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A momentous day was in the offing July 9 for Steve Clark and the 50 employees at his north Charlotte County fresh produce business.
That was the day the $12 million company, then named Sheckler Produce, turned on a new comprehensive computer system. This wasn't your average software upgrade, though. This was a large-scale Enterprise Resource Planning (ERP) project. It was produce 2.0, a system that would whisk the company from yellow sheets, pencils and paper to the digital age.
Yet the move slowly went from momentous to maddening. Instead of efficiency and simplicity, the switch became a business owner's worst nightmare. There were six weeks of daily chaos and confusion. Delayed and downright lost orders were the norm. “It has been a very painful process,” Clark says. “But we are beginning to see the benefits.”
The shift in technology, or more specifically, the shift to technology, is one of two recent major milestones in Clark's business life. The other one: In buying the Englewood-based business, now Sunfresh Produce, Clark went from cell phone tower industry expert, who launched and later sold a $4.1 billion company, to rookie food distribution entrepreneur. Considering Sunfresh just came off a rocky period, where the firm lost several customers, the move is unusual — even on the Gulf Coast, where successful retirees often seek second acts.
“I was probably what people would consider a workaholic, and as a result I didn't have any hobbies,” says Clark, who founded SpectraSite, a Cary, N.C.-based company that owned and operated 10,000 cell phone towers at its peak. “So I spent some time twiddling my thumbs, trying to figure out what to do. The produce business, at first glance, looks pretty simplistic.”
Clark discovered that's not exactly true. He's learned it's a hyper-competitive industry that's sensitive to time and price fluctuations.
Clark, who bought the produce business in January, has also relearned a few valuable lessons that apply to just about any business. A big one: Hiring not only smart and talented people, but people who can work well together, especially in trying circumstances, is crucial to success. Clark says another key is to not hesitate to drop customers who drain time and resources and offer little in financial return.
Big opportunities
With that backdrop, Clark, who spent $2 million in upgrades on Sunfresh, from 14 new trucks to a thoroughly renovated facility, envisions a large growth spurt in the near future. He projects Sunfresh will surpass $15 million in sales in 2013, up at least 20% from 2012, when he says it will finish with about $12 million.
He further believes the company can hit $20 million, possibly $25 million in annual sales, in a few years. Sunfresh currently has about 500 accounts, spread from Bradenton to Naples. The list includes nursing homes, restaurants and schools.
Another key to Clark's strategy is the produce distribution business on the Gulf Coast, in some respects, is top heavy. There are dozens of small operators. Then there are the behemoths: Riviera Beach-based Cheney Brothers, Richmond, Va.-based Performance Food Group and Houston-based Sysco, which has a 350,000-square-foot facility in north Manatee County. Sysco, in total, had $42 billion in sales in fiscal 2012 and is one of the 70 largest companies, by revenue, in the U.S.
“The opportunity in this marketplace is enormous,” Clark says. “We're not Sysco, but we're not a mom and pop.”
Competitors, of course, sense the same opportunities.
Cheney Brothers for example, recently announced plans to build a 250,000-square-foot distribution facility in Charlotte County. The company has done business on the Gulf Coast for years, but it's done it from facilities in Ocala and Riviera Beach, on the east coast. “Our growth has required us to look for a facility” on the Gulf Coast, says Warren Newell, head of new project development at Cheney Brothers.
'Punch and price'
Clark says he knows he will lose a price battle with his bigger competitors. So he instead focuses on customer service. To do that, he basically built a new company on the premise he could win business on other things customers don't get from big players. “We put a lot of money into the physical side of the business,” says Clark.
But first, from January to May, Clark waited and watched the business run. Then, in June, he began the overhaul process. Contractors rebuilt the entire 28,000-square-foot facility. They installed new racks, floors and refrigerators. The company replaced the shipping docks, and Clark bought a new forklift and pallet jacks, to lift and move goods. The $2 million in renovations and upgrades doesn't include what Clark paid for the business, which he declined to disclose.
Clark hopes the infrastructure, in addition to the new software, will enable Sunfresh to out-do competitors, big and small, on service. For instance, he says Sunfresh will do on-demand delivery runs, and offers morning and afternoon drop times, which other companies don't.
The move to redefine the business through customer service, moreover, is why Clark changed the name. Scott Sheckler founded the company in 1988 and sold it in 2004. He bought it back a short time later, when the company was under some financial distress. While Sheckler stabilized the business in the second go-around, Clark says it was still in operational decline, with “dissatisfied customers and demoralized employees.”
The company, adds Clark, “was more about punch and price and seeing what you could get.”
In a riskier move than a name change, Clark says he will also look to expand Sunfresh, to even possibly open a retail outlet in Sarasota County. The company currently operates a 2,500-square-foot retail stand in front of its Englewood facility, where customers can purchase fruits and vegetables. Clark says it brings in about $1 million a year in sales, and it's profitable. But he believes there's a bigger opportunity to snare retail customers in Sarasota.
Clark, furthermore, says he's considering buying some other local produce companies, to build up the customer base.
High cash flow
Building up a customer base is Clark's forte.
That's what he did with SpectraSite, which he founded in 1997. The company grew fast by building and acquiring a large portfolio of cell phone towers. “You have to create a customer base and demand,” says Clark. “That's tough work, and to be honest there is an element of a crapshoot to that.”
Clark certainly did all right in that gamble, given SpectraSite's rapid rise. That ascent, however, was dented in 2002, when the company filed for bankruptcy. Clark called the move a “restructuring of our balance sheet due to excess leverage,” a common issue for debt-heavy cell phone tower firms in the early 2000s. But SpectraSite was able to come out of bankruptcy, and a competing firm, American Tower Corp., bought it in 2005 for $3.1 billion.
A Kansas native and onetime physics major at the University of Colorado, Clark made millions in the sale, and he first invested in business opportunities closer to what he knows. That includes a European wireless tower company and real estate projects in North Carolina, where SpectraSite was located. Clark founded and ran several technology firms in Boston and Silicon Valley prior to SpectraSite.
But in Sarasota, where he and his family have a home, Clark found out about the produce business through searching bizbuysell.com. He sought a business with high cash flow and recurring revenue. “Those are hard to find,” says Clark, “and can be expensive when you do find them.”
So when he found Sheckler Produce he was interested, although the produce business, says Clark, “is about as far from the high-tech business as you can get.”
Now, nearly a year into the Sunfresh venture, Clark likes where things are going. “I've never been a highly specialized guy,” Clark says. “I've done a lot of different businesses. (With produce) I am either going to be really brave or really crazy.”
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