Job creator turns adversity into opportunity
by Dick Youngblood
Staff writer Star Tribune
Sunday, May 15, 1994

To those of us afflicted with an envious nature, Kim Carlson has an annoying propensity for turning adversity into business opportunities.

The results are equally irritating: While I'm still working for wages as I plummet headlong into my dotage, Carlson is a hyperkinetic whippersnapper of 34 who's running her own million-dollar company.

Carlson is co-founder and president of Cities Management Inc., a residential property-management company that ended 1993 with 45 employees and revenues that fell just $35,000 short of $1 million. She started the St. Louis Park company in 1982 with the man who was to become her ex-husband, the motivation mainly involving the fact that she couldn't find a full-time job.

That was Adversity No. 1: "I finished college a quarter early because I was anxious to get out and start doing things," Carlson said. "The only trouble was, there wasn't anything to do."

The country was lingering in the trough of what I persist in calling the Reagan Recession. Carlson, who graduated from the University of Minnesota in business administration in 1981, wasn't the only kid who had trouble finding work back then.

Her response was to take a part-time job with a developer who built condominium units for nonresident investors. Those were the days, you'll recall, when the tax laws made such economically gratuitous exertions quite profitable for the moneyed set.

Carlson whiled away her part-time hours writing leases, collecting rent and arranging repairs for the properties. She did it, that is, for about a year, until she decided in the summer of 1982 that the only way she was going to find a full-time job would be to create it herself.

Whereupon, she began building her own property management operation while her husband concentrated on an associated condo brokerage business. Carlson bought her husband's share of the business after the marriage broke up in 1986.

The thing is, despite her youth and sex, she managed to thrive in an industry dominated by white males, most of whom have quite a few miles on them. Her initial strategy was to focus on the investor-owned condo market and by 1986 she had nearly 300 units under management contract. Together, she and her husband brought in about $260,000 in revenues.

Then came Adversity No. 2 - tax reform that eliminated the break for nonresident real-estate investors and killed the small but lucrative niche market around which she had built the company.

All of which nudged Carlson into another market that turned out to be even larger and more lucrative: She began pitching the condo and town-home associations that had sprung up with the boom in construction of those types of single-family dwellings in the early 1980s. By the end of 1993 she had about 3,000 units under management.

The upshot: In 1993, about two-thirds of her property-management income - upwards of $500,000 - came from management contracts with these homeowner associations. Another $250,000 was collected for management of conventional residential and commercial rental properties.

The remaining $200,000 of Carlson's 1993 revenues came from yet another opportunity that she spotted behind a problem. There were continuing quality and service difficulties with the vendors who were doing minor repair and maintenance work, she said, so in 1991 she started her own company to handle that work.

Cities Management has thrived not only because Carlson is a congenital hustler - "I'm easily bored," she said - but also because she's been willing, even eager, to take on the smaller properties that larger competitors tend to shun. "Some of the big companies even refer smaller clients to us," she said.

There's also a free-wheeling willingness to try something new, which helps explain why her company headquarters is adding a "meditation room" where staff members can go to unwind. And why there are regular staff training sessions on such wide-ranging subjects as diversity and ecology.

Her most ambitious flight into uncharted territory, however, involves what she's come to call her "Green Earth Initiative."

Inspired by her membership in a national group called Businesses for Social Responsibility, the Green Earth Initiative is an effort to adopt in her own company, and promote throughout the industry, management policies that minimize the environmental impact of maintaining multi-family properties.

We're talking a whole lot of impact, considering that maintenance of virtually every property involves toxic products used for everything from lawn care and pest control to carpet shampoos and floor and window cleaning.

"It takes time to educate and persuade the clients," Carlson said, but she's managed to incorporate nontoxic lawn products, paints and pest control into the maintenance schedules at about 10 percent of the properties she manages.

She's bent on expanding these efforts to all of her properties by year-end - while adding other environment-friendly practices ranging from recycling programs to lighting and plumbing retrofits designed to save electricity and water.

After that, Carlson figures to begin putting the arm on others in the property-management industry to adopt similar programs.

Many environmentally safe products and practices, ranging from bathroom and swimming pool supplies to window and floor cleaners, cost no more than their polluting counterparts and work just as well, Carlson said.

She conceded, however, that such products as nontoxic paints and carpet cleaners are more expensive. Moreover, it takes a while for light and water savings to offset retrofitting costs, and for a lawn to respond to nontoxic fertilizers.

Thus, it'll probably take some high-powered salesmanship to persuade Carlson's clients, not to mention her property-management colleagues, to move environmental concerns near the top of their priority lists.

Given her track record, however, I'd say Carlson has a better than even chance of succeeding.