Eye of the Survivor – Part 2

Diversification in the Workplace

Survive a Challenging Economy by Diversifying Your Business Model

By Eric Morse

This story is a part of a series addressing the challenges contractors
are facing in this economic environment. In December 2008, as the
effects of this recession were starting to impact all sectors of the
economy, business owners who use Bobcat equipment were interviewed and
asked to share their insights into the previous year and their plans to
keep their businesses viable in 2009.

Even though the economy is down, many contractors found in 2008 that
their business is up. Any challenge — even an economic one — presents
opportunities, and some enterprising contractors are diversifying their
businesses in various ways to take advantage of this situation. These
strategies include diversification by offering services related to
their core business, hiring additional employees and purchasing
equipment that performs more tasks.

Adding Related Services

Jake Kiliz is a co-owner and operator of Bingham Creek Construction in
Shelton, Wash. While Kiliz’s business is new — it was started just over
a year ago — he’s no stranger to construction, having worked for more
than 15 years in the industry, 10 as a foreman. His partner in his new
business, Blaine Maples, was on his crew. When the company both men
were working for was sold, they decided the time was right to realize
the dream of starting their own business.

While the economy taking a downturn seems to have come at the worst
time, Kiliz and his partner realized that they would need to change and
adapt their business in order to survive. Bingham Creek Construction
started by doing land clearing, dirt work and placing underground
utilities, since that was the primary responsibility of Kiliz and
Maples at their previous employer. Now, the business is adding other
services that are related to this type of work.

By offering additional services, Bingham Creek Construction stays on a
jobsite longer and eliminates the need for the general contractors they
work for to hire additional subcontractors. The ability to do more of
the work that a general contractor requires makes Bingham Creek
Construction more attractive than the competition. For instance, land
clearing has opened the door for Kiliz and his company to take on
right-of-way clearing and maintenance, which they now perform for a
pipeline company.

Chad Mittleider, an owner-operator of Mitts Tractor Service LLC, says
that contractors should be on the lookout for customers who are
contracting out work previously done in-house. Mitts Tractor Service
LLC, based in Montesano, Wash., offers many services from site
preparation to hydroseeding and is looking to gain business by stepping
in to do work that customers are no longer going to do themselves.
“Forestry companies in our area are getting out of maintaining their
land and are hiring contractors for the job,” says Mittleider.

In this economy, customers may be looking to cut overhead or reduce
other spending, but still have work that needs to be completed.
Contractors can fill these voids by being prepared to step in, even if
it’s not work a contractor typically performs.

Diversify Your Workforce

Adding new services and acquiring other businesses aren’t the only ways
to diversify. Keith Kamish is vice president of K.A. Kamish Excavation
Inc., based in South St. Paul, Minn. Kamish, who owns the business with
his wife, was trying to do everything himself. He was bidding on jobs,
scheduling them, and was running them after he had to fire a foreman
who was not providing the service to customers that Kamish expected. It
got to be too much for one person to handle. “The economy was bad and I
thought that I’d do everything myself, but it about killed me,” says
Kamish.

Even though it’s easy to think that a down economy would put a freeze
on hiring, Kamish knew that not hiring help would hurt him and his
business. When one person is trying to keep up with all the details in
each part of a business, the potential for something to fall through
the cracks increases. Kamish hired a new foreman and an estimator to
help with job bidding, and says it was a good decision.

Not only did the new employees help Kamish run his business well, they
also helped Kamish increase his network of contacts in the industry,
which has led to additional business.

“I have certain contacts that I work with and they have been slow for
the last two years. The new guys I hired have contacts and now we have
more work coming,” Kamish says.

Diversify Your Equipment

One thing these contractors share in common is they all own compact
loaders or excavators. This equipment is versatile and allows them to
perform a variety of tasks through attachments. As these contractors
have taken on work that they did not do previously, they have been able
to purchase additional attachments to use on their existing equipment.
Purchasing attachments that can do the work is a smaller investment
than buying new equipment.

Mitts Tractor Works LLC just purchased a Bobcat T320 and a forestry
cutter attachment. The forestry cutter attachment knocks down trees
from top to bottom and grinds them into mulch. The attachment quickly
clears trees, which has decreased the amount of time Mitts Tractor
Works LLC spends on land clearing jobs.

Mittleider says that the purchase of the forestry cutter can help with
right-of-way maintenance with the forestry companies, in addition to
land clearing. The way the forestry cutter works has also gotten the
contractor work. “We’re using the forestry cutter to do land clearing
for municipalities and cities because it’s a green way of doing it,”
says Mittleider. “You chip everything up instead of burning it, so
you’re not polluting the air.”

In economic conditions like these, contractors need to look at the ways
they’re running their businesses. In this environment, some ways of
operating a business are going to need to be revised for a contractor
to keep working or grow. Diversification — whether it is for the
workforce and management, through equipment, acquiring another business
or offering additional services — provides many solutions to
contractors to overcome the challenge presented by this economy.

To learn more about strategies other contractors are employing in this
recession, and for information on Bobcat equipment, visit
www.bobcat.com.

Eric Morse is a public relations representative with Two Rivers Market, based in Des Moines, Iowa.

Selling Your Services

Effective Ways to Market a Business in a Challenging Economy

By Eric Morse

This story is the conclusion of a series addressing the challenges
contractors are facing in this economic environment. In December 2008,
as the effects of this recession were starting to impact all sectors of
the economy, business owners who use Bobcat equipment were interviewed
and asked to share their insights into the previous year and their
plans to keep their businesses viable in 2009.

But just because the economy is in recession doesn’t mean all work has
come to a standstill. There is still work out there, and more to come
as the government, business and others work to get the economy jump
started again. During this economic downturn and as the recovery
begins, contractors need to explore new ways of connecting with
potential customers to get work.

Many contractors rely on word-of-mouth, their reputation and their
contacts in the markets they work in to generate business. Some
contractors are looking for ways to contact potential customers not yet
aware of their businesses. The contractors interviewed for this story
have tried new strategies to reach customers and have been rewarded by
sustaining or even growing their businesses.

Traditional Advertising

The most obvious tactic to try is advertising your business, and many
contractors are considering promoting themselves through advertising
for the first time. Chad Mittleider is an owner-operator of Mitts
Tractor Works LLC, a Montesano, Wash.-based contractor that offers many
services, from site preparation to hydroseeding. Mitts Tractor Works
LLC is known in the market for land clearing and site preparation. The
contractor’s hydroseeding ability is less known, and will be the focus
of an ad Mittleider plans to run in the newspaper.

A positive and negative of newspaper ads is that they reach everyone.
Advertisements in newspapers reach a wide demographic, both those
interested in the service and those who aren’t. The same is true for
radio and television. Advertising can be costly, and in order to be
effective, a contractor should advertise in a medium that will reach
the highest number of genuine prospects.

That’s why Mittleider is also considering advertising through the
Washington Onsite Sewage Association (WOSSA). Many associations like
WOSSA offer advertising programs for their members. A benefit for
members is that the association knows the most effective places for
advertising, making sure that members are promoted in forums most
likely to reach potential customers.

Underfoot

There are other marketing strategies available, and they range from the
simple to the elaborate. One contractor who does something easy is
Byron Andreas, the president of Robert R. Andreas and Sons General
Contractor, a residential and commercial concrete and asphalt company.
Andreas says he stamps the concrete at every residential project he
works on. The stamp includes the company name and phone number and is
visible to people when they are walking through the neighborhood.
Andreas says this simple stamp generates business for him because
people see the stamp when they are out walking their dogs.

Make Your Presence Known

While simple things like concrete stamps are smart and inexpensive ways
to promote a business, some contractors are looking for more innovative
ways to reach customers. Roger Powell has been a businessman in
Colorado Springs, Colo., for 25 years. Powell’s most recent endeavor is
a landscape company called Backyards Only, which Powell owns with Jon
Herman.

After seeing signs that 2008 would be a difficult economic year for
landscaping companies, Powell decided dramatic action was needed. At
the start of the year, Powell hired an advertising agency to come up
with a marketing plan. Powell credits this plan for increasing his
business by 25 percent over 2007. “I was proactive on trying to figure
out how we were going to get through 2008,” Powell says.

The plan did not include advertising in the newspaper or on the radio.
Instead, the agency recommended other marketing tactics. One
recommendation was for Powell to go back to previous customers and ask
for referrals. Another strategy was for Powell to purchase a list of
people who had just bought homes and to send an advertisement through
the mail to these homeowners. Powell tried both of these marketing
campaigns and says they generated business.

When most contractors get to a jobsite, they fire up their equipment
and get working. The advertising agency suggested that Powell and his
crews distribute flyers throughout the neighborhood when they get on
site. Left on doorknobs, these flyers announce that Backyards Only is
working on a landscape project and invites people to visit the jobsite.
Powell says that when his crews get to a job, they spend the first hour
canvassing the neighborhood with the flyers and that this has been the
most successful tactic that the advertising agency proposed.

“Many of these homeowners are new to the area and they don’t know who
to contact, so it really helped them to know someone in the
neighborhood had used our business and that we were looking for
projects,” says Powell.

Stay Positive

Each day, there seems to be another bit of depressing news about the
economy. Losses on the stock market, announcements about the
unemployment rolls and details about budget cutbacks can seem
overwhelming. Keith Kamish admits the news got him down, but it also
made him reflective. Kamish is the vice president of K.A. Kamish
Excavation Inc., an excavation and demolition contractor based in South
St. Paul, Minn. Kamish’s father, who also ran a construction business,
worked six days a week and nearly 12 hours each day. At 60, Kamish’s
father died of cancer.

Thinking about this has put the economy in perspective, and Kamish says
he now goes to a gym four days a week to keep healthy and has realized
that spending time with his family is important. “I’m starting to do
more things for my family the last couple years, because there’s more
to life than business,” Kamish says.

Every contractor interviewed for this story had increased business last
year. Most said that it was one of the best years they’ve had. While it
is impossible to know what the future will bring, all of these
contractors are optimistic. Kamish believes that the economy has
already bottomed out and has started rebounding.

It’s a lot easier to be optimistic when you put yourself in a position
to succeed, which is another trait each of these contractors share.
While the number of jobs to work may be lower and the competition is
higher, it’s not only possible to keep your business going, but to grow
it as well. The key is to find innovative ways to operate and promote
your company. The ideas presented by these contractors can be applied
by any contractor who wants to be successful.

To learn more about strategies other contractors are employing in this
recession, and for information on Bobcat equipment, visit
www.bobcat.com.

Eric Morse is a public relations representative with Two Rivers Market, based in Des Moines, Iowa.