Growth & Opportunity: Though New to the BE 100s, These CEOs Made Moves to Create Multimillion-Dollar Enterprises

By Richardson, Nicole Marie | Black Enterprise, June 2006 | Go to article overview

Growth & Opportunity: Though New to the BE 100s, These CEOs Made Moves to Create Multimillion-Dollar Enterprises


Richardson, Nicole Marie, Black Enterprise


Change is inevitable. That's what Tilmon F. Brown realized in 1994 as he stared early retirement in the face at age 49. As Interstate Brand Corp. launched a takeover, Brown knew his high six-figure salary as vice president of sales at Continental Baking, which made Wonder Bread and Hostess Cakes, was no longer secure, so he had to act fast. What happened next was divine intervention. Brown received a call from a good friend concerning a partnership to purchase a faltering manufacturer of soft rolls and English muffins.

Brown, who had been in the baking industry for 40 years, was a great candidate and felt that the call was a sign to follow his long-time dream of becoming an entrepreneur. "Too much fell into place too perfectly for it to be a coincidence," recalls Brown. "My wife and I prayed on it, and I decided to do it. I left Continental on a Friday and walked into New Horizons on a Monday." Brown structured a deal to form the new entity, New Horizons Baking Co. (No. 75 on the BE INDUSTRIAL/ SERVICE 100 list with $50 million in sales). He would eventually own 51% of the company, cut expenses secure capital investments totaling $18 million, and grow revenues by 33% in 10 years.

Brown is just one example of how entrepreneurs can use change to their advantage. Growth and opportunity, however. mean different things to every business owner. For some it means diversification to ensure that a company is not tied too closely to one client. For others, like John F. Carter, president and CEO of Carter Brothers L.L.C., it means aggressive expansion nationally and internationally to become an industry leader. These savvy entrepreneurs are among this year's Freshman Class--the newcomers to the BE 100s. They were able to build thriving enterprises by taking calculated risks, building sound strategies, and acting on their visions. The result is successful enterprises with substantial revenue growth and the profits to match.

THE MASTER PLAN

When Brown, now 61, got that fateful call from John Paterakis, chairman of Northeast Foods, he had been responsible for nearly $2 billion in sales at Continental Baking. Still, he felt the need to become an entrepreneur diving into the new venture with Paterakis and Peter Grimm.

Brown joined the company as president and CEO, Paterakis became chairman, and Grimm was named secretary. Their first order of business was to hammer out a buy-sell agreement: With Brown owning 20% of the company and each of his partners owning 40%, the agreement stated that once debt was cleared, Brown would expand his ownership to give the company minority-owned status. McDonald's (one of BLACK ENTERPRISE'S Best Companies for Diversity in 2005) wanted to groom Northeast Foods to become a minority supplier. The partners were able to pay off the debt owed to JP Morgan Chase bank in 2002, and Brown moved to get controlling interest.

Going into the venture, Brown understood that New Horizons and McDonald's had a unique relationship. The two businesses had agreed to the terms of the relationship on a handshake--which is the fast-food giant's corporate policy for suppliers. New Horizons would provide McDonald's with a continuous supply of buns in perpetuity for about 1,300 restaurants--approximately 10% of its U.S business--in Michigan, Ohio and West Virginia. Brown was assured by Paterakis, who had done business with McDonald's for nearly 40 years, that the restaurant would honor its end of the bargain.

The potential problem with this type of agreement is that McDonald's is 85% of New Horizons' volume. The agreement precludes Brown from seeking other clients in the quick-service restaurant industry, so he's diversifying his client list by adding other food-service companies.

The next goal, says Brown, was to turn the company around and build it into a stable, money making enterprise. "My first set of challenges was coming to grips with the fact that there was no big brother up there who was going to pave my road for my future. …

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