When Sam and Lori Flaherty decided to start a cabling-installation business, they pooled their talents and formed a thriving business in Pennsylvania. In March, they celebrated the company`s 10-year anniversary. This husband and wife team attributes its success to Sam`s years of experience in sales to the cabling industry and to Lori`s business savvy as a certified public accountant.
Sam began his career in 1979, working for Pioneer Standard, a billion-dollar electronics distributor. "I decided to leave Pioneer to be involved in an entrepreneurial company; I also wanted to get into an industry that had growth potential, so I chose cabling," says Sam, a registered communications distribution designer (rcdd) who, in 1986, went to work for a cable-assemblies manufacturer. Sam started a research and development division at the company, which installed cabling in buildings. When Sam discovered that the division was the only profitable section of the company, he decided to start up a company of his own.
Sam and Lori formed Teledata Systems Corp., in Souderton, PA, in 1988. As general manager, Sam maintains customer relations and works on customer designs; Lori handles all of the company`s finances. In 1992, Sam developed and patented a patch panel and wallplate product line that incorporates a tester and circuit identifier into the panel. This product served as the foundation for a second company that distributes cabling products.
During Teledata`s inaugural year, Sam worked out of the couple`s spare bedroom, and he and Lori financed the business using a credit card. He simply bought a cellular telephone and an answering machine--the only essentials for his start-up company. "During the first six months, I hit the pavement and made sales calls," Sam says. He approached computer companies that hired subcontractors and, in this way, found many jobs. After the company had been operating successfully for one year, the couple moved the business out of their house and opened an office. In fact, they have moved their office four times in the past 10 years to accommodate their growing business.
"Every year, our business has grown," says Sam, "because our company is committed to promoting the best quality services and work. As a result, repeat customers are the basis of our business." Half of their business is repeat customers, and Sam and Lori see this as one of the advantages of having a small company. "We have a lot of customer loyalty because there`s mutual respect. As a businessperson there is nothing better than that," says Lori. Sam agrees. "When we take an order, we put 100% into the job," he says. "We put our name on it, and we`re proud of it. A year later, it`s important to us that we have done our job well." While their company provides competitive prices for jobs, they do not try to come in as the lowest bidder on a project. "The lowest bidder inevitably cuts corners in customer service, quality, and attention to detail. Then their customers have no loyalty because the work is shoddy," Sam adds.
Starting their own business required a lot of hard work and sacrifice. "Sam came up with the idea, and I was very encouraging and very excited," recalls Lori. At the time, Lori had her own cpa firm with a good-sized practice. She supported them during the first six months when Sam was looking for contracting jobs. "The first six months were hectic because we couldn`t hire anyone to help Sam," she continues, "During my lunch hour, I would help by typing or making calls."
Sam had all the skills to run a successful cabling-installation business; he just needed the chance to use them, according to Lori. While Sam supplied the vision, Lori offered her practical and detail-oriented skills to the mix. "You have to have the right feel for the business, and you have to treat customers well," says Lori. "I liked the way he treated customers and built relationships. Building relationships is one of the most important and undervalued skills a businessperson can possess." As was to be expected, the couple were nervous about starting the business and about Sam`s resigning from his stable, full-time position, but they were optimistic, excited, and mentally prepared to take this challenge.
"During the first six months, we had to stay very positive because we had to build a business," Lori says. "It was difficult for me because I was torn between serving my clients in my cpa firm and [growing] our cabling-installer business. I decided that the best thing for me to do would be to reduce the number of my clients and move in one direction with Sam and work for Teledata full-time."
One of the first jobs that Teledata completed was for Deloitte & Touche. "There was very little competition for the first few jobs because the market for lan [local area network] cabling specialists was very small--we won nine out of every ten quotes," recalls Sam, adding jokingly, "I think I received orders because I could spell lan." There have been a lot of changes in the industry since then. For example, during that first job at Deloitte & Touche, there were eight users on a single coaxial-cable Ethernet network, but now there are about 1000 Category 5 connections on an equivalent cable.
"It is so interesting to look back and see how the industry has developed over the last 10 years," says Sam, who recalls installing ArcNet coaxial cable at one time. "During the last five years, Category 5 and fiber-optic cabling have taken over 95% of the market share and of our business as well," he says. Training has helped installers keep up, though. He notes that training sessions provided by organizations such as bicsi (Tampa, FL) are becoming valuable ways to educate installers. "bicsi, the Electronic Industries Alliance [Arlington,VA], and the Telecommunications Industry Association [Arlington, VA] are keeping installers informed about changes in technology and about standardization issues," says Sam. "And training makes the industry more competitive."
Sam advises installers to take training classes and to stay in tune with industry trends. For example, fiber optics is a growing percentage of the cabling business, especially with Category 6 and Category 7 coming to the forefront. "When I started in this business, a friend told me that I was making a mistake by going into cabling," Sam explains. "He really thought that everything would go wireless. I`m glad he was wrong. Wireless still lacks the security and reliability that cabling provides."
Sam believes it is much easier to work in the cabling industry today. "Five years ago," he says, "every cabling system was different. Now, it`s easier and cheaper to design a cabling system because cabling has become more of a commodity. Increased competition and availability have contributed to lower cost per cable." While he believes that it has become more difficult to start up a cabling business because the industry has matured, but that maturity also means there are more niches in the industry to fill.
Starting up any business is a challenge. "If you want to start a business," Lori recommends, "then do your homework and research the industry to see how viable your business idea will be. Don`t jump into it, but at the same time, don`t be afraid to invest your money if you`ve done your homework." She believes that too many hopeful entrepreneurs fail to address important business start-up issues, and that can cause a lot of problems down the road. In their business, Sam and Lori have followed this philosophy profitably. In the 10 years they have been operating, every year has been profitable and they have written off less than $500 in uncollected invoices. Lori also believes that competition within the industry has become much greater, so it`s important to stand out from the crowd.
Sam and Lori acknowledge that some of the greatest challenges they have encountered in their careers have been as small-business owners. In addition, the lan cabling industry has presented some industry-specific problems. "Because it is a young and growing industry, there are very few experienced installers," says Sam. "Employers hang on tightly to experienced installers because if these installers leave, then they will most likely have to hire untrained installers and train them. Training is expensive and time-consuming for a small business because it takes about two years before a new installer is truly competent. Treating your employees well is very important." Teledata Systems, now a $2 million company, currently employs 17 staff members.
While it has been challenging, starting their own business has also been the most rewarding event in their careers, say Sam and Lori. "The business becomes part of who you are as a person," says Lori, "and you take your values into the business." While the couple has worked extremely hard to make their company successful, they acknowledge the importance of their staff in their success. "Over the past year especially, there has been an emergence of positive people in the company, and as a result, the energy level of the company and the work that we do keep getting better," concludes Lori.