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Entrepreneur Runner-Up: Jim Abrams
Founder and CEO of VenVest Inc.
For all the teenage-level customer service, greasy food and watery soda, fast-food chains like McDonald's are doing a lot right. Jim Abrams says the idea of consistency is a business rule strongly missing from the home service industries, so the longtime executive created Sarasota-based VenVest Inc.
VenVest, Abrams first new company after a short retirement, is based around three contractor home services: heating, ventilation and air conditioning, plumbing and electrical. It's an ambitious venture: create a workable business of multi-pronged services with the ultimate goal of owning a large group of similarly branded home service companies. While it's a far cry from Ray Kroc's chain, VenVest has made great strides.
In the past two years, the company has gone from eight support employees to 40. VenVest has experienced healthy revenue growth from about $7.4 million in 2000 to nearly $41 million last year. Although acquisitions figure highly in the company's business plan, most growth through 2004 came from same-store revenue increases. Between 2000 and 2004, Airtime 500 grew from $2.8 million to about $6 million; BuyMax went from $947,000 to about $10 million; and Plumbers Success International increased from $3.6 million to $5.1 million. The two subcompanies, founded in 2001, Benjamin Franklin Plumbing and New Millennium Academy (an technician/management training subcompany), grew by $1.6 million and $443,000, respectively, in three years.
New company acquisitions now amount to about $7.7 million of VenVest's 2004 revenue. Since March of 2004, the company has acquired five businesses, including Quality's One Hour in Las Vegas, Winter Haven One Hour, Denico's One Hour in Melbourne, Ballard's One Hour in Palm Springs and Riverside, Calif., and Continental's One Hour in Beverly Hills, Calif.
The company's internal revenue grew about 13% for company-managed properties in the first year of ownership, Abrams says. He attributes most of that to consolidation of services and personnel.
"A lot of this comes from the combination of resources ... really basic integration," Abrams says. "We are projecting average internal growth of about 6% going forward."
Later this year, VenVest's acquisition plans will ramp up another notch through a major infusion of capital from an initial public offering. The company has already entered its unofficial quiet period, according to company officials, but has yet to file its first SEC public document.
At the same time, VenVest has added a new chief financial officer, Ron Newman, promoted former CFO A.J. Long to chief operating officer and hired former Service Master attorney Robert Beckmann as general counsel. All are familiar with the accounting rules stemming from the Sarbanes-Oxley Act of 2002.
"There haven't been any glitches so far," Abrams says. "The biggest difference is that the new public market rule changes have made things more arduous."
In October last year, 16 of VenVest's plumbing and HVAC clients merged to form Clockwork. VenVest will manage the businesses, which collectively generate about $43 million annually, and acquire them by year's end.
Abrams expects to acquire businesses with about $140 million in revenue this year. That's up from his previous projection of $80 million.
The acquisitions are being accomplished through a contract for cash or stock, most of which will follow the IPO.
The VenVest company name is being changed to Clockwork Home Services Inc. Abrams says that name more accurately reflects the focus of the company and franchise models, which usually involve some time elements.
The company operates four main client services business models. VenVest operates a consulting/management training business known as AirTime500 (HVAC), Plumbers' Success International and Electricians' Success International. For a weekly fee, those companies provide software, business plans, payroll tools, marketing and training for management and technicians. The newest consulting company in the company's stable, Electricians' Success International, has grown to about 200 client/businesses that generate about $400 million in annual revenue.
VenVest is also an Internet retailer that sells materials and equipment to all three-contractor groups through its BuyMax subcompany. The catch: business must become associated with Abrams' company through either consulting or franchising to utilize VenVest's buying power and negotiated prices.
Third, the company operates two franchises: One Hour Air Conditioning & Heating and Benjamin Franklin Plumbing. As with most franchises, this model includes collective marketing and many of the services offered in the consulting company.
Abrams, who found early success operating a quick growing Michigan-based Weight Watcher's franchise and a public home-services business consolidator, has spent most of the past 25 years in the HVAC industry. VenVest was founded as a partnership between Abrams and John Young, another former Trane Co. employee. In 1990, the two partners, who had previously owned and operated HVAC companies, created the HVAC consulting business, Contractors Success Group.
In 1996, Abrams and Young started Service Experts Inc., a Nashville-based HVAC business consolidator. The company went public and did well for several years (up from its IPO of $13 to $32 a share by the end of 1997). Abrams resigned in 1997; Young in 1998.
The they turned around a failing Service America franchisee in Sarasota, and started St. Louis based VenVest Inc. The company was profitable in its first full year (1999) with about $700,000 in net income.
The partners decided to relocate the business to Sarasota full time in 2001 after an illness in Abrams' family.
Looking forward, Abrams says the biggest question on the acquisition side of the business - aside from the public equity market - is having the proper employees to replace owners of the acquired companies.
The company has a contract to buy the 32,000-square-foot ninth floor of Plaza at Five Points. Abrams expects to relocate about 44 people from the St. Louis office, plus the Sarasota employees and add 50 more after moving into Five Points.
In August, Abrams plans to add a consulting business for roofing contractors called Roofers Success International.
And by 2010, Abrams projects the company and its company-owned businesses will generate $1.1 billion annually. Of that, the consulting businesses and franchising are projected to produce only $60 million.
"Right now I am just working on letting go of things that I have been personally handling so I can focus on my new job, which is really about forming relationships with the investment community," Abrams says. "I'm not worried; it's just hard for me. I raised three sons, and I sent each of them off to college ... It's hard to do. You know it's for the best, but it doesn't make it easy."
COMPANY STATS
Employees: 2003: 90;
2004: 200; 2005: 350.
Revenue: 2002: $14.3 million; 2003: $24.8 million; 2004: $40.8 million.
Average annual
growth: 67.4%
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