They Delivered the Goods
Steven Keihner’s courier service did $300,000 in its first year of operations and expanded quickly to seven offices throughout California. Eventually Keihner found the company was growing out of control. Over the last several years, he has used a series of management consultants and techniques to pull operations together and increase profitability. The company now delivers to nearly 1,000 customers, including Hewlett-Packard, Airborne Express and the U.S. Postal Service. Keihner was interviewed by freelance writer Karen E. Klein.
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We were doing about a million and a half in annual revenue when a representative from a debt collections service came to talk about helping us collect on bad debt and asked to look at our books.
A few minutes later, my bookkeeper came in my office crying and confessed she’d been embezzling for two years. When the books were examined, we found that the operations manager had been taking double payroll checks. People were taking advantage because I was out selling as hard as I could trying to grow the company.
I found that some of our offices were losing $5,000 to $6,000 a month. When I went to visit, I would find out that the mechanics’ bills were running $15,000 a month, things were being stolen, and the managers were complaining that the clients wanted the impossible.
The drivers were frustrated that they had not gotten their promised raises and that they had no health-care benefits. At one point, there was a threat from a union organizer. I had no way to measure employees’ performance, no accountability or auditing systems. The managers really didn’t know what kinds of numbers they were expected to hit each month.
I hired a consultant who helped me hire a new CPA firm. The firm turned me on to Management Action Programs, a system of management techniques that work for Fortune 500 companies and small businesses alike.
I sat down with a couple of my top managers and painstakingly crafted a business plan. We wrote detailed job descriptions and put together a 130-page policies and procedures manual. We taught our employees how to set measurable goals and we monitored their progress.
I also set up an incentive program for managers, so that they could make a 20% bonus on their wages every quarter if they met certain goals. We saw profitability double almost overnight.
Now we fly all the station managers in for a daylong meeting once a month. We go over their operations, help them with problem-solving and evaluate whether they are meeting their budgets and increasing sales and efficiency.
We survey our employees and our clients regularly, asking about on-time delivery, morale, communications and service levels. The managers know exactly how much to pay the drivers and how to deal with employees’ problems.
We also found that as we made the company more professional, all the people who were our B and C players started disappearing fast--of their own choice.
It took us about four years and several consultants to pull all the management systems we have now into place. During that time, I’ve probably spent $30,000 a year on consulting, basically the cost of one good employee in my company. But the value I’ve gotten for that has been unbelievable, in terms of taking our company to the big leagues.
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At A Glance
Company: Westwind Express Inc.
Owner: Steve Keihner
Nature of business: Same-day courier service
Location: 1101 Washington Blvd., Culver City
Founded: 1985
Employees: 155
Annual revenue: $6.5 million
