Somebody once said that if you have trouble running one business, instead of scaling back you should spit your problem in the eye, expand, and run two.
Or three, or four.
There are those who seem to have taken this to heart and now operate not only their ceiling and drywall business, but also an allied, or perhaps not so allied, company.
One wonders why. Is it to keep boredom at bay? Is it to solve some operational problem? Is it perhaps to expand operationally rather than geographically by diversifying? Or none of the above.
We decided to find out.
Cast of Heroic Characters
Five members of the Association of the Wall and Ceiling Industry not only run successful construction operations but have also branched out:
Joe Feldner of McNulty Bros. in Chicago also runs Lumber Street Supply, a business that supplies his own company and others with drywall, plaster and wood products.
Mike Heering of F.L. Crane & Sons in Fulton, Miss., also runs a successful pallet and crating company and has just started up a scaffolding supply and service company.
Jeff Collins of Les Collins Plastering in St. Joseph, Mo., also runs a fine drywall supply yard.
Kent Vipond of CDM Investment Group in Overland Park, Kan., runs his construction company along with 17 (yes, folks, that’s the number one followed by a number seven) other businesses.
Mike Poellinger of Poellinger Inc. in La Crosse, Wis., runs two additional businesses: a tile and flooring retail operation, as well as a mold remediation and building-failure restoration business.
Each of these gentlemen agreed to share what, if anything, keeps them up at night, and how life looks from the view of the ardent multi-tasker.
Why on Earth Would You?
The consensus is that additional operations such as these serve a definite, synergetic purpose that forwards the aims of the main business, either directly—by working and streamlining operations in the same industry—or indirectly, by providing a second (or third, or fourth) basket to hold your eggs.
For Joe Feldner of McNulty Bros., their supply arm simplifies and optimizes the building supply stream, while also selling to other companies at a profit.
Mike Heering admits he has always been on the lookout for diversification. He tells the story:
"In 2004, we set up a fireproofing division right next to the ThyssenKrupp Elevator Company and we noticed how they themselves were building crates for use in shipping their elevators. After a while, we got wind of their plans to move out of the crate-building business, preferring to outsource it.
"Well, the fireproofing business was a little slow at the time, so we decided to take them up on it. It’s taken off from there. Today we do close to $4 million a year on the crates.
"As for the scaffolding business, we saw the opportunity to provide a service not only for our main company but for others. Somebody always has to erect scaffolding, why not us?
"This company not only erects scaffolds for F.L. Crane on our jobs, but also for our competition. We want to see all this equipment rented, whether it is to our own projects or to another company.
"This, admittedly, is new for us, but it seems to work fine.”
For Jeff Collins the opportunity walked up and knocked on his door when the local drywall supply yard shut down.
"Lack of a supply yard presented a problem to us, so in order to supply our own projects we started up a small one ourselves. Soon, though, other contractors showed up and wanted to buy from us. And it grew from there.
"Basically, it solved a supply problem for us.”
As for Kent Vipond of CDM Investments, "As the name implies, that’s what we do. We invest in and manage construction-related businesses.
"We run pure construction, some manufacturing, and we also operate some supply companies.”
A man not too harassed by boredom, Vipond currently oversees and manages 18 separated concerns.
Today, Mike Poellinger keeps his finger on three different pulses: a commercial construction company, a retail flooring company, and what started as mold-remediation company but has since grown into a building-failure restoration operation that can repair structural and water damage to buildings as well as remove mold.
"We observed a need not being met by anyone locally and perceived it as an opportunity for us,” Poellinger says.
"Also, thanks to my involvement in AWCI, I had seen what was going on in other markets, which highlighted what was missing in my own.
"The building failure operation originally sprang from my relationship with attorneys who, representing parties with EIFS or stucco problems, came to us for expert advice or opinion.
"Seeing that there was a need here—and to better serve it—I took some additional classes on building failure, water intrusion, and mold prevention and remediation. We’ve taken off from there.
"At this point, we do more building restructuring than mold remediation, mainly because there are no national standards in the mold arena, meaning we often find ourselves up against firms like Service Master, or retail cleaning companies that have no idea what’s involved and always lowball us.
"So we wait until they’re done and then follow up with reconstruction or restoration.”
(Or, How to Get a Good Night’s Sleep)
It’s a testimony to their corporate good sense—and personal survival instincts—that each of these multi-business owners hit upon the same formula.
Feldner says, "While I am the president of both companies, I have an executive vice president for each, who run the business.”
Heering concurs: "I have a man in charge of the crating business, and all we have to do is answer the occasional question and give what little advice we can. He does a good job of taking that business by the horns and running with it.
"As for the scaffolding business, the same applies. My man in charge knows more about scaffolding than I do, and he runs it well.”
Collins knows how to spread the responsibility as well. "I delegate a lot,” he says. "I find the best people I can, and then let them get on with it. I am not a micro-manager by any stretch of the imagination.
"I concentrate on the construction company; it takes most of my time. The other business, unless there is a problem, just keeps running. I don’t have to pay much attention to it.”
Vipond, too, delegates a lot. "I, along with senior management, oversee the overall activities of our different divisions. But I hold each individual unit manager accountable for his own business.”
Poellinger adds, "Although some owners expect my personal involvement, I delegate as much as I can.
"I have a manager for the flooring company, and a retail salesman who works on commissions.
"I also have a project manager in the commercial flooring unit who bids that type of work—but who can also move into our regular construction business if flooring is slow.”
How Separate Is Separate?
Running more than one business out of your office demands that you keep them separate: both in your head, and legally/financially. But how separate is separate?
Feldner is adamant that each unit has to stand on its own feet: "They have to pull their own financial weight. Besides, they are two separate companies that pay separate taxes.
"Books, naturally, are kept separate as well. True, we are closely tied, but we are also at arm’s length. We are both housed on the same piece of real estate, but we are not under the same roof.
"One company will do some services for the other, but at the end of the day, each has to stand on its own.”
Vipond’s situation is much the same: "Each business is separately incorporated. They are separate, autonomous business units that have to stand on their own two feet financially. Still, while we look at them as individual businesses, of course there is synergy between our sister companies.”
Poellinger agrees: "We have three separate companies—they are separate legal entities, both for accounting purposes and from a liability standpoint—that have to be financially viable on their own.”
Advice to the Brave
Thinking about diversifying? Here are some pearls of wisdom.
Feldner reiterates, "You have to make the companies stand on their own feet. Each has to be profitable and pay its own way. If you let one company subsidize another, one will end up consuming the other and they’ll both go down.”
For Mike Heering, it is all about people: "My advice is to make sure that you find a competent person to run that business. This will allow you to keep your attention where you want it.
"You must line up the right resources and the right people—that combination will run the business for you. You will have to provide some guidance and leadership, of course, but the day-to-day running will not land on your plate.
"Dave, who runs our crate business, is a very innovative guy who’s always thinking about efficiency. If he sees a piece of equipment that’s going to make him more productive, he’ll run that by us. Most of the time we agree with his judgment and give him the go-ahead.
"And Chris, as I said, who runs our scaffolding business, knows more about that than I do.
"Make sure that the person you choose is a trail-blazer, someone who wants to get out there and who wants to make it happen.”
Among other things, Collins points out that to survive well, and not lose sleep in a multi-business environment, you have to watch your stress level.
"With some people, any little thing sets them off and then they walk around stressed all day. That is very unproductive. The truth is that you can choose not to let inconsequential things bother you. Once you manage this, the rest goes pretty well.
"I have what some would consider a high-stress job; on occasion I’ll have three or four people lined up in my office, each needing something. That doesn’t bother me a bit; I just don’t let it.
"Also, I hold everybody accountable for their area of responsibility. And I watch my bottom dollar: I do not overspend, nor do I over-commit.
"If I make a lot of money one year, I may give myself a bonus rather than a raise. Nor do I bank on making the same the following year, so I don’t commit to future expenses I am not sure I’ll be able to cover.
"That’s an important piece of advice: If you’re in business, you’re not going to make as much each year. You need to be aware of and plan for that.”
Vipond agrees with Heering: "It’s all about your people: Find somebody of strong character who also has industry knowledge.
"Now, our company is a collaborative environment. We meet on a regular basis with all business managers, and together we create policies and procedures for the business. Once agreed upon and set—and everyone has input to this process—we then hold everybody accountable to them.
"Also, an important factor for our organization is that we adopted, back in the early 1990s, the TQM format (see Total Quality Management sidebar), and we have used those principles ever since.
"I and senior management establish strategic directions and values that are then implemented through our annual budgeting process, where we work out the business plan for each unit to match this strategic initiative.
"This may appear somewhat bureaucratic, but the upside is that everybody knows where we’re going and how we plan to get there—and that’s critical.
"Everything we do aligns with our core purpose to ‘Develop Exceptional People and Lasting Relationships.’
"In the end, when your career is over, what you’ll find is that true success can be summed up in those good things you’ve shared with other people.
"It comes down to people and relationships.”
Poellinger’s advice is that, whatever you do, keep current.
"Even if you only run one business,” he says, "you need to stay current in your industry as well as in neighboring industries that affect yours. This way you’ll see what’s coming.
"That’s how we got into retail flooring. Changes in the industry made it hard for us to buy large quantities of tile directly from the manufacturer. By establishing a separate business unit to handle floor products, we solved that problem.
"The same holds true for our mold remediation. What was going on with stucco and EIFS at the time affected our business and allowed us to expand our scope of operation.”
Two Views on Expansion
Where do you go when you have grown as much as you can in your local market?
That’s a question that both Heering and Poellinger faced and solved with one word: Diversify.
"There are a lot of companies out there that do metal studs, drywall and acoustic ceilings very well,” says Heering. "Too many, in fact. So we felt that if we were to continue our growth we had two choices: We either had to diversify in our geographical area, or we had to expand our core business over a wider and wider area.
"We asked ourselves whether we would rather add more to our portfolio and grow that way, or whether to continue to grow our core all the way across the United States. By diversifying, we did not have to leave the market area that we already serve.”
Poellinger could not agree more: "We could bring our core business into a bigger market, but we choose to stay here. We like this area, we like the quality of life here. We chose to diversify within it.”
The Sleep Issue
So, who’s losing sleep?
Funny thing: These folks seem to sleep very well at night.
"Let the right people worry about the business problems,” Heering says.
Collins knows why he wakes up, if he does: "If I wake up in the middle of the night worrying about something, it means I have not taken care of something that I should have. This, though, no longer happens very often.”
Vipond gets his rest, too. "With the right people and TQM,” he says, "I’m not losing any sleep.”
The only one with a slightly different take on sleeping through the night is Poellinger, who seems to revel in the excitement of lots to do: as if running three businesses were not enough to keep boredom at arm’s length, he’s also the Mayor of his home town.
Wonders never cease.
Coeur d’Alene, Idaho-based Ulf Wolf writes for the construction industry as Words & Images.