Building $1 Billion Dollar Company From Scratch

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How To Build A Billion Dollar Company From Scratch

“Now, for the first time, this book provides the roadmap to the highly disciplined process that made Harry Figgie one of the leading builders of companies in America.” —JOEL L. REED, Principal, RA Capital Group

During the closing days of 1963, Harry E. Figgie Jr. left his job as a profit improvement consultant at Booz Allen Hamilton and patched together the financing to purchase a struggling $23 million sprinkler company. During the next 30 years, he grew the company into a consistently profitable, $1.3 billion diversified corporation. It was a wild ride, one that has many lessons for today’s entrepreneur.

Figgie did it the old fashioned way – through hard work, a strategic combination of internal and external growth, and a consistent focus on profit improvement. As this Entrepreneurial Handbook demonstrates, the principles he used have never gone out of style, and are being used today by him and his son to create another diversified enterprise. With that in mind, the author lays out a step-by-step guide how others can replicate his success.

The centerpiece of Harry Figgie’s strategy is what he calls the nucleus theory, which is essentially the selection, acquisition, and internal development of companies within selected major industries and with complementary product lines. At its height, Figgie International’s six nucleuses included Consumer Products (Rawlings Sporting Goods, Fred Perry Sportswear), Defense (Scott Aviation, Interstate Engineering), and Fire Protection (Automatic Sprinkler, American LaFrance), as well as Services, Labor Reduction Equipment, and Fluid Controls & Hydraulic Equipment.

In How to Build a Billion Dollar Company From Scratch, Harry Figgie explains that the initial acquisition that creates a new nucleus should be in an industry

* in which you have some experience
* in which a $75-100 million company represents a position of considerable importance
* that has quantifiable growth prospects.

He also suggests:

* Be on the lookout for concerns which aren’t so blue chip that you can’t afford them, but not so sick that they won’t be susceptible to profit improvement.
* Value companies the same way you do a new piece of equipment, based on how long it will take to pay back the purchase price from earnings.
* EBITDA (earnings before interest, taxes, depreciation, and amortization) is for financiers; cash flow and payback are for entrepreneurs.
* Before making an offer, find out why a company is for sale.