Thirty-year-old Jerry Carter has grown his payroll company, Priority Pay Payroll LLC in Hoboken, to $7 million in revenue and 5,000 customers in five years with a no-nonsense work ethic and by old-fashioned sales tactics.
A former Army Reservist, the Linden, N.J., native has expanded the business to an additional four locations nationally and five field sales offices by taking risks, hiring industry veterans and charging “recession” prices.
And Carter intends to keep going. Plans for 2009 include a new office in Phoenix in July and increasing revenue to $10 million. Carter eventually wants to diversify into offering insurance and other employee benefits services.
“I feel good, but I’m not content where I’m at,” he said. “I want to continue to grow. I’m trying to create an enterprise, not just a business.”
Carter learned the payroll ropes doing sales for giant Automatic Data Processing Inc. in Roseland, N.J., a competitor with $9 billion in revenue and a market cap of $17.86 billion, and a smaller firm. He wanted to open his own payroll company because, “I didn’t feel I would be able to make a name for myself.”
After bankrolling Priority’s startup with $50,000 by refinancing his condominium, he built a customer base “pounding the pavement” _ knocking on doors and calling small to medium-size businesses that he felt were underserved by his larger rivals.
Carter carved out a niche with businesses that average around 15 employees but can have up to 100, such as Paramus fruit importer Pro-Fruit Marketing Inc., and some municipalities.
Payroll is a $30 billion industry, said George Van Horn, senior analyst with the market research firm IBISWorld Inc. in Los Angeles, and has grown at an annualized rate of 2 percent a year over the past five years, he said.
But this year the industry will see only “nominal” growth because of the economy, he said, “and more importantly, rising unemployment rates tend to reduce billable fees to these service providers.”
Layoffs have affected Priority Pay, enough for Carter to scale back this year’s estimated revenue to $10 million from his ambitious goal of doubling it to $14 million.
The good news, according to Van Horn, is outsourcing payroll has been a trend likely to continue, and new employee benefits laws will also increase business for payroll companies.
Early on Carter knew selling was his strength, not daily operations. So hiring people who knew more than he did became a top priority. One of his key hires was a branch manager from a nearby rival, the $2.11 billion Paychex Inc. in Rochester, N.Y., who became vice president of operations.
Carter also attributes Priority’s growth to a payment model of bundling pricing for services that competitors charge separately for, saving customers 25 to 30 percent at the company level. Prices are guaranteed for two years.
“I created a pricing model (three to four years ago) that was fit for a recession before the recession,” he said.
Growth has also come from taking risks on opening new locations. Many have happened by chance, rather than as the result of market research or buying a competitor. While some have worked, others haven’t.
The Rhode Island office worked. Carter drove up to Newport to interview a client who was running a seasonal tax business that he wanted to close so he could become a salesman for Priority Pay. Carter felt good enough about the client that he gave him a chance.
“He brought in buckets of business and we decided to open an office there,” said Carter, and the former client soon boosted sales by 20 percent for Priority and now has about 15 staff.
Risks taken in Florida and Tennessee didn’t work. Florida didn’t have a market for outsourced payroll and Tennessee’s salesperson choice wasn’t a good match.
Going forward, Carter has no plans to change his strategy.
“I got us this far,” he said. “There’s no reason I can’t get us further.”
© 2009, North Jersey Media Group Inc. Source: McClatchy-Tribune Information Services.