9 Great Ways To Build Wealth As A Business Owner – Series (8 of 9)
This series of articles follows on from an article we published recently, titled “9 Great Ways To Build Wealth As A Business Owner”, where we mentioned that business owners who focus on building company value over company size, generally get to sell their businesses for a premium when the time comes to exit, allowing them to cash out the maximum with no regrets.
This article looks at Jay Steinfeld’s story about Blinds.com and covers the 8th way – Run your business like a public company.
Jay Steinfeld studied accounting at the University of Texas and joined KPMG after college. He went on to become Vice President, Finance at Meineke Car Care Centers, Inc., the nationwide automotive franchisor.
Steinfeld left Meineke in 1985. Mid-career and out of work, he joined his wife’s business selling blinds in her retail store. Her business was such a success he decided to open a second store.
Steinfeld quickly discovered that life as a retailer was harder than he imagined. He worked in the store six days a week and did the books at home on Sundays. Many nights, he didn’t get home until after nine o’clock. Determined to find a better way, Steinfeld began researching an emerging technology called the internet. It was 1993. Steinfeld invested $1,500 in his first online advertisement, which was mostly an electronic version of his brochure.
Over the next few years, Steinfeld continued to experiment with online advertising. His business model was crude. When customers responded to an online ad, Steinfeld instructed his staff to tell the caller that someone from the customer service department would call them right back. The employee in the store would then call Steinfeld, who in those days spent most of his days driving around Houston installing blinds, letting him know someone had responded to his ad. Steinfeld would pull off to the side of the road and call the customer back. With a calculator and notepad in hand, he would take their order from the front seat of his van.
While Steinfeld was tooling around Houston in his minivan, Jeff Bezos was experimenting with selling books online. It was 1994, and Amazon’s early success got Steinfeld wondering if people would buy blinds online. He ran the idea by a few customers, who balked, saying that shades were different than books because they needed to be measured and installed. Undeterred, Steinfeld invested $3,000 to build his first online store.
He continued to tweak his approach to advertising and selling blinds online. Eventually, Steinfeld got to the point where his online orders eclipsed the $1.5 million in sales he was making through the store. In 2001 Steinfeld decided to go 100% online and launched Blinds.com.
Unlike many of the first-generation online companies that operated with few financial controls, Steinfeld grew Blinds.com like an accountant. He was determined to run his business with the same rigor as a publicly listed company. He built an experienced management team and took the unusual step of assembling an outside board of directors even though Blinds.com was private and Steinfeld owned all of the stock.
The board met quarterly, and each of Steinfeld’s senior managers were asked to prepare and deliver formal presentations to his board. Steinfeld hired a Big Four firm to complete a full audit of his financials each year even though there was no need to be quite so button down to prepare a simple business tax return.
By 2014 Blinds.com had grown to 175 employees and, at more than $100 million in revenue, was the largest online retailer of blinds in America. Even though Home Depot had close to $90 billion in sales at the time, Blinds.com was outperforming them in its tiny niche, which made Blinds.com irresistible to Home Depot. On January 23, 2014, Home Depot announced the acquisition of Blinds.com. Terms were not disclosed.
Run Your Business Like A Public Company
As the story of Blinds.com illustrates, the most valuable companies are run with financial rigor. Some small businesses run as if their sole purpose is to fund the owner’s lifestyle. Many use the spending power of their business to buy trinkets and baubles like cars and expensive trips that further fuel their ego and get them noticed in town.
However, if your end game is to sell to a strategic acquirer, then you need record-keeping that will stand up to their scrutiny.
Consider recruiting an outside board of advisors, and host quarterly board meetings where key managers are asked to present their operating results, along with plans for the quarter ahead, to an outside board of advisors.
Invest in bookkeeping and quality reporting from your accounting firm.
If you found this article of value, then feel free to read through two other series we’ve published recently:
- 8 Key Drivers Of Company Value That Every Business Owner Should Know
- Unpacking The Subscription Economy
If you want to see how your business scores in “8 Key Drivers of Company Value” right now, take 15-minutes to complete this survey and you’ll get a comprehensive 25+ page report benchmarking your business against its peers, plus 49 tips on how to improve those 8 key areas.