OPEN BOOK

Financial Planning —
A Practical Guide to Business Growth

06 ECONOMY NOW —
Strategies for success in today’s
unique financial climate

16 OUR EXPERT — ­
Raymond Joabar on making plans
now for a brighter future

18 CARDMEMBER
STORIES —
An insight into the business tactics
being employed by your peers

Cardmember story —
Warren Brown
CAKELOVE

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Simply log onto OPENForum.com to
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grow your business.

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3
OPEN BOOk —
Financial Planning
www.openforum.com/openbook
3
FINANCIAL PLANNING
in a cyclical economy, a carefully considered
financial plan is your primary asset, allowing
you to emerge stronger from uncertain times
Welcome to the latest in our series of
guides providing practical advice to help
grow your business. This issue focuses on
financial planning, a term that refers to
managing your business through economic
cycles and varying stages of growth so that
you are poised for future financial success.
There’s no doubt the U.S. economy
has been adversely affected by the collapse
of the housing bubble and rising worldwide
oil prices. And this has a significant impact
on business owners, both as contributors to
the economy and as consumers. business strong and resilient. In the second
It can be easy to forget that the
economy is cyclical – good times inevitably
follow bad, and vice versa. However, if you
make the most of your knowledge and plan
well, your business can become more adept
at weathering the storms that crop up from
time to time. It’s worth the effort: a little
planning now goes a long way towards
ensuring you are well-positioned to enjoy
the benefits of the eventual turnaround.
Just as you would plan your
personal finances to accommodate the
different needs you have at different
stages of your life, so too should you be
considering the specific needs of your
business at each stage of its growth.
Whether you are expanding your business,
consolidating your operations or handing
over the reins, you need to make informed
decisions to ensure that you achieve all of
your goals.
In the first part of this OPEN
Book, we provide our experts’ take, as
Raymond Joabar and Christophe Le
Caillec offer tips on how to keep your
part, we’ve identified four Cardmembers
with businesses at various stages of
maturity, who have adopted a range of
techniques which enable them to fulfill
their individual ambitions. We’re sure their
stories will resonate with you, no matter
what stage your business is currently in.
We hope this installment from
our OPEN Book series contributes to your
financial planning expertise by helping you
make informed decisions and revealing
potentially rewarding ideas you may not yet
have considered.
4 financial planning — financial planning — 5
MASTHEAD CONTENTS

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Editor —
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6. ECONOMY NOW — 18. CARDMEMBER STORY —
Design Director — Nothing is more important for a GROWTH
maurus fraser successful entrepreneur than an Texas Driving Experience is a business
understanding of how best to respond in the fast lane. But what steps are
Designer — to macro- and micro-economic trends. necessary for an already successful
MaDS TØRK We reveal the key strategies to consider company to keep growing?

Photo Editor — 16. OUR EXPERT — 22. CARDMEMBER STORY —

Stephen ledger-lomas
Production Editor —
Jacqueline deacon
Sub-editors —
ANTHONY BANKS
LAURA VOGEL
Editorial Assistants —
Claudia Corrieri
DAVID PROTERRA
FINANCIAL PLANNING PLATEAU
Account Director, Winkreative — How can you maintain your business With five bakeries and a café already
Meighan Dobson during uncertain times? OPEN Expert open, CakeLove is a thriving brand.
Raymond Joabar presents his guide to We discuss the next phase with CEO
Project Manager, Winkreative — staying ahead of the game Warren Brown
Diana Keh
18. CARDMEMBER STORY — 24. CARDMEMBER STORY —
For American Express OPEN SM — STARTUP EXIT
Amy Fitzgibbons Kid Car NY is revolutionizing the way Handing over a business you have built
JAMI KELMENSON children travel in the Big Apple. CEO up over time calls for careful planning.
JAISHRI KOTHANDARAMAN Topher McGibbon explains how he got At Florida-based Airparts Company Inc.
Marcella shinder his show on the road the succession plan is a family affair
6 ECONOMY NOW —
www.openforum.com/openbook
ECONOMY NOW
financial planning is all about responding to the
prevailing fiscal climate. PROPER PLANNING NOW
will enable you to weather any storms ahead
Successful business owners often have a
few things in common. They build strong
relationships, not only with their customers,
but with banks and suppliers. They are
resourceful, negotiating through troubled
times and emerging more resolute as a result.
And they display ingenuity, devising brilliant
strategies for maximizing the potential of
their businesses.
Through our dealings with business
owners, we’ve come to understand that each
of these traits is essential when it comes
to surviving – indeed, flourishing – during
an economic downturn. The current fiscal
situation is on everyone’s minds, and it is
generally agreed that while the economy is
not at its most robust, there is no reason why a
well-run business cannot thrive with the help
of thoughtful financial planning.
In keeping with the spirit of
OPEN Book, we would like to take this
opportunity to present a comprehensive
exploration of aspects of financial planning
that are essential in the current economy.
From exploring possibilities for diversification
(including taking a look at expanding into
Illustration: Daniel Haskett 7
overseas markets) to buying futures contracts
that set guaranteed exchange rates against
foreign currencies; from outsourcing certain
areas of your operation to making moves
towards minimizing energy waste – we offer
suggestions to businesses of all sizes with
input by our own Christophe Le Caillac,
Vice President and Lead Financial Officer at
American Express OPEN.
But, first of all, we would like to
focus briefly on something that should
underpin every facet of financial planning – a
good credit score. No matter how much you
and your business are affected by macro-
economic factors, at a micro level you should
make every effort not to default on payments.
You can be certain that any failure to make
payments will catch up with you. Instead, be
proactive about boosting your credit score and
obtain your company’s report from one of the
major reporting agencies such as Experion
or Dun & Bradstreet. Continue to use credit
responsibly, and keep your personal and
corporate accounts separate. The result will
be confirmation of the old adage that credit
comes where credit is due.
8 economy noW — 9
foreign affairs
www.openforum.com/openbook
1. foreign affairs
With the dollar flirting with record lows
against other currencies, it may be time to turn
your business model upside down
today’s global economy has
t
transformed business. We import from
china, buy technology from europe and have
assembly lines in mexico. it is no wonder that
even the smallest businesses feel the sting
when exchange rates make foreign goods
more expensive.
because the dollar has lost value
against many world currencies (including a
15 percent decline against the euro between
september 2007 and april 2008), the
increased cost of foreign products is reason
for growing concern for even the healthiest
companies. ffortunately, there are a number
of ways to minimize the impact of the dollar’s
weakness and even to turn the situation to
your advantage.

— Understand the Impact

The effect of foreign exchange rates
is not always obvious. With supply chains
that criss-cross the globe, there may be several
currencies involved in manufacturing even the
simplest product. but a good foreign exchange
strategy should be as simple as possible. start
by asking yourself two key questions: Which
of your inputs come from strong-currency
regions, like the eu and Japan? and, what
would a 10 or 20 percent price increase from
those suppliers mean to your business?
armed with this knowledge, you
can begin to evaluate alternatives from a
new perspective. is it possible – perhaps even
profitable – to begin looking at alternative
sources of goods and services? are there
domestic vendors that you may have
overlooked previously based on cost? as
the exchange rates shift, so should your
sourcing strategies.
— Hedge Your Bets
for companies that are inextricably
f of course, a similar strategy would be
linked to suppliers in europe, there are two
challenges: The poor exchange rate itself and
the uncertainty generated by exchange-rate
one strategy for alleviating that
risk and uncertainty may be buying a foreign
exchange futures contract. This can be done by
using a brokerage transaction that guarantees
you a set exchange rate. any business that
can predict payments to foreign suppliers can
benefit from locking in rates in advance. “be
sure to work with a reputable company for
foreign exchange since even small spreads in
the exchange rate can translate to thousands
of dollars,” says christophe le caillec.
“The idea behind a foreign exchange futures
contract is to protect the margin you make on
selling your product or service. it’s not about
speculation.” le caillec adds, “it’s important
to get advice from a trusted advisor such as
your stock broker or banker to determine the
most appropriate way to reduce your foreign
exchange exposure.”
to lock suppliers into longer-term contracts
priced in dollars. That, in effect, transfers all
the foreign exchange risk to the supplier.
— Turn the Tables
f
fortunately, every foreign exchange
challenge brings an equal opportunity. These
days, a weak dollar means that your goods
and services are less expensive for foreign
(especially european) buyers.
“This makes diversifying
geographically an especially important
strategy,” says le caillec. large, untapped
markets may exist for your product in europe,
where your prices are now significantly less
than they were just a few months ago.
value of 1 us dollar to yen
¥120
¥110
¥100
¥90
“don’t be daunted by the opportunity
to sell internationally,” he adds. “fortunately,
f
fortunately,
we are at a time when the internet can play
an amazing role in selling globally.” Thanks
to online advertising, automated payment and
quick shipping, selling products to a customer
in paris, f
france, can be just as simple as selling
to a customer in paris, texas.”
t
for any business, protecting yourself
f
from further exchange-rate inflation can be
crucial – but the opportunity for new markets
may make the current economy look brighter.
value of 1 us dollar to euro
€0.74
€0.70
€0.66
€0.62

volatility. When foreign goods are priced in While this option can be an attractive Sept 2007 Nov 2007 Jan 2008 Mar 2008 Sept 2007 Nov 2007 Jan 2008 Mar 2008
their local currency, uncertainty in exchange alternative, it may simply cause the supplier to
Copyright 2008 Yahoo! Inc. Copyright 2008 Yahoo! Inc.
rates means uncertainty in pricing. further raise prices.
10 ECONOMY NOW —
Growing against the tide
2. Growing Against
the Tide
Strong leadership often requires
aggressive action. Now is an ideal time to explore
bold new markets and strategies for growth
A company’s response to turbulent
times doesn’t always have to be defensive:
Sometimes the best plan is to push for sales in
new markets and go for growth.
Of course, growing when those
around you are shrinking takes gusto: It
can mean looking at bold strategies like
diversification, acquisition and international
expansion. Or it could simply mean learning to
think more creatively by providing solutions to
your customers that will help maximize your
value to them. There may never be a better
time to explore the range of possibilities.
— Diversify
“Just as there are industries that have
been negatively impacted – there are also those
that are almost wholly disconnected from the
larger trends, and some that are historically
counter-cyclical,” says Christophe Le Caillac.
“Unlock new growth by targeting customers in
www.openforum.com/openbook
those sectors that are stable or growing.”
Healthcare and energy are among
those industries that tend to be less affected
by macro-economic cycles. Entertainment is
another that has, historically, shown growth
during recessionary times (in fact, market
trackers report that sales of video games
continue to break records – both consoles and
game software sales were up 63 percent in
early 2008 over the prior year). And then
there is the government sector, a stable and
largely untapped source of revenue for many
small businesses.
It could be worth your while to
explore how your business may be able to find
customers in these industries as a means to
weathering a financial downturn. One way of
reaching out to a broader range of prospects
could be to experiment with online marketing
strategies including email marketing and pay-
per-click ads.
— Buy Low
When industries are stagnant or
shrinking, stronger companies will nonetheless
have opportunities to increase their market
share by acquiring their competitors. And
a weak economy is the perfect time to spot
opportunities. If a company’s finances are
faltering, but their customer base is intact, they
could be an ideal acquisition.
Of course, purchasing can also be
used to expand into new industries. But don’t
stray too far afield. Good financial deals may
not seem so great when the economy improves
and you find that your acquisition is not a
good strategic fit with your core business.
— Go Global
If you have strong customers in the
U.S., chances are you’ll find equally valuable
customers in other Western countries, and,
during a slow economy is a great time to
explore options. The dollar’s decline against the
Euro means that American products will be
more competitive from a price standpoint.
“The current situation is shifting to
where the opportunities lie,” says Le Caillec.
“Cover your back, but also look at where the
opportunities are and where they are going.
People who are exporting are doing extremely
well at the moment.”
11
Goods and services from the U.S.
have never been cheaper for customers in
Europe and Japan. Now it’s up to you to find
them and close the deal. Investigate the SBA’s
office of international trade (www.sba.gov/oit/)
or a U.S. Export Assistance Center.
— Start Closer to Home
There are, of course, smaller steps
you can take to reposition yourself without
fundamentally altering your business model.
If your company’s sales are tied to
consumer spending, and consumer spending is
down, it might be best to focus your energies
on finding new uses for your existing products,
or selling upgrades to existing customers. Find
new ways to win customer’s hearts during lean
times and you’ll reap the rewards in improved
customer loyalty when things turn around.
Whether staying close to home or
venturing into new territory, those who face
today’s economic challenges head-on, by
adamantly pursuing growth despite bleak
forecasts, may well come out ahead – and if
we’re lucky, they may just bring the rest of the
U.S. economy with them.
12 ECONOMY NOW —
Labor of love
3. Labor of Love
Challenging economic times may cause
you to evaluate payroll cuts. Stop short of major
surgery and opt instead for a heart-to-heart with
your employees
Layoffs and downsizing tend to
go hand-in-hand with uncertain economic
conditions. When times are tough, one of the
first places that companies look to decrease
costs is their labor force. Small businesses need
to weigh such cost-cutting decisions carefully
as reducing the workforce too much can mean
a loss of critical knowledge and skills. It can
also leave a business understaffed when the
situation turns around.
There is a delicate balance between
optimizing staff and cutting costs, but it
is not necessarily an either-or proposition.
With careful and creative planning, it may be
possible to do both. Here’s how:
— Consider Outsourcing
Adding capacity does not have to
mean adding employees: There are many
opportunities to outsource a variety of business
functions. Generally, the less visible the job is
www.openforum.com/openbook
to customers, the more benefit there may be
to outsourcing it. Functions like accounting,
marketing, and even human resources can be
safely assigned to companies or teams outside
the four walls of your office.
Outsourcing can mean sending
work down the street, or across the globe.
There are ample opportunities to hire smart,
reliable firms outside the U.S. to perform
data-intensive tasks like accounting, customer
service, database maintenance, and software
development. International outsourcing firms
have the twin advantages of being extremely
cost-effective and performing a lot of work
during the U.S. overnight or early morning
hours, helping you accomplish more in less
time. A great place to start an outsourcing
search is www.outsourcing.com.
— Keep What You’ve Got
If you are wary of replacing staff with
outsourced labor, negotiating may be a better
option. Payroll has the reputation of being
untouchable, but in difficult circumstances,
employees have been known to take cuts across
the board rather than face layoffs.
“Everything is negotiable,” says
Le Caillec. “Offering employees options –
including reduced work hours or additional
time off – may be enough to keep current
staff on board while still reducing payroll
expenses by ten or twenty percent. Of course,
this is only a short-term strategy. Even the
most loyal employees will expect their full
salary back eventually.”
— Go Virtual
Remember, payroll is not the only
expense associated with having staff. The
cost of overhead – rent, phones and IT
infrastructure in particular – grow in direct
proportion to the number of employees
physically present in the office. These same
overhead expenses are ideal cost-cutting
targets. A temporary move to a smaller space,
or cutting some of your phone lines, can save
big bucks in a hurry, and help you endure
through tough times.
When cutting deep into overhead,
consider taking your workforce virtual. Online
tools make telecommuting more feasible than
ever. Consider using a VOIP (voice over
13
Internet protocol) service like Skype, Packet8,
or AccessPoint, which can connect work-at-
homers while also saving hundreds of dollars
over a standard phone service. Web 2.0 tools
like hosted exchange servers and Google
Docs can make a virtual workforce even more
productive than a typical office team.
Working from home is often seen as
a valuable perk, actually making your culture
more desirable to employees, as well as being
a cost savings to the company. Many studies
suggest that home-office workers may even
put in longer hours since they don’t commute
and are happier because they can spend more
time with their families.
— The Heart and Soul
Employees are the heart and soul
of your business. As tempting as it can be to
slash payroll costs during tough times, you’ll
need those same resources to make a successful
rebound. Rather than downsizing too quickly,
evaluate the alternatives and find a win-win
situation that leaves your company whole and
your employees happy and ready to embrace
the good times.
14 ECONOMY NOW —
this price isn’t quite right
4. THis PRICE ISN’T
QUITE RIGHT
As prices for fuel and raw materials
spike, smart business owners will take fast action.
According to the U.S. Energy
Information Administration (EIA) the
inflation-adjusted price of gasoline hit a new
milestone in March 2008, when, at just over
$3.21 a gallon, it became more expensive than
at anytime since World War I. And when
the EIA reported that the price of a barrel
of oil passed $130 a few months later, it too
set all-time-record highs and caused ripples
throughout the economy.
Of course, the price of petroleum is
not the only thing being affected. Crops like
corn and soy are being doubly impacted by
increasing transportation costs and a rapidly
growing demand. Raw building materials
like steel and concrete are also experiencing
shortages and price spikes.
Inflation presents a real challenge for
small businesses, but creative entrepreneurs
can find several options for dealing with
increasing prices, from passing along cost
increases to curtailing usage.
www.openforum.com/openbook
— Adding a Surcharge
One of the most common strategies
for dealing with volatile prices is to pass them
on to customers in the form of surcharges.
Fuel surcharges, for example, are common
among delivery and service companies that
rely on transportation. “The key strategy here
is to separate the cost of the raw material –
like fuel – from the underlying value of your
product or service,” says Le Caillac. “Have
your customers make the distinction between
your value and the uncontrollable third-party
costs like the costs of gas or steel or concrete.”
Eventually, if costs remain high, the
price of the product or service will probably
have to increase. But, in the short-term, a
surcharge helps customers adjust to the new
pricing. And since surcharges can be based
on actual market conditions, a calculated
surcharge can be a built into long-term
contract as a way to share the risk with
customers without seeming to raise prices.
— Retool to Reduce
Fuel prices in particular are driving
companies and consumers to make difficult
decisions in the areas of transportation and
energy use. Fewer people are willing to
commute long distances to work, and more are
looking to purchase goods and services that are
fuel-efficient or promise energy savings.
When it comes to conservation and cost-
cutting, companies that take action now will
be less susceptible to price hikes in the near
term … and more competitive in the long run.
“Take a look at all aspects of how you deliver
goods and services to your customer,” says Le
Caillec. “Is there an opportunity to move a
distribution center closer to larger customers
or to use alternative transportation?” With
gasoline prices at record highs, the return on
investment could be quite significant.
— Reducing Waste
“Reduce, reuse and recycle” is not
just an environmentalist mantra, but a great
way to uncover cost savings throughout
your organization. Challenge your staff to
identify areas where raw materials can be
reclaimed or reduced, and review your energy
bills frequently. Two simple places to start
are making the switch from incandescent
15
and halogen lighting to compact fluorescent
lightbulbs (CFLs) and using powerstrips
instead of plugging electrical equipment
directly into wall sockets. Also consider
installing motion-sensor-activated lighting
so that unused offices and conference rooms
aren’t constantly ablaze. Encourage “paperless
communication” – there are easily installable
software counters that can keep a tally on how
may pages are printed – thereby saving on
printer wear-and-tear, electricity and paper.
Keep in mind the secondary effects
of inflation. Higher fuel costs, for example,
will have an impact on employees who
commute by car. As the cost of living increases,
employees will be looking to their employers
to help them stay afloat. Keep a lid on wages
by helping employees reduce their own costs:
encourage telecommuting (as discussed on
page 13) or implement four-day work weeks
where possible.
As increasing prices ripple through
the economy, all aspects of business are likely
to feel the impact. Creative solutions – and fast
action – are likely to pay off sooner than you
might think.
16 OPEN EXPERT —
Financial Planning
EXPERT INTERVIEW
With the economy taking some hits recently,
Raymond Joabar offers his take on how you can
manage a resilient business through ups and downs
The recent economic uncertainties –
evident in oil prices, the housing market,
and international exchange rates – present
entrepreneurs with a confluence of challenges,
but also with opportunities.
In this perfect storm of macro-
economic tides, those businesses that turn
their attention to collecting receivables,
cutting unnecessary costs, and building
revenue diversification will be poised for
continued success.
— Improve collections and, as a last resort, using collections agencies.
and cash flow
Faster is always better when it comes
to converting invoiced dollars to cash, but it
never seems to happen quickly enough. Start
by getting maximum value out of your money.
Collect payments as early as possible and hold
on to your own money as long as possible. Keep
detailed records of the money that you are due
and consider using charge cards or credit cards
to pay bills – allowing yourself an extra period
for repayment for short-term needs.
When an account becomes severely
past due, ask yourself if the customer is worth it.
www.openforum.com/openbook
Are they a source of referrals? Can you afford
to lose their business? You may find that you
would be better off without a customer that
is causing you to carry a very substantial
unpaid balance.
Finally, regularly evaluate ways to
reduce or eliminate outstanding receivables,
not just from delinquent accounts, but across
the board. Simple strategies that can make a
big difference in cash flow include: checking a
client’s credit up front; offering (or requiring)
faster payment terms; accepting credit cards;
— Boost the bottom line score as high as possible. If you become really
by cutting costs
Big fixed expenses like payroll and
rent are an obvious place to start. Look
carefully before eliminating valuable staff,
key marketing efforts or vital customer-
facing services. Instead, look to renegotiate
big contracts for real estate leases and loan
repayment schedules. In turbulent times,
landlords and other vendors are more
interested in weathering the storm than
squeezing every last cent out of their customers.
Name: Raymond Joabar
Job Title: SENIOR VICE PRESIDENT,
Product management
and development
Description: leads the credit
card portfolio and
manages line-of-
credit products
Member Since: 1992
When cost-cutting, look to your
internal or external resources such as your
bookkeeper, accountant or finance department
for innovative advice. Make use of credit
card discount programs and cash-back or
rewards programs to reduce the cash used.
Take advantage of invoice terms to either
slow down payments or realize discounts for
faster payments.
No matter how sleepless your nights,
keep one thing in mind: A clean credit record
is priceless. Do whatever it takes to pay bills
on time, stick to the terms and covenants of
financial agreements, and keep your credit
strapped for cash in a given month, paying
off even a portion to vendors is better than
paying nothing at all. It shows that you are
acting in good faith, just as you would want
your customers to act with you.
— Find new growth all entrepreneurs in one way or another. But
opportunities
When the economy is down, it is
an excellent time to look for customers in
new markets – both domestic and global.
Illustration: Noli Novak 17
Marketing your business online can open new
markets you never expected to reach – and,
even more importantly, help you do so with
great cost-efficiency. Though it requires an
upfront investment, building a new web site or
selling your products or service online allows
you to reach more people, for less cash, in the
long run.
Also, while you’re looking for cost-
cutting measures and new sources of growth,
remember so are your vendors, competitors
and customers. The time could be ripe to forge
new partnerships or offer your customers
bundled packages that you and related
businesses can provide jointly. It could just be
a win-win all around.
— Keep an eye on the
big picture
Remember that no business is
perfect – economic cycles take their toll on
with a clear strategy and careful execution, any
business can get through the tough times and
emerge better prepared to take advantage of
the expanding markets that are sure to follow.
18 CARDMEMBER STORIES —
STARTUP: KID CAR NY
www.openforum.com/openbook
STARTUP:
KID CAR NY
You’ve hit on a winning business idea – but Starting
up is often hard to do. the entrepreneur behind a
car service for kids reveals his route to success
Six years ago, while having brunch in New
York’s Time Café, Topher McGibbon was
hit in the face by a piece of buttered waffle
thrown by a toddler at the next table. Instead
of getting irate, McGibbon was inspired.
“It was a Newtonian moment for me,” he
recalls. “I was sitting with some doctors,
and it prompted a conversation about safe
transportation for young children; I found
out, firstly, that the New York state law
mandating that children under the age of four
be restrained in a child-safety seat didn’t apply
to taxis, and that over 2,500 children were
injured yearly in taxi-related crashes. Secondly,
I learned that most U.S. hospitals require that
newborns leave the premises in a car seat.
That’s when the idea was born.”
Today, McGibbon is the CEO of
Kid Car NY, a Manhattan-based car service
designed specifically to whisk newborns home
from the maternity ward, and their older
brothers and sisters between play-dates, tutors
or piano practice, in safety-seated splendor
(along with parents or caregivers, of course
– “We don’t take unaccompanied kids or
parents,” says McGibbon with a smile).
Name: Topher mcGibbon
Company: KID CAR NY
Founded: 2006
Location: NEW YORK, NY
McGibbon wasn’t always so
convinced of Kid Car NY’s viability. A native
of Atlanta and an alumnus of Columbia
University and the Ross School of Business
at the University of Michigan, he reviewed
U.S. census data after his initial conversation
and discovered that only 20,000 children
were born annually in New York City at the
time: “It wasn’t enough,” he says. “I let the
idea go and went back to the tech field, which
is what I’m trained in – financial software,
product marketing.” But a perfect storm of
circumstances caused him to reconsider. New
York state law raised the mandatory car-seat
age from four to seven, effectively doubling
his potential market; and New York City’s
post-9/11 baby boom increased the number
of under-five-year-olds by 30 percent, while,
at the same time, growing numbers of parents
were opting to raise their children in the city
rather than migrating to the suburbs. “Lo and
behold, this was now a great market,” says
McGibbon. “This was a wave that we’d be
perfectly placed to ride.”
To raise the needed funds for Kid
Car NY’s eventual launch in 2006 McGibbon
canvassed old high school friends and put
together a group of investors, got a loan from
the Small Business Administration, and
bought startup equipment on credit. “I’m 34
now, and I was one of the few people who
started my own enterprise right out of business
school, and it made capital-raising that much
more difficult. We own our cars and don’t
use independent contractors, and it costs me
$30,000 to put a car on the road not even
counting drivers or training. So debt is a fact
of my life and I don’t always sleep that well.
But, then, this is the life of an entrepreneur,”
he says with a grin. “I take reservations, I get
behind the wheel, I’ll make the coffee. I’ll do
whatever I have to do.”
Kid Car NY rates range from $28
for a single journey within Manhattan to
$100-plus for an airport run. As McGibbon
explains, when you hire one of his luxury
Nissan or Honda minivans (all in maroon,
“to mark us out from the legions of black
Town Cars”), they come complete with
specially trained drivers who ensure that seats
are properly installed (as opposed to the 90
percent that the National Highway Traffic
Text: Stuart Husband 19
Photography: Mackenzie Stroh
Safety Administration estimates are not), thus
buying convenience and peace of mind along
with the ride. That may go some way to explain
why Kid Car NY currently has hundreds of
local families on its member database, though,
says McGibbon, “that doesn’t include the
families that visit New York City from within
the U.S. and abroad.”
McGibbon won’t reveal how many
cars or employees Kid Car NY has – “mostly
for reasons of competitive advantage,” he
says – but indications are that the service
is flourishing. Extra services such as Kid
Car After Dark, Kid Car MD (for pediatric
appointments), Kid Car Brooklyn and Kid Car
Hamptons (for visits to the beach) have been
introduced. Also, McGibbon has been finding
that parents – and new mothers in particular
– appreciate the service even more than their
kids do “It lessens their sense of isolation,” he
says. “We get them beyond the twenty blocks
that every new parent tends to stick, over to,
say brunch parties in SoHo. We’re allowing
friends to reconnect; there’s definitely a social
element to it. It’s part of the reason that our
motto is ‘Get Out and Go.’ ”
20 CARDMEMBER STORIES —
STARTUP: KID CAR ny
Such is Kid Car NY’s customer
loyalty that enough have signed up to the $300
yearly membership fee to enable the company
to manage its growth. “Because of our niche,
we can grow organically and we don’t have to
buy 50 cars at a time,” says McGibbon. “We
can reach the magic number of sign-ups and
add a vehicle that’s fully utilized before it even
hits the road. That differentiates us from every
other car service in the world.” Moreover, the
company is currently finishing up its second
capital-raise, financed almost wholly from its
member base. “Our waiting list went up from
about 25 to around 100 families at one point,”
says McGibbon. “We were approaching angel
groups and even local investment funds but we
were either too small or too low-tech. So our
members stepped in; they said, “OK Topher,
I’ll write you a check.” We’ve got several sets of
parents involved in this next round. They know
that we offer something special. If they phone
and need a car immediately, but we don’t have
one for, say, 20 minutes, they’ll say OK; it’s
more important for them to know their kids
will be safe than to stick to a schedule. They’re
prepared to accommodate us. That happens
www.openforum.com/openbook
every day, and it’s gold for a business like this.
It’s allowed us to get to where we are today.”
 Kid Car Boston, Los Angeles, San Francisco,
McGibbon balances such fidelity
against rising gas prices and talk of a nascent
recession, and is cautiously optimistic about
the future. “I can’t give out numbers,” he
says when asked about burn-rates, “but our
vehicles are almost at the point of paying for
themselves. Our revenues are covering our
variable costs and going a long way toward
covering our fixed costs. I anticipate us being
cash-flow-positive within 12 months.” With
21
a scalable model, he floats the possibility of
or Washington, DC – “cities with higher car
ownership but perennial parking problems.”
He’s even had inquiries about the possibility of
ferrying cab-wary seniors around Manhattan.
Yes, he concedes, they’ve had to raise their
rates to cover gas price hikes, and a couple of
people have nixed the service as belts tighten.
“But we’re a luxury that quickly becomes a
necessity,” he says with a smile. “People make
an emotional connection with our drivers and
our service. It’s not long before they wonder
how they ever lived without us.”
OPPOSITE PAGE ABOVE
Dorian White at the
control center
BELOW LEFT
Keeping the back-seat
drivers happy
For more info on
KID CAR NY see: RIGHT
www.kidcarny.com Door-to-door service,
Kid Car-style
Startup CONSIDERATIONS —
Early stage companies always wrestle with the perennial question: Where is the money
going to come from? Finding the right sources of funds that are both plentiful and flexible is
challenging, even in the best of times. Be sure to consider the following factors when starting
a new venture:
1. Your personal credit record is important. Can you afford to borrow to support a new business?
Secure some credit before you quit your day job.
2. Explore both leases and loans. If your startup requires vehicles or equipment, you will find
lenders willing to finance these items because they act as good collateral.
3. Look around for investors and partners. It takes a long time to nurture investor relationships,
so start early and be persistent.
4. Nothing helps a new business thrive like strong sales. Work hard to balance investment in new
capabilities with real demand from the marketplace. If you build it, they may not come.
5. Consider how your company will be impacted in times of economic uncertainty.
Is there a strong enough need for the business you’ve created?
6. Hold something back. Prepare a one-year budget that leaves you with a good cushion in the
bank. Things usually take twice as long (and cost twice as much) as you expect.
7. Register your business with credit bureaus such as Dun & Bradstreet, Experian or Equifax. Fill
out the basics about your company and ask your vendors to report your payment record.
The more information that creditors can obtain about your business, the more likely it
is that you’ll receive a favorable decision from them.
22 CARDMEMBER STORIES —
GROWTH: Texas Driving Experience
GROWTH:
TEXAS DRIVING
EXPERIENCE
Dawn Stokes, CEO OF Texas Driving Experience, talks
about how her business is growing at a rate that
outpaces even her yellow Corvettes
“I’ve been a car kook for as long as I can
remember,” says Dawn Stokes. “I’ve always had
a need for speed.”
As Stokes speaks, a fleet of ten yellow
Z06 Corvettes race past her. And while they
don’t literally have her name on them, they
have the next best thing – the name of her
company. Texas Driving Experience (TDE),
a racing academy and safe-driving school,
is located midway between Dallas and Fort
Worth, amid the impressive surroundings of
the Texas Motor Speedway. This 1,500-acre
site boasts a 1.5-mile track with 24-degree
turns and a 200,000-plus seating capacity. “It’s
actually the second biggest sports facility in
the States, after Indianapolis Speedway,” says
Stokes. “And I’m really proud to be a part of it.”
If the petite, blond Stokes cuts an
incongruous figure in these burnt-rubber,
testosterone-heavy surroundings, she’s quick
to assure that she’s right at home. She still
has the first car she ever bought when she
was 14 – a 1963 convertible Corvair Monza
Spyder, now “retired” to her garage. During her
previous life as a harried health-care executive,
she enrolled in high-performance driving
www.openforum.com/openbook
Name: Dawn Stokes
Company: TEXAS DRIVING
EXPERIENCE
Founded: 2004
Location: Fort Worth, TX
schools as an outlet for job-related stress. “I
quickly saw the value of these schools, both
as a way of letting off steam and of making
better drivers of people,” she says, in ebullient
tones. “I got caught in a workforce reduction
in 2003, by which time I was married and
divorced, and the mother of a young son. I
definitely felt like I was at a turning point. I
could have carried on in the corporate world,
but my entrepreneurial spirit was leading me
in a different direction.”
Stokes’s decision to marry a hobby
with a passion was largely inspired by the
fact that 6,000 teenagers die in car-related
accidents in the U.S. every year. “That’s an
intolerable statistic,” she says heatedly. “I
thought, do we not realize the potential
we’re losing?”
Thus fired up, Stokes drove out to
Texas Motor Speedway, walked in, and pitched
her idea, which she’d christened SKILLZ ­– for
Life. “They weren’t impressed,” she says with
a laugh. “I thought it was going to be easy
because I was going to save the world, but they
soon put me straight. They said you’ll need $5
million-worth of insurance for a start. And I’d
done no costings and had no business plan. As
a woman, it was hard to get them to take me
seriously at first. It could get really frustrating
when they’d address remarks to my male
employees rather than me. It was an important
and difficult lesson, but it’s helped me in other
strategic partnerships.”
To prove her seriousness, Stokes
cashed in her 401k (“I know,” she says,
laughing, “you are never supposed to do that”),
went MIA from her accountant and financial
advisor for a year and a half, and pre-sold three
events before she even had any cars. “I was
incredibly bullish,” she says. “But it was clear
to me from the start that a teen driving school
was going to be a hard marketing sell. It had to
be cool enough to stand out from traditional
Drivers’ Ed, but at the same time it had to
reassure Mom and Dad, who were freaked out
that their kids were coming to a racetrack.”
To raise serious cash, Stokes started a
service aimed at people like her former self –
corporate thrill-seekers. “It’s a total adventure
for the CEO or the executive or sales team,”
she says. Within months of setting up Texas
Driving Experience, Stokes was fielding
Text: Stuart Husband 23
Photography: Ture Lillegraven
calls from Fortune 500 companies seeking a
team-building exercise for their workforce
that would be a little more white-knuckle than
golf or paint-balling. She saw the number of
events rise from 12 in 2004 (at which time she
was only in business for a few months) to 150
in 2007, with almost 200 planned for 2008.
Revenue has also increased exponentially, from
$153,000 in 2004 to $1.5 million in 2007; this
year TDE is on target to hit $2.3 million.
Winning the Make Mine A Million
$ Business program, designed to help female
entrepreneurs grow their businesses with
a combination of money, mentoring and
marketing, was key to helping Texas Driving
Experience to pass that magical million-
dollar figure in annual revenue. “Make Mine
A Million was truly the best thing that ever
happened to this company, beams Stokes. “It
validated who we were and got us taken a lot
more seriously. ”
On a typical weekend afternoon at
the Speedway, the range of Texas Driving
Experience’s activities is readily apparent.
A team from a finance company which has
hired the Corvettes is furiously high-fiving
24 CARDMEMBER STORIES — 25
GROWTH: Texas Driving Experience

after a frenetic spin round the infield track
with TDE’s drivers. At the same time, the
SKILLZ school is taking teens through the
intricacies of wet-road driving, tailgating, and
the ABS braking system in their brand-new
Toyota Scions. The cars are aptly emblazoned
with the legend “Drivers’ Ed Was Never Like
This!” Stokes congratulates the corporate riders
as they remove their helmets and make for
TDE’s souvenir trailer; she then moves on
to give a rousing pep talk to the teens. “It’s
still the part of the company that I’m most
passionate about,” she says of SKILLZ. “We
get letters from people saying we’ve probably
saved their lives because of the things we’ve
taught them. That’s a pretty big incentive to
get up in the morning and come to work.”
As it approaches its fourth year in
business, Texas Driving Experience is looking
for new growth opportunities. In June of
2008, Stokes inaugurated the SKILLZ – for
Life Fleet Safety Training program, in which
some of the giant oil and energy companies
based in the area will send their drivers to
TDE to brush up their handling skills. “It’s
the teen school, transferred to drivers of
company-owned vehicles,” says Stokes. “And
they’re very keen on the team-building side
as well. As times get tougher, companies want
to invest in their employees and retain their
loyalty. So we’re expecting teams of thirty
people out here at least three times a week.
It has the biggest growth potential of all our
offerings – it’s projected to add over $100,000
in bottom-line revenue this year, with a
$250,000 goal for 2009.”
Stokes also has her eye on physical
expansion of the business. She’s been
asked to replicate TDE in other American
venues including Monterey, California, as
well as Dubai and Bahrain in the Middle
East. “Speedway Motorsports, Inc. owns
and operates seven tracks, including
Texas Motor Speedway, so there is much
potential for other locations. The growth
has been steady up to now, but the fleet-
safety side should take things to a whole
new level and open up a load of new
opportunities. It’s a pretty exciting time
for us.” While exploring the options, she’s
already secured the appropriate state domain
names – floridadrivingexperience.com,
californiadrivingexperience.com, etc –
“so that, if we ever need ‘em, they’re ready to
go!” she says with a grin.
Does she still feel the need for speed?
“Absolutely,” she says beaming. “But
now I don’t even need to get in a car to get it.
Running this company is so cutting-edge; my
adrenalin’s just flowing all the time.”
GROWTH CONSIDERATIONS —
Periods of fast corporate growth can be a
heady time. New opportunities seem to
be everywhere. It’s tempting to put the
pedal to the metal and grow, grow, grow.
Growth, however, can be a serious drain
on cash, and may also impact profits in
ways you don’t anticipate. Before you spin
out of control, consider these points:
1. Ensure that your new venture won’t place
undo strain on the overall business. —
Will the new opportunities be as
profitable as the core business? How
long will it take to ramp up sales of
a new product line or expand to a
new territory?
2. More salaries, rents and utilities can amplify
cash needs. —
Will the core business be able
to provide enough cash to cover
both the investment in new growth
opportunities, as well as any
potential losses?

3. Growth investments can decrease profits for a

number of years. —
If bankers or investors are looking for
bottom-line results, they are likely to
factor in non-operating expenses such
as depreciation or amortization

4. Spending for the sake of growth should yield a

good return on investment (ROI). —
Do you know what return your
investment is bringing or likely to
bring? If you have several options,
invest in those that are likely to
provide the highest growth potential
based on the numbers.

OPPOSITE PAGE LEFT ABOVE

Dawn Stokes with a Instructor George For more info on
revved-up customer Shepherd imparts Texas driving
his experience experience see:
OPPOSITE PAGE RIGHT www.texasdriving
Professional driver LEFT experience.com
Josh Gilbert The fleet at rest
www.openforum.com/openbook
26 CARDMEMBER STORIES —
Plateau: CAKELOVE
Plateau:
CakeLOVE
Your business has hit its stride, but that doesn’t
mean you can rest on your laurels. warren brown,
ceo of cakelove, is pushing on from the plateau
It’s a bright spring day on the waterfront of
Baltimore’s famous Inner Harbor, but it’s
not just the sun that’s bringing a smile to the
faces of the patrons of a light, airy and funky
food emporium on Boston Street. Foodies
scan the rows of cupcakes in mouthwatering
combinations (just a taste: chocolate-
raspberry, strawberry-vanilla, lime-lemon).
Also on display are formidable strawberry
layer cakes oozing buttercream icing as well
as a particularly lethal-looking chocolate-
and-ganache concoction, aptly named
My Decadence. The customers’ rapturous
expressions tell a simple story.
We’re here at CakeLove, to meet
38-year-old Warren Brown, the company’s
charismatic founder and CEO. “People
associate cake with celebration, good feelings,
and memories,” he says, as a white-haired
woman practically skips out of the shop with
a large slice of Cynthia’s Sin (a delicious
combination of chocolate, caramel and peanut
butter). “It’s a really rewarding thing.”
It’s certainly proved so for Brown.
Since CakeLove’s founding in 2002, he’s
opened five locations, plus a café – named
www.openforum.com/openbook
Name: Warren Brown
Company: CakeLove
Founded: 2002
Location: Washington, DC
the Love Café, naturally – in the Maryland/
Virginia/D.C. area (a sixth location, in
National Harbor, Maryland, will launch later
this year). He has won numerous accolades,
including DC’s Small Business Person of the
Year Award in 2006, published CakeLove:
How to Bake Cakes from Scratch, and has a
Food Network baking show called Sugar Rush.
Oprah has lauded him, but his most glowing
testimonials come from the kids he teaches
in his Introduction to Baking classes held at
his Silver Spring, Maryland, location (“Your
cakes were so good, I wanted to marry them,”
six-year-old Shauna, wrote, enthusiastically,
in the class guestbook). Brown is inclined
to downplay his achievements, however.
“I’m offering what’s already well-known, but
I’m just making it a little better, by using
the freshest ingredients,” he says. “It’s not
revolutionary, it’s just back to basics. But I’m
hopefully getting people fired up about food.”
Brown has always appreciated the
feel-good factor in food; He grew up outside
Cleveland, Ohio, where, he says, “My mom
always encouraged us to cook, and I really
felt a sense of accomplishment in producing
a family meal. With baking, in particular, you
kind of surrender yourself to the process; the
preparation and presentation is so meticulous.”
Brown’s real cake epiphany came
when he was ferrying one of his homemade
chocolate offerings to a family-reunion
dinner back in 1999. “People at the airport,
complete strangers, were coming up to me and
practically cooing over this thing, saying, ‘You
made this from scratch?’ ” he recalls. “It was
like having an adorable child or puppy in tow.
I was getting the same reaction on the plane,
and I’m thinking: OK, if this is what happens
with one cake, what would happen if people
were encountering whole shelves of them?”
At that point, Brown was laboring
at what he calls “a job I didn’t really like”
– after earning a B.A. in history at Brown
and a Master’s in public health from George
Washington University, he’d become a
litigator in health-care fraud. “I was just
out of law school, I’d just broken up with
my girlfriend, and I was one of millions of
lawyers in D.C.,” he says. “I felt I had more
to offer, so I found myself considering the
bakery idea really seriously.”
Text: Stuart Husband 27
Photography: Mackenzie Stroh
With faith that if he baked it, they
would come, Brown started producing seven
to ten cakes a week out of his apartment,
in tandem with his law practice – a baking/
litigating workload that brought on an
ER visit for exhaustion. With momentum
building, he took out a $125,000 bank loan
and opened his first CakeLove – with the
apt motto: “Cakes from Scratch” – in D.C.’s
up and coming U Street corridor (Brown is a
proponent of urban economic development
and looks to make an impact where he can).
It set the template for the CakeLove empire:
an interior that’s both compact and airy, where
customers can order personalized cakes and
watch the layering and icing process in action.
Enthusiastic and knowledgeable staff proudly
wear CakeLove T-shirts – “Make CakeLove
Not War” being a particular favorite. “The
first shop took off almost immediately,” says
Brown. “But I knew it could if I stayed focused
and did it right. Because of my relaxed attitude
people underestimate how much this whole
venture was calculated. My idea was to focus
solely on cakes. They have the best margins,
so why waste your time on other things?”
28 CARDMEMBER STORIES — 29
Plateau: CAKELOVE

(For this reason, he says, he won’t be opening Whatever the future holds, Brown’s OPPOSITE PAGE TOP LEFT
another Love Café, which sells sandwiches already proud of what CakeLove’s achieved. Warren Brown spreads A delicious
and savories alongside the cakes: “It’s too “My sister says I sell memories,” he says, taking the love birthday surprise
complicated and it dilutes the brand.”) a nibble on a cupcake. “Most people taste this
Growth has come at a moderate pace stuff and they’re right back to their childhoods, OPPOSITE PAGE BELOW BELOW
– Brown opened one new CakeLove location birthday parties, good times. Making them A cornucopia of cakes Customers at CakeLove’s
a year for the first few years, with the last happy makes me happy. So, whether we have Canton, MD, store
three coming in the last nine months – and, seven stores or seven hundred, I’m confident
so far at least, his product seems impervious to that we’ll be sticking around.” For more info on
economic teetering. “Our core customers don’t cakelove see:
regard cake as a luxury; they regard it as an www.cakelove.com
essential part of their lives,” he says, grinning.
“I’m amazed by the breadth of the customer
base – we get young and old and all shapes and
sizes, and when they find a cake that’s good
they’ll not only come back for more, they’ll
pass the word on. Most of our exposure, and
the other opportunities that have come my
way like the TV show, are all due to word-of-
mouth.” Perhaps people are also responding
to the green values that Brown espouses; three
of his stores and his office are powered by
electricity generated from wind turbines (“I’m
looking to get more heavily involved in wind-
power as the business grows,” he says), while
recycling of glass and cardboard is mandatory,
and customers are (gently) dissuaded from
using plastic bags.
Brown doesn’t give out any financial PLATEAU considerations —
figures for the business – “Let’s just say we’re
profitable, and the bank likes us,” he says Mature companies have iced the process of providing value to customers, now the business
archly – but he concedes that he’s now got the should be tuned to meet the needs of the owner. Consider the following points if your
base he needs to continue to grow – if that’s business has reached plateau stage:
what he wants. “People say, ‘Oh, you should
1. Restructure finances for cost savings. — A mature business is in the enviable position of
grab money from a rich investor and add 700
stores in five years,’ ” he says with a smile. “I’m being “bankable.” Take advantage of this by locking down lower rates and seek bigger
not compelled to try that. I want to keep the credit lines.
2. Withdraw some cash. — Use the improved financial structure to move some cash into your
company in my own image, to have my own
recipes, my imprimatur on it,” says Brown. personal life. It’s about time the business started paying you back for your original
“I’d like CakeLove in places across America, investment… with interest.
3. Negotiate with vendors. —With size comes privilege. Now is the time to step back and
beyond its borders, even, but I want to keep
the quirky feel. It shouldn’t get too ubiquitous; reevaluate your purchasing power. Go for better pricing and longer payment terms.
4. Invest in efficiency. — Improve your technology and upgrade your equipment – but only
it should be a place that people feel they’ve
discovered.” He shakes his head. “Growth is a where it will have an impact on efficiency. Try to centralize and consolidate processes
challenging thing, particularly when food and where possible.
5. Save where possible. — Build a war chest for future growth and acquisition.
gas prices are killing us. We’re having to raise
6. Position for exit. — Is the business the best size to interest a strategic buyer? Find the
our prices, which makes me more cautious –
instead of opening another four to six stores optimal size and benchmark your financial performance against recent acquisitions,
next year, I’m thinking it might be just one. At competitors or industry leaders.
7. Think about succession. — To whom will you pass the business? Start grooming a lieutenant
this point, I’m finished with major cash outlays.
I’d rather people came to me.” He adds with a now. Build a trusted team of managers who can run the place without you.
grin: “After all, when you don’t grow is when
you can actually enjoy the profits.”
www.openforum.com/openbook
30 CARDMEMBER STORIES —
EXIT: AIRPARTS company inc.
Exit:
AIRPARTS company inc.
how do you TRANSITION a business you have spent
years shaping in your own image? In the case of
Airparts, you make plans to keep it in the family
Behind the nondescript façade of a low-
slung building near Fort Lauderdale Airport
lies a treasure trove for airplane enthusiasts.
Hundreds of plane components are stacked
on floor-to-ceiling shelves; the packages
and boxes boast such obscure products as
“Avex Rivets,” “Valve Cover Gaskets” and
“Mouse Milk Lubricant.” Trucks shuttle
constantly between the loading bay and the
nearby runways. This is the headquarters of
Airparts Company Inc., one of the foremost
U.S. wholesalers of parts and engines for the
general-aviation industry.
Upstairs, in an office adorned with
wooden models of the jets and planes that
make up the company’s market – Cessna,
Hawker Beechcraft, Learjet, Piper – sits
Airparts’ unlikely CEO, a bright, vigorous
woman named Marta Maxwell. Next to her
sits her dapper, convivial husband George, the
company’s vice-president. Marta’s children,
Andy and Emy, Airparts’ sales manager and
general manager respectively, oversee the daily
comings and goings; this is the epitome of a
family business. Airparts began life in Marta’s
garage in Wichita, Kansas, in 1963; 45 years
www.openforum.com/openbook
Text: Stuart Husband 31
Photography: Mackenzie Stroh
Name: MARTA MAXWELL
Company: Airparts Co. inc
Founded: 1963
Location: Fort lauderdale, FL
later, Airparts boasts over 50 employees, a
network of 1,200 dealers which provides
a cozy cushion of 8,500 customers in 70
countries including most of Latin America,
Europe and Africa, as well as Pakistan, Israel,
and even Papua New Guinea, and revenue of
approximately $43 million per year. “It just
goes to show what a little determination can
do,” says Marta, with justifiable pride.
Make that determination spiked with
canny business acumen. Marta began Airparts
when she and her first husband, a pilot
looking for work at Cessna, left their native
Argentina for Kansas. “Wichita has always
been the air capital of the world, and was
a magnet for pilots back then,” says Marta.
“Cessna, Learjet, Beechcraft and Boeing are
all based in the town, and there was a lot of
traffic between there and Latin America. I
originally sold things like headphones and
sunglasses to the pilots, but then they started
asking me if I could get hold of tires, brakes,
fuel pumps and such, to help them service
their planes. They spoke no English, so I
acted as a broker for them. That’s how the
business originally got off the ground.”
32 CARDMEMBER STORIES —
EXIT: AIRPARTS company inc.
However, there was some initial
turbulence to negotiate. Marta divorced in
1969 and was awarded the fledgling company
as part of the settlement. She found herself
with two young children and banks that
were less than enthusiastic about her plans to
expand the business. One manager actually
advised her to open a beauty parlor instead.
Fortunately the vice president at her local
bank, who, as luck would have it was also
a woman, granted her the loan she needed.
It provided a boost to the cash flow of the
business and was the key to its success. “I knew
there was a market, and no one was serving
it,” says Marta. “I went out and cultivated the
personal relationships with the pilots and the
air companies.” (Indeed, Marta’s multilingual
barbecues became legendary in pilot circles.)
“The entire growth of the company has been,
predominantly, by word-of-mouth,” she
continues. “People know not only that we are
reliable, but also that we’ll go the extra mile
for customer service – we’ll stay open that
extra half-hour, we’ll even hop on our own
jet on Friday evening to deliver an urgent
part to Argentina or Brazil if you need us to.”
www.openforum.com/openbook
It’s this attention to detail that’s won Marta
the numerous business-leadership awards
that vie for space with the model planes on
the company’s shelves, including the Small
Business Person of the Year (U.S. SBA for
Kansas) in 1989 and Exporter of the Year
(U.S. SBA) 1988.
“We haven’t been 45 years in the
business without learning a thing or two,” she
opines, a twinkle in her eye.
Marta married George Maxwell,
an aeronautical engineer who’s also a pilot,
in 1982, and they relocated the main part of
their business to Fort Lauderdale while still
maintaining a subsidiary office in Wichita. The
move to Florida was convenient on two counts
– many of the small jets are now maintained
on the East Coast, and the Maxwells had an
eye on their eventual retirement. However,
Marta and George aren’t about to fly their
Citation jet into the sunset just yet. They still
assiduously attend the office and play a central
role in company decision-making. But their
exit strategy has always been to hand the
company on to the next generation. Andy has
been taking the company into new territories,
Brazil and Mexico this year, possibly
Argentina and Panama next. Emy has a degree
in business administration and is in charge of
Airparts’ finances.
“We’re hoping that the kids will take
up the mantle,” says George, as Andy and Emy
join them at the conference table. “We haven’t
actually worked anything out formally yet. But
the outlook for the industry is good. More and
more people are deserting the major airlines
and using the private jets and turboprops
whose parts we sell, and, because our business
has always been predominantly export, we
have some protection from any downturn in
the U.S. economy. Our orders are very healthy,
thanks to the weak dollar; domestic sales are
steady but foreign sales are buoyant. And we’re
always looking to venture into new markets; as
one market drops, another – Russia or China,
for example – rises.”
For these reasons – not to mention
continuing growth of around 20 percent a
year – there’s been a lot of outside interest
in the Airparts brand. “We’ve had several
companies call us, expressing interest in
buying us out,” says the pragmatic Emy. “But
we’re just not interested at the moment.”
33
“If someone comes along and offers
EXIT CONSIDERATIONS —
us $200 million, I’m not sure if you’ll find
these two working in Airparts any longer,” is
Transitioning a business to the next
George’s wry view of any potential buyout.
generation can be a perfect plan, or a
“But in the meantime, our prospects
natural disaster. It requires a delicate
for international growth are sky-high,” offers
balance between financial security for
Andy, who has inherited Marta’s former role
the founder, and the future health of the
of initiating new connections and business
business for the next generation. Here are a
partnerships. “Every time I travel, people ask
few points to consider when preparing your
me, ‘When are you going to open up here?’
business for family succession or sale:
Not only are we a one-stop shop for these
companies, we also have a cast-iron reputation
1. Know the key value. —All businesses
for honesty and probity. And that’s priceless.”
have one or more “magic metrics”–
Most of that reputation, as Andy and
those numbers that drive the health
Emy are quick to acknowledge, rests on Marta
and valuation of the business. Before
and George’s tenacious drive and personal
you hand over your company or put
charm. But the family is facing the prospect
it up for sale, be sure your metrics
of the change of Airparts’ principal crew with
look as good as they can.
equanimity. “The most important lesson I have
2. Get an outside advisor. — Any business
learned in business is that the name of the game
transition deserves to have objective
is friendship,” says Marta. “You need to get to
parties moderating the process.
know the locals and their customs wherever you
Investment bankers can provide
sell, and oil the business wheels, and Andy is
important legal and financial advice
great at that, while Emy keeps a tight rein on our
as well as prevent the parties from
expenses. I know that with these two, the future
getting too emotional.
of the company couldn’t be in safer hands.”
3. Consider all the options. — Any business
worth passing on may also be worth
selling outright. Make sure you
understand the true goals and desires
of the next generation before turning
down any potential buyers.
4. Remember Uncle Sam. — Meet with
an estate planner or tax attorney.
Selling a business to heirs can
have huge tax consequences, for
both seller and buyer. Be sure
you understand the long-term
ramifications of both valuations
and actual payments.
5. Get comfortable with risk. — Few buyers
(related or not) will pay your full
purchase price in cash. It’s likely that
sellers will have to “earn out” some of
the purchase price over time.
6. Think long-term. — What will you do
once the business is no longer yours?
OPPOSITE PAGE
Will you still have some degree of
The Airparts team keep
involvement or act as a consultant?
it in the family
Consider your life after the business,
For more info on
then make an exit deal that is
ABOVE AIRPARTS see:
aligned with your future interests.
Airparts’ Andy puts a www.airpartsco.com
consignment together
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