Entrepreneur Spotlight

 

Steve Petersen

President/CEO Petersen Incorporated

 

From humble beginnings, Steve Petersen has risen to great heights. As a teenager, he learned to weld and realized that he had a passion for it. That passion has carried him from his family's garage to the head of Petersen Incorporated, one of the top custom metals fabrication companies in the country. Petersen Incorporated designs, fabricates and assembles some of the largest products in the heavy industrial machining industry. It serves clients worldwide in industrial, environmental, aerospace, petrochemical and several other markets. Its immense warehousing division is a model of efficiency and serves clients such as Boeing. The company is also revolutionizing the waste management and transport industry with innovative products and solutions.

     

Launch: Tell us about yourself.

Steve Petersen: I am a guy who loves what I do. When I wake up in the morning, I love to create and be innovative. That's what charges my batteries — to be able to work every day. I love to work. I could be a workaholic really easily. A number of years ago, I went through a training program called Strategic Coach. It taught me that being a workaholic is not the most productive thing to do. They have what they call "Focus Days," "Buffer Days," and "Free Days." You need to have rejuvenation so that you can work hard and be productive. That's really affected my life. It's helped round my life out. I would say I'm a pretty well-rounded individual.

Launch: How did you start Petersen Incorporated?

SP: Petersen is a family business. My dad used to come home after work and teach me his profession, which was welding. I was certified as a welder when I was 14 years old, and I still love to weld and work with my hands. We started in a garage. I worked every night after school and got a scholarship in welding engineering from Utah State University. Then I thought I knew a lot more than my dad and moved away to Idaho where I worked building big heavy strip mining equipment. That's where I got my passion for big equipment. From there I came back to Utah and started working with my dad again. At first, I was on my own for a period of time. Then my dad quit his job and we went in together as 50/50 partners until 1985 when he retired. I'd been the sole owner until about three years ago when I decided that I really wanted the people that work here to be partners, not employees. So I went to an ESOP. Now, the employees of the company are buying about 20 percent of the business.

Launch: What kind of funding did you receive when you started the company?

SP: My mother worked for the Internal Revenue Service for 20 years and was very conservative. She'd let us do anything we wanted, but we couldn't borrow money. So, this business has been built completely on the reinvestment of the money we've made. Every year we reinvest the money we've made back into the company, and that's how we've grown. We have a line of credit but rarely use it. Everything you see here is debt-free. Our buildings are paid for; our equipment is paid for. We fund our work in process ourselves because we've rolled all the profits every year back into the company.

Launch: Did you ever feel that the lack of outside funding hindered you?

SP: Absolutely. It's a lot tougher to build a business organically, but it's a lot more solid than the alternative. There's more stability because you don't have a highly leveraged business and payments that you have to make every month. Sure, you have to grow the business slower, but when you grow it slower, you grow it smarter. Sometimes I think that if I'd had more access to capital, I probably wouldn't have spent it as wisely. I'm very cautious with my expenditures. We only spend money when we absolutely need to spend it.

Launch: What obstacles has your company overcome?

SP: I'd been in business for a few years, and I had one customer that comprised 70 percent of our business file for bankruptcy. Around that same time, I got a knock on the door from the Salt Lake County Sheriff. He was there to repossess a large piece of equipment I'd bought a year earlier. It turned out that the guy I bought the equipment from didn't own it and was still leasing it when he sold it to me for cash. In one week we pretty much lost everything. I learned a great lesson then: Diversification — don't put all your eggs in one basket. Through the whole recovery process — and it was very painful to work through — we never declared bankruptcy. We lost close to $100,000 from our client's bankruptcy, and probably $60,000 or $70,000 on the equipment, but through persistence, we were able to work through those obstacles. We've had our share of obstacles, but I've learned much more in the tough times than in the times when everything is going smoothly. You pay a price for that type of education, but the lessons you learn stay with you a long time.

Launch: Have you been happy with the ESOP?

SP: Yes. Because of the ESOP, my team members started thinking like owners instead of employees. It really makes a difference when we're trying to stay lean. One of the things we want to do is stay below 500 team members to keep our small business status. Of course, we still want to grow the business. To do that, we have to do more with less. By making people partners instead of employees, I've got a commitment level. I love the people I work with. We're really focused on "team." Even though I'm the President/CEO, I'm a worker bee, and I have to earn my stripes every day. I spend a lot of time with customers and with my team members.

Launch: Did you see a dramatic difference in team member attitudes when you instituted the ESOP?

SP: I've always had great people. You get to a point where you ask if it's just a job for them, or do they feel like I do? I wanted them to feel like I do. I'm not a guy to go out and crack a whip. I'm going to share the vision with you. I say, "Here's an opportunity. I'm willing to go and invest time, money and energy to go that way. Will you follow?" Because they have a vested interest in the company, they become much better partners with me in following the vision I create.

Launch: What have you learned about the hiring process?

SP: I have learned that there are some people who interview well, and there are other people who don't interview well but are phenomenal team members. We do what we call a "who/what" ticket. We try to identify what we want from a potential team member and define the scope of the work we want that person to do. That criteria shapes our interviewing and hiring process. We try to truly understand whom we're hiring. Our newly hired team members have a 90-day probationary period. We try to make sure that they have the same standards as we do. We really value honesty and integrity. People who have these kinds of values fit in very well here. We're very open. I share all my financials with everyone who works here.

Launch: What advice would you give to fledgling entrepreneurs?

SP: Be creative. Too many people try to follow the last entrepreneur. Everybody has unique abilities. Find your unique ability. I define "unique ability" as a state in which I am doing what I love. I know I am working within my unique ability when I can say, "I would go to work and not be paid." You can only work within your unique ability about 80 percent of the time in a regular job — there's that 20 percent you have to do that you hate. But if 80 percent of the time you can be in your unique ability, that's when you're going to be happy. To be successful, entrepreneurs have to be happy. They have to have a joy and a passion for what they do. If you don't have that passion, you're not going to be successful.