Growth & opportunity: though new to the BE 100s, these CEOs made moves to create multimillion-dollar enterprises.

Change is inevitable. That's what Tilmon F. Brown realized in 1994 as he stared early retirement in the face at age 49. As Interstate Brand Corp. launched a takeover, Brown knew his high six-figure salary as vice president of sales at Continental Baking, which made Wonder Bread and Hostess Cakes, was no longer secure, so he had to act fast. What happened next was divine intervention. Brown received a call from a good friend concerning a partnership to purchase a faltering manufacturer of soft rolls and English muffins.

Brown, who had been in the baking industry for 40 years, was a great candidate and felt that the call was a sign to follow his long-time dream of becoming an entrepreneur. "Too much fell into place too perfectly for it to be a coincidence," recalls Brown. "My wife and I prayed on it, and I decided to do it. I left Continental on a Friday and walked into New Horizons on a Monday." Brown structured a deal to form the new entity, New Horizons Baking Co. (No. 75 on the BE INDUSTRIAL/ SERVICE 100 list with $50 million in sales). He would eventually own 51% of the company, cut expenses secure capital investments totaling $18 million, and grow revenues by 33% in 10 years.

Brown is just one example of how entrepreneurs can use change to their advantage. Growth and opportunity, however. mean different things to every business owner. For some it means diversification to ensure that a company is not tied too closely to one client. For others, like John F. Carter, president and CEO of Carter Brothers L.L.C., it means aggressive expansion nationally and internationally to become an industry leader. These savvy entrepreneurs are among this year's Freshman Class--the newcomers to the BE 100s. They were able to build thriving enterprises by taking calculated risks, building sound strategies, and acting on their visions. The result is successful enterprises with substantial revenue growth and the profits to match.

THE MASTER PLAN

When Brown, now 61, got that fateful call from John Paterakis, chairman of Northeast Foods, he had been responsible for nearly $2 billion in sales at Continental Baking. Still, he felt the need to become an entrepreneur diving into the new venture with Paterakis and Peter Grimm.

Brown joined the company as president and CEO, Paterakis became chairman, and Grimm was named secretary. Their first order of business was to hammer out a buy-sell agreement: With Brown owning 20% of the company and each of his partners owning 40%, the agreement stated that once debt was cleared, Brown would expand his ownership to give the company minority-owned status. McDonald's (one of BLACK ENTERPRISE'S Best Companies for Diversity in 2005) wanted to groom Northeast Foods to become a minority supplier. The partners were able to pay off the debt owed to JP Morgan Chase bank in 2002, and Brown moved to get controlling interest.

Going into the venture, Brown understood that New Horizons and McDonald's had a unique relationship. The two businesses had agreed to the terms of the relationship on a handshake--which is the fast-food giant's corporate policy for suppliers. New Horizons would provide McDonald's with a continuous supply of buns in perpetuity for about 1,300 restaurants--approximately 10% of its U.S business--in Michigan, Ohio and West Virginia. Brown was assured by Paterakis, who had done business with McDonald's for nearly 40 years, that the restaurant would honor its end of the bargain.

The potential problem with this type of agreement is that McDonald's is 85% of New Horizons' volume. The agreement precludes Brown from seeking other clients in the quick-service restaurant industry, so he's diversifying his client list by adding other food-service companies.

The next goal, says Brown, was to turn the company around and build it into a stable, money making enterprise. "My first set of challenges was coming to grips with the fact that there was no big brother up there who was going to pave my road for my future. I had to make those decisions that would impact my future." Within the first week, Brown and his team sat down to identify ways to trim fat and increase profitability. First they reduced unnecessary manpower, dropping down to 205 employees from 345. Then they automated several tasks, which improved productivity and decreased workers' compensation claims by 20%. The final step involved disbanding the corporate office and splitting it between the bakery locations in Norwalk Ohio, and Fremont, Indiana, to save money on rental space. In seven years, Brown was able to invest about $18 million in capital improvements.

In 2003, the company decided to diversify its customer base and develop several noncompetitive customers outside of McDonald's, including ALDI, Michael Foods, and Schwebel Baking Co. Over the last 10 years, McDonald's began shifting its menu to offer more salads and chicken products, Brown says. This left New Horizons with the equipment to produce a lot more buns than McDonald's needed, and the excess capacity was costing both companies money. "If I have excess capacity and you are the only customer that I have, who eats all of the overhead? You do," Brown says. "So if I can spread that overhead over a broader base, I help maintain some stability in the pricing to my major customer, and in some cases, even reduce that price. It just makes good sense."

HARD-LINE DEALING

Cris Carter, former NFL wide receiver for the Minnesota Vikings, was in a league of his own. Banked second on the NFL's all-time list for total receptions and receiving touchdowns, Carter, 41, was named the 1999 NFL Player of the Year. But in 2001, injuries and age forced Carter to consider retirement. He saw this as an opportunity to partner with his brother, John, 42, to start the company they had always dreamed of." Carter Brothers L.L.C. (No. 80 on the BE INDUSTRIAL/SERVICE 100 list with $47.8 in sales). The electronic security company installs and provides security management, such as fire alarms, burglar alarms, and intrusion detection systems to corporations such as General Electric, Frito Lay, Bank of America, BP Oil, and the city of Atlanta.

Cris put up the initial seed money of $400,000 and became chairman, while John, who runs the company day to day, became president and CEO and added $250,000 to the pot. Before leaving his position as vice president of Barton Malow, a construction company based in Detroit, John oversaw close to $5 billion worth of construction projects for clients such as the Cincinnati Bengals and the Chicago Bears.

It was Cris' connections that got the fledgling security company its first break. An executive from ADT approached Cris as a fan, and in conversation Cris spoke about his new security company. The executive says he immediately saw an opportunity for the two companies to work together. At the time, Tyco Fire & Security, a major business segment of Tyco International Ltd. and an ADT affiliate, that provides electronic security and fire-protection solutions in more than 100 countries, was looking for a partner with construction experience. "Managing multiple large products and dealing with construction companies every day is where they saw their weakness. That is our strength and where our experience came into play," says John. Within weeks, the men set up a meeting.

Tyco Fire & Security benefited from the strategic alliance with Carter Brothers because it had been maintaining an in-house installation team, leading to tremendous overhead. The agreement allowed the company to outsource that work to Carter Brothers. In addition, Carter Brothers provided Tyco with its largest supplier diversity success story, says John. Over five years, Carter Brothers has managed more than $250 million in projects and assets for ADT. "If you looked at our business in the beginning, we were primarily supporting ADT as a second-tier supplier. Over the last five years we have been able to grow our relationships with some of our largest accounts." Certification as a Minority Business Enterprise with the National Minority Supplier Development Council helped Carter Brothers secure additional business, totaling about 200 clients.

John believes recent industry trends will allow for continued growth. Yesterday's security was cameras and card access. Today, it goes further to include how those cameras, card access, and IT interact with outside lights, border gates, and other barriers. Everything and everyone has to be in communication. "I think 9-11 has really changed it," John says. "You used to deal with a security director. Now you are dealing with the COO, the CIO, the security director, and the director of facilities." He expects revenues to swell from $47.8 million to as high as $75 million next year. Projects under management are expected to grow from $79 million to $150 million.

Both of these entrepreneurs have one thing in common: They understood when it was time to take a different path in life. As a result, they've created multimillion-dollar entities with strong foundations that are built to last.

Welcome to the club

2006
Freshman
Class

Industrial/Service

RANK   COMPANY                            LOCATION          STAFF

18     MIG-Visteon Automotive             La Vergne, TN     185
         Systems L.L.C.
26     Millennium Steel Service L.L.C.    Princeton, IN     55
30     Trillion Communications Corp.      Bessemer, AL      7
40     Systems Electro Coating            Madison, MS       51
57     New Technology Steel L.L.C.        Detroit, MI       140
74     C.H. James Restaurant Holdings     Deerfield, IL     1027
75     CMI Management Inc.                Alexandria, VA    600
75     New Horizons Baking Co.            Norwalk, OH       210
80     Carter Brothers L.L.C.             Atlanta, GA       110
81     Americus Credit Group              Los Angeles, CA   38
90     Z-Tech Corp.                       Rockville, MD     300
92     SoBran Inc.                        Dayton, OH        500
96     Altos Federal Group Inc.           Washington, DC    275
96     CDO Technologies Inc               Dayton, ON        275
100    Alpha Rae Personnel Inc.           IN                1,000

RANK   COMPANY                            TYPE OF BUSINESS

18     MIG-Visteon Automotive             Tier 1 automotive
         Systems L.L.C.                     parts supplier
26     Millennium Steel Service L.L.C.    Warehousing and processing
                                            of automotive steel
30     Trillion Communications Corp.      Provider of
                                            telecommunications supply
                                            chain services, reseller
40     Systems Electro Coating            Electro coating of automotive
                                            and industrial metal
                                            parts; subassembly
57     New Technology Steel L.L.C.        Slitting, pickling, blanking,
                                            and leveling special
                                            bar-quality steel
74     C.H. James Restaurant Holdings     Burger King franchisee
75     CMI Management Inc.                Administrative support
                                            services, records and
                                            government facilities
                                            management
75     New Horizons Baking Co.            Manufacturer of soft
                                            rolls and english
                                            muffins
80     Carter Brothers L.L.C.             Electronic security,
                                            equipment installation
81     Americus Credit Group              Equipment loans, security
                                            equipment sales
90     Z-Tech Corp.                       Software development,
                                            Web design
92     SoBran Inc.                        Biomedical and environmental
                                            research, mail sanitation
96     Altos Federal Group Inc.           Medical staffing services
                                            and healthcare providers
96     CDO Technologies Inc               Technology services,
                                            strategic consulting,
                                            business solutions
100    Alpha Rae Personnel Inc.           Recruitment & staffing

RANK   COMPANY                                   SALES *

18     MIG-Visteon Automotive                     242.000
         Systems L.L.C.
26     Millennium Steel Service L.L.C.            157.577
30     Trillion Communications Corp.              135.480
40     Systems Electro Coating                    103.000
57     New Tech nology Steel L.L.C.                72.000
74     C.H. James Restaurant Holdings              50.325
75     CMI Management Inc.                         50.000
75     New Horizons Baking Co.                     50.000
80     Carter Brothers L.L.C.                      47.800
81     Americus Credit Group                       47.000
90     Z-Tech Corp.                                35.000
92     SoBran Inc.                                 34.000
96     Altos Federal Group Inc.                    32.000
96     CDO Technologies Inc                       JL VVV
100    Alpha Rae Personnel Inc.                    30.000

Auto

RANK   COMPANY                         LOCATION           STAFF

83     Queen City
         Lincoln Mercury               Charlotte, NC      47
90     Southland Chrysler Jeep         Southaven, MS      48
96     Northpoint Ford Lincoln
         Mercury Inc.                  Bastrop, LA        32
97     Middletown Ford                 Middletown, OH     35
98     Anthony Underwood Automotive    Bessemer, AL       40
99     Westborough Buick
         Pontiac GMC Inc.              Westborough, MA    35
100    Cleve White Nissan Inc.         Statesboro, GA     25

RANK   COMPANY                         TYPE OF BUSINESS   SALES *

83     Queen City
         Lincoln Mercury               Lincoln, Mercury   28.691
90     Southland Chrysler Jeep         Chrysler,
                                         Jeep, Dodge      26.906
96     Northpoint Ford Lincoln         Ford, Lincoln,     19.478
         Mercury Inc.                    Mercury
97     Middletown Ford                 Ford               18.185
98     Anthony Underwood Automotive    Ford, Chevrolet,
                                          Nissan          15.000
99     Westborough Buick               GM, Buick,         14.543
         Pontiac GMC Inc.                Pontiac, CIVIC

100    Cleve White Nissan Inc.         Nissan             11.587

Private Equity
                                                      CAPITAL *
RANK   COMPANY              LOCATION          STAFF   UNDER M.

 3     Parish Capital       Chapel Hill, NC    13        425
       Advisor L.L.C.

Banks

                                                      CAPITAL *
RANK   COMPANY              LOCATION          STAFF   UNDER M.

 25    North Milwaukee      Milwaukee, WI      is      66.000
       State Bank

Investment Banks

                                                      CAPITAL *
RANK   COMPANY              LOCATION          STAFF   UNDER M.

 10    Capital Management   Chicago, IL       11.00    10,886
       Group Securites
       L.L.C.

* IN MILLIONS OF DOLLARS

SOURCE: B.E. RESEARCH