About Kerry Shapansky
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| Grew from $2 million to $51 million in revenues in 5 years (2,469% growth) ----- Pareto executes below-the-line marketing programs that help clients work faster, smarter and better. Whether it’s implementing marketing programs or running efficient incentive campaigns, we deliver measurable marketing tactics that generate revenue growth. Pareto is a people company, our success and magic come from the brilliant and talented team who pour their passion into creating a great company, every day. A publicly traded company, Pareto earned $50-million+ in revenues in 2005. We were 11th on PROFIT Magazine’s, PROFIT 100 List of Fastest Growing Companies. |
Recent Article:
Ask for advice and control your costs
- For more on Kerry Shapansky visit www.pareto.ca
I had developed a concept for this business and saw an unmet need in the market around an execution oriented marketing company. I went looking for a company that I could buy that would give me the infrastructure to launch this business. I bumped into an investment banker who had a fledging marketing company in need of leadership and strategic direction. I was able to take advantage of the situation and grab the under $2 million company with the shell and a group of committed financial backers. This enabled me to get to the place rapidly where I had the largest share position in the company and a great group of financial backers. There are a legion of orphaned companies that venture capital firms and other individual investors have made investments in which need leadership and direction.
The decision to purchase an existing company was driven by a desire to mitigate my own risk out of the gate but also to deal with the fact that I wasn’t sitting with several million of personal seed capital that I would be able to dispense. I had very very aggressive growth plans and wanted to jump start them. So how do you find access to capital? I liked the idea of starting with something that was broken rather than starting from scratch.
Advice for entrepreneurs - Ask for advice. I had built a successful business in the past as an employee and was looking to find my entrepreneurial wings. I was able to put together a profile of myself and I didn’t approach venture capitalists specifically to find a company. I went to them and asked them for their council. I wanted their opinions as to where and how I might be able to leverage my assets. That partnership approach worked very well.
Control your costs. This business I bought was losing $200,000 a month and was rapidly running out of cash. As a guy who has plans to build the first thing you have to do is wield the axe and bring the cost structure in line with the existing business.
Reverse field of dreams – it’s not “if I build it they will come”. Focus on “once they come I will build it”. Don’t build the infrastructure until you have the clients to support it. Only look at life sustaining elements and build out as you have the resources to add them.
Know what your investors need. It’s critical to understand what your stakeholders need in terms of information. I would go to the point of documenting it. Present them with the business plan and once you’ve done that understand what their expectations are in terms of information and progress updates. How do you look into the questions they have brought up? I always want the investor to believe and know that I’m looking at and am concerned about an issue they have identified well before they identify it. Proactive action is very important. I also don’t want any confusion as to who is running the business. You cannot run a business by committee. You need to get your investors to sign off on your business plan and agree to a level of progress updates and benchmarks.
Go public. I spent some time with individual venture capitalists and found that, for the most part, when you’re in a situation where you go home to one or a handful of investors, cash is king and those folks have a very hands on desire to add value. I’m a control freak and I want to run my business. I was much more comfortable with a large number of relatively anonymous shareholders that I can communicate professionally with but I’m not going to have their day to day involvement. They key is you need a very good boar d of directors.
Build a board of directors. I built my board one at a time. There are some fairly fundamental requirements. Everyone who sits on our audit committee needs to be financially literate. There are not a whole lot of people lining up to sit on board of micro-cap companies because of liability concerns and speculative compensation. I was able to find material investors who bought into me and the vision of what we were building. We brought them on the board. So I’m in a very fortunate situation where all my board members have written a cheque and bought shares. We have refreshed some of our board over the six years we have been in business and I can see we’ll do more about that in the future. Sometimes you outgrow your board advisors. If they are not adding value you need to bring someone else to the table.
Follow the market. I tend to use an anti-Christ philosophy. How do you see where the mass is going, what is everyone else doing and how can you find out what’s wrong with that? What frustrates the average customer? We’re a marketing business and everyone in the marketing business is about strategy and creativity. Pay us a retainer for our strategies and ideas. Customers were very frustrated with that – they wanted results, not just ideas. We turned the entire model upside down. We give away our ideas, strategies, and creativity and we charge for execution and results. It’s the same suite of services and benefits to the customer but it feels very different and has cut us a swath of blue ocean in the marketplace.
Create a strong culture. We use head hunters very selectively and every time we do I feel like we failed. I believe you need to have a strong, vibrant culture. We have a soul here at Pareto. We try to imprint that on our people. We are growing like heck and when our team sees someone out there that they know and they have these attributes, bring them on board. We reward our people with incentives for bringing in their friends. If our employees aren’t creating the buzz for us they we’re doing something wrong.
Get a mentor. Find someone who you respect and who believes in you and can be your touchstone for you through those early, lonely entrepreneurial days. A very good friend of mine and successful entrepreneur Michael O’Gallagher told me that I was an entrepreneur and said I needed to stop working for a pay check. He believed I had the traits to be a successful entrepreneur and encouraged me to take the leap and see what I had inside myself. He helped me jump over the cliff – no matter how confident you are, taking that first step is a scary thing to do.
Focus. Focus is so critically important. It is so easy in the early days to chase a buck. It can easily draw you off path and have you becoming so diffused in your efforts that you are not making progress down the path you’ve defined. Be disciplined enough to really have focus.
Plan. There is absolutely no excuse to not put together detailed, disciplined business plans. Set objectives for yourselves. Set benchmarks for yourself and don’t let yourself get knocked off course. Develop contingency plans. Discipline yourself to put together a very detailed plan. What does success look like and when will you get there? Activity is not progress.
Mistakes to avoid? - Channel positive energy. I’ve made almost every mistake known to man but I don’t remember most of them. It’s very important when starting out that you’ll face lots of criticism. You need to remain very focused on your vision and plan. Grab a hold of the things that work and use them to grow your company. Channel your positive energy. Learn from your mistakes and don’t obsess about the mistakes along the way. Ensure you can leverage success out of those.
Don’t fall in love with people. I’ve made hiring mistakes, for example. As an entrepreneur I have a strong sales bent and I fall in love with people. I have hired people based on their social skills and hired people who are like me as opposed to focusing on more of a whole brain approach that if I have strengths in these areas I need t surround myself with people with complementary skills. I’ve made colossal mistakes bringing in the wrong people and because I like them and resonate with who they are and the way they think, I’ve been too slow to pull the trigger and move on. If business is bout energy, energy is about leaders and if you have the wrong people at the top, it will massively drag your progress. Make the tough calls and take people out when you need to.
It’s the survival of the fittest. I was in Newfoundland a few weeks ago and found an eagle’s nest with two big eagles in it – it occurs but it’s not too common. What the mother eagle will do is pick the strongest of the two babies and throw the other out of the nest. It’s not cruel. Nature is cruel. The reality is if the she kept both they would both die because she can’t sustain the both. Sometimes that Darwinian approach is required in the early days.
If you were starting in a different industry, what would it be? - There’s a myriad of opportunities out there. There is a sea change in how consumers shop for and buy everything – most of them are being driven by technology. New industries are being created all the time. I see tremendous opportunities for new organizations to spring up and flourish. I also think it’s a really interesting time to be a Canadian business. We have a 95 cent dollar but if you look at some of the fundamental challenges in the US and the fundamental strengths in Canada it’s a great time to leverage our core competencies.
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