Do the Right Thing

Do the Right Thing

Frank Crum was a minister for a year before taking his faith into the business world. Now he leads an employee leasing company with $1.2 billion in annual billings.

Cover story by Janet Leiser | Senior Editor

The words of great-grandfather Ike Odum, a sharecropper's son who bought 12,000 south Georgia acres with his pay as a railway man at the turn of the 20th century, have stayed with him:

"Every morning when you get up, you find you a garden just like they have out there in the rose garden, and you walk through it and you praise him and ask him what you need. Then you listen to him. He'll give you the advice for the day.

"And then when the day goes on and things don't go right, take a deep breath, ask him to help you through it and trust he's there helping you."

Frank Winston Crum was about 6 when he heard those words. But half a century later he says they're the reason the business he founded with his father, Frank Crum Sr., is now one of the largest private employment leasing companies in the Tampa Bay area, with $1.2 billion in 2005 billings and revenue of $129 million.

"He transformed my thinking," Crum, 56, says of his maternal great-grandfather. "It really doesn't matter how smart you are, it's really more about how well you know the person who's really smart."

Crum was a minister in Atlanta for a year after he graduated from the University of Central Florida in 1972. But he left the religious organization after he became disheartened by petty politics. He went to work at JCPenney as a merchandise manager.

In 1981, he was running the Orlando office of a temporary employment agency when his father convinced him they should start an employment business. Crum Sr. had just sold a Tampa sportswear clothing company.

"I wasn't real keen on the idea because I knew the pressure was all going to be on me," Crum says. "I had the background in the temporary service field. I was the one that was going to have to set it up, sell it and manage it."

Father and son started Great American Temporary Service in Largo with about $100,000 and three employees. In 1986, the company established Ameristaff, which as an employee leasing firm is a co-employer with clients, offering payroll, workers' compensation and other benefits. In 2002, it became Crum Services.

As the business celebrated its 25th anniversary last month, it changed its name to FrankCrum Inc. The 260-person employment agency is projected to have sales of $1.5 billion this year. About 80% of its 49,000 leased employees are in Florida, with the rest in 40 other states.

Frank Crum Sr. helped run the company until his death in January at 76.

Capitalization issues

Crum says his former employer, the Orlando-based temporary staffing agency, unintentionally helped boost his business from the get-go.

"They did all my advertising for me," Crum says. "Every big HR guy in Pinellas County invited me in because they wanted to meet this person that people spent so much energy telling them they shouldn't do business with."

Crum would explain he'd opened the business in Pinellas so he wouldn't violate his non-compete agreement. Most people understood, he says, and hired his firm.

The human resources director at one hospital, however, refused to talk to him. She'd yell at the receptionist to send him away, she'd heard about him. Crum says he visited monthly in hopes she'd talk to him.

His efforts were fruitless for six months.

He stopped at the hospital to find the receptionist wasn't at the front desk. "I hear this voice from the office, 'Come on back, Frank. The other lady is gone. You just got all our business.' "

Crum credits his success to his faith, and the impact of his great-grandfather's words.

"We always do the right thing for the right reason," he says. "We worry about keeping the quality employees. We worry about how we can achieve the same quality and higher going forward."

And there are others who've helped.

The startup wouldn't have survived its first months or years, if not for Jim Phel, a Barnett Bank vice president in the 1980s, who helped Crum keep the company afloat.

"It's a huge receivables business," Crum says. "You pay the temporaries this week and bill it out. But you don't receive your money from the client for another 30 to 60 days. As your payroll grows and you're successful, you're paying all these people week after week."

The bank gave Crum weekly signature loans. But cash flow remained a problem until the late '90s, he says.

One year was particularly rough when the company was forced to repay a $700,000 loan in six to eight months because its bank had been acquired by another bank.

Crum says he isn't sure how he came up with the money.

"I don't know," Crum says. "Everything you see in the success of our business is really sort of miraculous in its own way."

Office space was also a problem in keeping up with the firm's rapid expansion, he says. "We were constantly trying to rent the space next door and knock the wall out."

Insurance crisis

A serious problem for the company as it grew its employee leasing business was finding and affording worker's comp insurance, required by state law. It became a crisis in the early 2000s when the only company that offered the insurance to professional employment organizations (called PEOs) announced it wouldn't renew PEO policies.

Crum talked to a consultant, who was previously with the Florida Department of Insurance, about his options. The consultant suggested he start his own insurance company.

But Crum needed a minimum of $4 million in capital. He wasn't sure how he'd find the money.

He also had to convince his insurance company to renew the company's coverage until he could get Frank Winston Crum Insurance up and running. It took three six-month extensions and $7 million in capital.

"I remember standing there at 4 in the afternoon knowing our extension ended at 12:01 - eight hours and one minute later," he says. "Then the call from Tallahassee came through."

He now had an insurance company.

"It's one of the things I'm most proud of," he says. "How a poor, little boy from Jacksonville would ever own his own insurance company."

The insurance company, now three years old, has greatly improved the company's performance. Revenue has grown from $31 million in 2002 to $129 million in 2005.

Crum wouldn't disclose profit figures. But he says there were few years, if any, in the red, and the company's focus isn't on making a large profit.

Long-term growth

The cost of the company's generous employee benefits package eats into the bottom line, he says. FrankCrum offers paid medical insurance for employees, long- and short-term disability, a 401K plan where the company matches up to 4%, a subsidized restaurant for employees and other benefits.

"There are PEOs that have a better bottom line than we do," he says. "We have a good bottom line, but theirs is better."

As for profit, the goal is to make more money this year than last year.

He recently hired the company's first chief financial officer on the advice of an accounting firm. CFO John Thigpen is trying to set more financial goals for the company, he says. But Crum says all of his goals are long-term. He wants the company to be around for many decades to come.

He doesn't plan to take the company public or sell it, even though there have been offers.

"I want my children to have this company after me," he says from his third-floor corner office in a 128,000-square-foot office in downtown Clearwater. Crum has three grown children.

The company paid $14 million for the building in 2004. It cost its original owner, AMR Global, about $31 million to build.

Crum points to the purchase as another example of the miracles his company has enjoyed.

"I don't think I could find 15 vacant acres for $14 million in any metropolitan area in Pinellas County," he says. "Yet alone land with a building like this."

Others have called the building the Taj Mahal because of its elaborate landscaping and construction. And there have been people who've tried to buy it for double or triple what the company paid.

"It's not for sale," he says.

He's not just talking about the building.

Secrets to success

Entrepreneur Frank Winston Crum Jr. says he believes the secrets to a company's success is always doing the right thing for the right reasons. He also offers other tips that he says will help a business succeed. "If you do these things," Crum says, "profit will take care of itself."

• Make sure you have lots of experience in whatever industry you plan to start a business.

• Have a business plan and know how much working capital is needed. Crum's company was initially undercapitalized and if it wasn't for a banker that saw the firm's potential, it could have gone under because of cash flow.

• Hire the best employees possible. Pay them well, give them good benefits and treat them like kings.

• Never lose your integrity. Get out of the business before you sell yourself short.

• Go the extra mile for the client and remember, the client is always right.