NJSBDC Ramapo Case Study: Hafco Foundry & Machine
Small businesses and even non-profit organizations, which by and large are also businesses with a mission rather than profits in mind, have the good fortune to turn to Small
These centers are situated in many locations in every state, oftentimes affiliated with a university or college business school.
I recently learned of an interesting and fruitful collaboration between the New Jersey Small Business Development Center at Ramapo College of New Jersey and Hafco Foundry & Machine Co., Oakland, NJ. As a result, the company successfully emerged from succession difficulties and set out on an energetic course of prosperous business development.
Hafco is a family-owned distributor of metal castings and machined parts to the rail industry, and manufacturer of industrial pneumatic vacuums and dust equipment for the coal mining industry. Founded in 1969 by Horace Fornaci, the company is managed today by brother co-presidents, Basil and Billy Fornaci, who are third-generation owners of the business. During nearly five decades in business, Hafco experienced steady and consistent growth, achieving more than $6 million in annual sales.
Basil and Billy Fornaci joined the company in 2011 and 2013, respectively, with Basil as the head of sales, and Billy as the chief engineer. Their uncle, Michael Fornaci, served as president for 16 years, and their father, William Fornaci, the CFO.
In September 2015, Michael Fornaci unexpectedly passed away.
With no written agreement in place to cover ownership succession, his widow became the default owner, and placed her trust in a law firm that cared only for her personal gain, without considering the needs of the business or its employees. Having cast CFO William Fornaci as an adversarial party, instead of the next rightful president, the company’s future was anything but certain. Legal and accounting fees were mounting, with little communication with William Fornaci.
Then in March 2016, William Fornaci passed away, before any ownership rights were transferred.
The Fornaci brothers took control of day-to-day operations, while also reviewing a draft of an agreement, proposed by the original lawyers, written to cover the ownership and define the future operations of the company. It was at this point that Billy Fornaci reached out to the New Jersey Small Business Development Center at Ramapo College.
Vincent J. Vicari, regional director of the center, assigned the Hafco case to business consultant Jim Palumbo, whose experience and knowledge was a perfect fit for the company’s immediate needs. At the very first meeting, Palumbo pointed out some significant flaws in the way this agreement was written. The agreement was then re-written and accepted based on recommendations of Jim Palumbo. Basil and Billy Fornaci were quick to realize that business people cannot take business advice from lawyers and accountants without verification. The NJSBDC at Ramapo later connected Hafco with a law firm that ultimately served as a neutral party, drafting the formal agreements and handle the transfer of ownership.
Palumbo’s advice turned out to be invaluable for Hafco. In fact, he saved the company from what could have been a disastrous agreement. Over the past year and a half, Palumbo has helped to transform Basil and Billy from family business employees to confident and knowledgeable business owners. In addition to managing day-to-day operations, they’ve learned to create a business plan, generate yearly and quarterly budgets, and forecast the company’s sales. More importantly, they’ve realized the value of implementing all of these business tools.
The company’s growth was recently recognized by the state-wide New Jersey Small Business Development Center. Hafco was presented with the center’s Small Business Growth Success Award.
“The SBDC was a blessing in disguise for us. Our company was at such a fragile point when we reached out to Vince. We were able to use many of the resources and knowledge that the NJSBDC could provide,” observed Basil Fornaci.
His brother Billy noted “Being paired with Jim Palumbo was exactly what we needed. His knowledge and expertise were so valuable to a point where I was ready to make him an offer to get him out of retirement. We will be continuing to meet with Jim once a month as our business is now growing faster than ever and the ability to execute some of his ideas really shows. Thank you and see you at the top.”
Today, Jim Palumbo and the NJSBDC at Ramapo continue to offer advice to Hafco in areas such as human resources, distribution agreements, marketing plans, customer relations, inventory management, etc. Going forward, Basil and Billy will continue to implement these new skills and knowledge, and carry on Hafco’s legacy of success.
Small Business Development Center locations can be easily searched online. In New Jersey, the main office is located at Rutgers University in Newark. The Center is committed to guiding established small business owners and aspiring entrepreneurs to create and expand their business enterprises, which will, in turn, result in sustainable growth, job creation and statewide economic development and prosperity. NJSBDC counseling is free. Training workshops are fee based but affordable.
NJ Small Business Development Centers
Rutgers Business School
1 Washington Park, 8th Floor
Newark, NJ 07102
NJSBDC at Ramapo can be contacted at this address:
Vincent J. Vicari, Regional Director
NJSBDC at Ramapo College of NJ
Anisfield School of Business
505 Ramapo Valley Road
Mahwah, NJ 07430-1623
Small businesses will be interested to know that there is a wave of optimism on the horizon. Check my previous blog. In view of this buoyant mood, it would be wise to promote your goods and services now using all traditional and new wave media and social media. Don’t forget to tweet and retweet often – up to a half a dozen times a day – about what you produce and offer.
If you need help, contact me.
I’d also like to invite you to visit my Thought Leadership website:
If you’re looking for advice on recruiting, company handbooks and other human resources topics, I’d like to suggest to you this interesting website:
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PHOTO: At the NJSBDC Small Business Growth Success Awards luncheon: Brenda B. Hooper, CEO and NJSBDC director, Basil and Billy Fornaci of Hafco Foundry & Machine Co., Joe Palumbo, and Vincent J. Vicari, regional director, NJSBDC at Ramapo College.
