From distributor to installer

David Strickler started a successful telecommunications equipment distribution company on a shoestring budget. His experience as a salesperson in the cabling industry, coupled with his master`s degree in business administration from the University of New Hampshire, put him on the fast track, first for opening a distributorship, then later for starting a cabling-installer business.

Karen Graziano

David Strickler started a successful telecommunications equipment distribution company on a shoestring budget. His experience as a salesperson in the cabling industry, coupled with his master`s degree in business administration from the University of New Hampshire, put him on the fast track, first for opening a distributorship, then later for starting a cabling-installer business.

Strickler began his career in the cabling industry as a district manager for Panduit Corp. in the Columbus, OH, office, where he was promoted to national sales manager. When Paul Paris, a businessman from Rhode Island, approached Strickler about starting up a distribution company, Strickler accepted the opportunity to work on the project. During the following month he wrote a 100-page business plan for a telecommunications distribution company. The idea seemed financially sound to both Strickler and Paris, so they decided to pursue the opportunity.

Leaving corporate America behind, Strickler moved to East Greenwich, RI, back to his New England roots, to start the distribution company. He received $40,000 in seed money and invested $10,000 of his own money. The bank lent the partners an additional $50,000, so they financed the entire operation on $100,000, forming EM Network Products (Warwick, RI).

"When we first opened EM Network, the company and the office space were about the size of an ice cream stand--our office had only 2500 square feet," recalls Strickler, who assumed the role of president. The experience was nerve-racking for him. "I had no idea what to expect because I was inexperienced in starting up a business," he explains. "I just grabbed a phone, plugged it into the wall, and started making phone calls."

During EM Network Products`s first month of operation, Strickler found a creative way to advertise the company. He put together a postcard mailing by targeting every possible customer listed in the phone book. "I called every telephone and computer installer in the phone book and then sent them a letter," he recalls. "I was honest and straightforward. I introduced myself to prospective customers and told them about my business.

"It was difficult because I knew that we only had enough money for about four months," he continues. "It cost $10,000 a month just to survive. As time went by, I kept saying, `this boat is filling up and we`re going to sink,` but in April, month four, things turned around and the stars lined up: Our hard work paid off. Our first break was when Leviton franchised with us and then Hubbell stepped in. The company went from zero dollars and no customers to one million dollars the first year and two million the second year."

EM Network`s name spread throughout Rhode Island and into Massachusetts. "Word of mouth, postcards, and phone calls were our main forms of advertisement," says Strickler. During the company`s first year in business in 1996, 80% of EM Network customers were in Rhode Island and 20% in Massachusetts. During the company`s second year, the ratio was 60% Rhode Island and 40% Massachusetts. "I knew that a small company could be successful in a remote area," he adds.

Cabling is an attractive industry for small businesses, according to Strickler, adding, "If you establish good relationships, then your company can do well. It is important to be cognizant of the fact that it is a small industry."

Starting a cabling business, though, requires prospective entrepreneurs to be very knowledgeable about the business. "To be profitable, entrepreneurs need to talk to an expert in the cabling industry," says Strickler. "They need to look at the costs, analyze product lines, and figure out what the inventory should be. Competition among distributors is fierce because profit margins are low."

Getting investors involved requires a lot of work, too, but it is a necessary step for growing a successful business. "A start-up can`t be cash-thirsty. With a start-up company, cash flow is king. The company makes money, but it may not receive this money," says Strickler, who devised creative ways to save money. "We asked our suppliers to charge us after the twenty-fifth of the month so it wouldn`t appear on our charge for 65 days. It was a little thing that saved us money and kept our cash flow intact."

He advises small distributor companies to hire someone who knows the business to structure their operations. "It sounds like a cliché, but entrepreneurs need to know the cost of doing business and how to deal with vendors before jumping in," he says. Knowing how to manage employees is another issue. "A salesperson who can articulate the sales plan and sell your products is essential," he adds.

EM Network kept its business going in the beginning by maintaining low overhead and contracting out for employees. Strickler explains, "There is an enormous need for service of any kind with phones and software. The climate is excellent, and it seems to be getting even better for experienced installers."

Strickler wouldn`t trade his start-up business experience for corporate America. "As a small-business owner, you can create your own path and create a product or service that has value. It is a good time to take advantage of the business climate in this industry," he concludes.

Strickler grew his distributor business and then eventually sold it to Cablelan Express (Norfolk, VA) last March. But that hasn`t stopped him. He`s re-investing his money from the sale and starting up a cabling-installer business, Pinnacle Network Systems, in Rhode Island.

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