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Undercover Boss: United Van Lines' Big Small Business

The American business landscape is often neatly divided in half. On one side, hulking global mega-corporations employing thousands and operating across continents. On the other, plucky small businesses that drive the majority of growth while hiring in the single digits and staying on a first-name basis with customers. Now imagine that you have to manage both. This is the task that daily confronts United Van Lines President and CEO Rich McClure.
McClure -- who will appear on CBS's Undercover Boss this Sunday at 9 p.m. ET/PT* -- took the top job at United Van Lines in 2002, after first joining the company in 1995, following a career in banking and politics. "In terms of management challenges, our business model is unique," McClure said of the company, which was formed in 1928 and is now the biggest moving and storage firm in the United States. "We operate though agents, who have exclusive agreements with us as independent small businesses."

The power of big combined with the values of small
Make no mistake, United Van Lines is very big. It's part of the privately owned UniGroup, which generates $2.2 billion in consolidated revenues from its diversified businesses. United Van Lines has approximately 400 locations around the country, according to McClure, but many of these have under 50 employees. "Our role is to support them," he said. "Our agents are our shareholders. There's just not enough margin in this business to satisfy the demands of investors. But in our model, agent and investor are one one and the same."

In practice, this enables United Van Lines, by virtue of its size, to basically make life much easier for its agents. "We pay agents in just under 12 days," McClure said. This timeliness is of critical importance to small operators, who can struggle with unpredictable cash flow.

This model isn't as tightly structured as a co-op, McClure pointed out. "We rely on independent contractors," he said. This extends to his board of directors. "I like to say that we had an independent board before it was cool."

Negotiating the financial crisis and shedding debt
Although UniGroup remained profitable through the financial crisis, United Van Lines had to deal with significant management hurdles. "The housing downturn dramatically impacted our business," McClure said. "We saw a 20 percent drop over the period." Fortunately, by that time the company had already begun a process of cleaning up its balance sheet.

"We completed a de-leveraging process in 2007," McClure said. "When I came in as CEO, we were in the middle of that." He indicated that company is now "cautious" about debt in general, but that it wouldn't rule out borrowing money to achieve business objectives. "We've leveraged in the past, to fund acquisitions, and if the right opportunity came along, we would leverage again."

Making decisions that will perpetuate growth
So what has been McClure's biggest management challenge since he became CEO? "Figuring out how to diversify our business to help our agents grow," he said. For example, the company's mix of services are now about 50 percent household relocation and 50 percent specialty logistics services. "We've also broadened our international base," McClure said. "We acquired a company in Asia to serve the Chinese and Southeast Asian market."

Obviously, worldwide growth can't compromise the core of United Van Lines' business, which remains focused on local partnerships. "We were created with relationships in mind," McClure said. And on his watch, that's not going to change. It's only going to become more important.

*Disclosure: CBS owns BNET.com.

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