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CEO Fought His Way In to Lead Battle Vs. Colds

"I didn't have a lot of confidence going in as CEO," he admits. "I had to learn on the job. I had to learn the consumer packaged goods business. I had to learn how to manage other people. It was really an overwhelming task to start out."

Karkus says he immediately hired management consultants, and one of his first initiatives was to give employees personality assessments to find out the strengths and weaknesses of each. That assessment led to dismissing 10 of the original 25 employees at the company's headquarters. Today only five of the original 25 still work for ProPhase Labs, he says.

"We've reduced a couple million dollars of overhead at our company," he says. "We're a more efficient company. I think we're operating better with less people and less overhead."

But Karkus' mission is to get retailers comfortable with the product again. To do that, he has taken to personally going on sales calls to its retailers because shelf positioning is "critical."

"Your retailers are your partners," he says. "It's your retailers that determine how much shelf space you get and what the positioning is on the shelf. If you don't have good positioning on your shelf you're going to become irrelevant -- consumers are not going to be able to find you. If they don't notice you on the shelf they're going to buy your competitors' item."

To get prime shelf space, retailers want to know that the company is growing and spending money on advertising to promote the brand, he says.

"It's kind of self-fulfilling: As you get more shelf space, you're going to sell more product. You sell more product, the retailers feel good about putting you on the better shelf position, they're going to give you more displays," he says.

According to the company's latest quarterly report, net sales - which includes sales of the over-the-counter product as well as private-label commissions -- rose 58% for the six months ending June 30, to $4.9 million, versus the year-earlier period.

So far the biggest lesson Karkus has learned as CEO is the critical importance of hiring good employees and being able to delegate tasks.

"You can have the best product in the world, if you don't have good management and you don't have good employees and a good staff working with you there is no way the product is going to be successful," he says. "There are a thousand decisions I have to make every day, and I rely on my entire team to make them."

-- Written by Laurie Kulikowski in New York.

To follow Laurie Kulikowski on Twitter, go to: http://twitter.com/#!/LKulikowski

To submit a news tip, send an email to: tips@thestreet.com.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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