul," admits Doug, a compact, muscular guy with salt and pepper hair. Marilyn, 63, keeps the books. Tami, 38, joined the company three years ago. She helps her mother with the accounting but chafes at not being allowed to handle key jobs such as receivables and collections. Marilyn worries that she'll be irrelevant to the business if she delegates too much. The result? Family disputes often get heated. How heated? "You can sum it up in five words," says Norm: "'Mom, am I really fired?'" "Delegation is a risk, just like starting a business is a risk," Pollard replies. "But if the day-to-day stuff consumes all your energy, you'll wind up delegating higher-level tasks like marketing, strategic planning, and R&D to your competitors." Pollard suggests that the Dobers delegate chores where the customer won't be affected much if the handoff doesn't go smoothly at first. So what if the new guy has to spend a little extra time running around to figure out what needs to be done? If the right part still goes out in a day or two, the customer won't detect any internal disarray. And if customers are affected, communicate with them. "Tell them you're a growing company with growing pains," says Pollard. "You're putting new processes in place that will help you serve them better in the future." When marketing specialist Melanie Schmidt arrives the next day, the conversation soon turns to regional expansion. "I want to see WindVest on as many bikes in South Carolina as I do in California," declares Doug. The company advertises in several biker publications and on four California radio stations. About a third of all sales come through a handful of national distributors, which in turn sell the screen kits to retailers. WindVest sells another third of its products to retailers. The remainder go directly to bikers, who buy the kits at motorcycle shows, online, or by phone. Doug is convinced that the best way to boost sales in new territories is for him to demonstrate the product at bike shows and rallies. That approach has worked well close to home, but he's too busy to take his show all the way across the country. "There's a biker rally in New Hampshire that draws 300,000 people every year, and I can't get there," he laments. Schmidt, 34, starts gently poking holes in his strategy. Only a fraction of all those bikers at the New Hampshire rally will actually visit the WindVest booth, she points out. Perhaps Doug should concentrate on marketing where bikers live, not where they visit for a week. "Don't you want to go to the states with the most bikers in them?" she asks. She pulls out a color-coded map of the U.S. Arizona, Colorado, and Wisconsin have huge numbers of bikers, she notes, about as many as Texas. And WindVest's sales are strong in Florida, even though Doug has done little street marketing in the Sunshine State. It turns out that a particularly energetic local distributor has been pushing WindVest in Florida from the beginning. So the key to boosting sales might be cultivating distributors, not hanging out at bike shows. "Have you ever asked your distributor in Florida what he does that works so well?" she asks. "You should." One dependable strategy is to offer incentives to the salesmen who work for the distributors. Give them marketing materials to distribute, and provide sales data that prove the popularity of the product. "You don't have to persuade salesmen that the WindVest is cool," she says. "Imagine you're a salesman and you've got a wife and four kids to feed. Explain how popular the product is. Show him that he will make more money if he puts his efforts into selling WindVests than into motorcycle luggage. Nothing is more persuasive than numbers." And the verdict? The Dobers are agog that Rolanda Pollard was able to convince Doug that he needs to delegate. Even Doug is impressed. "Sometimes you have to hear it from someone else, not just from family," he says later. "I'm working on a list right now of all the things on my plate that I have to start handing off. I'm up to 38 right now." They plan to solicit bids from new suppliers and use them as leverage with existing ones, as von Bretten urged. But despite Schmidt's market research, the Dobers still cling to their dream of building sales on the East Coast. Can WindVest throttle up its business? We will revisit the company from time to time and report on its progress. |
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