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Indiana's small business person of the year.

Back in 1953, Charles Reese Smither made a decision that would change his life.

He was 32 years old and worked for the motor division of Indianapolis-based Meier Electric Machine Corp., one of the largest electrical companies in the state. But the company was diversifying and expanding. Meier Electric bought out another business that made electric window fans and fan blades. The sales and manufacture of those products snowballed, and quickly the new division became the biggest in the company.

Meanwhile, the motor division was atrophying. It had only 16 employees left when Meier approached Smither, Al Brehob and Lew Jonas about buying the division. The alternative was closing the motor plant.

Smither and his two partners took the plunge. They formed a new company and named it Brehob Electric Equipment Inc. after Brehob, who was the largest investor. The move paid off. Now Smither, the only original partner remaining, owns 55 percent of the company. Sales last year were in excess of $16 million.

This year, the U.S. Small Business Administration will honor the 69-year-old chairman of the board of Brehob as the Indiana Small Business Person of the Year. "Charles Reese Smither is a sterling example of one of Indiana's small-business persons," says Robert D. General, district director of the SBA. "I am very proud to have him represent Indiana at the national Small Business Week ceremony in Washington, D.C."

The importance of small business to the U.S. economy will be recognized throughout the nation during Small Business Week, May 5-11. This year's theme will be "Small Business Building America's Future."

Smither's business faced adversity just nine months after it split from Meier. A devastating fire destroyed half the plant and threatened to wipe out the company. "The fire burned off the roof and the side of the building that had the furnace, so we had no heat," Smither recalls. "It rained and it was cold, but we set up temporary salamanders, put up a big tarpaulin through the middle of the plant and worked on the good side with the salamanders."

The business also got a helping hand from a local competitor. "Scherer Electric down the street came the day after the fire and offered us the use of their facilities at night to repair motors," says Smither. "They also offered to do the motors for us at their cost until we could get back on our feet."

Brehob is privately owned by 20 stockholders, all of whom are employees, and Smither stresses that it will stay that way. Since 1981, the company has increased its business from $3 million to more than $16 million. It now has more than 131 full-time employees.

Smither credits this huge increase in sales to the fact that the company was broken up into three separate divisions: the electric motor division, which involved sales, repair and service of electric motors; an air compressor branch; and the overhead crane division.

"Before, we had the whole company under one sales force and everybody sold everything. What turned the sales around for us was putting three young aggressive people who specialized in their fields in charge of each of those divisions. The key for us was diversifying into different areas and specializing in different fields."

Smither also attributes his success to surrounding himself with good people and paying whatever it takes to get them to stay with the company. This policy, he believes, reflects in every aspect of the business. "We hire people who are knowledgeable so that when they talk to a customer, they can answer all the questions," he says. "We believe that we have to take care of our customers. If a customer has a warranty problem, any one of our salespeople can make an adjustment to make them happy. We provide good service and are fair with our customers."

Although Smither's company hasn't had any real financial setbacks, he does believe in borrowing money, albeit carefully. "We're a company that believes in keeping a little bit ahead and not going out on a limb or getting leveraged. We always felt that if we wanted to do something, we knew exactly what it would pay off before we went to the bank. We don't go to the bank except for large projects, like buildings. We used the SBA once for a loan for equipment and it worked out beautifully. We paid for the equipment out of the additional sales and service that we could do out of that equipment." The company has grown, Smither adds, by reinvesting.

"We take very little salary out. We're well-paid, but we don't take an exorbitant amount out. All of the profits go back into the company for expansion. Up until 10 years ago, we put almost everything back into it to grow."

Smither also believes in rewarding employees for a job well done. Immediately after he broke away from Meier Electric, he gave his 16 "new" employees a 10-cents-an-hour raise, a hefty sum at the time. "It was the best move we made," says Smither. "Then we had 16 employees who were working hard for Brehob because they appreciated it." Currently, Smither keeps his employees happy with profit sharing, good employee benefits, cost-of-living increases twice a year and merit increase.

According to Smither, his company has not been hard-hit by the recession, although it is not experiencing the growth that it did last year or the year before. "Sales of new products are down, but service is up more to compensate for that. We're still about 8 percent above last year," he says. The company is expanding by opening offices in other cities. It currently has an office in Cincinnati and is considering establishing others in Louisville, Ky., and either South Bend or Fort Wayne.

Does Smither think it would be easy to start a small business now? No. "There's so much competition in everything," he explains. "You'd have to start small and it would depend on how much financing you could come up with. To start a new business, I'd use what financing I had and then go to the SBA. I'd try the alternate financing route."
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Title Annotation:Charles Reese Smither; Brehob Electric Equipment Inc.
Author:Partington, Marta
Publication:Indiana Business Magazine
Article Type:Biography
Date:May 1, 1991
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