When it comes to cash management, some small businesses that missed the dot.com boom-and-bust learned valuable lessons from the excesses of that era. These smart companies are long on employee perks, high on morale and -- unlike most of their dot.com counterparts -- short on wasteful spending.
Chris Ashton is president and CEO of Petplan USA, a Philadelphia, Pennsylvania-based pet insurance company. Founded in 2006, long after the Internet boom and its subsequent crash, the company is decidedly frugal. “We're always saving money,” says Ashton. “I think it's an important tenet of any young company to be aware of costs, to be frugal. Some of the greatest companies in America have an ethos of frugality. We instill it in everyone.” In a nutshell, he says, it's about not wasting resources.
‘Mindful of microeconomics’
“Our employees do have free lunches,” says Ashton. “I'd rather save money on printer cartridges and paper so we can afford the free lunches. I’d rather save that money and give the best possible benefits to our employees. We have flexible savings accounts, which cost the company money. But we pay for it by being smarter about other things. We are mindful of microeconomics.”
Petplan employs 35 people and has annual revenues of about $15 million. The company has plans to grow – and to maintain its green, frugal culture. “At the rate we are growing, in a couple years when we have hundreds of employees, the culture we’re establishing today will have a big impact,” says Ashton.
Ashton learned some important lessons from having watched the tremendous amounts of money he believes were frittered away by the dot.coms. “You don't need to spend the money the way they were spending it,” he says. “I was in business school at the tail end of that. There were a lot of stories of the crash. You could argue that it's simple to learn lessons from that. But a lot of it comes to the fundamental tenets. Do you have a viable business model? There are revenues and expenses. In the dot.com bust there was no sense of expenditures.”
‘We are ready’
Petplan’s green ethos goes directly to its overall philosophy. “Our corporate philosophy is planning for the long term,” says Ashton. “We want to be a viable business, a long-term player. So one of those values has to be concern for the environment.”
Of course Petplan owes its success to more than just its frugal culture and commitment to the planet. “We're investing now in building our channels,” says Ashton. “We have a strong online presence in terms of our advertising. But one of the things we are launching now is TV advertising. Direct response TV advertising still gets the best response. We are trialing, investing in a nationwide TV campaign.” But, Ashton warns, television advertising is a big step for a business. “You've got to be ready for TV advertising. You can’t do it and have just two people answering the phone. You’ll lose impact. We are ready in terms of our infrastructure and our processes.”
Eric Siegel, adjunct lecturer in management at Wharton School and president of Siegel Management, advisors to middle market growth companies, agrees that the trick is to save money without undermining morale. “Some people think the more money you raise the more you succeed,” says Siegel. But that isn’t the case. “Do you offer perks that offset [your competitors'] higher salaries?” It looks as though Petplan does exactly that.
Says Ashton, “Had we started this business during the dot.com boom, and we'd raised $160 million, we might have done it differently. But I'm quite happy in terms of where we are at.”