A Healthy Respect for Work

Cancer wasn’t part of the equation when Michael Garvey began to wrestle with growth issues at his booming fitness equipment business. His main concern as sales climbed toward $1 million in early 1995 was how to expand fast enough without sacrificing a record of excellent customer service.

The former personal trainer had found a lucrative niche selling turnkey exercise-equipment packages to corporate clients such as Chevron and Mattel and hotels such as the Mirage and Treasure Island in Las Vegas.

But as business grew, Garvey’s health began to decline. He was diagnosed with leukemia in June 1995 and soon shelved expansion plans.

It took almost two years, but Garvey fought his cancer into remission. His Torrance-based business, Dumbell Man, also survived. For this he credits the support of his suppliers, a top-notch assistant and his brother, who moved from the East Coast to help out.

With his strength back and sales roaring toward the $3-million mark this year, the growth issues have resurfaced.

In the aftermath of his illness, Garvey takes seriously what many entrepreneurs pay only lip service to: the need for a balance between work and home life. The idea that health is more important than profits is no longer theoretical for Garvey.

“I’m probably right where I should have been [sales-wise] two years ago, but I’m alive,” Garvey said.

Part of the challenge Garvey faces as he positions his company for the next stage of growth is how to carve out time to “play hoops or go get fresh air or watch a movie when I need to go do that.

“I’ve definitely seen where the business has demanded I work more, but I promised myself that I will never lose sight of the fact that I need to create a balance,” Garvey said. “The bottom line is, there’s got to be more [to your life].”

Time management is the answer, according to business consultant John Rooney, president of the Valley Economic Development Center, which operates one of the Small Business Administration’s small-business development centers.

“He needs to develop his organizational skills,” Rooney said. “He is a typical entrepreneur who tries to do it all.”

For a small-business owner, learning to use time wisely means more than writing to-do lists and keeping a daily calendar, said Rooney. It means long-term planning, including marketing strategies, to set the business on the right track. It also means creating the internal systems and management team necessary to make sure it stays on track.

Creating an aggressive marketing plan to take advantage of the red-hot fitness market should be Garvey’s first priority, Rooney said.

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With the help of F.Y.I., a research service of the Los Angeles Public Library, Rooney assembled a 100-page market assessment of the fitness equipment business. (The service is available through the center.)

The report shows that the demand for Garvey’s product--turnkey fitness systems for hotels, resorts, health clubs and corporations, as well as multiunit sales of individual equipment is booming.

“He has a great business and a lot of potential,” the consultant said. “The market is growing by leaps and bounds. . . . Even at truck stops you are seeing fitness centers.”

The company doesn’t have enough salespeople to address its market opportunities, however, nor does it have a marketing plan or a formal sales program, Rooney said.

Garvey knows he wants fitness-minded salespeople, but beyond that he’s unsure how to proceed and is wary of the potential legal traps for employers.

Rooney suggested the business owner work with Jim McJunkin, a sales consultant on the Valley Economic Development Center’s referral list, to learn how to hire and motivate a qualified sales force.

Garvey’s marketing strategy should include advertising and promotions geared to the vertical market, such as corporate fitness centers, schools, resorts and country clubs. Direct mail and trade publication advertising should be part of the plan, Rooney said.

“He needs to think through how he will get to media in those trades and the vertical market,” the consultant said.

Rooney’s organization can assign a small-business marketing consultant at no cost to work with Garvey or any other small-business owner on the nuts-and-bolts of implementing a marketing strategy, he said.

“He has the right instincts, he knows what he needs to do, he has a good sense of the market,” Rooney said. “But getting him focused on making it happen consistently and hiring the salespeople and taking some of those big steps is going to be a challenge for him.”

Rooney also suggested the company consider increasing prices on a selective basis. “A segment-by-segment price-and-margin analysis . . . would reveal the price sensitivity of the market and which segments are the hottest to focus on,” Rooney said.

Garvey should find some high-margin niches he can dominate, Rooney said.

His second major recommendation is that Garvey “get his risk situation handled.” Disability insurance is critical, he said.

The consultant checked with Jim Oppenheim of Burbank-based Frenkel Insurance, which specializes in employer insurance programs, about Garvey’s ability to qualify. Now that the leukemia has been in remission for more than a year, “there are some group policies where he can just jump right on” for a nominal cost, Rooney said.

Risk management also would include buying employer liability insurance, which Garvey will need as he begins to hire more employees, and setting up a retirement savings plan, Rooney said.

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The time to set up these programs is, of course, before they are needed.

“After my medical expenses, I didn’t have a pot to piss in,” Garvey said. “Now I’m trying to save and think about the future. A few years ago I didn’t even have a future.”

Risk management also includes “taking care of himself personally . . . pacing himself, not working long hours, delegating and setting up the company so it is not stressful for him,” Rooney said.

Business planning and infrastructure building are Rooney’s third recommended area of focus for Garvey.

“He needs to develop his skills beyond the sales area, and he needs to learn enough to oversee and set up the systems he needs,” Rooney said.

He recommended Garvey attend the free entrepreneur training classes offered by the Valley Economic Development Center. The 10-week program will teach Garvey how to organize his business, “not just do a business plan,” said Rooney, who developed the course.

Sponsored by the city of Los Angeles, the program is provided for businesses within the city limits, although waivers are sometimes granted, he said. USC offers a similar program.

Rooney also suggested he consider the center’s new Breakthrough program, geared to CEOs at growing companies. The yearlong program, which costs $195 a month, brings together 10 to 12 company chiefs for half a day each month. The group serves as an informal board of directors, sharing expertise and offering objective feedback and support.

The monthly fee buys access to consultant services that would cost much more if bought by each company separately, he said. Each quarter the accounting firm Arthur Andersen helps the executives set and review financial goals. There is a quarterly strategic planning session, leadership training for company managers and ongoing sales and customer service training for all employees.

Garvey’s company also could benefit from the human resources software and consultant expertise available through the program, the consultant said. He’d get help setting up personnel systems and scheduling regular employee reviews and goal-setting sessions, Rooney said.

That’s a valuable service for an entrepreneur such as Garvey whose company is growing beyond the capacity of its start-up infrastructure. Missing, for example, are basic personnel documents such as an employee handbook and written workplace policies.

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He also suggested Garvey use an outside payroll service as the company expands. “It will save him a lot of time and headaches, and the cost is negligible.”

A $50,000 line of credit to use in a business emergency would be helpful, Rooney said. He recommended the company apply for it now, while cash flow is healthy.

Garvey knows the organizational tools he needs to build a growth company exceed the capabilities of the index cards and corkboard he started with eight years ago. But he’s determined not to let business demands overwhelm his need for a balanced life, for “having done something more than just putting in 70 hours a week and making money when you punch your ticket out at the end of 40, 60 years.”

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This Week’s Company Make-Over

Name: Dumbell Man

Headquarters: Torrance

Type of business: Fitness equipment sales and service

Status: Sole proprietorship

Owner: Michael Garvey

Founded: June 1990

Start-up financing: $1,000 of personal savings

1997 sales: $1.7 million

Employees: 3 full-time, 1 part-time, independent sales reps

Customers/clients: Chevron, Gold’s Gym Hollywood, Hollywood YMCA, Jonathan Club, Mattel, Mirage Resort, Sony, Treasure Island Las Vegas

Main Business Problem

Lack of business organization and planning

Goal

Increase sales, expand into new markets, advertise, organize business.

Recommendations

Develop an aggressive marketing plan: Hire more salespeople, advertise and promote to the vertical market, increase some prices, conduct market segment analysis.

Take steps to manage health risks now that leukemia is in remission: Buy disability insurance, set up a retirement savings plan, maintain a reasonable work pace.

Improve business planning and internal systems.

Apply for a line of credit.

Look for ongoing education and training opportunities geared to small businesses and entrepreneurs.

Meet the Consultant

John Rooney, president of the Valley Economic Development Center, designed the center’s award-winning entrepreneurial training program.