The year was 1988 and RCG Management had reached the breaking point. Partners John Neal and Doug Wall faced a mountain of debt $100,000 high and not enough clients to boost them over. Neither relished the idea of returning to a stable finance job even though Wall's first child was on the way. Together they agreed to give the venture one final go, borrowed $20,000 apiece on their credit cards, rolled up their sleeves and got serious about building a business. "We made a commitment to God, our families and ourselves to make it work," Wall recalls. "I had a passion to just do it. Of course, you never know how much it’s going to be - how stressful, how scary, how intoxicating ... It becomes your life." With a father in real estate, Wall was no stranger to the lean times that come with a small business. His mother agonized over the family's "feast-or-famine" lifestyle in El Cajon during the '60s and '70s. But Wall says that up cycles, and inevitably a new car, always followed the hard times when there was no room in the family budget for toys and Hamburger Helper was a dinner mainstay. "My dad was a pretty optimistic person," he recalls. "He knew there would always be a deal that would close eventually." Today, after more than 10 years in business, RCG Management has emerged as San Diego’s largest - probably only - full-service management consulting firm to small and emerging growth companies. RCG offers part-time and temporary solutions for these companies, acting as a stand-in controller, chief financial officer, head-hunter, human resource manager, software systems coordinator, marketing manager, and, most recently, strategic planning adviser - helping young technology companies draft business plans and meet venture capitalists and other potential sources of funding. The firm also handles specific projects for large corporate clients. Financial services continue to make up the bulk of RCG's work. RCG employees act as virtual employees in clients' offices for a half day, full day or several days a week. Many RCG clients, such as McBride Electric, are well-established ongoing companies that simply don’t need full-time professionals in certain areas or need temporary help filling a vacancy or handling a specific project. RCG, for example, helped Doctor Design, an engineering design company, with a part-time CFO and practical accounting and financial software system advice, says Sharon Soto, vice president of administration. RCG also handled all the financial due diligence of the proposed acquisition of the company by Integrated Systems, a corporate coupling that Soto says has been "very much a success story." RCG continues to send an upper level adviser on a less frequent basis. In the last two years, RCG has moved increasingly into the role of key adviser for young technology entrepreneurs. Mark Murray, founder and president of fledgling Team ASA, calls RCG's help "indispensable" in his struggle to build a high-speed LAN adapter and specialized software company. "You really need someone to mentor you in the process, to prepare you for the presentation and the questions that will be asked by venture capitalists. While we have not had a great deal of success (to date), I think that Doug and RCG are directly responsible for the $160,000 we’ve raised," about a tenth of what the company hoped. Now, on RCG's advice, Murray is refocusing his company from hardware to software. RCG "was instrumental in defining this transition that needs to take place," he says. One of RCG's success stories is Molecular Metallurgy Inc. RCG began working with the El Cajon titanium nitride metal coating company in late 1995 when Wall helped president and CEO Nathan Meckel draft a strategic plan. Since then, Meckel says RCG has sent "top notch" advisers to the 3-and-one-half-year-old company and helped raise capital. So far, the company has closed one round of financing for $425,000 and now is finalizing terms on another $1 million. "If I have a financial situation where I need a CFO, I can call and get a CFO," says Meckel. "If I need somebody out here to help with computer work and so forth, I can get that. Just this week an HR (human resources) situation came up, and I could call. I feel very confident and very comfortable that I’m getting good advice from all the people who work there with Doug." RCG is one of a number of local consultants offering valuable services for emerging technology companies, reports Barbara Bry, director of programs at UCSD's Connect program. "Ten years ago, there weren’t as many people who were knowledgeable about the needs of emerging technology companies, and there are many, many more now. That's good, that’s good. The community needs that. There's room in the marketplace for RCG and many competitors to RCG." RCG founder Neal first saw the need for high-level advisers in small companies as a small-business consultant at Deloitte & Touche. A few years later he found himself bored after an energetic turnaround effort at Girard Savings. So in mid-1985, Neal headed off on his own as a CFO for hire. Soon he was helping with human resource problems as well. The active, multi-company role appealed to Wall, who knew Neal through accounting circles. After their paths crossed - Wall's auditor to Neal's part-time CFO - Wall approached Neal with a request to join his operation. Soon Wall had left the security of the Big Six and joined as a 50-50 partner. Analytical, meticulous and soft-spoken, Neal provided crucial financial expertise. Outgoing and amiable, Wall was - and still is - the firm's public face. It is a good match, Wall says. When the company faced its tough times in 1988, the two reconnected through a common Christian faith - a faith that grew after cancer robbed them of two associates, and Wall lost a child to crib death. The firm opens and closes its internal meetings in non-denominational prayer and uses Christian values as the basis of its code of ethics. Not all employees are Christian, however, and Neal says the principals don’t proselytize. "We believe that in everything we do, we’re serving God," Neal says. "We welcome anybody of any faith to our firm." Employees include Jews and at least one agnostic, he says. Wall echoes Neal's sentiments. All four company principals are "pretty strong in our beliefs" but "we don’t wear our faith on our sleeves." High ethical standards are important in Wall's home as well. Four years ago, he and his wife, Therese, chose home schooling for their five children (not all are of school age yet), a role that keeps Therese busy full-time. "We think that we can do a better job," Wall says. Traditional values, morals and ethics are an important part of the home curriculum. The same goes for the workplace. What matters "is, are we honest? If we make a commitment do we follow through on it? Do we care about people? Do we put our clients before ourselves? And in our firm, do we put our employees first?" Today, the company is growing at a fast clip - about 90 percent a year since 1995. RCG now has four principals - including Stanley Blackburn (the key adviser at Doctor Design) and Catherine Gauthier. Employees number 31, and RCG expects to add six more before the year is out. Revenue will double in 1997 over 1996, principals predict. (RCG declined to disclose revenue figures.) Growth plans are ambitious. RCG seeks to expand its network to 10 or 15 cities in the next three to five years with a liquidity strategy that includes a possible initial public offering, acquisition by a larger company or a merger. The first satellite office, in Orange County, is being set up this fall by Michael Smith, who approached the company after working with several RCG consultants on a few projects. Gauthier, who joined the firm two and one-half years ago, has been instrumental in helping the company plan its expansion and in devising a new program of stock options for the firm and its employees. Equity in their clients' new companies is part of the firm's standard contract now. Gauthier also is organizing stock warrants from client companies into an internal venture pool that will dole out shares to all employees, including the receptionist. "We’re really committed to having all of our people involved in the success of the company," Neal says. "We hope our employees see this as a career home." Indeed, the caliber of employees - the controllers, CFOs, human resource managers and others who work each week with RCG clients - is the key to the firm's success, several competitors say. Several praised RCG's accomplishments to date. Stan Sewich of HRC Inc. says RCG is the only San Diego company he is aware of that has managed to put together a sound group of professionals representing such a wide variety of fields. "A successful consulting business is a very, very, very difficult thing to do," Sewich says. "There aren’t that many folks out there who have the interest, let alone the set of skills that combine to make it possible. I have a lot of respect for what Doug has been able to accomplish at RCG. There isn’t anybody in San Diego who's been able to re-create this (type of company)." Still, RCG has had its own growing pains. A few years ago Neal and Wall slowly severed ties with about a quarter of their clients because the working relationships weren’t right. Since then, Wall says the firm is very picky about which new emerging companies it takes under its wing. "I like to work with them early, when they're still coachable," he says. Often the firm conducts due diligence for a number of months - Wall has been talking to one prospective client for eight months now - to make sure the technology is sound and the entrepreneur will listen. "You can tell pretty quickly if someone's not coachable. It’s pretty obvious, they just reject the advice, and we don’t engage with them," he says. "My philosophy is you surround a good idea and an entrepreneurial company with wise counselors, experienced, talented resources - not just money but wise money, wise capital.Typically, the entrepreneurs have open ears and want to receive counsel. What’s wonderful is when they do [want advice] and things just start happening and the company takes off." One lesson that RCG has learned during 12 years of consulting is that no organization is without flaws. "No company has their act together completely, and if you even think you do, you’re setting yourself up for a fall," Wall advises. RCG recently hired an outside management consultant to help the four principals work together more effectively. "We’re still in that process, and it’s great," he adds. "In a way, we’re a lot like the guys who fix the shoes but we also realize that we’ve got shoes that need repair." |
| A partial list of RCG clients, both past and present. |
Life Sciences/Bio-Technology
Health Care BehavioralCare Communications
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Service
Technology/Manufacturing
Wholesale/Distribution/Other
Real Estate AV Builders |
RCG Timeline 1985
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