Starting a company is challenging, but starting a company based around a new premise creates its own trials and tribulations.
Ron Shahani experienced that firsthand when he quit his job at Ford Motor Co. to found staffing firm Acro Service Corp. in 1982. While working to find ways for Ford to break even as sales declined, Shahani realized companies could cut costs by hiring contract workers rather than full-time employees.
That premise became the basis for Acro, but first he had to convince prospective employees and clients that his company would be a profitable alternative.
“In the early ’80s in Michigan, the concept of using contract engineers or programmers was a very novel idea,” says Shahani, president and CEO of Acro. “Nobody had used engineers and programmers on a temporary basis.”
Initially, the company catered to the automotive industry, but Shahani quickly realized it was risky to rely on just one industry. He created a diversification plan and now has clients from industries including engineering, information technology and government, and has grown his company to $99 million in revenue.
Smart Business spoke with Shahani about how he overcame the challenges of starting Acro Service Corp. and how he diversified his client base.
How were you able to attract employees to work in a new industry?
At the time, this was such a new commodity for the auto companies from an acquisition perspective that we pretty much had free reign in working out the arrangements with the using manager. We were able to persuade them to give us adequate budgets so that we could attract people who had permanent jobs (and convince them) to quit those jobs and take a contract position with us.
We paid very well and offered great benefits. We tried to emulate a permanent job as much as possible. Most people who knew the auto industry, after they saw what we were offering, were savvy enough to know that if they got hired on for a project, let’s say to design the braking system for a car that is coming out in three years, their job is good for at least three years.
We were able to convince people that this was a good way to go. Since you are not a part of the company, you don’t have to get involved with the politics of the organization. You just do your work, and you are highly paid for it.
How did you establish credibility in the marketplace?
I packaged my growing business (as having) something much more expensive than what it might look like at first glance. My understanding of the processes within the auto industry helped me leverage what we were offering.
Knowing the culture was the biggest advantage, like how to package the marketing material, the resumes, what they look for and how they tend to make their decisions and how to collect money from a large company and make sure you get paid on time.
How did you develop a diversification plan to expand your customer base?
A diversification plan is particularly important being in metro Detroit because of the dominance of the auto industry. It is easy to rely on them, but at the same time, it is too dangerous.
From Day 1, when my first client was General Motors, I have made a considerate effort to branch out and diversify as much as possible. This had allowed Acro to grow in spite of the twists and turns of one industry.
The commitment has to be persistent to achieve an equitable amount of diversity. Making diversification a priority and communicating it throughout the organization is the key. It is not particularly difficult to look to other industries, but it must be done in an organized manner.
It is important to note that diversification should not be at the expense of a beneficial industry. The goal we have is to grow our total business, inside and outside the auto industry.
How did you attract other industries to Acro?
We leveraged our experience in the auto industry. For example, we won a contract with the federal government. They were looking for large numbers of computer scientists and other types of engineering scientists. We have extensive experience servicing the auto industry providing exactly the same type of skill sets.
The government checked the references we provided, and we got very good reviews. And the pricing and proposal we put together to service them was something that we were very pleased with. That, along with the good references we had, helped us win some contracts outside of the auto industry.
Once we had those contracts, we could leverage them, provided we did an outstanding job. We wanted to build a portfolio of loyal customers. Satisfied customers are not good enough nowadays and they never have been.
We want to exceed customer expectations so we retain loyal customers who will do business with us year after year. To our credit, we have never lost a client.
HOW TO REACH: Acro Service Corp., (800) 844-2276 or www.acrocorp.com
