Healthcare Solutions Mgmt. Group Inc. (HSMD)

[Prudent Capitalist]

Spader teaches businesses methods for success

Jodi Schwan, [e-mail] 8:14 a.m. CDT June 10, 2015

Spader Business Management guides businesses to improve operations, boost sales



Noel Lais, John Spader and Michael O'Connor serve as the executive team at Spader Business Management. (Photo: Elisha Page / Argus Leader)Buy Photo

Imagine a business that could show an owner the optimal way to run a dealership.

Any dealership.

It doesn't matter whether the business sells cars or boats or furniture.

By taking each dollar and following a proven method for how much to spend on people, product and other expenses, that dealership will outperform its industry peers.

That was the founding premise of Spader Business Management, a Sioux Falls-based consulting firm that has been in business for 40 years and has built a client base far beyond dealerships to serve a wide range of industries.

It remains largely unknown locally even as it regularly does business nationwide.

"In town, people just have no clue," John Spader said. "We've been accused by most of our clients, the handful we have (in Sioux Falls), of being the best-kept secret in town. That's part of what we'd like to change."

John Spader knows his name is synonymous with the RV business his father, Duane, brought to Sioux Falls in 1971.

That is where the roots of Spader Business Management exist. But it has expanded into a full menu of services for any business, from leadership development to budget building, with plans to do more outreach to local businesses.

Entrepreneurial spirit

Duane Spader is a born entrepreneur.

A farm kid from Oldham with 15 siblings, he raised chickens, ducks and geese while in high school. In 1964, about to be a senior at South Dakota State University, he had saved enough money so he wouldn't have to work for a year.

But instead of finishing his classes, he used that $1,000 to buy an RV dealership in Brookings.

"I started like most small-business people. I didn't know how to run a business," he said. "I wasn't trained in selling. I wasn't trained in management. I made a lot of mistakes, and that led to Spader Business."

At first, he worked 100 hours a week but was barely surviving, Duane Spader said. In 1971, he moved the business to Sioux Falls, where he connected with five business leaders as mentors. He absorbed their knowledge of budgeting and management, and gave a presentation on what he had learned at a national RV convention. Other dealers called him and asked him to consult.

"I went out and helped a few smaller dealers make their budgets and said I'm not going to be a consultant," Spader said. "That's not my lifestyle. I want to run my own business."



Michael O’Connor leads a meeting at Spader Business Management. (Photo: Elisha Page / Argus Leader)

In 1975, he became president of his RV industry association and decided to form executive peer groups of RV dealers to share ideas and information.

The businesses involved shared financial and operational data with Spader. With access to that information, he was able to analyze best practices and optimize a business model.

Powered by Bounce Exchange®
A group of boat dealers heard about it and asked Spader to form a similar group for them.

He did, and at each meeting he taught some of the business principles he had learned, but they wanted more. In 1980, he told them he would share what he had learned about business, but it would take a week of their time. It would cost them $1,665 each. And they would have to come to Sioux Falls.

He thought any one of those would be a deal-breaker. But he was wrong.

"Eight dealers showed up, and from there on it was the foundation of Spader Business Management. I tell people it was kind of like the 'Field of Dreams.' 'Duane, you put it on. We will come.' That caused me to dig deeper and deeper."

Building the business

Noel Lais was Spader's bookkeeper during those early years. He worked with Spader to develop the economic equation that remains a cornerstone of the business. He now serves as vice president of operations.

"I've lived with this for the last 40 years and still when I experience it, it's the same thing. The light bulb goes on," Lais said. "And I say that's why we do it that way. Our pay plan. Our inventory. Why we need the margins we do. He had the reason for it. It wasn't only just a system. It was the business principle for why you did it. And I think that's what differentiates us."

The system breaks each business into one of six types, depending on the mix of products or services it provides. Spader then applies a "one-dollar principle" to each to recommend how much should be spent in a specific area.

People "can understand that," Lais said. "Then, they can manage thousands or millions or tens of millions."

Customers "are amazed at why we can jump industries so quick," John Spader said. "If you're on a principle it will scale. We have clients doing over $1 billion, and clients spending $1 million, and they use the same ratios. The techniques are different, but those principles scale."

One farm equipment dealer client went from being an $18 million business to a $450 million one 15 years later using the same principles, he added.

Larry Canfield was an early believer.

The CEO of Canfield Business Interiors heard about Spader Business more than 20 years ago as he and Duane Spader walked through a campground his friend was considering buying.

"I was so intrigued," said Canfield, who then sent Duane Spader three years of financial statements to analyze.

They had lunch three weeks later.

"We were there an hour. He's got the last three years of my business life on an 8-and-a-half-by-11 sheet of paper, and I can understand it," Canfield said. "In 15 minutes, I understood it. It was that easy."

He then attended a five-day Spader workshop "and that was it," Canfield said. "It was game, set, match, and I came back and we started implementing Spader management from that point on. That's how we run the company today."

Canfield introduced Duane Spader to the furniture industry, where they formed another executive peer group and customized a business model for the industry.

"It gives you what I call an end-to-end system," Canfield said. "All my systems are set up and tied together, from pricing to compensation. Duane is a Class A entrepreneur. We call him Einstein. And John took it and just stayed laser-focused and really grew the business."

Eighty percent of the Spader formula is the human side of running a business, Canfield said. Twenty percent is economic.

"What everybody wants to focus on is the economics side, not the human side. And they teach the human 'why' behind what you do and what your decisions are and how that connects to the economic side."

The human side

Duane Spader found a complementary counterpart for his business in Michael O'Connor, an author, professor, consultant and the founder of Life Associates Inc. and the Center for Managing by Values.

The two met 30 years ago and realized they could combine their expertise to offer a menu of services to businesses. O'Connor started his career researching values while a student at Harvard University in the aftermath of 1960s violence.

"One thing led to another in terms of understanding human beings and their behavior, and almost all my work now is in a performance context," O'Connor said. "There's no such thing in my opinion as a company. There are only people. People make decisions. People do the work. People determine the strategies and the vision."

His businesses merged with Spader in 2010, and O'Connor now is an executive vice president.

At the same time, Scott Weber joined the team. A former Spader client, he came from Bombardier Recreational Products, where he had worked with Duane Spader and O'Connor to develop his boat dealer network and transform his sales team.

"We definitely had an uptick in performance due to the level of accountability," Weber said. "All of a sudden, people knew what they were chasing, why they were chasing it and how to go get it, and they were getting proper feedback along the way."

A believer in the Spader model, Weber said it revolves around four tenets: Culture, people, process and strategy.

"Either there's an opportunity or a problem in one of those quadrants, and we're able to boil it down."

Weber works with David Spader, another one of Duane's sons, on the human side of the business. David Spader joined the family business in 2001. He was sold on O'Connor's methods and was brought in to work with clients on them.

"You have a lot of organizations that are good on the process and the hard side, and when you look at the people side, that's something a lot of people don't get training in, don't get coaching in," he said. "They stumble through it, and they get a lot done through hard work, not necessarily because they're using the most-effective tools."

Soukup Construction has worked with Spader for several years, "especially in regards to teamwork and helping us establish our values and determining what our company values should be," CEO Jim Soukup said.

He also has sent managers to Spader's workshops and completed training on working with different generations.

"It's kind of unique, especially in the construction industry, so I saw value in it and just decided to take that leap. It's made a huge difference."

The Spader methods have helped create a better work environment and given Soukup a competitive advantage, he said.

"We're creating careers instead of just jobs," he added. "If you would have asked me 20 years ago if I would be working on the people side of things in the construction industry, as far as personalities, I would have said you're crazy."

Getting bigger

Spader Business Management employs about 30 people, with trainers and consultants in five states and Canada. The headquarters is an office with a large training center inside the Western Mall.

It has grown from offering four products and services to a 62-page resource guide and has worked with more than 7,000 businesses in the U.S. and Canada in the past decades. In the process, it has amassed large amounts of historical performance data on businesses of all sizes and industries and uses it to analyze businesses against peers and their industry, identifying why the top performers have success and illustrating what others need to do to improve.

Spader still organizes executive peer groups – now a few dozen in more than 10 industries. Professionals regularly travel to Sioux Falls for training.

While the roots are in dealership-driven businesses, Spader works with everything from technology companies to large manufacturers.

The company sees opportunity as baby boomers retire and businesses transition, as well as with helping businesses navigate a number of mergers and acquisitions that are taking place.

Weber estimates the company's coaching and consulting division could double in five years.

"We're in it but not to the level we could be in it, and that will feed Spader's core business," he said. "They're complementary. You don't have one without the other, so we see this as a growth engine."

Duane Spader retired in 2012. John Spader was named president and primary owner in 2003.

"He's taken it and expanded it greatly," Duane Spader said. "I think it's got the potential of getting bigger because it's just simple. I say that now, but it's simple, basic management. And we put the total picture together."

If you're going

•What: Spader Business Management will hold a workshop, Foundations of Effective Management & Leadership, to introduce itself to the Sioux Falls business community.

•When: 8 a.m. to 5 p.m. June 23 and 8 a.m. to noon June 24

•Where: Spader Business Management inside the Western Mall, 2101 W. 41st ST.

•Information: Call 339-3616 or email Tim Phillips at [e-mail].

Argus Leader link to news article: http://www.argusleader.com/story/news/business-journal/2015/06/09/spader-teaches-businesses-methods-success/28768237/