VGM founder up for Ernst & Young honor

May 12--WATERLOO -- It's kind of like Finals Week for Van Miller.

On Thursday, Miller, founder of VGM Group Inc. in Waterloo, will travel to Minneapolis, along with two other Iowa-based finalists, for a daylong barrage of interviews with panels of judges who will determine the winner of Ernst & Young's Entrepreneur of the Year award for the Upper Midwest.

The other two finalists for the regional honor are Duane Smith of Cedar Rapids-based insurance and financial services company TrueNorth Cos. and Christopher Klitgaard of Coralville-based healthcare revenue cycle management firm MediRevv.

All of the finalists will be honored, and the winner announced, at a black-tie gala June 11 at the Hyatt Regency Hotel in Minneapolis.

The winner will qualify as finalist for EY's U.S. Entrepreneur of the Year, which will be awarded in November in Palm Springs, Calif.

The national winner moves on to worldwide competition against top leaders from 60 other countries in June 2015.

What if Miller passes the big test? He likely won't claim much credit; that will go to others at his Waterloo-based company, VGM Group Inc., which he launched as VGM & Associates in 1986 as a national purchasing group for independent home medical equipment providers.

The company he started with just a handful of assistants, now employs more than 650 workers in more than 20 business units, primarily connected to the HME industry.

In 2005, VGM launched an employee stock ownership plan, and three years later, it became 100 percent employee-owned.

Another honor

Miller is no stranger to awards. His business efforts have garnered attention both inside and outside the home medical equipment industry.

Were it up to him, he'd prefer the company, rather than he, take the bows.

But, he also said he'll take one for the team.

"Our CFO (Mike Mallaro) thought we'd have a great story here and we basically give recognition to the community," Miller said. "I said OK. And I think it would be great for the community, somebody from here, who started a company from scratch."

In 1986, Miller sold his 50 percent ownership of Miller Medical -- a franchise-based company he and brothers Blaine, John and Doug started in 1978 in a storefront on Fifth Street in Waterloo in 1978 -- to start VGM & Associates.

"VGM was a concept that basically was a similar concept to Miller Medical, but it's not a franchise; it's a membership," Miller said. "We try to be like a home office for home medical equipment suppliers, where they can get other services that big corporations enjoy. They have their own in-house counsel, CPAs, government-advocacy people and so forth. A smaller company doesn't have the resources to have that type of infrastructure, so we try and provide that for them under a membership program. When we get our monthly fee from them, that's kind of like a vote that we're doing something for them."

Getting started

The business had a rough start, Miller said, noting that his goal at the outset was probably modest.

"My vision was to be still be in business a year from when I started -- not very sexy, is it?" he said.

The next step was to be profitable enough to draw a salary; that took 2 1/2 years, Miller said.

Early support from investors like Jim Walsh and John Deery was crucial, he said.

Miller worked to build a client base from the outset. Starting with just four employees, Miller and his nascent firm attended a trade show in Atlanta in August 1986 and brought 10 manufacturer contracts out of that event, based on a plan to have 200 members within the first year.

He made that goal, and the company was off and running.

"We started out as a buying group, and we've evolved into a membership organization," Miller said, discussing the early days. "The buying part is part of our services, but it's not the only service, whereas when we started out, it was a buying group."

He said building a membership base was tricky

"It's a chicken and egg," he said. "How do you get a manufacturer to give you good pricing if you have no members, and how do you get members if you have no contracts? Well, you've got to do a sales job."

Miller said his success can be traced to the people around him.

"It's hiring the right people," he said. "I'll be honest; our first 10-12 associates were from the former company, Miller Medical. I already knew them and they already knew me. Some of them, it was quite a challenge to make that jump. When you go from a very secure job to a new company, it's kind of rolling the dice. It's kind of a tough decision."

Judges visited

Ernst & Young already has sent a delegation of judges to VGM to get a first-hand look a the operation, said Todd Papa, EY's Entrepreneur of the Year director for the Upper Midwest.

The judges look at a number of criteria, including leadership style, management structure, how they deal with adversity while creating jobs and how they treat employees, Papa said.

In general, the award carries numerous benefits, Papa said.

"Some we see are recognition internally at the companies, successes of the employees, owners and management team that have supported the owner," Papa said. "Obviously, it has positive publicity and marketing for companies. And it's opportunities for networking and potential additional business opportunities."

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