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Michael A. Johnson’s eight employees keep his company running like a well-oiled machine, but it wasn’t always so finely tuned. In 2001, his decision to quickly hire staff so that he could get his company started proved costly. “One employee threw a party in my office while I was on vacation. She was also running a portion of her outside business through my company. She was using my UPS service and my [money],” says Johnson, president and CEO of Chicago-based Johnson Financial Group (JFG), an independent mortgage broker that specializes in securing jumbo and commercial loans.
Johnson severed ties with the entire staff and started fresh, hiring a team of temporary workers to keep the business afloat. However, the smaller staff yielded lower productivity, causing sales to dip about 20% for the month following the firings.
The CEO says he learned an important lesson from those events: “I was so busy at the beginning of my business–I just needed bodies. Well, some of those bodies turned out to be very painful mistakes. You have to know who you can trust. You have to know who you can leave your business to when you’re away.” Johnson has vowed not to repeat this misstep and now checks referrals and conducts competency exams as well as thorough background checks on prospective employees. Eventually, Johnson was able to rebuild a full-time staff through referrals provided by former colleagues and his business network.
Running a business is no cakewalk. Some newbies quickly throw in the towel, but Johnson stuck with his decision to become an entrepreneur after graduating from Northwestern’s Kellogg Graduate School of Business. He saved the bonuses and portions of his income from his job at an investment banking firm during the two years following graduation. His financial discipline allowed him to shell out $20,000 for startup costs, which covered expenses for licenses, space, furniture, technical equipment, and staff. Revenues in the first full calendar year were about $205,000.
Johnson is unique because of the fact that he has experience on both sides of the mortgage transaction. He began his career as a mortgage banker and loan officer. Then, he went in a completely different direction and assumed the role of loan underwriter for Chase Manhattan Corporation.
JFG remains competitive by carefully attending to the needs of its clients. And with more than 15 years in the mortgage industry, Johnson knows exactly how to do that. Consultants attend every closing. In addition, JFG guarantees a 24-hour response to all inquiries. “We follow up with our customers and consider them lifelong partners versus transactional deals. We stay in touch through a monthly newsletter to make sure, one, they remember us, and two, that we’re adding more value; so they feel like they’re a customer more than just for that one deal.”
Despite an early setback, JFG managed to recover. Almost six years later, the company is at the top of its game. Revenues last year were $600,000 and Johnson projects more than $1.2 million for 2007. The entrepreneur has
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