By Beth Bily
A business that began in a garage is taking off like never before, and executives say the company is poised to hit $25 million in annual sales within the next five years.
Grand Rapids-based MNSTAR Technologies has been around since 1993, but having grown to 100 FTEs and preparing to begin a footprint expansion within the next two to three years, the company’s local profile is getting larger.
MNSTAR worked with local economic developers to implement a growth strategy. Itasca Economic Development Corp. President and CEO Mark Zimmerman said the company was a stage two firm, with the potential to grow in all 50 states, and just needed a plan to reach that next level. It’s just the kind of company, he said, they hope to help with a regional economic gardening effort that launches this year.
The firm designs and manufactures electronic-related components for emergency vehicles, fleets and the marine industry. It has gained a market foothold in the design and manufacture of electrical wiring harnesses.
The harness is described by company founder and CEO Mike Rhodes as a “plug and play” system that acts as a universal set up for aftermarket vehicle electronics. Company executives take pride in the fact that all harnesses are thoroughly tested and tracked to ensure their customers get an excellent product from the outset.
MNSTAR Technologies may have started out of Rhodes’ garage while he was still working for the Department of Natural Resources, but today it has a sizable footprint on Highway 169 between Grand Rapids and Coleraine.
The company’s headquarters, which Rhodes purchased from Itasca County in 1997, is currently about 23,000 square feet. He and CFO John Damjanovich, however, are quick to note the 30,000 square foot pad in back that’s ready and waiting for expansion.
A bigger footprint isn’t the only growth that’s likely. Damjanovich noted that revenues grew by 38 percent from 2012 to 2013 and they’ve added 25 positions in the last year.
Achieving that growth wasn’t easy, however.
“We started out as a mom and pop operation,” said Rhodes, who described past operations as heavily leveraged. “We’d reached a wall in terms of growth.”
That growth wall meant Rhodes could struggle to fulfill his long-term goal of company stability and to eventually transition to an employee-owned ESOP.
MNSTAR Technologies enlisted the help of IEDC with an eye toward kick starting revenues. The company met with the nonprofit economic development group in 2012 “to discuss overall business, market and financial analysis after a distributor change.”
Using an assessment of operations, which included input from independent consultant Lisa Walsh, a number of goals were set. Management:
• Established a business team management concept
• Expanded its management team by hiring a CFO
• Established an advisory board to the board of directors
• Developed a better understanding of financial ratios and developed a management dashboard concept
• Established a line of credit with a local bank
• Established a five-year strategic profile
While working with IEDC, the company also targeted its market segments: emergency vehicles, commercial trucks, quality OEM (original equipment manufacturer) companies like Terex, marine and oil/gas apparatus/machine manufacturers.
The resulting goal was 5/5/5 – $5 million in sales in the five targeted markets in five years. It appears they’re on target to meet those goals. Since developing new strategies and ways of doing business, MNSTAR Technologies increased its year-to-date profits by $500,000 (as of the third quarter) in 2013.
Zimmerman said attitude and follow-through were key to the achievement.
“Lots of companies seek outside help then ignore the advice,” Zimmerman said. “They took the advice. We helped them work through their list on a monthly check-up basis.”
The company has more growth planned. In addition to adding square footage, MNSTAR anticipates an annual growth rate of 20 to 25 percent during the next five to six years. Plans also call for growing FTEs to more than 200 as well as the purchase of $750,000 to $1 million in new equipment.
But no matter how much they grow, executives here say they are committed to remaining local and to producing top-of-the-line products.
“Our focus is on quality and customer service,” said Damjanovich. “Our tagline is ‘quality by design.’”
Zimmerman credits the company with the results but also noted that economic developers can play a role in producing concrete outputs and results to grow business in the region.
“Economic development is a gray and nebulous area to people who aren’t involved with us at all,” said Zimmerman. “This is the kind of help we can provide.”