What Lies Beneath

What lies beneath the surface of a successful African American firm? Hard work? Definitely. Perseverance? Of course. But for this year’s Freshman Class, the new entrants to the BE 100S INDUSTRIAL/SERVICE list, what also lies beneath their success is vision, planning, and calculated strategies meant to grow their businesses well beyond a one-man shop.

Entrepreneurs such as Benjamin B. Hankins Jr., president and CEO of Axiom Resource Management Inc.; Sid E. Taylor, chairman and CEO of SET Enterprises; and Joseph E. Fergus, president and CEO of COMTek are making smart, strategic moves to grow their businesses and, well, make money.

GROWTH BY ACQUISITION
Want the world to beat a path to your door? Don’t build a mousetrap, just stick to your knitting. This strategy has helped Axiom Resource Management (No. 76 on the BE 100S INDUSTRIAL/SERVICE LISt with $42 million in revenues) grow from a one-man operation to a multimillion dollar firm with more than 500 employees nationwide. Based in Falls Church, Virginia, the company provides consulting services, primarily to the federal government, in a variety of areas, including program management, IT solutions, and operational support. Axiom also provides Web marketing and distance-learning services to government agencies.

“One of the things I’ve always focused on is sticking to our core work,” says Hankins, Axiom’s CEO. Hankins, 38, who began the firm in 1996 with what he calls “youthful naiveté” says, “People have come in and said, ‘Let’s build a software package and sell it to the world.’ But we don’t do that; that’s not our area of expertise.” Axiom has instead focused on strategies designed to strengthen its business relationships and reinforce its position in the marketplace. Hankins uses two basic approaches to his business: a “client-first” philosophy and the acquisition of key companies within Axiom’s line of business.

In the last four years, Hankins has brought several companies into the fold as divisions within the firm. In 2000, the company acquired Conwal, a professional consulting firm that had a strong relationship with the Department of Health and Human Services and the Department of Veterans Affairs. In 2001, Axiom acquired Didactics, a performance technology company that offers distance learning as one of its key services; and Keymind, a large IT firm that provides database management and Internet development services. In 2002, Hankins brought professional consulting company Gober Keener Associates on board, along with the formidable talents of Hershel Gober and Mary Lou Keener. Gober is a former acting secretary and a former deputy secretary for the Department of Veterans Affairs, and Keener is a former general counsel of the Department of Veterans Affairs and former assistant secretary of the Air Force. In 2004, Axiom purchased CESSI, a company that provides accessibility services to federal and state government and the private sector. Axiom and CESSI had begun a business relationship some three years prior.

Axiom now has teams in eight states, including Alaska, Georgia, and New York. It also has a team in the District of Columbia. Its acquisitions helped it win valuable government work in 2003, including a $7 million contract from the Department of Health and Human Services for program management support, as well as a $3.3 million contract to support its TRICARE online portal. Ninety-seven percent of Axiom’s clients opt to renew their contracts with the company.

But while acquisitions are key to helping the firm stay profitable, Hankins attributes his company’s success to two other factors: his business partners and his employees. “Picking your business partners is almost as important as picking your spouse,” he says. “They’ve been relationships I treasure. We do good work together.”

In order to continue that success, Hankins says it’s important to invest in his employees. The company recently created the Axiom M.B.A. “One of the things that we recognize, as we continue to grow, is that we have to have succession planning; we have to build the next generation of leadership,” he says. Hankins, along with his Executive Vice President and CFO Kevin Riley and his Executive Vice President and COO A. Douglas Peardon, created the company’s intensive, year-long M.B.A. program, tailoring it to the firm and the services it provides. They select the literature and teach the program’s courses in accounting, finance, and ethics, among other topics. Axiom provides all of the books and materials for the program, but “from my perspective, it’s a fairly negligible cost when you consider what we’re trying to do,” says Hankins.

Axiom actively supports charities such as Christmas in April and other altruistic organizations. Says Hankins, “[We try] to balance the realities of business with the needs of our larger community. On one hand, we make a fair profit by providing great support for our clients. On the other hand, we’re very proud of our corporate citizenship, helping neighbors in need. It’s a balancing act, but I think we’ve got it about right.”

ON A SLOW ROLL
When you look at your car, what do you see? No doubt you see polished chrome and gleaming glass — the exposed metal. But look underneath at the unexposed metal. At the chassis, brake work, and component parts. Not quite as pretty is it? Maybe not, but all of that metal, the exposed and the unexposed, is the essence of Taylor’s Warren, Michigan-based SET Enterprises, a metal processing and assembly company (No. 24 on the BE 100S INDUSTRIAL/SERVICE list with $161 million in revenues).

After 22 years at General Motors, Taylor, 55, launched SET in 1989. (Back then it was called SET Steel Inc.) “The entrepreneurial bug really bit me after I had been at GM about 15 years,” says the company chairman and CEO. “But it took me time to really get a grip on which direction I wanted to go.” After doing his research and “dialoguing with folks on the outside” to see where the opportunities were, Taylor headed out. He cashed in his GM stock, which was worth about $250,000, and started SET. “I had a good business plan and I had the financing,” he says. Plus, when he was at GM, he had the opportunity to learn different aspects of the automobile manufacturing business and develop key contacts.

Still, the first year was a struggle. “[Every startup company needs] a champion, someone who will stick their neck out for you and make a make-it-happen decision,” says Taylor. His champion was Ford Motor Co.; it gave SET its first contract. At the end of 1989, SET had earned roughly $90,000 in revenues. “This year, we’ll end up north of $200 million,” he says, adding that slow, steady growth has been his strategy. “I watched what some suppliers had done — they grew too fast and, in some cases, grew themselves out of business. I wanted to make sure I had healthy growth.”

Taylor’s healthy growth strategy includes key mergers and acquisitions as well as moving the company when necessary. In 1998, SET purchased a company in Detroit’s empowerment zone. “I moved from the suburbs … to bring jobs to the city of Detroit. This was my first big move,” Taylor explains. In 2000, the company purchased six plants from Michigan-based Noble Metal Processing. It was after this purchase that the company changed its name from SET Steel Inc. to SET Enterprises and moved its headquarters to the city of Warren.

In August 2003, Taylor made another key move: SET acquired a facility owned by the Sumitomo Corp. of America, one of Japan’s largest integrated trading and investment business enterprises. What did that mean for SET? Well, for one thing, it provided the company with a larger facility and better equipment. Something else it did was increase the company’s visibility and give it a certain amount of business cachet. The move also put SET in the expose
d steel business, making it the only minority supplier to work with both kinds of metal. Exposed steel, or exposed blanking — the metal on a car’s surface — is a higher quality, more sensitive, and more challenging metal to work with. It’s also more expensive to produce. “The Sumitomo deal put me in a niche category,” Taylor says. “I am no longer doing just unexposed, which is easier to do.” About the significance of acquiring the facility owned by Sumitomo, Taylor says, “It’s important for customers to see you as having growth potential; it’s crucial. It shows [them that you] have the wherewithal to grow.”

KING OF THE TECH WORLD?
His telecommunications firm might not yet run the world, but Fergus has plans to change that. “We’re not in business to be a follower,” says the president and CEO of Communication Technologies Inc. (No. 54 on the BE 100S INDUSTRIAL/SERVICE list with $70 million in revenues). The Chantilly, Virginia-based firm provides telecommunications broadband, network operations and maintenance, systems integration, information security services, and training and development to the public and private sectors. Communication Technologies, or COMTek, is also one of only a handful of firms capable of providing facility-based broadband services worldwide. “We own our own switching systems and fiber, and we team with companies around the world to provide end-to-end solutions for our customers,” he says.

With more than 900 employees, Fergus, 48, is far removed from the days he first launched COMTek in 1990. “It started with one person, myself, over the kitchen table,” he recalls. “Now we have a lot to be thankful for.” Like Hankins, Fergus admits that his first year business strategy could have been described as “ignorance is bliss”; he didn’t fully realize how daunting running his own company could be. “Not being mindful of certain things wound up being positive for us,” he says.

Fergus laughs as he remembers one bold move he made to secure a certain

piece of business, one of his first major contracts. The former Navy communications specialist had run into an Army general at a conference. The two talked and Fergus was able to convince the general to meet with him to discuss business at another time: “Three weeks later I called his office, his secretary put me on his calendar, and we met. Before [the meeting was over,] he said, ‘This is a company I want on my team.'”

This, Fergus says, was the start of his early success. “In the early years, we were struggling to establish the company as a player, to be recognized by larger firms and customers … and you have to be persistent and tenacious in your efforts,” he says. That tenacity has paid off. COMTek has operations in all 50 states, plus the U.S. Virgin Islands and Guam. And Fergus, who spent nine years at Bell Labs spearheading research in areas such as Signaling System No. 7, ISDN, and Intelligent Networks, is an internationally respected telecommunications expert. Fergus says that when it comes to business, despite vision and planning, “there is no script to follow. You have to develop a keen sense of what is right for you and the company, and use your gut instinct to make the best decision.”

This combination of head and heart (or gut, as the case may be) has served him well. COMTek tripled its revenues in 2003 and Fergus plans to bring on another 300 employees this year. He’s also focusing on implementing two strategies: providing added value to COMTek’s customers and combining acquisition with organic growth. “Managing growth is always a work in progress,” he explains. “But growth will always be based on what we understand to be our core strengths.” COMTek has had to broaden the definition of what its core business is. “We’ve had to be flexible in terms of what we consider our niche without stepping out of the bounds of telecom,” says Fergus. “Understanding your skill set and making sure you offer value to your customers are very key to success.”

B.E. 100S FRESHMAN CLASS

B.E. 100S INDUSTRIAL/SERVICE COMPANIES

Company	Type of Business	Location	Ranking	Revenues*
Converge	Tech manufacturing	Peabody, MA	10	317.0
SET Enterprises	Metal processing	Warren, MI	24	161.0
The Romar Group	Apparel design	Los Angeles, CA	38	90.0
Communication Technologies Inc.	Telecommunications services	Chantilly, VA	54	70.0
LESCO	Government contractor	Huntsville, AL	66	52.0
Raven Transport Co. Inc.	Truck load transport	Jacksonville, FL	70	50.0
Management & Engineering Technologies Int’l	Engineering & IT services	El Paso, TX	72	43.5
Axiom Resource Management Inc.	Management Consulting & IT support	Falls Church, VA	76	42.0
OEM/Erie Inc.	Automotive assembly	Erie, PA	80	38.0
MTS Technologies Inc.	Management consulting, IT & systems analysis	Arlington, VA	90	33.0
ChaseCom L.P.	Customer contact services provider	Houston, TX	97	31.1
Sanderson Industries Inc.	Metal stampings & welding	Atlanta, GA	100	30.0

B.E. 100S AUTO DEALERSHIPS

Company	Type of Business	Location	Ranking	Revenues*
Wade Ford Inc.	Ford dealer	Smyrna, GA	16	113.0
Jaguar of Novi	Jaguar, Ford dealer	Novi, MI	45	66.0
Southwest Pontiac-GMC-Southwest Hummer	Pontiac, GMC, Hummer dealer	Houston, TX	52	IGN=”MIDDLE”>58.8
Smokey Point Buick-Pontiac-GMC Inc.	Buick, Pontiac, GMC dealer	Arlington, WA	70	43.0
Chandler Lee Buick-Pontiac-GMC Inc.	Buick, Pontiac, GMC dealer	Ellicott City, MD	73	41.8
Elk Grove Pontiac-Buick-GMC Inc.	Buick, Pontiac, GMC dealer	Elk Grove, CA	75	40.5
McKinney Dodge Inc.	Dodge dealer	McKinney, TX	79	37.1
Nissan-Mitsubishi-Kia of Lake Charles	Nissan, Mitsubishi, Kia dealer	Lake Charles, LA	86	34.0
Cox Nissan Inc.	Nissan dealer	Bronx, NY	88	32.5
Ultimate Pontiac-Buick-GMC-Isuzu	Pontiac, Buick, GMC, Isuzu dealer	Fredericksburg, VA	91	30.2
Lexus of Mishawaka	Toyota, Lexus dealer	Mishawaka, IN	92	30.1
Cross Creek Lincoln-Mercury Inc.	Lincoln-Mercury, Subaru dealer	Fayetteville, NC	100	25.5

B.E. BANKS

Company	LOCATION	RANKING	ASSETS*
Citizens Savings Bank & Trust Co.	Nashville, TN	24	54.8
Commonwealth National Bank	Mobile, AL	25	46.6

B.E. PRIVATE EQUITY FIRMS

Company	LOCATION	RANKING	CAPITAL UNDER MANAGEMENT*
Pharos Capital	Dallas, TX	4	205

B.E. ADVERTISING AGENCIES

Company	LOCATION	RANKING	BILLINGS*
Compas Inc.	Cherry Hill, NJ	4	140

*In millions of dollars