Magazine

Mr. Small Biz?


Steven Preston has done very well in big business. But is he the right person to do well for small business? The White House is betting so. On Apr. 25, after the resignation of Hector Barreto, Preston was nominated to head the U.S. Small Business Administration, a $152,000-a-year post.

Preston has no experience running a small company. He joined Lehman Brothers as an investment banker in 1985, straight out of grad school. In 1997, he became CFO, and then executive vice-president, of ServiceMaster, a $3.24 billion grab bag of franchised businesses ranging from pest extermination to lawn care and home cleaning. He oversaw 39,000 employees at 5,500 locations and was paid $1.7 million last year. Preston declined requests to be interviewed.

While Preston is little known by business organizations in Washington, he has had a link to the Bush Administration in Claire Buchan, now chief of staff to Commerce Secretary Carlos Gutierrez. She was vice-president of communications at ServiceMaster until 2001, when she left to become White House deputy press secretary.

Some small business owners say ServiceMaster is a bully. They complain that ChemLawn and TruGreen franchisees take federal contracts that might otherwise go to independent outfits. That's enough for the National Black Chamber of Commerce to oppose Preston's confirmation. "That company," says Harry Alford, the group's president and CEO, "has been predatory against small business."

But ServiceMaster executives say that because the company relies on franchisees, Preston understands small businesses. He has also had some small business exposure as an adviser to private equity firm Concentric Equity Partners in Hinsdale, Ill..

Given the SBA's size and management challenges, Preston's Big Business background may be an asset. The 5,585-employee agency has an annual budget of $730 million and $65 billion in loans outstanding. It also oversees all federal set-aside contracts for small businesses, which came to $69 billion in 2004. The National Federation of Independent Business is backing Preston, says CEO Todd Stottlemyer, because he knows how to manage complex organizations.

Representative Don Manzullo (R-Ill.), chairman of the House Small Business Committee, calls Preston "an excellent choice" and says it doesn't matter that he has never run a business. "You don't have to have a bad tooth to be a dentist," Manzullo says. "I would rather have someone with administrative experience who knows how to deal with hundreds of people in disastrous situations and knows how to kick some butt around the SBA than someone necessarily with a small business background."

While Preston has gone far in Big Business, he was never completely fulfilled by his corporate role, say former co-workers. He mentored high school students through Operation Exodus-Inner City, a nonprofit aimed at helping poor Dominican American youth finish high school in New York. He recruited dozens of other mentors, says the group's chairman, Luis Iza Jr., and even took in one boy who was having particular trouble. Later, as president of ServiceMaster's Christian-focused charity, the FairWyn Fund, Preston oversaw donations to the Billy Graham Evangelistic Assn. in Charlotte, N.C., Chicago's Moody Bible Institute, and the Emmanuel International Ministries in Wheaton, Ill. He also leads a Christian discussion group.

He and his wife, Molly, appear to be encouraging their five children, all under 12, along the path of voluntarism. Concentric Equity managing partner Ken Hooten, who lives near Preston in an affluent suburb west of Chicago, says one of Preston's daughters recently went door-to-door raising money to save an acre of rain forest. "All of their kids are super-conscientious, super-smart," Hooten says. "I have young kids, too. And my theory has been if they hung out with the Preston kids, they'd turn out O.K." Preston no doubt hopes the testimonials at his confirmation hearings will sound as good.

By Michael Arndt


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