Personal reassessments - big company management skills aids small business entrepreneurs - column

Personal Reassessments

Large companies can be very good for entrepreneurs, both as customers and as teachers. My partner, Bill Quinn, and I are both glad that we had the chance to learn and develop our skills in big companies.

We were both in high-tech fields--I was working for COMSAT as a senior business analyst, and Bill was a sales representative for Hewlett-Packard. Although many people like large offices for the weekly paycheck or the social atmosphere, those factors weren't very important to Bill or me. We wanted to acquire experience that would lead to our own enterprise. Neither of us wanted to spend our lives with a big company. My plan was to get trained in a large company, to get a feel for the politics, and to understand the protocol of how things are presented and sold to big companies.

Bill and I met at a real-estate seminar about four years ago; we both were small-time real-estate investors. With our mutual interest in real estate, high technology, and entrepreneurship, we created Property Tax Specialists, Inc. It fit our requirement for a business that would be service-oriented, not capital-intensive. We took real-estate license exams and appraisal courses, and we researched the field of tax appeals.

In the late '80s, I felt that the real-estate cycle in the Washington metropolitan area was about to change. I was convinced that the run-up in prices just couldn't go on forever. The properties weren't worth their selling prices. Because of institutional money and inflated appraisal assumptions, the market was becoming overbuilt.

It followed that the tax assessments on many properties might be too high for the actual income they generated, and that owners of midsized businesses could not afford expensive lawyers and appraisers--who also lacked technical backgrounds--to make cases before assessors and boards.

We also believed that analyzing the methodology of assessment offices seemed a good way to go. These offices were supposed to be applying the same rules to everybody, but we believed we could show in many cases that they did not. We also thought that whatever tax representatives were doing for big corporations could be done for smaller ones that couldn't pay the big fees. We envisioned a small company able to provide service without having the huge overhead.

We went to Empress Software in Greenbelt, Md., for software we could use to catalog every assessment of every property in the Washington area and to search the database according to several criteria. That database is the heart of our success. We built this database on the assumption that at least one-third of a successful appeal consists of information management; this was our competitive advantage.

Meanwhile, I worked nights to earn enough extra money to get started. Bill fell back on residual commissions. We felt we knew the market, and we even had some customers lined up. We wrote our business plan and consulted with the Washington law firm of Kirkpatrick & Lockhart, and in 1988 Property Tax Specialists was incorporated.

Our instincts turned out to be right. Our firm has won cases that other firms had declined to appeal. In one situation recently, a building that sold for nearly $40 million was assessed at over $30 million. The owner thought the assessment was too high but was advised by others not to appeal it because it was below the selling price. We thought the assessment should be appealed, and we had it reduced to $30 million, which saved the owner $25,000 that year on a tax bill of several hundred thousand dollars. Our database and our unique ability to uncover inequities in assessments within an area made the difference in this case.

Typically, our assessment reductions are 10 to 15 percent, though sometimes they reach 25 percent or more.

Property Tax Specialists may not be the biggest appeals firm, but size is not our objective. We learned from our experience in major corporations that big can mean slow and bureaucratic. Because we appeal each case ourselves, we provide personal service. Other firms can't do this.

As we have begun to acquire large clients, such as Trammell Crow Residential and NV/Ryan, we have drawn on our backsgrounds in big business. Bill has great natural sales skills, and he received excellent sales training at Hewlett-Packard. I have an MBA from Carnegie-Mellon and gained strong financial experience from working at Hughes Aircraft and COMSAT. Our skills are complementary, and we know how to make successful presentations to large companies.

And then there's the motivation: We want to make our mark through a value-added service. We want people to be able to say, "These guys do it right."

We took our core skills, refined them with what we learned in corporate environments, and started a firm. Others can do the same. The corporate environment is not a trap unless you convince yourself that it is. It's truly an opportunity.

David J. Levy is co-founder of Property Tax Specialists, Inc., in Rockville, Md. He prepared this report with free-lance writer Sara Elizabeth Levy.

Readers with special insights on meeting the challenges of starting and running a business are invited to contribute to Entrepreneur's Notebook. Write to: Editor, Nation's Business, 1615 H Street, N.W., Washington, D.C. 20062.

COPYRIGHT 1991 U.S. Chamber of Commerce
COPYRIGHT 2004 Gale Group