Employees Power Benefit Corporation Back from Natural (and Manmade) Disaster: Announce First Profit Ever
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BROOKLYN, N.Y. - It wasn't just Hurricane Sandy that hit New York-based IceStone: the company was already wading through years of losses before the super-storm. But this month, it will turn its first profit after 10 years of red ink, and management credits a new corporate structure.
IceStone is among the country's first benefit corporations, a business model that balances public benefit with profit. The firm manufactures countertops made from recycled glass and cement. Two years ago, it changed its structure and asked investor Dal LaMagna to take over as president and CFO. He quickly asked top-paid management to leave, and increased wages for the lowest-paid employees.
"I find that empowering employees can make a successful company even more successful, and a failing company more likely to succeed," said LaMagna.
IceStone made its 38 employees part-owners and created an executive committee, including an employee representative, to make company decisions. According to LaMagna, the company went from losing $250,000 a month to a more-manageable $20,000 within months.
IceStone's success hit a roadblock in October last year when Hurricane Sandy flooded the Brooklyn factory with five feet of water. LaMagna said he was ready to throw in the towel, but his employees rolled up their sleeves and started drying off their high-tech equipment, piece by piece.
"My employees, who are now empowered employees, said, 'We could fix this.' They took all the motors apart, they took all the electrical components apart, they dried everything," he related. "Three and four months later, factory is up and running. The employees did it."
LaMagna also secured an SBA disaster loan that helped get the company back into production. And profitability came mostly through national sales, not storm renovation. IceStone distributes its products across North America.
IceStone's triple-bottom-line business model - for people, planet and profit - legally allows a corporation to focus on other benefits besides financial. LaMagna, a serial entrepreneur who has started and sold several successful companies, including Tweezerman, has been a member of Social Venture Network since 1996. He proves that it's possible to be successful and keep an eye on the big picture.
"You do that, and you end up with a company with loyal employees, loyal vendors, more productivity," he said.
Currently, 18 states have passed benefit-corporation legislation. According to a report from the Worldwatch Institute, the total gross revenue for all certified benefit corporations, such as IceStone, totals about $6 billion annually.
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