We're 18 businesses under one roof," says Stuart Frenkel, CFO of Canadian musical and audio equipment distributor, Jam Industries. For the past nine years, Frenkel has been part of a small leadership group that has evolved Jam from a domestic leader to a successful global enterprise. Today 60 per cent of Jam's turnover is from outside Canada.
As they have grown, Frenkel and his team have stayed true to Jams' entrepreneurial roots. They have structured their enterprise as a group of small specialty businesses, all sharing the same high level management and back-end functions. "We strive to keep the entrepreneurial spirit," says Frenkel. "Each group is like a small business fighting for its share of the market." To stay true to this philosophy while expanding rapidly overseas, Jam has developed its global management capability and worked hard to ensure that the organization's entrepreneurial culture is not diluted by growth.
Managing across borders
Orchestrating a complex international business is hard, and each new market brings its own challenges. For example, Jam acquired a struggling US company that they needed to rapidly restructure. Distance made this difficult. "We weren't there on a regular basis. We were relying on others and setting up reporting systems, but we couldn't really see or feel what was going on," says Frenkel. In the end it took too long to shrink costs and Jam absorbed some losses.
That experience ultimately proved invaluable. Frenkel and his colleagues went on to develop a more systematic approach to acquiring and running overseas firms. This included more face-to-face contact, with either one of the leadership team flying out or a local manager flying in. "Our reporting systems have improved as well," says Frenkel, "We have more visibility that enables analysts to be more on top of things. They see if anything starts to veer off course. But we still do more visits than we did initially."
We weren't there on a regular basis. We were relying on others and setting up reporting systems, but we couldn't really see or feel what was going on.Stuart Frenkel, CFO, Jam Industries
Keeping the entrepreneurial spirit
Jam has also focused on instilling the right culture across the companies it has acquired. Jam's leadership team know their business relies on self-motivated, energetic staff who takes ownership of their roles. "Some people are used to large organisations with lots of hierarchies. But we're a very entrepreneurial company and the culture needs to fit with the people that work here," says Frenkel. "Sometimes it doesn't work. The culture isn't the same, they don't have the same goals or aspirations. So we always look for that entrepreneurial spirit." Frenkel believes that as the company continues to grow; developing the next generation of talent will become a focus for Jam's leadership team.
A personal leadership journey
"In a company like ours you have to dedicate your time to the job, knowing you can't do it halfway, because halfway means there's a good chance it will fail." explains Frenkel.
Balancing personal and professional commitments is a common challenge for executives at mid-market companies. However, making it work can offer generous rewards. Frenkel says the challenges of international expansion have allowed him to grow professionally, have different opportunities and develop into a more seasoned executive. "There is more stress, and there's time away from the family, but these are growth opportunities for me personally, not just for the company. It's all worth it and I certainly have no regrets whatsoever."
Early in their international expansion, Jam's leaders learned a simple but critical lesson: the business needs to be ready to grow, not just able to grow. In their desire to grow, many mid-market companies are attracted to what seems like bargain acquisitions, but often underestimate the resources both human and financial, needed to restructure, integrate and grow the new business. Jam learned that a strategic, controlled approach to growth is the best path to follow when considering an acquisition. Their advice? If a bargain seems too good to be true - it probably isn't a bargain - you get what you pay for.