Small Business of the Month: 9 to 5 Seating

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    SBO_9to5_Body.jpgby Susan Caminiti.

     

    In our latest installment of SBC’s monthly small business feature, we meet Darius Mir, founder of 9 to 5 Seating, a manufacturer of ergonomically designed office chairs based in Hawthorne, California. In a recent interview with business writer Susan Caminiti, Mir—who runs the company with his wife, Susan, CFO, and son Dara, who is president—explains why they started the company after arriving in the U.S. from Iran in 1982, how they were forced to reinvent the business, and why sometimes a drastic change can turn out to be a blessing in disguise.

     

    SC: You were trained as an accountant in Iran but came to the U.S. in the early 1980s. Why?

    DM: My wife Susan and I got married in 1978 and the revolution in Iran started about a year later. We stayed in Iran for a few years after that thinking that things might change and get better, but they didn’t. In 1980, we had our son Dara and decided this was not a good environment to raise a family and we left Iran to come to U.S. My wife’s brother is an American citizen so when we first came here we lived near him in northern California. We moved to southern California a short while later when we decided we wanted to open our own business. We felt that area had more of a business environment.

     

    SC: How did you get from accounting to seating?

    DM: When we were in Iran my wife had a garment business. So when we decided to start our own business we began with a line of girls’ dresses. That didn’t work out the way we wanted and we were thinking about going back to Iran. A friend of mine had a home furnishing business in the U.S. with sales and marketing teams all across the country. He said if I could find something that didn’t conflict with his business, he’d be happy to help. So I thought, he’s in the residential furniture business; I can go into the commercial side. I traveled to Italy and found some manufacturers of office chairs. In the early 1980s ergonomic chairs were just coming onto the market. We were one of the first companies to begin importing ergonomic chairs and doing wholesale distribution in the U.S. Our timing was very good.

     

    SC: Who were your early customers?

    DM: The end users were mostly home offices or small businesses that would go to an office furniture dealer for chairs. Our initial market was targeted more towards the home offices and small offices rather than corporations. Then in the mid-1980s, the warehouse clubs and superstores started to come into play.

     

    SBO_9to5_PQ.jpgSC: How did that affect your business?

    DM: Between 1984 and 2002 our business grew at a tremendous rate because places like Costco and Price Club were so popular. We started doing business with these retailers and because of the volume they did, our business grew tremendously. All the money we made we plowed back into the business and got more involved with in-house manufacturing. By 2002, we owned a factory in southern California and had very few but very large accounts, including Costco, Office Depot, IKEA, Staples, and Sam’s Club.

     

    SC: Did that concentration on a few accounts worry you?

    DM: It worked to our detriment because by 2002 Chinese manufacturers were starting to penetrate the U.S. market. In a very short period of time our customers switched over to these Chinese manufacturers, so we lost a lot of our business. We tried to combat that by explaining to our customers that in doing business with us they were getting a U.S.-made product that was only about three percent to five percent higher in price than the Chinese product. But in those days a trend had started—if you’re not buying it from China you’re not buying value. That’s what the belief was. It was a very rough time for our company and we realized we had to make some drastic changes. The one good thing was that since this is a family business, we made all the decisions about the changes ourselves.

     

    SC: Given the crossroads your company was at, what did you decide?

    DM: If we can’t beat the Chinese we’re going to join them, and I believe it is the reason for our success. Instead of going to China to buy products from other Chinese manufacturers, we went to China and formed a company that is 100-percent owned by us. In that factory we manufacture many of the components for our chairs and then send those components to our factory in California. The one thing we wanted to make sure of is that, in China, our concentration is on quality. We are buying the very best raw materials we can find. The manufacturing process is the best. We are able to make a high quality product and make it for a good price. Labor and real estate is cheaper in China so we take advantage of that.

     

    SC: What happens to the components once they’re made in your Chinese factory?

    DM: They are sent to our California factory. The two factories working together have enabled us to offer something that’s different from chairs that are manufactured in China and simply imported into the U.S. If we were importing a finished product we would be stuck with whatever color and style was in the box. Doing it the way we are, we are able to basically tailor-make a chair to the exact specifications of the customer and deliver it within a few days.

     

    For example, on an office chair, we make the casters, wheels, base of the chair, and some of the plastic and metal parts in China. We ship those parts to California where we keep a very large inventory of components. In California, we do all of the cutting, sewing, and upholstery of the chairs and use this large inventory of parts made in our China factory. As a result we can offer a high quality office chair for about half the price of what our competitors are offering. We can ship it between two and five days after getting the order and offer chairs in nearly 1,000 different styles, fabrics, and colors.

     

    SBO_9to5_Sidebar.jpgSC: How did that change your customer base?

    DM: We got away from the mass market and warehouse clubs and put together a very capable sales and marketing team. Our sales teams go to different furniture dealers and convince them to represent our line of chairs. Today, we have between 1,500 and 1,600 dealers in U.S. They understand what projects are coming up with major corporations and government agencies and they contact the designers and specifiers on those projects and recommend our chairs. Looking back, the change was a blessing in disguise because the concentration of our business with those warehouse clubs was something we were concerned about.

     

    SC: How long did it take for you to see that this change in strategy was working?

    DM: We started in China in 2003 by end of 2006 we already had a good team of people trained and working. We also understood the culture, bookkeeping, accounting, and foreign exchange. By working on our facility for those years, we had a pretty good handle and decided this was the way to go.

     

    SC: In the meantime, what was happening in California?

    DM: Up until 2010 we were leasing our space in California. Our lease was coming up so we decided to look for land to design and build a manufacturing facility and office. Our son Dara was very involved in the design and construction of the new building. I would have gone for a more traditional design but he wanted one that was tied into more environmental issues. For instance, we have solar panels on the roof and even have a live link on our website that shows 24/7 how we are generating all the electricity requirements we have. The building has become an interesting part of our business. We have dealers come to see it and the new construction has enabled us to become more efficient in our production.

     

    SC: How did your business do during the financial crisis?

    DM: In each of the years between 2008 and 2012, our business has grown somewhere between 25 percent and 45 percent. Dara is in daily contact with our dealers and reps to find out what we should be developing next. There’s no question that when Susan and I retire he will be running the business. In fact, if it weren’t for Dara coming on board in 2002 we probably would have sold the company. But when we saw that he wanted to get involved, we got a new wind.

     

    SC: What’s been the biggest surprise in running your own company?

    DM: The surprise was that I, as a first generation immigrant, could come into this wonderful country and with a little money and a lot of hard work, make it happen. To see that a business that you built has a life after you, and is going to continue on through your children, is a great gift. To me, that is a bigger measure of success than the money you make.

     

    The interview has been condensed and edited for clarity.