Joseph Wade began as an outside controller, but he eventually bought Shelba D. Johnson Trucking after handling cash and succession crises.
Joseph Wade is determined to reshape Shelba D. Johnson Trucking Co. into a technology-enabled logistics provider for the furniture market.
“We’ve set some pretty long-range goals, and I’m not going to let anything get in the way of them,” says Wade, who became president of the Thomasville, N.C.-based SDJ Trucking in September 2001 and 100 percent owner in August last year.
Appreciating the enormity of Wade’s goals requires an understanding of how far SDJ Trucking has come. When Wade began working with the company three years ago, it was on the brink of disaster. Owners Red and Shelba Johnson had built the business from a small truckload furniture hauler into a $30 million LTL furniture-hauling business.
But SDJ Trucking’s management capabilities had not kept pace with growth. No one in the company had the training or education to run a business of that size. Red, a former truck driver, managed drivers and booked loads. Shelba handled the books. Red ran the company through the force of his personality and his personal commitment to getting the job done, Wade says.
“I still hear from clients who say they knew Red and Shelba personally,” Wade says. “In a company with 8,000 customers, that’s pretty amazing.”
Nowhere was the strain on management resources more evident than in accounts receivable. SDJ
Regis Koloshinsky (left), SDJ Trucking’s maintenance director, was reassured when Joe Wade formally took over. “Joe pays attention to the company and really gets the most out of the people who work here.”
Trucking went from processing 200 freight bills per week to 1,500 per day without any real change in technology or internal controls. This led to a chronic cash flow problem.
SDJ Trucking’s controller devised a quick fix: factoring receivables. Unfortunately, management treated the resulting cash infusion as a windfall and committed to additional tractors, trailers and other expenses.
The Johnsons didn’t realize it, but their controller had sown the seeds of a full-blown crisis. The factor not only had no experience in trucking, but it had taken many of SDJ Trucking’s receivables with full recourse. Whatever receivables the factor didn’t collect in 60 days returned to SDJ Trucking, which had to repay the advance.
The dawn of transition
The receivables blunder, among other things, led to the controller’s departure. The Johnsons turned to accounting firm Dixon Odom PLLC for help. In December 1999, the firm sent Joe Wade to the company to serve as temporary controller and to train a new controller when one was found.
Although Wade had no experience in trucking, he was more than qualified to help SDJ Trucking revamp its accounting system and internal controls. He came with strong education and experience – an MBA from Duke University, about 15 years experience in systems planning and cost and budget management and a stint in long-range planning at Lowe’s during which the home improvement company grew from a small chain to a big-box retail giant.
Wade’s first challenge at SDJ Trucking was rebuilding internal processes and finding the right personnel to track accounts receivable. The credit and collections department was understaffed and overworked because several people had been let go as a result of the decision to factor receivables.
Wade also discovered that the Johnsons had not invested in the technology necessary to compete in the furniture market. Retailers were demanding real-time tracking of shipments, a capability the company did not have.
A growing crisis
Such problems were only the beginning. Wade quickly learned that the Johnsons had helped finance the start-up of another trucking company that soon went out of business. SDJ Trucking took on the drivers and customers and was now operating out of two locations with all receivables handled by the Thomasville office, further straining SDJ Trucking’s resources.
But the biggest challenge came in December 2000, when Shelba died suddenly after suffering kidney failure and a stroke. With Shelba’s death, Wade lost his main ally in correcting problems. Shelba understood the concepts of managing cash flow, making collections and pairing the right people with the right jobs.
Almost simultaneously, Red was diagnosed with lung cancer and faced debilitating treatments that rendered him incapable of handling the company’s affairs. Wade, who had already taken full control of the receivables situation, also exercised a stronger hand elsewhere, including final say over hiring.
The crisis built further when the bank that managed SDJ Trucking’s lockbox and extended it a $500,000 working capital line of credit decided that due to Shelba’s death and the lack of a successor to Red, it no longer wanted to do business with the carrier. Another banking relationship was sought.
The only thing standing between SDJ and complete failure was Wade. He could have stepped away and worked on other projects for Dixon Odom. Instead, the situation inspired him.
“It was pre-ordained that someone with my skills and experience would be in a position to continue normal operations,” Wade says. “I helped put the pieces in place, and the employees supported me. I’d expended a lot of energy, and I felt like it would be a shame to lose that.”
Under new management
Wade continued working hard to maintain financial records and correct billing errors. In September 2001, he accepted Red’s offer to buy half the company on the condition that Wade purchase the rest when Red died.
Now officially part of SDJ Trucking’s management, Wade hired an accounts-receivable consulting firm, Worthington, Moore and Jacobs, to continue improving that aspect of the company. Once an account hit 60 to 75 days past due, it was turned over to WMJ for
Founders Shelba and Red Johnson grew the carrier into a $30 million enterprise.
collection. Wade reorganized the credit department, improved computer systems and implemented new payment options, such as check by phone and credit cards.
Red died in April 2002, and the sale of the remaining half of the company to Wade went through in August. In the interim, Wade had begun serious work on restructuring other parts of the company. Through various realignments and transitions, he had brought the number of employees down to 320 from a high of 450.
The employees, ranging from managers to drivers, still speak fondly of Red. But they know the company’s future is secure under Wade’s leadership.
“I wasn’t at all concerned when I heard who was taking over,” says Regis Koloshinsky, SDJ Trucking’s maintenance director. “Joe pays attention to the company and really gets the most out of the people who work here.”
“He’s brought a more professional style than what we had before,” says Mike Marsh, who has been SDJ Trucking’s operations manager since 1989. “Joe comes from a business background and has brought a more business-like attitude.”
“Being a CPA, he knew exactly what it would take to improve the bottom line,” says Sam Muffoletto, WMJ president.
Set for the future
Working with WMJ, receivables dropped from 57 days to 47 days in 10 months, with cash collections increasing each month. The company’s cash flow has improved as well. SDJ Trucking paid off a bank note and made a balloon payment to own 30 trailers outright. Several other leases and loans have been paid off, and other debts are being financed at lower interest rates.
Wade’s turnaround of SDJ Trucking is nearly complete. The company lost $1.2 million in 2001 but only $200,000 to $300,000 last year. His projections for 2003 are to make $800,000 to $900,000.
Now that he has stabilized SDJ Trucking, he’s setting his sights on his long-term vision of evolving the company into a quick-turnaround logistics operation. Realizing that vision will require major technology investments. Last summer Wade added the company’s first computer network and new PCs to support new operations software.
In the near future, SDJ Trucking’s website will allow customers to more accurately track their shipments. “Customers are becoming more accustomed to using the Internet,” Wade says. “We move 5,000 pieces of furniture a day. To be able to track them, we need systems help.”
Plans are to add GPS tracking of tractors and trailers, imaging, electronic data interchange, website enhancements that will allow customers to check shipping status, bar-coding for item tracking and phone-system improvements.
Wade also envisions westward expansion. In addition to encompassing the entire East Coast, SDJ Trucking has a presence in the Midwest, Mid-Atlantic and Southwest. But because the company depends on an industry dominated by imports, it must establish a West Coast presence and is currently working to establish partnerships with carriers in that region.
“Any trucking company that is going to survive long-term needs to handle imports,” Wade says.
SDJ Trucking will also market itself more aggressively, Wade says. For example, the company will have representation at the Tupelo Furniture Market, the San Francisco Furniture Market and the International Home Furnishings Market.
Wade’s main goal, however, is to provide security for loyal employees who have stayed with the company through good times and bad.
“This is a long-term project,” Wade says. “My intention is to make the company a long-term enterprise for the employees.”
Shelba D. Johnson Trucking
Location: Thomasville, N.C.
Principal: Joseph Wade
Equipment: 179 tractors, 450 trailers, including owner-operator equipment. Freightliner tractors; Detroit Diesel engines.
Freight: Furniture on an LTL basis.
Challenge: Salvage a company on the brink of financial disaster.
Solution: Revamp accounting system and internal controls; take control of accounts receivables.