Starting a business is hard enough, maintaining long-lasting client relationships even tougher. Sam Malhotra, founder and CEO of Subsystems, an IT services company based in Rosslyn, Va., is a master of both. Two of Subsystems’ major clients for nearly 20 years are the FAA and the US Army. The list doesn’t stop there. Nor does the company’s exceedingly bright financial forecast. In the following Q&A, Malhotra talks about how his company has successfully made the transition from small business to one that can compete with the big companies and pick up major, long-lasting clients along the way.
How did you manage to build Subsystems from the ground up?
Sam Malhotra: We started this company on a foundation of solid, clear core values. We built on that foundation and evolved by adding members to our strong management team. But it’s not just about collecting high caliber people. It’s about teamwork. The team must function as a fully synchronized unit. It’s analogous to putting them into a competitive rowing crew type of situation; where each of them pulls their oar in the same direction, at the same pace with the same momentum.
Tell us about your key customers.
Sam Malhotra: We find and stay with our customers by building lasting relationships. That is how we started and stayed with our two major clients, the FAA since 1992 and the US Army since 1993. Also among our key customers is the Homeland Security Department where our work has endured since 1988 through our continuous support of the Immigration and Naturalization Services. Our work with DEA started in 2000. EPA is our newest client.
What best practices help further your business development?
Sam Malhotra: Focus on the client. That’s the key to our business development. As we see business development, it is truly about understanding our client’s mission and being engaged at all levels with them. It’s about where they are going and what’s important to them. We make sure that our people – the people we bring to the table for performing our clients’ missions – are an exact match for the client’s needs. We take a lot of time doing that and it pays off, not just for us but for the client.
As someone with a well developed sense of future market directions, can you share any pressing trends with us?
Sam Malhotra: The big three would be security, the aging population, and the challenges of finding new energy solutions. For our company the global war on terror and an aging U.S. population will be at the top of our list. At this point it is difficult to predict which administration will be in power next year and equally difficult to identify what that new administration will bring. But no matter who comes in, there is still going to be a tremendous amount of attention on the combating terror. As for the issue of the aging population, our attention will also be on agencies like Health and Human Services.
Give us a snapshot of your projected revenue for the year. Also, are you looking to acquire more companies?
Sam Malhotra: We should finish the year around $40 million. We anticipate strong growth of our current business, say 20 percent a year. However, even with that growth we will not expand to the level we want. So the natural direction to take is to supplement our current base with acquisitions. We will balance our efforts between our current work and acquisitions. We feel that having sustained growth in our existing business is just as important as growth through acquisitions. If we can maintain an organic growth rate and make acquisitions of $25 plus million a year we could be a $150 million company here in short order.
What’s next for the company — any new partnerships?
Sam Malhotra: We look at partnerships on a case by case basis in conjunction with opportunities we are targeting. So there is no one single partnership for us. Most of the acquisitions we are looking at are in engineering services. We think that engineering services is the most likely growth area for us as a company.
What’s your biggest challenge In business today?
Sam Malhotra: We have several challenges. One challenge, in a good way, is that we are no longer a small business. So our operating rules have changed. Now we compete with the big companies — that’s a huge challenge. Another challenge is meeting the expectations of our new Board. We have developed a new board with very experienced people. It’s an outside board of directors — a legal entity. Managing and meeting their expectations is my number one priority, my number one challenge.
Are there any books that changed your life, either personally or professionally, in a meaningful way?
Sam Malhotra: Execution by Larry Bossidy, that is a good book. As the title implies, it’s all about execution — you know we can have strategy galore but if you don’t execute then all your efforts will go nowhere. Then on a personal level, another book that has changed my life is Eckhart Tolle’s Power of Now; that made a huge impression on me and how I view not just personal relationships, but business as well.
Interview with Sam Malhotra was conducted by JD Kathuria
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