Flour Power - Li'L Guy's Third Generation Goes Beyond Being Chips Off the Old Block

Kansas City Business Journal, March 3-9, 2006
cgranez@bizjournals.com | 816-421-5900

 

David and Christina Sloan should be careful. They just might outgrow the name of their grandfather's company.

The two young, third-generation principals of Li'l Guy Foods have taken the company from the brink of disaster and positioned it to generate more revenue in 2006 than at any point in its 40 years.

Along the way, David, 34, and Christina, 29, have learned some important -- and difficult -- lessons.

The Sloans, along with their brother, Edward Sloan, who works as a company delivery driver, grew up working at Li'l Guy making tortillas in production, pushing paper and delivering products.

"We've done every job in this company," Christina Sloan said. "It gives us a different viewpoint for our employees because we've done their jobs, so we understand it."

Don Miranda and his friend, Fred Garcia, founded the company in 1965 when the two Topeka railroad workers decided to start a business. When Miranda died of cancer in 1989, his daughter, Deborah Sloan, bought the company out of probate and rebuilt it.

She made David Sloan vice president of the company when he was just 17.

"I was probably the youngest person on staff," he said. "It took a lot of work to get people's respect."

When Christina Sloan became sales director in 1996, at age 18, everyone on staff had at least 10 years of experience.

"Plus, I was a girl," she said. "They didn't want anything to do with me. We had to learn really quickly, and we grew up really quickly."

When she worked for her father, Deborah Sloan said she felt he held her back when she had an innovative idea or wanted to try something aggressive.

"I said if my kids ever become involved in the business, if I reach point where I'm afraid to take chances, then I need to leave and let them take over," she said. "In the late '90s, David was making suggestions, but I became nervous and apprehensive. Christina and David were coming up with brilliant ideas, and I felt like I was holding them back."

Deborah retired. She and her husband, Robert, sit on the board and consult on big financial decisions. But the children handle the day-to-day operation.

David and Christina found ways to improve efficiency, such as cutting down on overtime pay, and to increase sales to existing customers through more consistent customer service. They earned the respect of their employees by working long hours and boosting sales.

"Some of our employees were thinking, 'These kids don't know nothing.' Some even thought we would let the business fail," Christina said. "But we got down in the trenches with them."

Soon, business was going well, the company was growing, and the Sloan children were on cloud nine.

"We thought nobody could bring us down," Christina Sloan said.

But that's very nearly what happened in the first quarter of 2001. Two brands Li'l Guy distributed pulled out, instantly wiping out about half of sales. The $1.4 million hit put the company in serious jeopardy. The Sloans set about the arduous task of rebuilding based solely on the company's brands and products.

"At this point, all of our business is 100 percent our own. Nobody holds any of our cards anymore, which was a very important lesson to learn," Christina Sloan said.

One key strategy to improve the business was an investment in technology. Every delivery driver had a cell phone before that was common. Recently, each driver was given a personal digital assistant. The hand-helds allow drivers to instantly pull up sales statistics on a grocery store along their route. A portable printer allows them to print a report, which they can use to make a case for additional or more prominent display.

Since the disastrous quarter in 2001, the company has grown about 12 percent annually, matching 2000 sales for the first time in 2005, with revenue of about $3 million. The goal is to increase revenue 20 percent in 2006 and 2007.

Andre Hinton, president of Leawood-based AH Inc. Consulting, worked with the Sloans through the Ewing Marion Kauffman Foundation's Kauffman Coaches program. Hinton immediately recognized growth opportunities in Li'l Guy. He said the company was producing high-quality products in the fast-growing Hispanic foods market and already had a strong regional brand name.

Hinton helped the Sloans focus on a handful of key areas for improvement, including boosting production efficiency.

"We could probably see 10 percent (revenue) growth (in the next fiscal year), and 20 percent is not unreasonable," he said. "We expect profit growth to be even greater than that."

The program, David Sloan said, "became a catalyst for change."

Henry Marquez, owner of the three Rancho Grande Cantina Mexican restaurants, said he has contracted exclusively with Li'l Guy for more than six years. He puts Li'l Guy's logo on menus because customers so frequently ask about the tortillas his restaurants serve.

"The product is excellent," he said. "Other tortilla companies have tried to get our business, but no one could match their prices, quality and service."

Marquez said the Sloans personally have resolved any problems promptly. Christina Sloan even has hopped in her car to deliver products in a pinch.

Li'l Guy also recently was certified as a minority-owned business through the Mid America Minority Business Development Council, formerly the Minority Supplier Council. This could lead to contracts with corporations or government agencies.

Chris Kelly, a vice president for the council, said the certification will help Li'l Guy become aware of -- and potentially win -- high-dollar contracts.

"I would say that the potential is great for them because we have core members who are in the food industry, like area casinos, who would use their products," she said.

Kelly said Li'l Guy also could benefit from the council's nationwide network if the company works at it.

Christina Sloan said Li'l Guy hopes to leverage the certification initially to go after increased business with area casinos, which have no local, minority-certified tortilla producers to choose from. By networking with others connected to the council, she said Li'l Guy hopes to widen distribution and be in six states in about five years.

The Sloans said the success shows they are beating the odds. Small businesses often run into trouble when one generation hands off to another, particularly by the third generation. And they said minority-owned businesses often struggle harder to succeed.

"We have all these odds against us, and then we lose more than half our sales in one quarter," Christina Sloan said. "But we beat the odds, and it had nothing to do with luck."

 

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