A Start-Up with Roots in the Industry

Reproduced with permission of the National Association of Professional Employer Organizations


Lone Star PEO, Inc. was established in June 2016 out of a love of the industry and a strong commitment to build and maintain close-knit client relationships. While my PEO is a start-up, my roots in the industry stretch back many years.

Intro to PEO

My father-in-law, Wallace Brumley, introduced me to the PEO industry in 1999. He asked me to research it to determine if we would like to work together as a family. I took about six months to gain industry knowledge and insight. I attended several seminars and posed many questions, but I already knew I was hooked. The idea of the PEO was fascinating to me and I saw a long-term future within the industry. We packed up our family from Houston and headed to San Antonio.

Todd Newton is president of
Lone Star PEO, Inc., San Antonio, Texas.

Once we were settled, I immediately started working as the 401(k) administrator. I had my insurance and securities license and a background in insurance and investment strategies, executive benefits, and business continuation. Once we were content with the 401(k) plan, my role expanded into an operational position. I was exposed to all facets of the business and was quickly promoted to chief operating officer. I enjoyed the technical and transactional aspects of the PEO. Other key elements I encountered were problem solving and technology development. We focused on the small business owners in Texas and learned the art of maintaining relationships and client retention. Employee gratitude, a family atmosphere, and a high moral code was also a strong focus within our office environment.

Ten years after working for the same PEO, the company was sold. Management was restructured and I was placed into a sales management and leadership role. I was then exposed to a rapid-growth PEO model and worked in that environment for several years. I realized that the sales-only role was not a good fit for me. It was then that I reevaluated my career, family obligations, and goals. I spoke at length with my wife, Becky Newton (also in the PEO industry for 10-plus years), and together we decided to “get back to our roots” and open our own PEO.

Forming Lone Star PEO

We formed our PEO and quickly obtained our license and joined NAPEO. The resources available to a small organization such as ours through NAPEO membership are invaluable. We used many offerings, including the regulatory database, educational webinars, and other resources available to members. This helped us confirm the path we wanted to take in forming our PEO.

We used our savings for the start-up costs and did not have a need for an investor or any loans. This was a risky move, but we both felt confident in our abilities, relationships, and experience to take the leap. We maximized efficiency in everything we did. We opted for a very small brick-and-mortar footprint and only signed a short-term lease. We also focused on new construction to make sure we didn’t have to deal with ailing real estate issues. Our office is also completely wireless. Everything is cloud-based, allowing us to work from anywhere. We chose to go paperless from day one to keep our costs down and remain eco-friendly. Months of planning and preparation allowed for the birth of Lone Star PEO, Inc.

We quickly secured a team of brokers and successfully onboarded our first client within 60 days of opening our doors. Our steady, cost-based growth model was in full swing. We are focusing on small blue-collar businesses. I believe that helping small businesses and developing strong relationships is the key to the success of our operation. These business owners are looking for a commitment to their businesses and hands-on service. While we may not have a large product offering at this time, we do have a high-touch customer service standard, which is imperative for each transaction. This methodology has secured us great clients, and referrals began to come in faster than we could have ever imagined. Conservation of our clients is just as important as sales and has taken a front seat in all our processes.

We recently celebrated our one-year, debt-free anniversary. We have a steady revenue stream and a high closing ratio. Our risk tolerance profile has stayed true, even though it meant turning down prospects if they were not a good fit. We have hit our base level goals and are now prospecting to larger employers and more white-collar industries. Using technology to the fullest extent while minimizing our overhead and maintaining a small footprint will help during this growth phase. We are continuing to refine our internal processes and seek highly qualified team members and consultants. Maintaining a family atmosphere and promoting a healthy work-life balance is also a focus. We allow some team members to telecommute, which fits their lifestyles, resulting in highly dedicated employees. Finding and selecting a dedicated team as a start-up was something we were initially concerned with. We have learned that open communication and flexibility when possible can make all the difference when hiring internal staff.

Growing and Refining 

I am grateful for my past experiences working in the PEO industry. Working for a steady growth, family-owned business as well as working for a rapid-growth PEO has allowed me the opportunity to refine my passion. I have a firm belief that businesses have a need for the PEO and I’m excited to help in their success. Lone Star PEO will continue to seek the smaller business owners and develop relationships that will go beyond “just business.” Developing relationships and getting to know your client base is imperative in our environment. Large PEOs may have a broader product offering, but our clients want to use a small business. They appreciate the value we offer, but they also realize that sometimes the relationship is just as important as the cost of doing business. It is also quite refreshing as an owner to quickly develop a solution to a problem and revise current processes. This was not always the case in a larger PEO environment and dealing with multi-level managers. Our clients have appreciated us being small and quick on our feet.

We are currently working on building mass and expanding our product offering to help us in this next conservative growth phase and are looking forward to 2018. We recently negotiated an excellent workers’ comp rate, which will allow us to be even more competitive. We are starting to prospect to larger, more sophisticated clients that are still defined as small businesses. We expect our internal costs to stay minimal and the size of our clients to increase. In addition, we plan to apply to become a certified PEO, making us more credible to our current and prospective clients.

It has not been our goal to be the largest PEO, nor the fastest-growing PEO. We have set reasonable expectations and are achieving our goals. It is very rewarding to develop a business plan and check off the boxes, some almost a year ahead of schedule, as one tool to measure our success. Working together side by side with my wife during this transition has made this a phenomenal experience. We enjoy working towards a common goal and look forward to watching our company grow.