On Tuesday 25 February 2014 the Midwest Entrepreneurs class boarded two Monmouth College “turtle top” buses–piloted by your humble narrator and co-instructor Mike Connell–and headed north and east to the farming town of Alexis, IL (population 823). What we saw there was absolutely amazing.

I turn to student blogger Darnell McKissack to tell the story…

But please pay particular attention to his discussion of how what is viewed as a “goods manufacturing” company uses CUSTOMIZATION-BASED SERVICE to gain and sustain a distinct competitive advantage on a global scale. This is an issue I feature prominently in many of the classes I teach here. It would be hard to find a better example than this!!

Prof. Gabel

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Tuesday, the class took a field trip to the tiny town of Alexis, IL. There, we encountered and learned about a world-class, high-end, manufacturer of customized fire engines and other fire equipment; the Alexis Fire Equipment Company (http://www.alexisfire.com/).

We met with President Jeff Morris, who described himself as the “an SOB; the son of the boss.” While leading the class on a tour of the expansive facility, he began the story of his family’s business by describing how the company, founded in 1945, originally started by making general items such as wagons. However, one day in 1947, they were asked to make a fire truck. As Mr. Morris put it: “someone just asked us to make one.”

The company has since grown into one of but several high-end, completely customized fire engine producers with sales all around the world. Overall, the company competes in a really unique but highly competitive market of only about 300 fire engine manufacturers with around 2500-3500 units sold in the United States in any given year.

But the Alexis Fire Equipment Company–based exclsuviely in the tiny town of Alexis, IL–stands out on the basis of a distinct competitive advantage!!

The key to this company’s growth and ongoing success is customization and a focus on serving each customer’s specific and unique needs. Their sales team meets with clients on a daily basis early in the sales cycle. Maybe most importantly, they seek to create THE specifications for that particular customer. This gives them a competitive advantage because their competition has a hard time coming in and bidding on a truck that Alexis has already set the specifications for. These specifications deal with anything from which of the 600 different shades of “fire-engine red” paint will be used to having more water pressure, computer-programmable and remote-controllable sirens and emergency lights, and any of a wide variety of other accessory equipment.

One big but wise investment the company has made that helps them with this customization-based competitive advantage is a $300,000 water-pressurized cutting machine used to cut sheet metal and steel into whatever shape is needed. They can build fire trucks that sell for anywhere from $60,000 to $1 million. Maybe most impressive is that the company custom builds every part of the fire engines (outside of the core chassis and drivetrain, which is ordered from major trucking or auto companies per customer preference and need).

Mr. Morris told us in detail about several large sales to clients in Saudi Arabia, China, Mexico, and Canada. This is truly a global company in a very tiny town.

As Jeff Morris summed it up: “There is no dream or business too big for a small town like ours.”

Two important lessons were learned by students in the Midwest Entrepreneurs class last Thursday.

Lesson One: Change happens and you must be ready to adapt to it. In the morning, we had to quickly reorganize and reschedule speakers as our scheduled speaker, Vanessa Wetterling of local radio provider Prarie Communications, had to cancel due to a weather-related emergency at the office. Although many people are obsessed with structure and predictability, change such as this is inevitable and adaptation is a must; for Vanessa, for entrepreneurs, and, in this instance, for the class.

This need to adapt to change also became evident with our eventual guest speaker, whose firm perished due to not seing radical change in its industry coming on the horizon. More on that soon...

Lesson Two: Being an entrepreneur–particularly a high-tech entrepreneur–can be a very wild ride. This was a core lesson learned from our spur-of-the-moment guest speaker; Paul Schuytema, a former PC game programmer whose turbulent tale of very high highs and very low lows kept the students both laughing and on the edges of their respective seats the entirety of the class period.

I now yield to today’s student blogger–Tom Lawson–to tell the tale of reluctant (former) high-tech entrepreneur Paul Schuytema as he saw it.  However, I will insert my self and marketing-professor insight into Tom’s blog entry at one key point.

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Before Tuesday I had no idea of who my speaker for Midwest Entrepreneurs was or what she did. However, when I found out that she would not be speaking and that Paul Schuytema would be filling in for her, I was delighted. I am sure that Ms. Wetterling is a wonderful woman, but I had the pleasure of working for, as well as getting to know Paul over the summer, so this came as a great surprise.

Paul grew up in the town of Park Ridge, IL, and he described himself as a “nerdy kid.” He felt his claim was justified by his addiction to board games, love of miniatures, and the creation of his very own rule-based game by the time he was in fourth grade. Although tragedy struck Paul early, with the death of his father when he was thirteen, it set in motion something that would create the man who stood before us. To keep his mind off the death of his father, Paul’s mother bought an Atari computer, one that allowed him to start his life-long love affair with programming.

Sadly, Paul’s love of programming had to remain a hobby, as it was not offered as a major during school at the time. After a few years working at our very own Monmouth College, Mr. Schuytema worked on a handful of PC video games on the side before being offered a job with 3D Realms, the creator of the Duke Nukem franchise. The company, however, ended up shutting down the game that Paul and many others had worked so hard on, due to a greater need for focus on the new Duke Nukem release. Disheartened but wiser, Paul returned to Monmouth in 1999 to start his own video game company, now knowing how a company should not be run. To get some spending money, he and his partners wrote video game walkthroughs and attempted to launch their own games, but they subsequently ran into branding problems.

The big break for Magic Lantern Playware (their company) came with the release of Tom Clancy’s Rainbow Six: Covert Ops Essentials. This first-person shooter received four stars upon release and gave Magic Lantern the money they desperately needed; a profit of around $750,000. Not only this, but during the process of writing the game, the team assembled the largest existing encyclopedia on counter-terrorism. After Rainbow Six, Magic Lantern released a few more commercially successful games, including Combat and a game based off the hit TV show Survivor. 

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NOTE from Prof. Gabel: As I sat listening to Paul’s story at this point, I got the feeling that the release of the Survivor PC game signalled one of the highest high points of his turbulent entrepreneurial ride. Exemplary was the picture displayed on the projection screen of a happy Paul–drink in hand–laughing it up at a major video gaming conference with one of the female stars of the Survivor TV show. However, looking back now, I see how Paul’s experience with this game was a bit of both a signal and a microcosm of the downward spiral to come. As Paul described the experience, although the game was introduced with great fanfare in the industry it ultimately sold poorly–and quickly vanished from shelves–due to the fact that those responsible for the marketing of the game–not Paul’s programming firm–did a poor job of market segmentation and targeting. While much money was spent on advertising and otherwise promoting the game, lacking concern for who might actually want to buy the game led to a situation in which, as Paul put it: “No one cared.”

Sounds like a situation of wasting tons of money on advertising due to their being no demand for the product and lacking concern for the target market; essentially there was no demand because there was no target market for the product.

Not Paul’s fault but also a recipe for entrepreneurial decline if not remedied… Things had started to unravel…

Back to Tom Lawson’s account of the END of the story…          

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Although they stepped on various “landmines,” as Paul put it, the demise of the business came not because of a selling out or bankruptcy. In the T.S. Eliot poem “The Hollow Men,” the last two lines read, “this is how the world ends; not with a bang, but a whimper.” The same can be said for Magic Lantern. The company had a handful of new ventures and featured hits and misses, but nothing replicated the success of the Tom Clancy release.  When Bungie released the console video game Halo, it revolutionized the gaming industry and was a death sentence to small developers like Paul who failed to see console gaming coming in time to adjust.

Having Paul Schuytema come speak provided the class with a unique opportunity, to hear about a business failing. Maybe fail is a cruel word for this instance, because his company being edged out with the rise of console gaming was something he had no say in. As Professor Connell teaches in Business 105, innovation is creative destruction; Magic Lantern is living proof of that.

Not all is lost, however, for life can start anew.

Paul is currently the City Planner for the city of Monmouth, runs the Blues Festival every year, plans to cash in on his latest business venture with Connell, and is newly married to the lovely Susan Schuytema, owner of Market Alley Wines (our very first guest speaker of the semester).

Although they did not have the money that big developers did, Paul took care of his coworkers within his LLC by providing healthcare, a 401k, and a sense of family. They didn’t try to grow and take over other companies and make six figure salaries, although it would have been preferred in retrospect, they just tried the best they could. The members at Magic Lantern simply tried to make a quality product for the customer while living out their dreams of doing what they loved.

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Well stated Tom!!…

And thanks to Paul Schuytema for both filling in at the last minute and then captivating us with his turbulent “best of times, worst of times” entrepreneurial story!! 

We learned in class this past Tuesday–from a practicing McDonald’s franchisee–how franchising can represent a special type of entrepreneurial venture. More on franchising from an entrepreneurial perspective can be found at the following link.

http://www.entrepreneur.com/encyclopedia/franchising

Today’s blog entry is written by Midwest Entrepreneurs student Johnathon Donald. In it, Johnathon captures very well the key points of franchising existing as an entrepreneurial option.

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Last Tuesday, we had Mike Luna, a successful McDonalds franchisee, speak to our class. Mr. Luna got his start in the business at a young age working at the McDonalds in Galesburg, IL. After working there for five years he went off to school, but eventually made his way back to McDonalds working as a supervisor. He was given the opportunity to buy into a franchise in Kewanee, IL and this is where his journey as a franchisee begins.

Before I go deeper into his story I would like to talk about the uniqueness of Mr. Luna’s business.

All of the other speakers we have had thus far have been entrepreneurs who have started their own business from scratch. Mr. Luna is different from others because he is a franchisee of a much larger corporation. This means that he has specific rules and regulations he has to follow as set by the McDonalds Corporation, and he has to work closely with them to make sure his location is up to standards.

With this though he has a lot of advertising that the corporation itself does, and he doesn’t have to put his own money into. He is also able to set his own prices as to stay competitive on the local level. Perhaps most importantly, although McDonalds controls from whom Luna buys meat and other raw materials, McDonalds gives him volume-purchasing power that means he is getting the highest possible quality materials at the best possible price; better than he could get on his own if he were running his own business. This savings and quality is then passed on to the McDonalds consumer.

In this endeavor, Mr. Luna was given the option to receive more stock in the franchise, which he gladly accepted. When the Kewanee location was bought out, he had enough money to start his own franchise right here in Monmouth in 1990. Through his dedication to customer service and willingness to do whatever work he must to make sure his franchise is operated correctly, he has been able to run a highly successful McDonalds. He has also been able to open another McDonalds in Aledo, IL.

Part of Mr. Luna’s success comes from the effort his employees put in to their jobs, and this can be attributed to Mr. Luna’s own work ethic. He stated that he was the type of person who would rather be out in the front of the store helping customers and making sure his building is in excellent shape than be a person working behind the scenes. Mr. Luna made the point that if you want your employees to work hard and do their best, you need to be willing to set the example that you wish for them to follow. He also strives to make his location a place where people want to come to work, and will continue to work. These aspects have enabled his franchised restaurants to be some of the most successful around.

Mr. Luna is a man who was willing to take the risk to bring a new type of business to a small community. The work that he put in to this business, and still continues to put in, has made his business successful for the last 24 years. His story is proof that by working hard and by believing in the decisions you make, you can run a successful business.

Johnathon Donald

Last Thursday’s Midwest Entrepreneurs class began with a time-lapse YouTube video of the construction of an $875,000 grain elevator roughly five miles east of Monmouth, IL. The man behind the project is Will Zimmerman, a 2011 Monmouth College Business Administration graduate—and former Midwest Entrepreneurs class member–who owns and operates Avon, IL-based Modern Grain Systems.

Today’s blog entry is written by present class member Raahsaan Fox.

The YouTube video that began class last Thursday can be found at the link below.

http://www.youtube.com/watch?v=9qELQMCDRtk

Enjoy…

Prof. Gabel

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Last class we heard from Will Zimmerman who is a Monmouth College alumni. Will graduated in 2011 and ever since then he has never looked back. Will came up with his idea for his grain storage construction business while he was a senior at Monmouth College. He drew up his business plan for one of his classes and used that same plan to pursue the proper funding for his business. His business plan was approved and he received a $200,000 loan to start the business.

Something interesting Will pointed out during his presentation was that a lot of his peers didn’t approve of his idea and thought he would fail terribly and cost his family tons of money. Despite the negative reactions he went forward with his plan and today he is a steady name when it comes to building and servicing storage units in this area.

After his business became up and running one of Will’s top priorities was to pay off his loans as quickly as possible; something he had learned as a business student here at Monmouth College. He said he wanted to do this because the longer you have lingering loans the higher the interest will be and the harder it will be to pay them off. He also pointed out how he didn’t believe in using the money he made to make his life better. He used the money to make the business better. “ You have to spend money to make money” I think is a quote to live by for all business owners because some people forget that and when they make money they never want to spend it.

Will pointed out how his main problem with his business was the fact that he was 21 when he first started and the people who worked for him were much older and they had a hard time taking orders from a younger boss.  He also made it clear that the thing that separates his business from his competition is his work is second to none. He makes sure he is always available to help his customers and his work ethic is unmatchable.

Will’s success just goes to show that anything is possible if you believe in yourself. He went from a partying college student to President of Modern Grain Systems. If that doesn’t give you hope then I don’t know what else could. Will is a good example of how  hard work and dedication  can get you ahead in the world!!

Raahsaan Fox

Our Guest speaker last Thursday was retired agricultural entrepreneur John Twomey. His inspirational six-decade-long entrepreneurial success story is documented below by Midwest Entrepreneurs student Tyler Bean.

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John Twomey shared with the class last Thursday his compelling story of becoming a successful entrepreneur in a company he started over 60 years ago. Emerging from humble Depression-era beginnings, he came to eventually operate one of the most successful grain elevator and loading facilities in the entire United States. He is a true role model; an honest, hardworking man who has never stopped doing his very best from early childhood until today.

Twomey was born in 1923, back then corn was around ten cents per bushel (today it’s around four dollars). John identified himself early on as a workaholic, much like his father was when growing up when needing to save his eighty acre farm. He said that this was an inspiration for him to do well, “it’s all about products of your environment”, he said.  Into high school, Twomey was a basketball manager and ran track and field quoting times as “great experiences” and talked about how these times became a part of who he is; essential to any entrepreneur.

After running cross country and track at Western Illinois University, Twomey became a D-24 Bomber for the United States Army, while shorty after receiving his Master’s Degree from the University of Illinois. Twomey began his entrepreneurial journey by starting a farm, just like his father did. Twomey later came up with an idea to help store grain more efficiently for others to buy. And from one grain elevator that burnt down in 1956 Twomey created eight separate custom made grain elevators (240 ft. long and 600 ft. wide). It was like no one had ever seen before. And soon after John received visitors from Texas, Ohio, and Iowa that wanted to see how he did it. Because of this idea John Twomey became the most successful river elevator and grain loading entrepreneur in Warren County.

Human resource issues were also important to Mr. Twomey’s entrepreneurial success. When hiring new employees John didn’t always look at the tangible assets, he would always hire the employee on the person, not the task at hand. Explaining, “Until the right person came through the door, we wouldn’t hire anybody”. He told us about once even hiring a worker when no new employees were needed. Twomey simply thought the man was a good person and would be an excellent worker and wanted him to work for his company, so he hired him for no particular position.

John Twomey’s Midwestern roots, diligence, and ‘always moving forward’ attitude made great characteristics for a great man. He showed our class that anything is possible with an idea and the inspiration. Twomey had the stick-to-it-iveness to never stop chasing his dreams and knew that one day they would all come true. His business ethics are something that you don’t find commonly in the real world today. Mr. Twomey may be the most successful entrepreneur our class has seen. We all have something to learn from his success.

Tyler Bean

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Note from Prof. Gabel: Nicely said Tyler… I wish to add two points to your summary of Mr. Twomey’s presentation.

First, reiterating the theme of my blog entry for John’s visit to the Midwest Entrepreneurs class last year, the entrepreneurial story we were treated to last Thursday exemplifies entrepreneurism and business as it can and should be (but is far too often not). John Twomey did things the right way for 60 years. He continues to do things that way today in retirement; managing the foundation he created that donates money to local and regional schools, churches, and charities. He was and remains the epitome of a community-oriented business person; and a true role model for others.

Second, the central, driving role of innovation is highlighted in Twomey’s entrepreneurial story. Like all of our guest speakers to date this semester, Twomey’s business model was founded around customer service, customer satisfaction, and the resultant spread of positive word-of-mouth (WOM) communication. However, what propelled John’s business to heights not seen with other speakers was his creation of a completely new way to handle grain. He brought with him to the class the actual original drawing of this ground-breaking innovation. It allowed his company to handle 6-7 times as much grain as before and to hold it and keep it fresher longer. It is what propelled his family’s business to become one of the most successful grain storage and agricultural service firms not only in Western Illinois, but in the entire United States.

The culmination of this 60 year-long local entrepreneurial success story came in late 2011 when the business was sold to Consolidated Grain and Barge, Inc. for a large sum of money (although the family still runs a farming business, the CGB -Twomey Group, based in Smithshire, IL).

Wow… I am more impressed with John Twomey each time I am around him. He is without question the epitome of entrepreneurism and business as it can and should be!!!

Our entrepreneur guest speaker in class yesterday was 2004 Monmouth College graduate Joe Stefani. He was accompanied by 2010 MC graduate Josh Vanswol, a key employee of the company. Their young, growing company Scotty Gear is presently the largest producer of fraternity and sorority flags in the United States. Scotty Gear produces the flags through a contract manufacturer in China and then sells them—as a wholesaler—to retailers across the U.S. for final sale to consumers/users.

The following blog entry is written by Midwest Entrepreneurs student Evan Bean.

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Joe Stefani ’04 is the founder and president of Arlington Heights, Illinois based Scotty Gear.  What makes Joe’s business unique is that he started Scotty Gear with zero dollars and managed to attend school while doing so.  Joe was part of the fraternity Sig Ep, where he designed his first shirt (which sold for nearly fifty dollars on ebay).  At first, he thought of this as a way of having spending money during the week, but then it became much more than simply a means of having extra spending money.

While Joe was making roughly 100 dollars a week, he wanted to expand his sales.  He was tired of selling shirts and decided to start selling flags.  Scotty Gear has grown into a huge hit and now the flags account for 95 percent of its products and 99 percent of its sales ($1 million in 2013).  The company sells over 900 different styles of fraternity and sorority flags, and is one of the fastest growing fraternity and sorority products companies in the country. Joe would like to expand Scotty Gear into more than producing flags.  He recently began selling other products such as lanyards, cards, and stocking hats.  Scotty Gear is mainly a wholesale company where they sell to retailers countrywide; everything from small independent stores to campus bookstores of all sizes.

Sales by Scotty Gear sky rocketed last year by 2,000 percent and they hope to grow another 400 percent in 2014.  Joe works with a limited amount of employees, including 2010 Monmouth graduate Josh Vanswol.  With the rapid growth of the company, Joe and Josh hope to hire another employee very soon; they were in fact recruiting while here.  Joe is a big supporter of Greek life and would like to hire a qualified worker with similar interests who is hard working.

Joe is a great example of a college student who started a phenomenal business from what he enjoyed most from scratch with, as he put it, “nothing.” He described three things we should know when starting a business:

1.         It will not be easy,

2.         Everything may not be as it appears, and

3.         There is not always one right way to get to the end. 

As we learned from Joe Stefani, starting your own business will be difficult and its up to you how much effort your willing to give.  Joe was once ready to quit his business when he was selling shirts, but he stuck with his plan and is now one of the biggest fraternity and sorority products companies in the United States!

Evan Bean

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Note from Prof. Gabel:

In addition, we also learned from Joe Stefani ’04 and Josh Vanswol ’10 yesterday about the potential critical importance of the law—and getting good legal counsel—to the entrepreneur. Scotty Gear’s business model revolves keenly around licensing and protection of the designs it creates. Specifically, the company is a licensed vendor of products bearing the names and logos of fraternities and sororities. They then incorporate these names and logos into designs which they create (and place on flags and various other products). Just as important to the ongoing success and growth of the company is legal protection of the designs. Joe mentioned one case in which a major retail seller of their products co-opted one of Scotty Gear’s designs and sold it as their own. This was quickly discovered and arrangements for the retailer to cease and desist were worked out via Scotty Gear’s lawyer; with the retailer stopping the practice but remaining a valued customer. While Joe and Josh must be constantly vigilant of such infringement of their valuable designs, they cannot handle the legal matters alone. Securing the necessary licenses and then enforcing their legal rights on their designs are not simple matters to be handled by the legal novice. As a result, Scotty Gear continually retains the services of expert legal counsel via payment of a monthly fee; their lawyer also sits on their corporate board. When asked why he chooses to employ legal counsel on this ongoing basis—as opposed to paying by the hour on an as-needed basis—Joe simply stated that the need to protect their designs—and the business itself—is so constant and imperative that the monthly retainer is the best possible approach for Scotty Gear.

Thank you Joe and Josh for another great entrepreneurial story!!

See you all Thursday for a very different entrepreneurial story; one of a local man who recently sold off his business after a remarkable 60-year run of hard work, persistence, innovation, growth, and community involvement.