An industry trampled by the recession has a fresh entry. The firm hopes experience will equate to excellence.
Vince DiPalermo seriously wondered if his close friend and previous business partner, Eric Arfons, lost his mind late last year.
Arfons suggested the pair and their other old business partner, Jim Ramsey, launch a professional employer organization. The trio had built a successful PEO once before, with Bradenton-based Sunwest PEO of Florida.
Sunwest did so well, in fact, that in 2005 the partners sold it to Sarasota-based Progressive Employer Services, one of the largest PEOs in the region. At the time Sunwest had 73 internal employees who managed 6,700 workers representing more than $190 million in revenues.
Arfons wanted to recapture the magic. DiPalermo, a Brooklyn-born businessman with a blunt tell-it-like-it-is streak, didn't share his confidence. “I said, 'don't you read the newspapers?” recalls DiPalermo. “Don't you know what's going on?”
What was going on, of course, was the recession had decimated construction firms and small businesses, the type of clients that normally make up the core of a PEO's client list. The multibillion-dollar national PEO industry, which was essentially born in Bradenton in the mid-1980s, provides payroll, benefits guidance and human resource services for other companies.
DiPalermo, despite his reservations, took Arfons' bait. Along with Ramsey, the partners launched Remedy Employer Services March 1. The Palmetto-based firm signed up 15 clients in its first nine months, including a few local country clubs and restaurants. Its clients, all together, have 300 employees.
The growth so far has been molasses-slow compared to Sunwest, though DiPalermo predicts it won't be that way for long. For one, Remedy's target area for clients is large, stretching from Tampa to Fort Myers. Executives also haven't ruled out targeting Naples.
DiPalermo further projects Remedy will need to hire more internal employees, possibly 15 to 20, to manage the growth in 2011. “There's no better time to do this,” says DiPalermo. “People are looking for an alternative.”
Remedy's business model, moreover, is decidedly retro. It's modeled after Staff Leasing, a firm founded by a few Bradenton entrepreneurs in 1984 that's credited with being the first PEO in the country. Staff Leasing, which eventually became Gevity, and more recently was bought by California-based TriNet, did more than launch the industry. It also hired three ambitious executives in the early 1990s: DiPalermo, Arfons and Ramsey.
Those then junior executives helped lead Staff Leasing through its 1990s growth spurt, which included an appearance on Inc. magazine's nationwide list of the 500 fastest-growing companies. DiPalermo left the firm in 2001 to join Arfons at Sunwest. Ramsey came soon after.
Now Remedy, like Staff Leasing and Sunwest before it, will follow a fee-for-service model instead of an a la carte model many current PEOs utilize. “We are trying to stay true to the old Staff Leasing model,” says DiPalermo.
And that also means DiPalermo isn't afraid to turn down a potential client when he thinks the firm isn't a right fit — a move he says goes a long way toward building trust. “I've gotten more business from saying 'no, I can't help you,'” says DiPalermo, “than I have from jamming a one-size fits all solution down a client's throat.”