When Steve Schmidt needed to construct a business plan as part of the St. Thomas MBA Entrepreneurship program, he took a suggestion from a friend to research the bar code industry. Today, Steve Schmidt and now partner Jon Jacobs lead Abraham Technical Services, a company with $9 million in 1997 expected sales that has experienced a 50% annual growth rate over its five-year life.

Abraham Technical Services provides its customers with the ability to implement its technology to facilitate the efficient, accurate flow of data in many areas of their businesses. Abraham targets non-retail businesses including manufacturers, distributors, government and hospitals. Solutions include bar-code scanners, printers, labels and software along with equipment repair service and bar code expertise. Bar code technology can be utilized in many ways, for the now essential coding of products to be delivered to retailers, to the tracking of participants at seminars. The company is so committed to full utilization of bar code technology, that in a recent company newsletter, the birth announcements of associates were announced, including the fact that each child had been tagged, and that feeding times were being monitored by bar-coding technology.

Abraham Technical Services credits its success to its exceptional associates and their willingness to work to meet customer needs. The proximity to the customer, and its ability to provide a total bar coding solution provide competitive advantages. While mergers have forced many of its competitors to move to a broader, more nationally focused sales effort, Abraham remains committed to the Midwest. In addition to their main office in Minnesota, Abraham has established offices in Wisconsin, Illinois, Iowa, Indiana, and Colorado to remain close to their customers. By maintaining responsiveness to customers, Abraham is viewed as the local good guy.

Abraham views the total solution to include systems integration and provides the necessary technical support to accomplish the full use of technology sold. Major competitors entered the market via product-line extensions, which can limit their ability to provide the total solution. The focus on the customer is carried throughout the company where communication is considered key. Steve Schmidt notes, "strong communication is part of the company culture."

The company culture promotes teamwork, and associates quiz one another in weekly meetings to stay abreast of industry developments. They also rotate training assignments to enhance skills and cross-train team members. On a weekly basis, sales expectations are communicated with weekly incentives provided. Weekly progress is monitored by everyone. Each associate is aware of when break-even is reached.

This ability to monitor break-even in real time has resulted from timely utilization of the proper tools and full understanding of the profitability of Abraham Technical Services. In the early years, Abraham hit a cash flow crisis similar to many new, fast-growing companies: while the income statement was reflecting a positive bottom line, the cash flow was negative. Through a relationship established by their accountant, Abraham was able to secure a line of credit from Norwest based on receivables. As sales have grown, Norwest has continued to expand the line of credit proportionately.

The line of credit provided only part of the solution. Additionally, their accountant, John Manning of John Manning & Associates introduced several tools to allow Abraham to track cash flow and monitor profitability. The ability to determine the weekly break-even point results from defining product group profitability. By establishing standard pricing with minimums, standard margins can be projected by product group. The definition of margin, along with an understanding of monthly fixed costs, allows break even to be determined.

Annual projections are made which produce a pro-forma income statement, balance sheet, and cash flow statement. These projections are constructed from sales forecast along with assumptions on days sales outstanding, days accounts payable outstanding and inventory turnover. The pro forma incomes statement is translated into monthly and weekly sales goals. In addition to the weekly break-even monitor, monthly statements are prepared to measure actual results.

Additionally, tools have been put into place to monitor and manage the key components of cash flow. Staffing is dedicated to managing accounts receivable and accounts payable. To assist with collection, the sales force commissions are paid upon receipt of customer payments, assuring that the sales force has a vested interest in keeping customer payments current. Inventory is tracked and managed with the bar-code technology that Abraham Technical Services sells.

"With the proper tools and controls in place, Abraham has been able to focus on what is important-the customer," notes John Manning. Steve and Jon both continue as active salespeople in addition to their leadership duties. By keeping close to customers, they have been able to equip their sales force with the necessary tools, and customer needs can quickly be identified to assure that necessary technical support can be developed and delivered.

Abraham Technical Services is projecting a continued 50% growth rate in an industry where a 20% growth rate is considered the norm. By continuing to monitor key positions and promote effective communication, Abraham is positioned for realization of this phenomenal growth.