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Christiansen brings Flagsource from loss to profit

May 1st, 2009 / By: / Feature, Management, Marketing, Perspective

Janice Christiansen rebuilds the family business one solution at a time.

“When you’re faced with a problem, you need to break it down and take one thing at a time—because it’s not the size of the challenge, it’s how you handle it,” says Janice Christiansen, president of J.C. Schultz Enterprises Inc. (Flagsource®) in Batavia, Ill. That advice came from Christiansen’s mother, and Christiansen has drawn on it again and again as she led the family company from a state of near-bankruptcy into a debt-free, growing enterprise.

Christiansen joined the company, which started in 1920 as a cottage industry selling fraternal supplies, when she married John Christiansen, the grandson of the company’s founders. “I married him in 1968, and when you married into the Christiansen family, basically you married into the business,” she says. However, it wasn’t until several years later, after their children were older, that she started working part time at the company. She began by performing a variety of duties, including applying trim appliqué and working in sales. During that time, under the leadership of her husband, the company expanded to become one of the largest U.S. flag distributors in the country.

The impact of loss

The business was flourishing when, in 1985, at 40 years old, Christiansen’s husband died. His brother took over, but by 1989, all of the company’s equity had eroded; it had significant debt and was operating with a negative net worth. As Christiansen considered taking over as president, she took stock of her qualifications. She had never taken a business course, though she had a college degree in history, a teaching certificate and had attended several law school courses. She also had a working knowledge of the business, a passion for manufacturing and a desire to see the company turn itself around.

She decided to take on the challenge, addressing the most pressing issue first—debt. “We had some people come in and look at the company. They said perhaps it could be saved but with all the old debt we would need to file Chapter 11 so we could get going, find a new bank, blah, blah, blah,” she says. “Well, that’s not the way I was raised. You pay your debts.” She spoke to all the vendors, asking for more time to make good on the company’s debts. Some vendors agreed without condition—others insisted that she provide a personal guarantee.

A team of advisors

The next priority for Christiansen was to set up a board of directors that included people who were not family members. “I wanted people who had expertise in different fields who could bring value to the company and give objective feedback on how we were doing,” she says. She began by adding a board member from the financial field, one from the legal field, and one from the operations field.

With new leadership in place to help with efficiency and growth, and vendors on board with an adjusted payment schedule, Christiansen was able to focus on the future. “I had three goals: no personal guarantees, no debt, and to own real estate where the company was going to be located,” she says.

The payoff

She realized the first two of those goals in ’94 when the company was able to pay off all its old debt and she no longer had to sign personal guarantees. “I had thought survival was the hardest thing,” she says. “But after we survived and paid off our debt, I thought—now we need growth.” The company initiated several strategies for growth, some of which worked and some of which didn’t. “We didn’t lose,” she says. “We just didn’t grow the way we had hoped.”

In 2000, two changes occurred. First, the company secured a large government contract producing U.S. flags for the Veterans Administration; second, Christiansen hired the company’s current controller.

To fill the large government contract in a timely and profitable manner, Christiansen realized that the company needed to increase efficiency in current production procedures as well as tighten finances. Production procedures were improved with the help of the board member with expertise in the operations field. “Because of the operations input we were able to get the floor laid out properly and get the proper raw materials,” she says. “And that’s really the secret to producing in a timely manner.”

The financial direction was provided by the newly hired controller. “So often small companies think they can’t afford to have a financial person or a controller [on the payroll],” Christiansen says. “They think they can do it themselves. But if you don’t have timely information, and you don’t know what your inventory levels are, what your margins are, what your expenses are, and how it all plays together—then you’re not going to be successful in the end.”

Expansion

Christiansen and the company were—and continue to be—successful in providing U.S. flags to customers. In 2004, the company realized the third of Christiansen’s initial goals: to have the company own its facilities. With the U.S. market mature, Christiansen expanded the company’s products to include custom flags and banners. Now, about 40 percent of the company provides custom products, and the rest of its product base is comprised of manufacturing U.S. flags.

In a struggling economy, Christiansen believes moving forward, entertaining new markets and new products, and keeping a close watch on existing markets is more important than ever. For the past year her executive staff, including her son Jon, vice president of operations, and her son Spencer, vice president of sales and marketing, has been meeting weekly instead of monthly. The increase in frequency is an effort to monitor key indicators that might alert them to areas of the business that are showing a downturn, and consequently need attention. Christiansen and members of her staff are also working with dealers on new initiatives to expand into new markets. “You can’t stand still [in manufacturing]. I cannot stress this enough,” she says. “You can’t stand still.”

Sigrid Tornquist is a freelance author and editor based in St. Paul, Minn.

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