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MANAGEMENT
MAY 2, 2000


A High-Tech Honcho Who Says No to Hypergrowth

For Lurita Doan, life and business got a lot better after she constrained her company's expansion



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Three years ago, Lurita Doan should, by most standards, have been ecstatic. The U.S. government had offered her company, New Technology Management Inc., a $22 million contract. Its revenues were only $16 million at the time.

Instead, Doan had major qualms. The contract was for hardware. Her Oakton (Va.) company specializes in technology installation, support, and maintenance. Profits looked slim. She would have had to double her staff. NTMI's explosive growth was hurting margins and quality. She made a rare choice for a high-tech entrepreneur: She said no.

Then, Doan went further: She jettisoned half her 50-odd clients, worth a fifth of her revenues, the ones to whom "you can give the sun, moon, and stars...but they're still discontent." Her new goal: to deliver high-quality service to a select group of customers -- not to aggressively pursue new ones.

WORKABLE HOURS. A corporate death wish? Hardly. Her aftertax profit margins are now 15% to 17%, vs. 5% to 6% two years ago. Last year, NTMI was No. 67 in Forbes's ASAP 500 ranking, was named one of the Washington Post's Top 25 IT Companies, and made the "Fast 500" list of Deloitte & Touche. Doan's company has no debt, and her steady work for the Navy, Treasury, the Internal Revenue Service, U.S. Customs, the Immigration & Naturalization Service, and Agriculture Dept. keeps expanding. The 143-employee company has a turnover rate of 13%, vs. 20% for the region, according to the Northern Virginia Technology Council. It turns away qualified applicants -- thanks to generous benefits and workdays that end at 6 p.m.

Doan's revelation was simple: Seek profitable, sustainable growth. "I think that people like the gross numbers because they sound so fancy. But what really makes a business successful is the bottom line. It's what gives you your flexibility, your seed money for new ventures, your investment in your people, and your infrastructure. Not to mention you sleep better at night."

That's a quaint sentiment in the macho dot-com culture where entrepreneurs proudly live on the fiscal edge -- drawing down venture capital and taking profitless companies public. Yet Doan's tactics are emerging as a countertrend at women-owned businesses. Popular stereotypes about women managers dwell on personality traits: "dragon lady" or "earth mother." But some research suggests that women tend to have a different philosophy about business than men -- one that emphasizes fiscal conservatism over risk, quality control over rapid growth, and humanistic management over grinding pressure.

MANY FACTORS. "Women feel their competitive edge is based on quality, on superb customer service, and on relationship-building" with customers, vendors, and staff, says Sharon Hadary, president of the National Foundation for Women Business Owners, based in Washington, D.C.

Little hard data are available to explain why women tend to constrain their companies' growth, but researchers think several factors are at work. "We hear all the time that women are choosing to keep their businesses smaller," says Patricia Greene, professor of entrepreneurial studies at the University of Missouri at Kansas City. "It's probably for three reasons: so they can manage their family responsibilities better, because they aren't aware of the funding mechanisms available for growth, and because they're leery of giving up control out of concern over what's going to happen to the business."

Two of those issues -- family and control -- certainly motivated Doan. She never planned to be a high-tech CEO. A Vassar graduate with two degrees in Renaissance literature, she switched from college teaching to high-tech in 1984: "I wanted more money -- to be honest." She studied Unix and worked for four years at Unisys as a technician at "the sharing-a-cubicle level."

PICK-A-TITLE. Doan's newborn daughter, Natalia, motivated her to start NTMI in 1990: "I wanted her to see me in charge so she'd have a role model." She got her first work integrating Unix systems by pounding on doors armed with a list of agencies and three business cards so she could announce herself as a senior systems engineer, vice-president of business development, or president and CEO -- as needed.

Doan worked alone until 1993, when she landed a $250,000 Navy contract to install Unix on ships. (She still owns 100% of NTMI.) Soon she had 10 employees. Minority-contractor certification -- she's African American -- helped boost her access. From 1994 to 1996, her staff quadrupled, to 40 employees. Annual revenues soared to $7.4 million, from $450,000. Her lawyers urged deals and acquisitions on her. Her accountants talked IPO and mergers.

Success came at a price, though: 100-hour work weeks. She saw little of her husband or her children. (By then, she had a second daughter, Alexandra.) "I began to realize that all my ambitions for my company -- to provide excellent quality service, a great quality of life for the people who worked for me, and a wonderful bottom line -- were getting lost in the concept of gross revenues."

FEWER BASKETS. The slowdown paid off immediately. Employees had time to research customers' needs. A $12,000 Web site for the Agriculture Dept. morphed into a $150,000 online course. A $250,000 Navy contract for computer support evolved into a $4 million job serving overseas installations.

Relying on existing customers has risks, she acknowledges. "When you're putting all your eggs in a limited number of baskets, if something goes south, your revenue goes south. But I prefer to focus on positives. I'm not going to fail, my clients are going to do well, and they're going to move me up as they go up."

She hasn't lost a customer. Stacy Wright, program manager of Thunder Mountain Evaluation Center in Sierra Vista, Ariz., which tests equipment for federal agencies, subcontracts out work to NTMI employees. The agency now uses up to 20 employees at a time. "They're able, flexible, and give me what I need when I need it," he says.

EVERYBODY SELLS. Doan's strategy also contains overhead. Take legal fees. Once the company lands a federal-agency contract, follow-up jobs require only a simpler "statement of work." NTMI has only one marketing person. Employees get bonuses for winning new work from existing customers. "In some ways, we have 143 people marketing us," Doan says. "Even our receptionist has bought in business." The company now has eight Agriculture Dept. contracts, vs. three in 1998, generating 20 times the revenue, says Leine Whittington, who manages NTMI's contracts for Agriculture.

Low turnover cuts recruiting costs and overtime. Says Doan: "Most people work until 5:30 or 6 p.m. in their respective time zones unless there is a real, not imagined, crisis -- which is pretty rare these days." The company has offices in St. Louis, Atlanta, New Orleans, Sierra Vista, and Winchester, Va. Doan pays 10% of annual salaries for certification courses -- 2.3% is average for high-tech companies, according to American Society for Training & Development data.

Flexible scheduling helps retention too. "When our people who originated in Africa, India, or China go visit their families, they go for two to three months, so we have what I call flex-timing, part-timing, and some-timing," she says. Doan works 9 a.m. to 6 p.m. five days a week.

EXPLORING OPTIONS. The low-key life suits Doan's tastes. She understands why competitors wear expensive suits and watches: "I do believe it inspires a level of confidence with clients," she says. "But I just see where they're spending their company's money."

She's not impervious to the zeitgeist. Lately, she has been boning up on venture capital and IPOs. She formed an advisory board that includes the chief information officers of Novell and Amazon.com and the head of the Washington (D.C.) Technology Council. "I'm trying to understand what the ramifications of going down one of these paths are," she muses. "Right now, we're totally self-financed and have a lot of flexibility. So truly, I don't know what the advantage would be."

How much longer will Doan's approach work? Her success so far shows there are more ways to build a business than today's hyperstressed entrepreneurs often consider.


By Meg Lundstrom in New York

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