No time for the recovery room
Economic reality at breakfast, fine wine at lunch.
Before participants of this year’s Top Company trip to Napa Valley wined and dined at area vineyards, they talked about the economy at an early morning breakfast meeting.
A forecast presented by Bill Greiner, president of UMB’s Scout Investment Advisors, was followed by a roundtable discussion in which executives from participating companies discussed the outlook for their businesses.
This year’s class included a craft brewer, a law firm, a Web-conferencing company, two construction contractors, a travel agency, a funeral service company and a nonprofit that helps at-risk students.
These highlights from the conversation, edited for clarity and space, offer a glimpse of companies that are finding innovative ways to succeed, outpacing an economy that has yet to pick up much speed.
Wynne and Doug Odell, Odell Brewing Co.
Odell Brewing Co. won the Top Company award in the consumer category this year and also earned a No. 1. spot in the Colorado Sustainable Design Awards for the expansion of its Fort Collins brewery plant and headquarters.
Odell has benefited from loyal craft beer consumers, those who favor local brands.
Beer drinkers “are not buying the standard premium Budweiser anymore,” said Wynne Odell, the company’s CEO. “They’re buying whatever is Bud’s cheapest 36-can product or they’re moving up to the above-super premium better beer category. It works beautifully for our industry.”
Odell is even finding success with a wine-sized premium bottle of specialty beer for $25.
“Twenty-five dollars is a bottle of wine to a lot of folks,” she said. “Purchasing something that feels extra special to you as opposed to a $4.99 six-pack seems to be resonating with our customers.”
Odell’s Woodcut brand contains 10 percent to 12 percent alcohol, takes longer to produce and contains more ingredients than its flagship varieties. And barrel aging makes it more expensive to produce, founder Doug Odell said.
“Even with the added costs of producing these beers I think our customers still see value in the bottle,” he said. “One of the trends helping craft brewers get there is people wanting to know where their consumable products are coming from.”
Peggy Richter, Kutak Rock
Attorney Peggy Richter, whose focus at Kutak Rock includes real estate, finance, corporate and natural resource issues, compares current economic conditions to the ’80s, when opportunities emerged.
“We see increased activity in corporate acquisitions. M&A work is starting to pick up again,” said Richter, whose firm won top honors this year in the legal category. “The real estate side has plateaued, but we’re seeing other opportunities with government grant programs and transit-oriented development plans.”
Kutak Rock’s health-care and nonprofit practices also have grown, she said.
Don Owens, Mass Service & Supply
Mass Service & Supply has long had a niche with federal contracts, so it has a big head start on companies trying to make inroads into that market. The Pueblo-based business, winner in the real estate/construction category, specializes in construction services and project management.
Senior Project Manager Don Owens said the government’s injection of stimulus money into the economy has not had a lasting impact over the past 18 months.
“We have been awarded projects, and we have (hired) people, but when that job is done, that job for the individual is also done,” Owens said. “There’s money flowing into the economy through the government, but it’s not really contributing to lowering the unemployment rate.”
An influx of large companies entering the competition for federal contracts has led to some abuses, he said.
“There are a lot of very large companies that are coming in and teaming up with these small companies, and they’re really taking advantage of them,” Owens said. “And I don’t see the government really doing anything to enforce their own standards.”
Maureen Barker, UMB
Maureen Barker, president of UMB Asset Management, says clients remain cautious. The private banking group, now about 4 years old, has seen business build over the past year, she said.
“The momentum really started to build at the end of 2009 and 2010,” Barker said. “We have found that people are willing to talk, that perhaps the paralysis is over, and they want to take a more prudent approach to what they’ve been doing.”
Sandy Rothe, Deloitte
Sandy Rothe, managing partner at Deloitte in Denver, said the accounting and consulting firm has enjoyed growth over the past year, though uncertainty continues to be an issue for many clients.
“Our business generally reflects the economy because of the diversification, and we serve all size clients. It varies by industry,” he said. “Some sectors aren’t doing as well; other sectors are doing very well. Federal practice, for instance – fortunately or unfortunately – is booming.”
Deloitte, a long-time Top Company sponsor, is making major investments in information technology to improve its performance with clients.
“Companies are really trying to get lean right now, trying to increase their productivity,” Rothe said. “They still seem to be a little slow as far as wanting to pull the trigger and make big acquisitions or big expansions into new markets. But they’re clearly ready and have been getting ready for a couple of years. So there are some very positive signs in the process.”
John Horan, Horan & McConaty
“Contrary to what many people think, death is not optional – though the baby boomers have been described as the first death-free generation in the history of humankind,” says John Horan, CEO of Horan & McConaty, a funeral services provider.
With people living longer, many baby boomers might reach their 50s before they’ve faced the death of a parent, spouse or sibling, he says.
“It’s the first time in the history of humankind that that has become commonplace,” said Horan, whose company was a Top Company winner in the services category. “A challenge for us is increasingly dealing with this generation of baby boomers that have no experience with death.”
The company’s volume has remained steady over the past couple of years, but average expenditures by customers have remained flat, Horan said. He’s also seeing an increasing number of customers who rely on assistance from the state to pay for funeral costs.
“The person who died may have been receiving Medicaid,” he said. “There are just no funds to pay for anything. On the other side of that equation, state funding for indigent services has gone down and has not risen since the early 1990s.”
As the boomer population ages, projections call for an increase in death rates in 2012 and beyond, Horan said. Boomers also are changing expectations since they’re eschewing solemn services.
“It’s becoming more celebration-oriented, less focused on the deceased,” he said.
Daniel Cunningham, ReadyTalk
Web- and audio-conferencing firm ReadyTalk has found success in strong and poor economies, Chief Technical Officer Daniel Cunningham says.
“When companies have larger budgets to spend on technology, we’re a line item on that sheet,” he said. “When the economy goes down, like we’ve seen the last few years, our business actually grows at a faster rate.”
Denver-based ReadyTalk, a Top Company winner in the telecom category, has recorded 50 percent growth year over year since 2003 or 2004, Cunningham said.
“I think the software industry as a whole has been pretty impervious to a lot of the downturn in the economy,” he said.
That means hiring continues to be a challenge: “Software developers seem to be a scarce resource in the Colorado area.”
Jeanette Blanco-Wellers, JBlanco Enterprises
Hiring is also one of the greatest challenges for Jeanette Blanco-Wellers, founder and CEO of JBlanco Enterprises, a roofing company based in Sheridan.
“We don’t have a lot of trained employees so we tend to be pretty short on staff,” said Blanco-Wellers, whose company specializes in federal contracts.
“We’ve been pretty lucky. We had the best year last year, and we’re already on the books to have as much as we’re going to do this year for next year,” she said. “What we have done is create really good relationships with our customers.”
JBlanco – ranked the second-fastest growing minority-owned company this year by ColoradoBiz based on its 2009 revenues – has embraced sustainable practices, including the use of photovoltaic solar panels on rooftops. “As things change, we change, too,” she says.
Jon Robinson, UMB of Colorado
UMB has prospered during the economic downturn, earning raves for the strength of its balance sheet from such noteworthy publications as Smart Money and American Banker.
“We’re 97 years old, so the company has lived through the Great Depression; we’ve lived through this recession,” says Jon Robinson, CEO of UMB of Colorado. “The bank has grown through each of the economic downturns throughout our history.”
Real estate makes up about 35 percent of UMB’s loan portfolio, compared to the industry standard of about 70 percent, Robinson said. The bank has ample money to loan, but its larger borrowers have spent the last 2½ years paying down their debt, he said. Thus, UMB’s deposits have grown about 70 percent.
“It’s like a big stack of gold that is just piling up,” said Robinson, whose company is the primary sponsor for the Top Company trip.
Among Robinson’s biggest concerns is the pending federal financial reform.
“The majority of that legislation is still up in the air,” he said. “There is going to be a consumer affairs regulatory body that is being created, and a lot of the financial reform is going to come out of that regulatory body. We don’t know exactly what that’s going to look like.”
What seems to be clear is the federal government’s desire to reduce the number of banks nationwide, he said.
“When I started in the business we had 16,000 or 17,000 banks. Today we have less than 8,000. Where the government wants this to be is a handful of very large banks in the U.S. And the reason for that is they feel like they can regulate it – they can control a handful of banks versus the 8,000 banks. That’s where the industry is headed. We do not think it’s healthy.”
John Husband, Holland & Hart
Law firms have not been immune to the economic downturn, with spending down and clients demanding more value for their money, says John Husband, chairman of Holland & Hart, a Top Company awards sponsor.
“These have been very challenging times. There’s no question about that, but they’ve also been times of great opportunity,” Husband said.
While revenues have been down at most law firms nationwide, Holland & Hart has recorded growth, rising from No. 20 to No. 13 in the ColoradoBiz Top 250 Private Companies list.
“Almost every law firm in the country cut attorneys; they cut staff. They curtailed summer clerk programs and new attorney programs,” Husband said. “We honored our commitments, and I think it paid off because our people are rededicated. They understand that the partners are committed to the employees in the organization.”
The largest Denver-based law firm, Holland & Hart was recently named the sixth best law firm in the nation, according to the total number of metro area “first-tier” rankings in the first U.S. News – Best Lawyers “Best Law Firms” guide.
“If you have quality and can provide value, you’re going to do very well in this market,” Husband said.
Robert Polk, CEO, Polk Majestic Travel
Two-time Top Company winner Polk Majestic Travel has prospered through the rocky economy and changes in the travel industry in large part by helping companies manage their travel costs. The company added 30 new corporate clients this year, and now works with more than 500, CEO Robert Polk says.
“Companies that have allowed their employees to use the Internet (to book travel) are coming to us and saying, ‘Please help us manage this. We are sick and tired of surprises. We don’t know what is being spent. We don’t know how it’s being spent. Help us manage the expenditure of travel and entertainment,'” Polk said. “We can build in systems to make sure the money is being spent the way the companies want it spent.”
Polk remembers when there were 35,000 travel agencies nationwide; now there are fewer than 10,000. While Polk expects that number to continue to shrink, his company has been able to grow this year and in September had a net gain in employees for the first time in three years when it hired additional travel agents.
“We are a large regional agency, and we think the largest in the state,” Polk said. “We think opportunities for us are great going forward.”
Mike Painter, Colorado Uplift
For nonprofits a tough economy means ensuring your supporters know their contributions are being put to good use.
That’s not a tough sell for Colorado Uplift, a 28-year-old organization that helps at-risk children in 20 Denver schools achieve success.
Colorado Uplift begins helping students as early as the fourth grade, teaming them with mentors who serve as role models and surrogate family members. About 90 percent of children who participate in the program for three years or more graduate from high school, compared with the 52 percent rate for Denver Public Schools, said Mike Painter, president and CEO.
“For many kids in the inner city, what they really lack is that one long-term adult caring relationship in their life that is going to help them through the difficult challenges that they are facing,” Painter said.
The program helps about 3,600 students a year at a cost of about $1,200 each. Painter considers that a modest investment, considering that it costs $72,000 a year to incarcerate a youthful offender in Colorado.
“Kids in our nation who do not graduate from high school are more likely to depend upon public assistance and welfare,” he said. “They’re more than likely going to have chronic health issues of some kind, and more than likely they’re going to have entanglement with the law at some point in their life.”
Thanks to a large donation from a Denver foundation, Colorado Uplift was able to hire two staff members this year.
“We have lots of kids to help,” Painter said. “Even though sometimes it’s difficult, our mission is such that we have to find our way around the obstacles.”