Makeover my business: How to expand
FSB helps a prosthetics firm add new branches.
GETTYSBURG, PA. (FORTUNE Small Business Magazine) - Two best friends with the same first name, Jeff Brandt and Jeff Quelet, met years ago when both were in the early days of an unusual career: fitting patients with artificial limbs and body braces, a field known as prosthetics and orthotics.
Quelet's path was laid out for him very early: Cancer required his right leg to be amputated far above the knee when he was 7, and he has worn an artificial leg ever since. Brandt started out studying medicine but decided in college that he would rather become a CPO -- certified prosthetist/orthotist -- than a doctor.
The two men resolved a decade ago that they would someday open their own practice. Quelet even signed a dollar bill and handed it to Brandt to make sure, he said, "that I'd be Jeff's first customer."
Their dreams have come true. After years of laboring in a limb factory, studying at Northwestern University for two years, and working for a big prosthetics firm, Brandt got word of some space opening up in a medical office in Gettysburg, Pa., where he had grown up. He launched his business, Ability Prosthetics & Orthotics (www.abilitypo.com), in March 2004. (Gettysburg was an apt choice, given that the artificial limb industry got its start serving soldiers in the Civil War.)
Business has been good. Revenues the first year hit $300,000. Quelet joined the firm early last year, setting up a branch office in Hagerstown, Md., about 40 miles southwest of Gettysburg. In October they opened a bottle of champagne to celebrate their millionth dollar of revenue. Ability wound up grossing $1.2 million for the year.
The two Jeffs have bigger ambitions, though. They asked for a makeover from this magazine, saying they wanted advice on how to expand to a few more locations -- "three, no more than five" -- in the area, and maybe grow to a $5-million-a-year company.
In addition, Henry Weintrob, co-owner of the big prosthetics factory where Brandt worked earlier as well as his former boss, has asked him to join in a bid for a $4 million contract to provide prosthetic-limb fittings and services to war-injured soldiers at the Walter Reed Army Medical Center in Washington, D.C. Brandt would like suggestions on how to woo Uncle Sam.
And, of course, as the business grows, the two Jeffs find themselves swamped with tedious paperwork, accounting, and management chores. Which technologies might make life easier?
To explore Ability's expansion plans, we pulled in Rick Gibson, president of HOTventures, a venture capital firm from Tucson. Gibson has started a number of successful companies, including Knowledge Adventure, a "software edutainment" firm that he and his partners sold for nearly $100 million. He says he reviews about a dozen business plans a week from aspiring moguls.
For suggestions on how to navigate the federal procurement bureaucracy and win the Walter Reed contract, we turned to Raymond Roberts, CEO of Cairo (www.cairocorp.com), a thriving software firm in Chantilly, Va., whose sole focus and customer is the federal government. Paul Prusakowski, a practicing prosthetist from Gainesville, Fla., who spent years designing an elaborate software program for prosthetists and orthotists, arrived to help Ability cure its managerial migraines.
Gibson, the first to visit, is so effortlessly friendly and engaging that he soon has Brandt and Quelet discussing major business issues even while he is ostensibly just getting some coffee and a tour of Ability's warren of device-fitting rooms and workshops. Eventually everyone settles into some hard chairs alongside a set of parallel bars used to help patients walk while wearing a new device.
Gibson, who has a receding hairline, trimmed three-day beard, and sunglasses around his neck, listens as the two partners explain their formula for success: Provide lots of follow-up care to make sure the devices fit properly, and schmooze physical therapists, who may spot a patient who will benefit from a brace. Demographics are also helping.
"Boomers are getting older, and there are more and more diabetics with limb problems," says Brandt.
But there's an undercurrent of frustration in the conversation. Too many doctors, they say, view prosthetists as unsophisticated or, worse, as mere hardware salesmen.
"Everybody understands the value of an artificial leg for an amputee," says Quelet. "But even a lot of doctors were never educated in how a foot brace can help a stroke patient with a droopy foot walk better." (What doctors think is important. Every patient needs a doctor's prescription to be fitted for a limb or brace.)
Brandt and Quelet tell Gibson about their lengthy training to become certified: a year of postgraduate work in everything from nerve disease to new materials used in limb- and bracemaking, and a two-year internship.
Suddenly Gibson lights up. "The more I hear about your training, the more impressed I become," he says. "You guys underestimate yourselves. The training you have is huge. You've got a story to tell to doctors--something short you can tell them in the elevator. You saw an opportunity--patients not getting care."
Gibson is animated. "It won't be easy getting your story out there one doctor at a time. You need to reach the influencers, the physical therapists and doctors who can persuade their peers. Are there associations or meetings of these people? Can you attend them and explain what you're doing? Collect testimonials and stories from doctors and patients and therapists who have been impressed with your work." Work at persuading them, he urges. "Don't look like you're selling something."
There's more in store from Gibson. While the two Jeffs are digesting his marketing ideas, Gibson tells them to describe their plans to expand into two or three additional offices. They would be staffed by CPOs like themselves, Brandt explains, and located no more than 30 miles away so that the two partners could easily keep an eye on the sites.
While they're talking, Gibson draws a map with a cluster of circles overlapping like soap bubbles in a sink. "This is what your expansion model looks like to me now," he says. "If I were an investor in your business, I'd want to know why it couldn't look like this." And he sketches a dozen freestanding circles, each connected back to Gettysburg with a straight line. "You can grow a lot faster with this model."
Brandt slaps his forehead and grins. "I'm having an epiphany," he says. "We don't have to grow contiguously. We can set up multiple remote offices!" Later he explains, "Up until then, what was limiting my growth was the idea that I, Jeff Brandt, had to see the patients and do the marketing for any new offices. Then it hit me that if we hire competent practitioners, they can do that. And I'm freed up to drive sales. This is huge!"
When Paul Prusakowski shows up a few days later to describe OPIE, his management software for prosthetists, he and Brandt begin by discussing how the application (currently the only software designed specifically for prosthetics businesses) can handle supply-chain management and incorporate videos and photos into patient files. But Brandt is still pumped about his "epiphany" and imagining a whole new way organizing and growing the company.
"What if we want an office in Kansas City?" he blurts. "Can this help?"
And for the next hour Prusakowski tells Brandt how he can pull up OPIE from anywhere, tap into a central server, and monitor operations at a remote Ability office. OPIE, says Prusakowski, will track the suppliers from which Ability prosthetists are ordering and check whether volume discounts are available. Brandt sees he could open far more offices than the five or so that he was imagining a few days earlier. "I'm very impressed, he says. "This will make a big difference."
Brandt's world of opportunities and possibilities expands again when he sees Raymond Roberts, an expert at landing contracts with the federal government. The meeting is at the Fairfax, Va., offices of Brandt's former employer, the Orthotics Prosthetic Center, with whom he's been asked to team up to pursue the Walter Reed contract. Roberts, a striking, compact figure who sports a goatee, French cuffs, and green suit, explains that the key is to present some tightly focused "win themes" that explain why Ability is the perfect company to serve injured vets. The procurement officers who will review the application are often overwhelmed with work and want the proposal kept simple.
"You need to establish winning themes," he says, "and repeat it over and over."
When Weintrob mentions that his son, a prosthetist, was once an Olympic slalom canoer and loves working with young, active patients, Roberts is delighted. "As a win theme, it's brilliant." And Roberts is ecstatic to learn that Weintrob's wife, an orthotist, owns 51% of OPC. "That's wonderful!" he says. "State upfront that you're a woman-owned business and you know how to take care of female patients."
Brandt says that he has tried to learn how other applicants have won contracts but can't get details of their applications. Roberts disagrees. Virtually all applications and contracts are available under the Freedom of Information Act. Information companies such as Fedsource and Input routinely collect contract data and will share it for a fee.
Finally, Roberts urges Brandt and Weintrob to spend as long as a year getting to know the right people at Walter Reed. Someone jokes that delivering a few bottles of whiskey might help.
"That's not allowed," says Roberts coldly. Instead, he recommends that they contact the Office of Small and Disadvantaged Business Utilization (OSDBU) at Walter Reed. Almost every government organization has an OSDBU office (that is supposed to help small contractors level the playing field with the likes of Lockheed Martin. How to schmooze an OSDBU?
"Call them once a month," says Roberts. "Send them your corporate newsletter. Ask OSDBU if there is anybody you should speak to about working with amputees or prosthetics at Walter Reed. Ask to take a look at operations." The spadework pays off, he assures them. The government doesn't always award to the lowest bidder, but it usually tries to find the best value. "They won't pick a Yugo over a Toyota just because it's cheaper," he says. "And people do business with people they have a relationship with."
As the meeting winds up, Weintrob hints that he knew a lot of this stuff already from his years working in the federal government, but that some of it has been useful. Brandt, however, is ecstatic. "This is great. When we open new offices, I'm going to go after the VA hospitals. Now I think I know how."
We will stay in touch with the two Jeffs and report back on Ability Prosthetics in months to come.
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