When the only traffic light in Glenwood, Minn., is red, few vacationing motorists notice Pizza Ranch, Randy's Candies or Hometown Photo. In fact, as some of the town's 2,500 residents point out, many motorists don't even notice the traffic light.
That's because out-of-towners driving on Minnesota Avenue often look west to Lake Minnewaska (the state's 13th largest lake) nestling against a backdrop of tall pines. Water-skiers, fishing enthusiasts and campers living two hours southeast in Minneapolis or two hours northwest in Fargo, N.D., come to Glenwood for recreation, not pizza or hand-dipped chocolates. So people here understand when vacationers don't notice their quaint shops or the town's strong bond. After all, how could a close-knit community explain to an outsider the joy of saving its cultural-and-arts center from a wrecking ball, as Glenwood did in 1994?
Larry A. Zavadil is one of Glenwood's most ardent supporters. He's inside the building located at 31 E. Minnesota Ave., a short walk from the traffic light. The building has more than 20 windows, and affixed to each one is a small label of an American flag. Inside, red-white-and-blue bunting adorns the first-floor walls. If Zavadil (pronounced "Zah-vah-jil") were outside on the street instead of pacing the second-floor hallway, people undoubtedly would recognize him and wave. This isn't because he was one of 22 nominees for Ernst & Young's Entrepreneur of the Year award last year. Nor is it because Zavadil is president of American Solutions for Business (formerly American Business Forms Inc.), a network of 425 distributorships nationwide that's supported by 190 staff members in Glenwood. Ninety additional staff members are located nationwide.
"Most of all, the town appreciates Larry because he's one of them," says Craig McLain, American's vice president of sales and COO. McLain joined the company in February 2000, a few months after Zavadil took him to lunch and outlined the company's strategic plan on the back of a place mat. "That was vintage Larry," says McLain, who spent nine years in Chicago working for manufacturer Moore Corporation Ltd. before joining American. "Part of the beauty of this company is that it's entrepreneurial, flexible and fun" instead of mired in formality and minutiae, he says.
McLain sits behind a conference desk with his legs crossed. He's wearing a yellow golf shirt, jeans and no socks. "This area has very down-to-earth people," he says. "They identify with Larry as a good family man and a successful businessman. Anyone can tell that he loves this company. But more than that, he loves his place in life."
American's Founding Father
Zavadil grew up on a 160-acre farm five miles north of Glenwood. His father was 100 percent Czech and his mother was 100 percent German, but it's anyone's guess as to which genes, if any, made Zavadil a man of mantras and metaphors.
When talking with American's staff or writing his column for American Pride, the company's monthly internal newsletter, Zavadil chisels problems to their cores. His specialty is simplicity: "Never underestimate the power of dumb luck." "Anger is only one letter short of danger." "If you want a place in the sun, expect a few blisters." The list goes on.
And so does the listening. American's sales associates, staff and vendors universally regard Zavadil as a caring person who doesn't dismiss problems as insignificant or exaggerate them as permanent. He laughs frequently, sometimes to the point at which his right eye nearly closes. "He's the glue that holds the company together," says Jerry Bryant, a sales associate who joined the company in 2001, shortly after Dallas-based distributorship Precept Business Services Inc. filed for Chapter 11 bankruptcy. (Precept owned the firm Bryant worked for, Florence, S.C.-based distributorship Southern Systems Business Forms & Data Supplies.) Today, Bryant oversees American offices in LaGrange, Ga., and Roswell, Ga. Combined, they generate annual sales of more than $8 million. "Larry cares about our success as solution providers and as people," Bryant says.
Zavadil honed his communication skills at the University of Minnesota, where he graduated in 1971 with a bachelor of science degree in journalism and advertising. (He also had a successful 4-year college baseball career). Upon graduation, he worked briefly in Minneapolis for the SysteMedia division of business forms and supplies manufacturer NCR. In 1973, Zavadil returned to Glenwood and dabbled in produce sales and automotive parts sales and became owner of Mr. Z's Pizza. He also founded manufacturer Glacial Printing and Office Supply with two other people, but sold his interest in the firm soon afterward.
In 1976, Zavadil returned to NCR and became its SysteMedia division salesman for two-thirds of Minnesota and half of North Dakota. Despite a promotion to district manager and annual sales that reached $770,000, Zavadil felt uncomfortable at NCR because "we basically chased orders," he says. "We were trained in the art of gaining the most money from the customer without having a fight. It was impossible to develop the best product proposition that way. My true boss should have been the customer, not a factory production schedule."
Diane Marie Zavadil, his wife since 1970 and the mother of their three children, gave her husband tough love. "She told me to either start my own distributorship, or shut up and not complain about it anymore," he says. "It was pretty good advice."
When Zavadil resigned from NCR in October 1980, he didn't intend to build a nationwide printing distributorship. But he did have a mental list of cogent business concepts: 1) People most directly involved with customers--sales associates--are best suited to act as extensions of their clients' purchasing and marketing departments. 2) If sales associates are empowered to make independent product, service and vendor decisions, multiple management layers are frivolous. (Zavadil's mantra: "American will never be an ivory tower.") 3) Highly motivated, highly compensated salespeople are critical to customer satisfaction. 4) Customers buy from people, not companies, so establishing long-term client relationships is key.
The American Spirit Comes Alive
Zavadil's concepts provided a kind of Bill of Rights for American, which he launched in January 1981. He considered calling the company Zavadil Business Forms until he and a client had a few beers at Main Street Bar in Marshall, Minn. The client, who worked for Marshall-based frozen-food delivery firm The Schwan Food Company Inc., convinced Zavadil to gain credibility by choosing a company name that would make his fledging firm appear large. "I was living the American dream by running my own business, so I embraced that concept," Zavadil says. "I feel strongly that this country is the best place for business dreams to come true. 'American' is a spirit at our company, not just a word."
Zavadil and American's first two salespeople, Dan McAnally and Gary Skordahl, worked out of Zavadil's remodeled basement, then his remodeled attic, while generating the firm's first-year sales of $550,000. Steadily, the company gained accounts and added salespeople. In 1984, the firm moved next door, into another house Zavadil owned. "I remember six of us carrying three pieces of an IBM computer like it was a train through two feet of snow," he says. "I guess every company has growing pains."
But not every company achieves award-winning growth. In 1986, American moved into the east half of its present-day site (the former location of Zavadil's Mr. Z's Pizza joint). Two months after relocating, the company purchased the west half. Two months after that, it purchased the basement. Also in 1986, American made Inc. magazine's list of the 500 fastest-growing, privately held companies. In 1988, it won the Small Business Administration award for excellence and achieved annual sales of $16 million. The company has enjoyed consistent growth since, reaching sales of $23 million in 1993, $37 million in 1994, $67 million in 1995, $100 million in 1996 and $195 million in 2000.
In fiscal year 2002, American's annual sales were $217.5 million. The company now occupies eight buildings in Glenwood, seven of which are linked with a fiber-optic phone network. Zavadil usually works from sunup to sundown, and often refers to The Schwan Food Company as a prime example of creative possibility. Marvin Schwan launched the company in March 1952 with only a 1946 Dodge panel van and 14 gallons of ice cream. Today, the firm is the largest branded-food company in the United States, primarily because it refocused from selling ice cream to homes to selling frozen pizzas to schools and other organizations. Sometimes, Zavadil sits in meetings or walks down the hallway and says, "What's our pizza? What's our pizza?" He's challenging his staff to ponder how American can repackage itself for future growth.
A Culture of Trust and Partnership
American's management calls the firm's structure a "hybrid" because it combines tenets of franchise and independent ownership. When sales associates join the company, they don't sign franchise or non-compete agreements, nor do they pay up-front investments. They operate under American's corporate entity, but have "complete control of their professional lives, earnings and future goals," Zavadil says.
Staff members in Glenwood handle sales associates' invoicing, customer service, computerized forms management and usage reports, product source assistance, and other operational and financial functions. That benefit is one reason nearly 90 new associates join American each year. Associates cite three other reasons: improved buying power through the company's Partners for Progress vendor program, better recognition in the marketplace, and the opportunity to share ideas and experiences with fellow associates at the firm's two annual conference/trade shows. (The summer conference is held at Cragun's resort in Brainerd, Minn. The winter conference is held in Minneapolis.)
American's Partners for Progress program exemplifies the company's high regard for partnerships. The program enables manufacturers to increase their exposure to the firm's 425 sales associates in exchange for prompt-pay discounts and rebates. Vendors' participation levels determine their prominence in American's printed and online vendor directories, the number of direct mailings in which their materials are included, the cost of exhibiting at the company's two conference/trade shows, the ability to create educational seminars and workshops at those events, and more. According to Wayne Martin, American's director of vendor relations, 442 vendors are in the Partners for Progress program, and 60 percent of them are Patriot Level members (the highest of the program's five levels). Patriot Level members offer prompt-pay discounts and rebates totaling five percent. They receive a slew of extra marketing benefits for doing so, including the ability to update their capability profiles and success stories on American's online Employee Resource Center at www.americanbus.com. "It's a pleasure to drive business to companies who value their relationships with American," Martin says.
Bryant says he relies on the Employee Resource Center frequently. He also says he appreciates ACES, American's proprietary and customizable software that enables end users to order online. (For more information about the Partners for Progress Program, ACES and AIMS, American's internal information management system, visit www.printsolutionsmag.com and click on "Print Solutions Web Exclusives.") "We didn't have the money or purchasing power to accomplish everything we wanted to do for our customers, but that's no longer the case," Bryant says. "We have a huge corporate environment that supports us when we go after large accounts that crave technology, and we also can sell to local banks and other places that crave customer service."
Michael Stai, American's vice president who has worked at the company for nine years, says the firm's sales associates appreciate the freedom to manage their own client relationships. "We pretty much stay out of it," he says. "There's really no hand-holding. We concentrate on giving them the tools they need to satisfy their customers' needs. In return, they get a larger commission split with American than they could with anyone else."
American receives and pays all sales associates' bills, sending commission splits to the associates from its headquarters in Glenwood. Associates receive 50 percent to 75 percent of profits, based on the products they sell. "If you generate the money, you should get the lion's share of it," Zavadil says. "The more you sell, the more you eat."
American's management team trusts sales associates to place and write orders honestly and professionally. Occasionally, it learns about invoices sent directly to sales associates instead of to the corporate office. If sales associates collect invoices in exchange for cash or receive checks in the names of their businesses instead of in American's name, the firm's legal counsel considers the act theft. "Anything that's going to last must be built on a few core foundations," McLain says. "Honesty and integrity are two of them. American's strong sense of ethics is one reason I'm here. It's absolutely essential."
American's structure is ideal for responsible, self-directed and money-motivated industry pros who enjoy autonomy yet recognize the value of a support network, McLain says. The average experience of American's sales associates is 15 years, and their average annual income is $109,000, he says.
"Working with American is like being able to go to heaven without having to die," says Bruce Zweber, a top sales associate in Burnsville, Minn., who joined the company in 1994. His sales have increased each year except 2002, and he's a member of the firm's Million-Dollar Club. "The independence allows you to set up your own lifestyle," he says. "You have to be a self-starter and work hard to succeed, but if you can't sell under the American system, you probably shouldn't be in sales."
