A New Beginning
After being dismissed following 12 years at Kraft Foods, Paul Scharfman was at a crossroads.
The Wisconsin resident considered next career steps that would fit his food industry sales experience. Having owned his own small business in his teens and early 20s, Scharfman decided to reenter the entrepreneurial world. In 1991, he piled up all he had and purchased a small company that operated five small cheese-making plants. Looking to jolt new life into his acquisition, Scharfman researched mega trends in the U.S. food market. With the projected increase of diversity in the U.S., he saw an opportunity to produce cheese to serve growing markets.
Specialty Cheese Company, Inc. was born.
“We were then able, over the years, to screw it up royally,” Scharfman said. “We made some boneheaded mistakes and some other types of mistakes, but over a number of years we got better at it.”
For nearly three decades, Scharfman and his staff have worked to diversify their product line to make cheese for various ethnic groups in America. The company’s success has had a positive ripple effect on surrounding rural communities.
It took great perseverance and trust for the people in the company to help Scharfman make sound decisions, while he contributed his sales expertise.
“We looked cold and hard at what we, the owners, did not know and rewarded the people who did know that stuff,” he said.
Scharfman also listened to what customers and consumers wanted and then worked with staff to figure out how to produce different types of cheese. The strategy eventually worked, but not before the company flirted with financial collapse.
Facing the Abyss
Buying the organization and having enough working capital early on took all of Scharfman’s resources, plus contributions from his family. As Specialty Cheese Company executed its new strategy, finances were tight. It went from bad to worse when a new product, a low-carb, crunchy cheese snack, failed, sending Scharfman’s net worth below zero.
“I was personally shoveling the waste in the waste fields,” Scharfman said. “I couldn’t afford to hire people. It got a little grim for a while. We were fortunate to keep on trying and persevere through some of those mistakes.”
Through the difficulties, Scharfman saw the importance of being completely truthful about his circumstances, including with himself. The experience taught him not to act out of fear or shame, but to be deliberate and forthright. So he called his bank, which had recently sold. The new owners identified Scharfman as the worst loan on their books.
One of the bank’s top officers brought him in and said they had essentially written off his loan when they bought the bank, and asked him what he was going to do to fix the mess so they didn’t have to call him in to personal bankruptcy. Scharfman took out his keys, put them on the table and told them he didn’t know what else to do but fix the business.
“I’m willing to work with you to fix it, if you don’t shut me down,” Scharfman said. “They pushed the keys back and said, ‘All right, let’s work together.’”
Tough decisions were made. Scharfman brought in his suppliers and said he was going to pay them late, but assured them they would be paid. He put together a plan that involved cutting salaries, and in the end the plan worked.
“We always acknowledged people’s feelings, we always told the truth, and we had a plan that worked over time,” Scharfman said.
Revitalizing a Rural Community
Since 1991, the cow population in the Dodge County, Wisc. has increased while the population has decreased. Dairy farms are more automated, creating more productivity and fewer families and children. This forced the county to close down the high school in Reeseville at the turn of the century, a crushing blow to the community. It started a downward spiral. Property values went down and criminal activity went up.
In 2003, Specialty Cheese Company purchased the high school and turned it into a bustling business headquarters, helping to reverse those negatives. Local property values are increasing as the company helps employees purchase homes. The company even recently sponsored the first annual Reeseville Art and Music Fest and is working on a child-care facility for its employees and the community.
Today, the company is thriving from its rural headquarters. CNN reports it is nearing $50 million in annual sales.
Some ask how Scharfman can find enough people to employ in a growing company located in a town with a population of less than 1,000. The answer: be innovative.
Specialty Cheese Company instituted a transportation program to bring in employees from neighboring communities. It employs 10 people, in three shifts a day, to drive employees from their home to work.
“We have the people we need,” Scharfman said. “Two hundred fifty folks work here, and it’s 12 miles to the nearest supermarket.”
Bullish on Rural
Scharfman’s belief in rural America is strong, saying it “is the next hot investment opportunity.”
He points to a “hidden workforce,” people that want to work, who are gritty and persevering, but currently can’t work because of barriers unique to their location – they can’t afford a second car, they can’t afford child care, they can’t find health care. So if an employer comes in and provides employment that includes child care, health care and transportation, there are people that want to work, Scharfman believes.
“If you treat the people in rural America as what we are: upstanding, bright, hardworking, persevering human beings … we’re good folks out here,” Scharfman said. “If you treat us honorably, we will respond, and we have a work ethic and a grittiness that is just wonderful.”
Scharfman believes another big advantage to doing businesses in rural America is the availability of land.
“The place to do ag, to do solar, to do land-intensive industries is in rural America,” he said.
“We are a strong proponent of building communities in rural America,” he later added.
Scharfman said policy makers must understand the backbone of rural America has to be business, in particular manufacturing or processing. Today, getting products to market is easier than ever through internet marketplaces. For example, Scharfman has the best-selling cheese on Amazon called “Just The Cheese.”
What local, state and federal officials can do is recognize the barriers to business success, including access to capital, Scharfman said, adding it’s harder to get a loan for a manufacturing facility from rural America than urban America. He said it’s hard to build a child-care facility in rural America and legislatures can fix that with loan guarantees.
Scharfman also noted the need for mental health services in rural America is important. “This notion that farmers don’t do feelings,” Scharfman said. “No, that’s nonsense.”
Wisconsin health officials reported increasing suicides in the state and particular stress among dairy farmers.
“It’s terrible when people are afraid to talk about their feelings,” Scharfman said. “When people are afraid, ashamed or undervalued. Feel less than they are. When a business owner comes in and says, ‘Folks, I see more in you than you see in yourself,’ it’s empowering. People rise to the challenge.”
He added, “Our success story can be traced directly to the time when we started teaching emotional intelligence to our management and supervisors.”
For those thinking about starting a business in a rural setting, Scharfman encourages them to do what he did early on and identify some “mega trends” to find a competitive advantage.
He encourages utilizing resources specific to rural areas, the land, the agriculture, the sun and making use of programs that improve access to capital for rural communities. More importantly, he encourages rural entrepreneurs to take care of the people around them and help them improve soft skills, acknowledge feelings and assist them with self-management.
After all, it’s the people in rural America that make Scharfman enthusiastic about its future.
“I can’t speak highly enough of the people in rural America,” he said.