If peanut butter and jelly sandwiches were the universal symbol of burgeoning success, every jar of Jiffy would have Todd Werstler’s likeness on the label.
Werstler is president of Tower Industries LTD, a cast-polymer manufacturer of kitchen and bath products, including sinks, showers, tubs and countertops. His 24,000-square-foot facility in northwest Massillon has tripled in size since he went into production in June 1995. His annual revenue has swelled to $2 million. And his staff has expanded to 20 employees.
Six years ago, Werstler had no capital. He had no connections. But he had a concept for a company and he spent an entire year doing his homework to make it happen.
Werstler says that the comprehensive early market research he performed, bolstered by a meticulous business plan, enabled him to raise $250,000 to start his company. He also confides that for two years, he worked 100-hour weeks to put the company in the black. During that time, he lived on what kids eat when they’re doing their homework.
That’s why Werstler hopes he never has to eat another peanut butter and jelly sandwich again.
Business 101
For as long as Werstler can remember, he’s been doing his homework and taking care of business. It was just 13 years ago that he was recruited right out of Wake Forest University into a management training program for a large national trucking company, where he rose to district and regional manager posts.
“Managing those profit centers for the corporation gave me invaluable experience in running a small business,” he says, explaining that he gleaned expertise in sales, marketing, operations, human resources and finance.
After several transfers in seven years, Werstler wanted to return to his hometown of North Canton to start his own company. In 1994, he quit his job and asked his father, Bob Werstler, to become his partner.
“My father had owned a couple of small businesses when I was younger, and as a salesman, he’d recently severed ties with the cultured marble company he worked for,” Werstler explains. “When we discussed what type of business we could start, he told me about a new product called solid surface material that was taking the market by storm. That’s when our concept was born.”
Werstler notes that, before the mid-’90s, the original Corian solid surface was used more commercially. But solid surface materials began to gain popularity in residential kitchens when the product became more affordable for homeowners.
“It was also more attractive and different from anything else on the market, and you could easily customize it,” Werstler says. “So we decided to develop our own formula for production.”
Concrete research
Having settled on a specialty, Werstler hit the streets.
“In October 1994, I started traveling everywhere, from the East Coast to the West Coast, meeting everyone I could in the industry. I contacted mold and machinery manufacturers, raw material companies and anybody who could give me insight into how to plow forward,” he says.
He also consulted with W. Roderic Covey, founder of Covey & Koons Inc., a Canton advertising, marketing and public relations firm.
“Rod suggested that my father and I do a market research study to find out how the product would be embraced by the market segment we were targeting,” he says. “He helped us put together a simple questionnaire to determine the interest in our solid surface material, and we sent this direct mailing to about 400 regional builders, designers, and kitchen and bath retailers that would be potential users of our product.”
The response, says Werstler, was overwhelming.
“Typically, when you send out a questionnaire or a marketing piece, you might get a 2 or 3 percent return. We had an unprecedented 40 percent return rate,” he exclaims. “Obviously, people were looking for something unique and more affordable, and they were excited that we planned to offer them options they didn’t previously have.”
That concrete market research survey would become a potent appendix to Werstler’s business plan.
Writer’s cramp
Next, Werstler rolled up his sleeves and wrote his blueprint for business. He also developed impressive spreadsheets that detailed revenue and cost projections, including start-up and daily operations expenses for the first three years on a month-to-month basis and five years overall.
“It was just months and months of assembling data — how much to find and outfit a suitable location, how much to buy the machinery, what it would cost to buy the raw material and start making our product. By the time I wrote the marketing plan, the overviews, the balance sheets and the resumes, it was 100 pages thick,” he says.
When he presented the document to the Stark Development Board, its members were stunned.
“I think I blew them away because, when I’d originally approached them, they asked to see my business plan and I’d said, ‘Well, I haven’t written it yet but I wanted to see what you guys offer.’ Basically, they’d said, ‘Well, go away and come back when you have something,'” he laughs.
“When I returned in April 1995 with this 100-page business plan, a market research survey and a commitment from potential buyers, lo and behold, we raised about a quarter of a million dollars!”
The funding was a combination of an SBA loan, a revolving loan from the Stark Development Board, funds tapped through the City of Massillon from the Federal Department of Housing and Urban Development and a loan program through the state. Werstler and his father, who would become the company’s vice president, also received financing offers from five banks.
“Four of the banks gave us exactly what we asked for. The fifth didn’t want to give us as much as we wanted, so we bypassed them,” he says. “Ultimately, it was a matter of waiting for the first bank to put their offer in writing, because nobody wants to be the first to provide a start-up with funding. Usually, a lender will only sign on if they know somebody else has.”
The final sign-off came in May, and Werstler says there’s no doubt they won the lenders’ faith due in part to his father’s estimable reputation in the community — and because he had spent “thousands of hours” preparing such a precise business plan.
The learning curve
In a business plan, you can project what you think is right, but when reality sets in, that’s a different story, says Werstler.
“You’ve heard the expression, ‘Hang out the shingle?’ Well, that’s really what you’re doing,” he says. “When you hang it out, people don’t yet know you exist. Even if you’ve done early market surveys and you continue to market, people need to hear from other people that they’ve had a positive experience with you.”
Just as lenders were hesitant to sign on until someone else had, says Werstler, “The folks we thought were going to buy from us right away didn’t, because they wanted to see if we were going to ‘make it.’ So we lost a ton of money in 1995 and 1996.”
In fact, from the time Tower Industries produced its first casting on June 5, 1995, until the company had positive cash flow in June 1997, Werstler worked 18-hour days but never took a paycheck.
“Imagine working without getting paid, the company’s not making any money, and I’m eating peanut butter and jelly sandwiches just like I’m back in college.”
Eventually, all those prospective buyers did come on board. But it took about 18 months.
“It took an awfully long time to get enough of our new product out on the market and enough customers buying from us so that we could actually purchase what we were making,” he says. “So that’s the learning curve — getting enough people to recognize you as a reputable vendor.”
Extra credit assignment
According to Covey, competition was yet another hurdle for Tower Industries.
“Todd and Bob truly went against all odds — no capital, a brand new venture and an industry giant like DuPont as a competitor,” says Covey.
Werstler concedes that DuPont corners about 80 percent of the solid surface market nationally, and cites other big competitors, including Formica, Wilson Art and Corian. But the big guys didn’t deter him.
“It was more like when you see a garter snake in the grass — it’s more scared of you than you are of it,” he says. “I think the large manufacturers see a trend in solid surface where companies like Tower Industries can make a very good product without gigantic overhead. Of course, none of us are going to put DuPont out of business. But collectively, we can certainly make a dent in all of those companies’ pocketbooks.”
To gain a competitive edge, Werstler became active in the International Cast Polymer Association, the Washington, D.C.-based trade group that represents manufacturers in his industry.
“Two years ago, when I became active in the Solid Surface Development Council, they asked me to serve as chairman, and then they asked me to join the board of directors. This year, they asked me to become president elect, so I’ll take over as president in 2001,” he says.
Despite the initial challenges, Werstler says he was always convinced that his company would become very successful — and that he’d eventually be able to afford a steak dinner. He attributes much of the success to the diligence and support of his father, and credits individuals at Covey & Coons and the Stark Development Board and others who mentored him along the way.
Covey says he’s sure Werstler’s early market research was a vital part of the company’s rise to success.
“That, plus a lot of hard, hard work, and a great father-son relationship,” Covey adds. How to reach: Tower Industries LTD, (330) 837-2216; Covey & Koons Inc., (330) 456-7381 or www.covey-koons.com
Lessons learned
Although he had performed extensive market research and compiled a voluminous business plan, Todd Werstler says there were critical elements he overlooked. Here’s a checklist he says others should consider when doing their homework.
Go with the high estimate. Werstler thought he had all the costs covered, but it cost much more to get into the business than he projected.
“The things you think are going to be low-cost incidentals are not. If you think something is going to cost a dollar, it’s probably going to cost $1.50.”
* Account for hidden costs. Setting up shop will cost more than you think.
“More than anything, I was set back by leasehold improvements to get my building to the point where we could manufacture product. I budgeted $10,000 for the electrical hook-ups, but it actually cost $50,000.”
Don’t overproject your sales. It’s very easy to assume that the marketplace is going to embrace your product quickly, but typically, that’s not what happens. So you better have a couple of years worth of working capital to get you through the lean times.”
