Pittsburgh’s Number One Fastest Growing Company of 2012 – Target Freight Management
Pittsburgh Business Times Article
Jennifer Curry Managing Editor- Pittsburgh Business Times
What does it take for a company to grow 2,000 percent in three years?
For Target Freight Management, the answer is to keep your trade secrets just that — secret.
The three-year-old company, formed in January 2009, got off to a slow start but quickly picked up steam, increasing revenue by 2,235 percent between 2009 and 2011, making it the Pittsburgh region’s fastest-growing company.
While President Michael Wagner was hesitant to get into too many details about how he managed to get a successful company up and running in the midst of the worst economic times since the Great Depression — after all, why would you reveal your best strategies to the competition, he reasoned — he did sit down with the Business Times to talk about launching the company and the lessons he learned along the way.
“We are growing a lot faster because we are doing different things than (the competition),” he said. “We are getting in front of the right people more than our competitors.
Target Freight Management wasn’t one of those companies that began in someone’s garage. Instead, it started in a car wash.
Before he founded TFM, Wagner, a baseball player from Brookline, skipped from one job to the next. He started out as a package handler and driver for FedEx Express, then sold garage doors, windows and pharmaceuticals before returning to FedEx as an inside salesman. Next up was a stint in pharma, followed by sales jobs at UPS, Overnight Transportation Co., AFS Logistics and Keystone Dedicated Logistics.
From this experience, he gained the expertise that later lead to TFM’s rapid growth, and he also came to a realization: Corporate life was not for him. He wasn’t happy making $40,000 a year; instead, at age 25, he set a goal of making a six-figure salary by age 30.
“I grew up very poor,” he said. “I was always motivated by that. I wanted to get there a lot faster than most people. I was not a corporate guy who was willing to sit and wait 20 years to make any money.”
On Halloween 2008, just weeks after the notorious stock market crash that signaled the economy’s downward spiral, Wagner ran into Mark Raymond at a party. Raymond, an investor also originally from Brookline, had built a fully automated conveyor car wash in 2006.
Wagner pitched an idea that would take his past experiences in the industry and create a freight management company that reached customers more quickly than the competition could and saved them money.
Raymond was quickly sold on it. “He knew what he was talking about, and he knew the industry,” Raymond said. “I decided to give it a shot.”
Raymond gave Wagner two rooms in the car wash and enough money to get the company up and running. There was no going back.
“The economy was a disaster at the time,” Wagner said. “My mother-in-law asked, ‘Are you insane — this is the worst economy since the Depression?’” His backup plan if they failed was to move in with his in-laws.
The company officially got off the ground in January 2009 with Wagner and one other employee.
Growth started out slowly as the company worked to secure its first customer. Wagner and his employees — he later hired three sales reps — spent the days cold calling one customer after another. Wagner used his industry experience and references to get a foot in the door. Then, he made sure to meet with potential clients in person — a practice the company still does today.
“The best way to get people to buying is be honest,” he said. “We told them, ‘You’ve got nothing to lose. We are here to streamline processes for you.’”
For the first six months, Wagner barely slept as the firm burned through cash, spending 40 percent of the amount he received from Raymond.
Then, in May, the company secured its first customer: Camarillo, Calif.-based Dynacorn International Inc.
By working with TFM, Dynacorn has been able to save more than 20 percent on their freight trucking expenses. Those savings added up, considering the company’s total freight bill is almost $1 million a year.
They’ve proven to come through time and time again when we needed them,” said Dynacorn Vice President and General Manager Jim Christina. “Without savings, we wouldn’t be able to ship anything by truck. It would be way too expensive.”
But, what Christina likes best about working with TFM — and what sold him initially on the company — is their honesty.
“If they make a mistake, even if they can’t fix it, they’ll own up to it and I like that,” he said. “Mike is a stickler for honesty. And he has a Rottweiler, what can you say?”
ACHIEVING 2,000 PERCENT GROWTH
From there, TFM grew quickly, moving out of the car wash after nine months and into a building up the road. By July, the company was making money, and by Year Two, it was profitable.
After Raymond shut the car wash down in 2010, TFM moved back into that building and recently completed a 5,000-square-foot addition, bringing their total space up to 11,000 square feet. In February, the company opened an office in Nevada, and plans to open sales offices in Dallas and either Seattle or Portland, Ore., in the next few months.
Today, the company has close to 100 clients and 21 employees. Ironically, the bad economy Wagner initially worried about ended up helping the firm. Manufacturers were desperate at the time to find ways to save money on freight expenses, and that’s exactly what Wagner’s company promised to do.
“Any reduction in freight is finding money for a company,” Wagner said. “Every manufacturer we were calling was hurting. Everybody needed to save money.” The company’s primary role is to negotiate freight contractors — they work with about 20 to 25 core trucking carriers — for its customers, saving them between 15 percent to 20 percent on LTL, or less than truckload, shipments. Their sweet spot is small to midsized manufacturers with $40 million to $50 million in sales.
The more shipments that companies have, the more money TFM makes. “Business is up tremendously from 2008 to today,” Wagner said. “Most (clients) still say they are not where they were pre-2008, but they are getting close to it.”
The firm also has developed its own IT system that can give customers all sorts of data on trucking to help them run their systems more efficiently, including cost per client, cost per pound and lost opportunities. The system also handles billing and operations tasks that have helped TFM streamline processes.
“Automation has been a key to growing,” Wagner said. “Technology makes a huge difference when you show a customer the soft-cost savings.”
LOOKING TO THE FUTURE
TFM EXPANDS WITH THE OPENING OF TWO NEW LOCATIONS
Due to unprecedented growth Target Freight Management has opened new offices in Beaverton, OR and Austin, TX. These new offices will initially be sales offices but in time as we continue to grow, we will be expanding them into operations offices as well. There has been significant demand for our services on the West Coast and these new facilities will help us overcome the time differences. Check back for more updates as we continue to grow!