Letter from Ed: Small Companies Are Different from Large Ones
Pallet Enterprise founder shares thoughts on what makes small companies competitive and how they can thrive in the future based on a few lessons he learned from a friend and fellow entrepreneur.
By Edward C. Brindley, Jr.
Date Posted: 10/1/2013
There are small companies, medium sized ones, and large companies, and there are all three in the pallet industry. During my pallet experience which stretches back over 36 years, I have seen our industry grow. We have a few fairly good sized companies in our industry, but most are still relatively small.
Pallet One is the largest pallet manufacturer in the United States and IFCO is the largest pallet recycler. Both of these companies have sales of several hundred million dollars a year. Of course CHEP, with worldwide sales in the billions, owns and manages the largest pallet rental pool in the world. But it still relies heavily upon independent pallet companies to manage its pallet pool and repair pallets. Looking over the industry landscape, it is easy to see that small companies think very differently than big ones, and that means there is room for the little guys to succeed. In my opinion, it is the mid-sized companies that will struggle in the future more than any other.
A very good friend of mine, Bill Spencer, who is now well into his 70s, became an entrepreneur after years working in product development with DuPont. He specialized in developing products that ended up being appropriate for small markets, not the large markets which DuPont typically serves. So, when DuPont decided to get rid of these small product lines, Bill said, “How could I tell the people I had personally recruited from within DuPont to help me grow the businesses that they would soon be either working for another company or possibly be without any job at all.” As a result, his team set out to form their own company called Xymid which developed a broad portfolio of profitable niche businesses in bedding, carpeting, protective apparel, print sleeves, artificial leather, and absorbent fibers. After a few tough years of working out of the DuPont philosophy mold, Bill’s company has gained strength by finding and developing new business opportunities that will fuel the company and its growth.
Bill has shared with me some of the business principles he has applied to building Xymid. Some of these ideas are applicable to the entrepreneurial pallet business as well.
One of his most important business principles is “speed to market.” Bill said, “It’s not the big that eats the small, but the fast that eats the slow. A customer can come to us with a problem on Monday and we can have a solution by Wednesday. That’s almost impossible in a large corporation.” Sounds like the pallet industry doesn’t it? People who design and manufacture wooden unit load and packaging products can normally move very fast because they are lean and have customized products that can be quickly manufactured. Wood lends itself to custom manufacturing in specialty sizes and small lots.
Another business principle at Xymid is the belief that “small is better than big” – a major departure from big corporate philosophy of companies, such as DuPont. Many small business products require limited amounts of research and can be manufactured quickly. They are flexible and can quickly adjust to sudden market changes compared to a larger company that must navigate corporate bureaucracy.
Xymid’s philosophy is “make a little, sell a little, make a little more.” This manages a company’s exposure and investment. In this sense it is very much like the pallet industry. Except for high volume pallets, such as a GMA, most pallets are designed specifically to meet a precise need and made in fairly small quantities to stay flexible.
Xymid believes in a number of business principles including “No productive person ever has fun with too little to do.” Every pallet company owner wants his people to be productive and knows that productive people typically enjoy what they do. They want to stay busy. It is often stated that a large portion of people are not happy in their jobs. It is certainly true that quite a few jobs in a pallet plant are far from exciting. The one thing that a pallet company can do to help keep people productive is to keep them busy. A specific job may not by nature be that exciting, but it has been my experience that even a mundane job can be exciting and interesting if you put yourself into it and go out of your way to challenge yourself. Employees want a sense of accomplishment and challenge. Finding effective ways to do that is the responsibility of smart pallet and lumber company leaders.
One of Xymid’s philosophies is “Our ultimate boss is the customer. Forget that and you will ultimately fail.” All of us know that keeping a customer happy is the best way to run a financially successful company. Manufacturing quality pallets that meet the specific needs of a customer is obviously a requirement to keeping a customer happy. But doing so with a positive attitude and an approach toward being a dependable source of information can help differentiate you from other suppliers in the market. If you don’t have a positive, friendly attitude, it will eventually show up in your level of customer service and interaction.
While big companies may have more resources and can crush competition, the little ones tend to be hard to kill and can find ways to make money where the large ones would rather just leave alone. That is certainly what happened with my friend’s company. You have to stay fast, flexible and customer focused to succeed. Oh, it also helps to have fun along way. Serving the pallet industry has been a blast for me over the years, and I look forward to how our products can continue to help you stay competitive no matter how tough the market gets in the future.
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