Key Idea #1: Invent an Industry
David started in the lighting business when there was almost no equipment. As he said, entertainers would just walk in a room and put on a show using available light.

Topic For Discussion: What do you know and what can you guess David has done to build a business when at the beginning there didn't seem to be much potential.

Answer: David put one foot in front of the other. He stepped in to the darkness (excuse the pun) and found ways to please customers. When he started he was young and had nothing to lose. It was not at all like starting a gas station or a restaurant. Those were proven businesses with track records. While building his own company, David has been part of inventing an entire industry.

David's story is the story of free markets and capitalism. It is a perfect example of why things get better. He and a few pioneers believed that live entertainment could be made more enjoyable by adding lighting.

David was a founding member of ESTA, the Entertainment Services and Technology Association, the trade association for his industry. He was there when the group wrote the safety regulations and codified best practices. They jumped ahead of government regulators because the business owners cared about the safety of their employees.

Topic For Discussion: What are the risks/rewards of being first?

Answer: The risk is always you could completely fail. This happens when no critical mass forms. If David was the only person who thought entertainers needed special lighting, there would be no business today. What David saw, others saw and an industry was born. The rewards are tangible and intangible. Being the "old guy" means some business comes your way. You have an enormous reserve of trust built so customers choose you. It' like being IBM. No purchasing agent or technology chief ever gets fired for buying IBM. Then there's the great sense of pride about what you and other pioneers have accomplished. You can step back and look at what you have done to make life better for others.

Topic for Discussion: Do you think most of the other pioneers are still around today?

Answer: No. David is rare. Not many people have the stamina to do what he has done.

You think about it: Is there an industry that needs inventing now? Do you have the energy to be the pioneer? Could it be an extention of your current business or would you start from scratch?

Key Idea #2: Treat Your Service Business As An Asset Management Business
Being at Theatrical Lighting was fun. We saw the equipment stacked and repairs being made. We saw David's crew set up for a big show and we attended the show. We were thinking, "Wow. There's no business like show business." Then David said, "we're in the asset management business." We were jerked back to why he is successful. He articulated so clearly what he has to do everyday and that is maximize the return on his investment. He has to know where every piece of equipment is and how he is collecting for its use. He also has to know when he lands a new job if he should buy or rent the equipment he might not have on hand to handle the project. He walks a tight rope.

Topic For Discussion: What are the assets of your business and would it help you to think in terms of being in the asset management business?

Answer: Every business will have different answers to this question but it is much easier for a manufacturer or wholesaler to think in terms of assets than it is a service provider. Also, most of us have a product/service bundle. A spa sells a facial but also it sells the cream the customer can take home. Do we tend to be better at counting the bottles of cream and making sure our ordering is in balance with sales than we are at measuring the service assets we have?

Even though David rents equipment, he thinks in terms of a bundle including both product and people. Also, in follow-up conversations with David and Janet, we learned that it took years for them to teach a banker that they are bankable. Their first loan was in 1981 for $3,000 and they were charged 21% interest. They paid that loan back early to prove to the banker that they are a quality investment. They took out another small loan and paid it back early. Over and over they demonstrated their character and ability to pay. Janet said, "We worked on bankers slowly to establish good credit. and we cultivate that relationship." Janet went on to say that they had to educate the bankers about lighting. They do that by inviting the banker to show up when their equipment is in use locally. David explains to the banker how different lights achieve different affects on stage. David and Janet even include the banker in company parties.

NOTE: If you are thinking about getting a loan from a bank, or expanding your line of credit, first look at RMA: The Risk Management Association's ratios for your industry and see if you are within the norm (based on information from 150,000+ loans per year contributed by 3000+ banks).

Janet and David have all of their business assets in Theatrical Lighting. All of their time and energy is devoted to the company they have been working on since 1981. However, personally they own a portfolio of real estate including all the buildings that serve as a location for Theatrical Lighting. In 2003 they moved into a 58,000 square foot building which they own and have leased out all the other space they own around Huntsville.

You think about it: What are you doing to invest in those kind of assets your banker needs to justify a loan or increased LOC? Do you know your key critical ratios? Do you know how you compare within your overall industry? When it comes to asset allocation, is it smart to put all of your eggs in one basket? What system can you put in place to measure the return on your investment for your existing assets?

Key Idea #3: Do One Thing Well
This isn't the only time we have heard this advice. Andy Murstein of Medallion Funding said his grandfather taught him that there are, "riches in niches." From the outside looking in, it seems as if David is missing a big opportunity. He has lighting equipment and trucks arriving at the same scene as we found sound equipment and trucks owned by other companies.

Topic For Discussion: Why would David leave money on the table when he has customers who trust him? He ought to be able to provide sound and sound engineers along with the lighting packages, right?

Answer: To the uninformed, equipment and trucks all look alike. David says, "Lighting and sound are completely different technologies and employees don't cross over." The way David earns profits on sound is by outsourcing it. When a customer wants David to provide lights and sound, he delivers his own gear with his own employees to provide the light. He delivers a sound company he has contracted with to do the sound. This way Theatrical Lighting doesn't have to own sound gear or hire and train sound engineers but David can give his customer a turn-key result. Theatrical Lighting and its favorite sound companies and engineers know each other and do business with each other. They serve as centers of influence and sources of referrals for each other.

You think about it: Do you need to say "No" to work that distracts you from your core competencies? Do you need to shut down parts of your business? Is it time to clean out the products and services that don't thrill you or make you money?

Key Idea #4: Hire Good People
Sounds so simple. If someone new in business had told us this we would have thought, "how sweet and how naive." But when a person who has been building a strong company for over two decades says it, we listen.

Topic For Discussion: What do you think David means by the word, "good?"

Answer: David goes on to say if you hire the right people you will be successful and if you hire the wrong people you won't be. The words "good" and "right" carry more weight than the words, "experienced" or "knowledgable." This reminds me of President George W. Bush. When he became president he started nominating people for cabinet positions and leadership roles in Federal agencies. In his nomination speech I would almost always hear him say, "This is a good man."

David and President Bush are saying that a good person is more important than a competent person. Both leaders assume there are plenty of competent people to choose from. They want more than competence. What the owners of strong, long-lived companies have learned through experience is: integrity, honesty, kindness, thoughtfulness, interpersonal communication skills and a deep respect for others is more important than a particular knowledge or skill.

You think about it: How will you go about finding a good person to hire?

Key Idea #5: Face The Facts Daily/Weekly
Janet is the CFO at Theatrical Lighting. She is responsible for the banking relationship and cash flow. I love what she said about the vendors being their support system and by paying them fast, Theatrical Lighting gets great service.

Topic For Discussion: How does Janet keep David informed?

Answer: She generates a weekly "flash" report. This provides information about sales, receivables, the current cash position and more. As the business grows, the leadership can't possibly keep everything in their heads. One business owner told us he thought that most owners with under $3 million in annual sales are pretty good at keeping numbers in their heads. But over $3 million it is too complicated.

If you are currently doing under $3 million in sales and you keep your numbers in your head, do you think it would help to create your own flash report like Janet does for David? Maybe this is a chicken-egg situation. Maybe we stay under $3 million because we think we have a handle on the financials and don't need any daily or weekly reports. No business is too small to track key numbers. We suggest that you ask your CPA to come up with a simple way for you to see on paper what is going on in your business.

NOTE: In 2003 David and Janet did their first audit. They thought it was time for a complete outside review of their operation.

You think about it: How do you know where you stand now? How often do you "weigh" in?

Key Idea #6: Hire Slow And Fire Fast
This is so hard. We want to hire fast because we've decided we need someone and we need them now. And, we want to fire slow because we don't want to go through the pain of finding a new person and teaching the new person. David says he doesn't want to, "give up on somebody." He sees letting a person go as his own personal failure. We also keep a person because we think that the person we hire to replace the bad apple might cause all kinds of problems we've never had before! Our imaginations run wild so we keep the person we know we should fire.

Topic For Discussion: How do we overcome procrastination when it is time to fire someone?

Answer: Think of the person causing problems as a cancer. Imagine their bad habits spreading through the entire organization. This is not over dramatizing what is actually going on. Bad habits are contagious and you can't afford to contaminate your company. The most popular technique for firing fast is not to hire until a person has made it through a probabtion period. David does this and many other small business owners use this strategy.

Topic for Discussion: How does David find good people?

Answer: He invites the finest from his competition to consider a little TLC. He can only do this because his company has one of the best reputations in his industry. Most often, he has seen the candidate on the job and has heard about the individual's personality and work habits. He always flies the candidate into Huntsville. This means the recruiting can cost big bucks but David says in the long run, it is money well-spent.

Topic for Discussion: Why do you think people enjoy working at Theatrical Lighting?

Answer: David and Janet create a family feeling. This is the standard at strong small companies and we heard Janet say, "when an employee gets in trouble, they come to you." She feels it is both an honor and an obligation to help the employees. She knows if she helps with their car insurance or makes them a quick loan, it is a win-win for everyone. In the mid 90s, to help every employee become more computer literate, Theatrical Lighting made computers available for employees to take home.

You think about it: What changes can you make in your recruiting strategy to slow the process and increase your odds of success? Who needs to be fired now?

Key Idea #7: Turn Stress Into Strength
Janet said don't even try to work in a business together if your relationship is not already strong.

Topic For Discussion: How does this couple manage the personal and business relationship?

Answer: They never eat lunch together and Janet said, "we try not to take work home with us." This is probably impossible but the fact that they try is significant. Every couple we have studied here has their own set of coping mechanisms. What we see David and Janet doing that is common among all great companies owned and operated by a couple is: they respect each other, they admire each other and they stay out of the other person's specialization.

Topic for Discussion: Why are so many couples successful at growing a business?

Answer: Two heads are better than one. This has many implications. With a couple the company has two sets of natural talents and abilities that no one person could possibly have. Two people have twice as much time as one person. You may laugh at this but a business often requires a 24-hour daily commitment. With a couple, each person can give 12 hours and nobody dies. Two people can work for the price of one. A couple can live on one salary. A couple can live on one retirement fund. A couple can make it with one car. Starting and growing a business takes sacrifice. When the couple is in it together, there isn't someone at home complaining that there is no new furniture. You should know that Janet told us that the start-up phase brought she and David very close. And she warns that when the business gets strong and stable that you still have have to keep working on the marriage!

You think about it: If you work with your spouse, what can you do to have time away from each other?

Key Idea #8: Reach Customers In Multiple Ways
All strong companies do this. You can't just post material on the web, you can't just fax, you can't just mail, you can't just call, you have to do it all.

Topic For Discussion: Why can't we teach customers how to communicate with us and not fool with all the different types of communications?

Answer: First of all there are best ways of doing specific types of customer communications. And second, we have to be where our customers are not where we want them to be. Many owners dream of the day when they can simply post everything on the Internet and be done with it. Well, that may happen but we're not there yet. David said that even though they were early to the web and love the benefits of using the web, their customers still want a physical catalog they can quickly refer to without going to their computer.

You think about it: What is your customer communication plan and how can you make it better?

Key Idea #9: Shift From Doing To Leading
David started in the lighting business as a lighting guy and he says now that he's a businessman.

Topic For Discussion: How did David make the transition?

Answer: Painfully. He said he had to force himself to send other people out to do projects even though he always thought he could do a better job himself. This thinking that, "I can do it better than others" is the reason that companies don't grow. Assuming you have a viable business model, if you keep doing and don't learn to lead others, you will stay small. And, that is perfectly fine. The wonderful thing about owning your own business is you get to decide if you want it to be a one-person, or 20-person, or 100-person place. Having a partnership with Janet from the beginning tells us that the two were already pre-disposed to the idea that others can be taught and lead.

You think about it: What are you doing now that you can teach others to do? Hint: Anything that repeats, teach.

Key Idea #10: Go Outside For Insight
David felt the company had hit a wall and so he hired a consultant who spent about three weeks at Theatrical Lighting. That person looked at processes and people and discovered that too many people were reporting directly to David. With some simple changes, the processes were smoothed and the company was positioned to handle more growth. The experience was also empowering for employees as the consultant interviewed them and made changes that gave them more authority.

You think about it: Who could give you excellent insight? Your banker, CPA, attorney, a group of peers?

Key Idea #11: Give Back
David has a huge heart. Since 1974, he has given time to raise money for the local Cerebral Palsy Association.

Topic for Discussion: How do business owners, the busiest people in the private sector, find time to give to causes and how do they afford to give money away that they could use to grow their companies?

Answer: The owners we know are involved in their churches and other charities because they are not driven by money, they are driven by big important ideas. And, they are not self-absorbed. We business owners tend to think about and worry about others and put ourselves last. This works because as we help others iimprove their lives, our life gets better on all levels.

Marc Katz, owner of Katz Deli says he gives because he stole the idea from big business. He reminds us that people who run big businesses are, "not stupid." Big businesses establish foundations and other programs to assist those in need because it always pays to be nice. His strong commitment to charities comes from studying big foundations. Other business owners we know who subscribe to this strategy talk about it as the way they launched themselves in business.

Topic for discussion: Why is volunteering to work with a non-profit organization good for the soul and also such a good marketing technique?

Answer: Albert Black is founder of On Target Supplies and Logistics. His passion is community service and by accident he found this to be his best marketing strategy. Albert gives of himself because he loves people and love life. Yet, when you want to sell something, it is difficult to know who actually has the checkbook!

When you work on a good cause, you will meet people who will often tell you who they know and who might possibly be your next customers. Albert worked with the Chamber of Commerce and when he received an award for service, John Castle was present at the event. Today, John Castle is on Albert's board. John also leads EDS, one of the country's largest companies, and as you might guess, EDS is now one of Albert's customers, too.

You think about it: What have you given in the past? What can you give? What should you give?

Key Idea #12: Have Fun, It's Only A Game
David said the mission statement of Theatrical Lighting is, "We make money doing lights." The reason this is so powerful to him and everyone in the company is, just doing lights is fun! People who love the concert scene can be recruited to do the work. They enjoy the excitement of setting the stage for the entertainers then running the lighting for the performance. This is David's personal background. However, as you get older you want to be able to buy a house and a car and go out to dinner. David and Janet decided they could build a company that actually makes money while having fun. Doing lights is easy compared to making money doing it.

Topic For Discussion: How does David keep himself motivated now that the company does make money doing lights?

Answer: He says that, "business is a competitive sport." He is competitive and wants to win every bid and when they lose he works hard to figure out how they lost. The beautiful thing about David's attitude is, it is contagious. Everybody at Theatrical Lighting wants to win. They see David and Janet having fun. They don't take themselves too seriously. After all, there's no business like show business.

You think about it: Do you need to be more competitive? How could you have more fun? How can you turn your own competitive spirit into a game for everyone?

Key Idea #13: Send Handwritten Notes
As email volume increases, the power of a handwritten note increases.

Topic For Discussion: How do you feel about the person who writes you a note and sends it via the physical mail?

Answer: You might think that the person is nuts. However, we believe that this personal touch enchances every relationship. The first President Bush was famous for writing handwritten notes and for adding a PS in writing to a typed letter. All big business deals are done between people who have a relationship and writing notes builds something special between you and the person to whom you write.

You think about it: When was the last time you wrote a note and mailed it to a business contact?