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Business Observer Thursday, May 14, 2009 13 years ago

Entrepreneurs to watch: Supply Survival

Alex Miller has discovered a recession-survival ticket for her medical distribution company: It's a combination of savvy financial moves, employee morale boosters and a stuffed animal named Henry.
by: Mark Gordon Managing Editor

Alex Miller has discovered a recession-survival ticket for her medical distribution company: It's a combination of savvy financial moves, employee morale boosters and a stuffed animal named Henry.

Alex Miller and the medical supply company she runs should have this survival thing down cold by now.

Long before the recession, Miller and the company, Sarasota-based Mercedes Medical, nearly collapsed. The root of the problems was an executive management change made by Noelle Haft, company founder and Miller's mother.

In 2003, Haft stripped Miller, then the company's operations chief, of most of her authority. Haft brought in an outsider chief executive with a buttoned-down corporate approach — an attitude that clashed like polka dots on stripes at Mercedes, a folksy, happy-go-lucky company that sends its customers fresh-baked cookies and offers its employees free back massages.

The approach also crushed Mercedes' financials: In less than a year, the two-time Inc. 500 company for fast growth saw its net income drop to $500,000 in the red. It hovered near bankruptcy, too, when its bank ceased credit extensions.

Miller, however, emerged from the internal company power struggle as a savior. She came back to the business within a year and is now its chief executive and minority owner.

Now, of course, the survival game is one of beating the economic downturn. And Miller is proving to be deft at this battle as well. The company's percentage revenue growth slowed to single digits last year, when it hit just over $20 million, but its gross margins are up 5%, to almost 40%. “I think that is as good as it gets these days,” Miller says. A

The company is also projecting more growth in the next 18 months, aiming for $25 million in annual revenues by 2010.

One key to the financial survival comes in the company's system of hedging against the U.S. dollar, as almost half of its products are imported. Says Miller: “It has been a real important strategy for us.”

For example, the company recently bought a block of Euros to buy shipments in Germany and Holland, a move that saved the company more than $1 million.

Miller, 35, is also leading a Mercedes Medical expansion. She plans to hire six sales reps this year, bringing the total to 21. And the company is currently in the build-out phase of adding 2,300 square feet to its 22,000-square-foot facility near the Sarasota-Bradenton International Airport.

The company, at its core, sells hundreds of medical supply products, from surgical scissors to test tubes. To reach customers in such a diverse selling base, the company has created a database of 400,000 doctors, medical agencies and laboratory testing facilities that can be narrowed down to individual sales targets.

“We have focused on a pinpoint niche,” says Miller. “We take it to an extreme, which no one else in this industry really does.”

But Miller also says she has long recognized that in such a saturated field, where competitors include billon-dollar players such as McKesson Corp., the company really needs to be selling service.

Hence, there is Henry Histo-potamus. Henry is a stuffed animal that is the focus of Mercedes' marketing campaign for selling its histology products, which are used in analyzing cells and tissues of plants and animals. The company has created a separate Web site for Henry, where customers can order products and follow the furry creature's life on a blog.

Miller says having fun like that is key in creating sales growth and long-lasting customer relationships, as it helps make the company memorable.

And the fun doesn't end with customers. Miller, who brings her dogs to work, says she puts a premium on employee morale, offering the massages and the occasional company-wide cruise. The company also runs a token-system of employee giveaways, where good work is rewarded with chips that can be turned in for free days off, gift cards and other perks.

Miller also takes the have-fun but stay-busy approach to her life outside of Mercedes. In addition to her role at the company, Miller just recently completed a grueling weekend MBA program at Johns Hopkins University. She has also considered entering the world of politics by running for a seat in the Florida House of Representatives.

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