They know what it takes - Blue Chip Enterprises help small businesses learn from each other - includes list of chosen companies for 1992

Nation's Business, March, 1992 by Michael Barrier

Harlow Fullwood Jr. spent almost 24 years as a Baltimore police officer--a career that he found highly rewarding. He devoted many off-duty hours to the community. But as his children approached college age, Fullwood grew concerned about what kind of education he could afford for them.

Then, in 1984, a neighbor called his attention to a new effort by the Kentucky Fried Chicken chain (now called KFC) to recruit minority franchisees and suggested Fullwood apply for a franchise.

He did, even though the odds against his getting one were large. He lacked both business experience and money--and KFC expected both from its franchisees. But he had evidence of his standing in the community, including press clippings and glowing recommendations from the governor of Maryland, a congressman, and members of the Baltimore City Council.

KFC decided to risk backing Fullwood. He got the chance to remodel a defunct fish-and-chips shop in suburban Parkville into a KFC store. Then Fullwood put his people skills to work. Recruiting new officers had been part of his job with the Baltimore police force, and now he recruited customers--standing at the door to greet everyone who came in, and carrying elderly customers' bags of chicken to their cars. He recruited loyal employees, too, by offering generous benefits and promoting from within.

Fullwood didn't take a paycheck for a year and a half. But he can afford to take one now. He owns four KFC stores in the Baltimore area; their annual sales total about $3.3 million. He employs more than 70 people. KFC has honored him often.

Fullwood received another honor this year: His company, Fullwood Foods, was singled out as a Blue Chip Enterprise. It is one of almost 200 companies across the country to be given that title in the second year of a competition sponsored by Connecticut Mutual Life Insurance Co., the U.S. Chamber of Commerce, and Nation's Business.

Connecticut Mutual initiated the Blue Chip program two years ago, with the aim of helping small businesses learn from one another's experiences.

As the application form states, the program seeks to locate "companies which have already demonstrated an ability to meet competitive challenges, weather the cyclical nature of business, creatively realize opportunities, and overcome adversity." The program then packages "their case histories of resource management to share with small businesses everywhere" with the aid of participating local and state chambers of commerce.

Applications for the second year of the program were accepted last fall. Then judging began by panels of experts for each state. Each state's judges could designate as many as four Blue Chip Enterprises. The top designee in each state, the District of Columbia, and Puerto Rico formed the group of 52 companies from which the four national designees were chosen. These national designees were honored Feb. 24 at the U.S. Chamber's National Business Action Rally in Washington, D.C.

Here are examples of difficulties surmounted by representative firms of the nearly 200 chosen as state designees:

Government Action. Mr. King, a Birmingham, Ala., furniture company that offered generous credit terms--and whose collections therefore badly lagged sales--learned that the 1986 Tax Reform Act might put it out of business, by requiring it to switch from cash to accrual accounting. It survived by (1) tightening its credit standards; (2) opening Happy Rents, a rent-to-own store, so that rental payments counted as income only as they were received; and (3) using its expertise in collections to open a third company, AmChex Collection Services, which now collects for many other creditors.

Formidable Competition. Cambex Corp., a Waltham, Mass., firm, makes memory and storage systems that enhance the efficiency of IBM mainframe computers. Its biggest competitor: IBM itself. Cambex has survived and prospered by (1) keeping pace with IBM's own technological advances; (2) providing intensive service support; and (3) matching IBM's price reductions while relying on tight cost controls and low overhead to keep it profitable.

Economic Disaster. Den-Con Tool Co., an Oklahoma City manufacturer of oil-drilling equipment, saw its sales plunge 90 percent from 1981 to 1982, as the energy industry in the Southwest all but collapsed. The firm survived by (1) expanding into international markets aggressively; (2) allying itself for marketing purposes with two companies manufacturing product lines complementary to its own; and (3) controlling inventories tightly.

Natural Disaster. Entek Corp., a Longview, Wash., heating and air-conditioning contractor, found its business all but wiped out by the 1980 eruption of Mount St. helens. The company fought back by (1) aggressively seeking out projects, including maintenance contracts, that it might have passed up before; (2) expanding into the Vancouver, Wash., market, 45 miles away; and (3) instituting new training programs to enhance the quality of its work.