February 7, 2006
No matter how you start up your own job shop, it takes a delicate balance to become - and remain - successful. Profitability certainly helps, but so do flexibility and diversification.
|Karl Fischer says that staying flexible, within the skills you have to offer, has helped him keep his business successful over the years. Here, he stands next to a 304 stainless steel beer carbonation carboy that required internal pipe upgrading.|
With a small, $200, one-afternoon job, Karl Fischer was on his way to self-employment success.
This was, of course, after months of getting nowhere.
With his pressure vessel and pressure pipe experience, Fischer was a natural for shops in his area, where the oil and gas industry has a large presence. But working in a shop often meant undesirable shift work. After a year and a half of starting his workday at 5 p.m., Fischer was done feeling like a self-described zombie and wanted more out of life.
"I decided to invest into my own welding equipment and go out on my own," Fischer said. This was the beginning of what is known today as Catfish MetalWorks, located in Calgary, Alberta.
But going into business first left Fischer feeling like he was fighting a losing battle.
"It was difficult to get my name out and find work when I first started. No one knew who I was or if I was capable of doing quality work," he said. "For three months I contacted companies, with no luck finding work."
That is, until he finally got is big break with a small job.
A friend of Fischer's mother called one day to ask if Fischer could repair a wrought-iron fence at a small apartment building. Although Fischer felt that this person was contacting him out of pity, he took the job.
As Fischer repaired the wrought-iron fence, he noticed a construction site for a new condominium across the street. A dump truck driver waiting in line to unload gravel stepped out of his truck and asked Fischer about his welding experience and qualifications. He told Fischer that he was an independent gravel truck owner/operator looking for someone to repair his dump truck box.
A few days after the two exchanged business cards, Fischer completed the man's dump truck repair. The owner paid Fischer and took a stack of business cards from him — marking the beginning of networking in the trucking industry for Fischer.
A year later Fischer realized there were about 250 small, independent owner/operator trucking firms are in his area. At this time he was receiving at least one call a week from a new customer who had been referred to him by another truck driver.
Today he works six days a week on tandem dump trucks, pup trailers, Bobcats, backhoes, and the like. He also recently landed a contract to fabricate 70 roll-off bins for construction sites.
Thanks to his success, Fischer has been able to move into a better-equipped shop and is even considering building a larger shop, possibly next year, to help ready himself for larger equipment investments.
One factor Fischer attributes to his success is his flexibility to take on the jobs available to him in his area.
"I think that the most powerful aspect of the welding and fabrication industry is its flexibility," he said. "If I lived in another region, perhaps there wouldn't be as great a demand for welding work for trucks, but there could likely be work for other types of weldments."
Because so many welders and fabricators are involved in the oil industry in Canada, plenty of work has been available for Fischer in trucking — especially once he learned from experts in the truck repair industry to make sure he could do the jobs required of him properly.
"That willingness to learn and flexibility have resulted in a nice, solid welding company for me," he said.
For Fischer, being solid partly means having a good customer base. Currently he serves 50 customers, 15 of which supply him with 90 percent to 95 percent of his work.
Another source of stability for Fischer has come from the changes in his business. Although he started out working with ornamental railings and serving the residential market, Fischer has found his niche in the industrial segment. He said he has found that his industrial customers provide both quality and profitable opportunities.
What Fischer is doing with his company is a good example of conservative diversification. There's no reason other metal forming and fabricating firms can't take the same steps, regardless of their size.
"You could argue for flexibility within a certain segment," said Peter Toja, president of Economic Planning Associates, Smithtown, N.Y.
"You don't have to go to extremes and say you want to get into construction while it's hot, but when it cools down, you want to get into the energy sector," he said.
He said this kind of fluctuation can land a company right out of business.
"You want to have the diversification within a certain segment so when, [for example,] residential [construction] is there, you have what you need, and then when it cools down, you can get into commercial [construction] when it heats up," Toja said, noting that such a company is still staying within a major category.
"You want flexibility, but within reason. While he's flexible and diversified," Toja said of Fischer, "it's within focus. Trucks, trailers, and off-road equipment are all in one segment."
Diversification is just what Tracy Delce's looking for. Unlike Fischer, Delce, president of Tin Man Welding Services, is at a crossroad right now, trying to figure out where it's best to focus her company's skills and services.
At first the Fort Worth, Texas-based company took just about any job it could get. Today the company is more focused, yet still striving for the right opportunities for growth and stability.
Initially the company performed mostly welding repair and was heavily involved in the residential market because it offered quick pay. Specifically, the company fabricated gates and fences. Before long Delce realized she needed to make some changes.
"Unfortunately, you don't get to make a lot of repeat business out of this," Delce said of manufacturing fences and gates. This led the company to work with several customers that specialize in all sorts of recycling, which gave it more opportunities for repeat business.
Delce said that the company's strength was in its welding services, but it still needed more repeat business than it was getting. So Delce started looking for contractors that had fencing and handrail projects. She also decided to broaden the company's scope — at the time the company was manufacturing only wrought-iron fencing.
Today Tin Man Welding provides contractors with temporary fencing used on construction sites and safety fencing that assists drainage at construction sites, as well as the permanent fencing the company already had been producing.
This has been a step in the right direction, Delce said.
"It's much more attractive for a contractor to give all of their fencing needs to one company rather than three different companies," she said.
While the company's business is doing well in the field, Delce is still pondering what to do in-house that will supplement the business when construction is slow. The next phase, she said, is to develop an in-house service in the next 12 to 18 months to provide the company with revenue from jobs not affected by climate.
One option, Delce said, is to offer focused fabrication services, such as cutting. Another avenue is paint and powder coating services.
"We're at the point where we're planning and researching," Delce said. "We were having a fence job ourselves where the panels needed to be powder-coated. I called 25 powder coating establishments, and only two of them powder-coated fence panels, so I thought with as much fence paneling [as] we could do, that could be a good line of business for us."
Yet another possibility could be the oil and gas industry, Delce said.
"We're at the crossroads — if I identify any industries that they're [other fabricators and welders] leaving, I'll go after that, but if in oil and gas there's a niche we can serve, I'll go after that," she said.
In all of this decision-making, costs also play a role, Delce added.
"The fuel and the steel costs that we've seen fluctuate so widely have driven us in some respects because you try to go toward markets that are cash-heavy and customers that pay quickly. We haven't been unaffected by those costs in raw materials and in fuel," she said.
In many respects, Fischer is past the heavy decision-making Delce is dealing with right now. Instead of finding his niche, Fischer is focused on moving forward, growing, and hopefully buying new equipment.
Currently Fischer uses Lincoln Electric gas metal arc welding (GMAW), gas tungsten arc welding (GTAW), and shielded metal arc welding (SMAW) machines for his work. A new plasma cutter is an investment on the horizon, and once Fischer moves into a larger facility, he hopes to purchase a waterjet cutting machine.
All of this is possible because of Fischer's business strength, much of which comes down to profit, investments, and overall financial success.
But the money isn't everything, Fischer is quick to point out.
Although his business is going well, success to Fischer means more than good financial standing.
"Business is more than profit, and it's more than money. It has to fulfill a lot of different needs for the owner," he said.
In fact, profitability is third in line behind flexibility and happiness on Fischer's list of priorities. Doing well in self-employment means you want to enjoy your life outside of work as much as you do when you're working.
One way Fischer maintains an enjoyable life is by growing his business — but not too quickly.
Catfish MetalWorks has been in business as a one-person operation for about five years, and Fischer hopes to keep it that way by investing in more automation. Fischer feels that by keeping growth in check and his company under control by running it by himself, he can get more satisfaction out of the business as a whole.
Fischer also keeps in mind that although business is good and the money's coming in, he doesn't want to blow it all on investments. Inevitably, he said, a downturn will come. All of these decisions are examples of business knowledge that Fischer said has been instrumental in helping him find profitable business opportunities that he's comfortable with.
The best advice Fischer can give also is the easiest, he said.
"Especially for a new shop or company, they're always concerned with establishing cash flow, and it's a stressful time," he said. "It's very easy to cut corners and be very competitive pricewise to get business coming in. Figure out your costing and stick to your guns. Even if you get turned down, stick to your guns and build a good reputation. The work will come."
Catfish MetalWorks, 520 Attica Drive S.E., Calgary, AB T2H 1P6, Canada, 403-410-9353, firstname.lastname@example.org, www.catfishmetalworks.com
Economic Planning Associates Inc., 1050 W. Jericho Turnpike, Smithtown, NY 11787, www.epainc.com
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