Tom Kmak of Olathe left corporate security to start his own business, Fiduciary Benchmarks Inc., in October 2007.
Making decisions involving thousands of employees or millions of dollars is a breeze for top executives at large corporations. Ordering office supplies, however, can be something else entirely.
“What surprises many people making the transition to running their own business is the lack of support services, which can be something as simple as ordering business cards,” said Monica Doss, a director of the Ewing Marion Kauffman Foundation.
The perception used to be that it would be difficult to move from being an executive in a large company to starting your own business, she said, but it has become more acceptable because “many people want to try something different with the rest of their careers.”
Tom Kmak of Olathe has not only survived that transition but is thriving. He founded Fiduciary Benchmarks Inc., which provides retirement plan benchmarking services, in October 2007. Before that, he spent 17 years as a top manager at two large corporations.
“I joined American Century in 1990 and started a retirement business unit within the company,” Kmak said. “That unit was later acquired by J.P. Morgan. By the time I left, I managed 1,100 people and had 200 prestigious clients, such as Southwest Airlines and Coca-Cola.”
Walking away from that success wasn’t easy, but even while climbing the corporate ladder, Kmak had an entrepreneurial spirit.
“People used to refer to me as an intrapreneuer,” he said. “I think the difference between an intrapreneur and an entrepreneur is whose capital you are investing. There is a big difference when there is a company such as American Century or J.P. Morgan behind you, risking their capital.”
An entrepreneur also is a person who can find a better way to do things, Kmak said.
“I’m good at looking at a problem and saying, ‘there is a different way to ” he said. “There is no need for a client to hire you unless you solve this,’ can show them something better. I related that to something I saw happening while at J.P. Morgan. It was clear that fees would become a hot topic in retirement plans, and there was no good way to benchmark a 401(k), no central database. I couldn’t build a benchmarking business from inside American Century or J.P. Morgan because of the conflict of interest.”
Kmak mulled over his idea for a year and a half before venturing out on his own. “I thought it through hard and said, ‘OK, this really is the time to try to ” he said. do this,’
Fiduciary Benchmarks is a virtual company, with partners around the world. Surrounding himself with qualified people has been a big part of Kmak’s success.
“I had a partner at the time who had the contacts to bring in talented people,” he said. “That was critical. Without a doubt, the most important thing for entrepreneurs is to surround yourself with good people.”
It also helps to surround yourself with plenty of working capital.
“The number one thing I learned from the corporate world is that cash is king,” Kmak said. “There is not an unlimited budget you can tap into in case something goes wrong. Because cash is king, do your due diligence. If you are going to spend money on people, technology or marketing, make sure you have thought through how your money will be spent and how you will earn it back.”
Doss, meanwhile, counsels would-be entrepreneurs to take a hard look at their objectives before taking the plunge.
“It really must be a family decision, not something that involves only you,” she said. “It may be a lifestyle decision, such as not wanting to travel as much. But it also may mean that your company can’t take a vacation for three years.”
That is exactly the process that Kmak went through.
“I used a weighted system and evaluated the pros and cons of staying where I was or starting my own business,” he said. “What is the potential to make more money, what is the potential to lose money and what is the impact on my family and health? You need to approach it as an outsider looking in.”