Two years of lagging sales didn’t bring an end to an Orange County mattress maker.
Custom Comfort Mattress Co. in Anaheim—whose managers at one point during the recession were considering filing for bankruptcy— is back in hiring mode.
And the company’s opening a pair of stores in its first expansion into Los Angeles County, according to Mel Trudell, Custom’s chief executive.
“We’re planning to get back to the size of workforce we had before the downturn,” he said. “But we’re doing some things differently, changing the breadth of our workforce and expanding our product mix.”
Custom, which makes mattresses at an Anaheim Hills plant, got its start with Trudell and one of his brothers making beds for family and friends out of their apartment.
Twenty years later, Custom had grown into a family-run operation with 100 employees. By the mid-2000s, amid the housing boom, it was generating annual revenue nearing $20 million.
“It just kind of crept up on us,” Trudell said. “We never imagined it would grow into that big of an operation.”
Then came the housing downturn, credit crunch and larger economic slowdown. In late 2007, the company started the first of three rounds of layoffs.
By the end of 2008, about 30 jobs had been cut and a retail expansion into the Inland Empire was closed. Left were six OC stores to sell the company’s mattresses.
“We avoided bankruptcy by working out deals with all of our vendors and suppliers and making a lot of changes in how we work internally,” Trudell said.
Part of that was getting employees to “think like an owner,” he said.
“No matter what they did, whether they were working in a warehouse or as a store clerk, we taught them what a balance sheet shows, what a profit and loss statement means and how those results impact a company and each department,” Trudell said.
Managers let it be known that everyone had a role to play in the company’s survival and future growth, according to Trudell.
“We even started creating scorecards so everyone could measure how much waste and inefficiencies existed in each operation they were involved with,” he said.
Custom’s management also moved to take better advantage of its ability to control the entire manufacturing and sales process.
“Most mattress manufacturers go through wholesalers and third-party stores. But we don’t have to deal with any sort of middleman,” said John Kalil, Custom’s chief operating officer. “That was a competitive advantage we decided to use more effectively.”
That meant tracking more closely which models were selling the fastest, he said.
“If something wasn’t moving out of the warehouse, we immediately started developing other types of mattresses to put in our showroom floors,” Kalil said.
The company had 28 different mattress lines. In 2008, it completely replaced or significantly revamped 20 of those designs, according to Trudell.
“And that was just to survive, not to expand our business,” he said.
The company’s revenue dropped about 20% from 2007 to 2008, Kalil said. In 2009, sales kept dropping and wound up 16% lower than in 2008.
Custom broke back into profitability last year, thanks to cost cutting and restructuring.
“The company turned from being top-line focused to concentrating on profitability,” said Greg Arbues, founder of Santa Ana-based Client Advocate Network. “It was a real eye-opener for them.”
And that’s not an uncommon mistake for many small businesses, said the consultant who was hired by Custom in mid-2008 to help formulate long-term strategies.
“A lot of companies forget on the way up to keep concentrating on their bottom lines,” Arbues said. “They see 20% growth and 10% profitability and don’t recognize that profit growth has to stay at the same level as revenue. If it drops, then it’s actually costing a company more to generate sales.”
Custom started to hire workers again late last year. It’s also planning to start expanding beyond OC. The company has leased space in West Los Angeles and Pasadena.
“We’re hoping everything will be ready sometime before June, but we don’t have an exact opening date yet because construction work is still being done on the buildings,” Trudell said.
As Custom expands, its focus on making employees understand the importance of maintaining a strong bottom line will remain, according to Kalil.
“We’re bringing in more employees with different types of manufacturing and marketing experience,” he said. “They’re providing us with new ways to increase profitability and manage our growth.”
With 2009’s revenue at about $10 million, the company is looking at climbing back to about $14 million in sales with the new stores, according to managers.
The company has learned its lesson, according to Trudell: “Although our own internal projections are for revenue to grow this year, we want to maintain our same profit levels.”
