Ann Arbor's Motawi Tileworks and Menlo Innovations named to Forbes' top 25 small companies list

Ann Arbor companies Motawi Tileworks and Menlo Innovations have made Forbes magazine's second annual list of 25 "small giants," featuring outstanding small, privately-owned companies across the U.S.

The Forbes article says it recognizes companies that have "sound models, strong balance sheets, and steady profits." The companies on the list are noted by others in the field as being outstanding, and all give back to their communities in some way.

Menlo Innovations, founded in 2001 by CEO Richard Sheridan and COO James Goebel, is an Ann Arbor-based company that produces custom software. The company was named after Thomas Edison's "invention factory" at Menlo Park in New Jersey and was featured by Forbes for being an innovative model for other companies.

The Forbes article noted that Menlo is so well-respected in its field that people pay to tour Menlo's office and executives pay a premium to spend time there observing the company's business model.

Nawal Motawi, founder of Motawi Tileworks, says she didn't know her company was named to the list until she got the new issue of Forbes in the mail.

"This means more to me than any other business reward I've received," Motawi says. "I'm blown away being in the same list as some of the other companies on the list that I study and revere."

Motawi started her tile business in Ann Arbor 25 years ago, confident in her art but humble about her knowledge of the business end. Art school actually discourages people from changing any of their work just to make a profit, she says.

"In art school, selling art for money is a bad thing," Motawi says. "I knew I didn't know anything about business, and I was very open-minded at the beginning. I sought out what resources were available, like the Ann Arbor Chamber of Commerce, the Service Corps of Retired Executives, and I read Inc. magazine."

Over time, Motawi grew her business, but profit margins remained low. She made the tough decision to continue selling art tiles at galleries around the country but to pull installation tiles out of showrooms and allow the wholesale side of the business to die off.

"The margins were terrible," she says. "It was fun to be in big trade shows, but the more I studied it, the more I felt it was not making sense."

It was a controversial decision that caused a split between Motawi and her business partner. But several years later, profit margins at Motawi are much better, closer to 10 percent than 2-4 percent.

Motawi says being part of the "Small Giants" club is not just about being small at all costs but about being "human-scaled."

"It's a different attitude than the carrot-and-stick hierarchy in most businesses," she says. "Ordering people around isn't much fun. I rely on my employees to make decisions and give them the information and tools to do that."