Driven to succeed, this North Dakota excavation contractor contends with the pros and cons of rapid growth.
As the owner and operator of SRD Excavation/Construction in Williston, North Dakota, Seth Dixon finds himself continually contending with a good news-bad news paradox. The good news:
The company has grown exponentially since he established it in 2013. The bad news: The company has grown exponentially since he established it in 2013.
On one hand, nearly doubling the company’s revenue every year for the past four years is a good problem for the energetic 31-year-old, who firmly believes in the if-you’re-not-growing-you’re-dying philosophy of business. “The way I look at it, the minute you stop wanting more, you stop working as hard,” he explains. “If you don’t keep aspiring to do bigger things, you lose your drive.”
On the other hand, rapid growth causes what Dixon calls a “speed wobble.” Speed wobbles are a host of pressing and time-consuming challenges: More bills to pay. More employees to hire. More equipment to buy with limited financial resources. More managerial headaches. More obstacles to maintaining on-the-job quality. “Keeping everything under control has been difficult,” he notes. “It’s such a balancing act every single day.”
How has Dixon worked through it? “I’m not sure we’re through it yet,” he replies. “We always seem to need more people and need more this, need more that. We’re still a young company.”
Headaches aside, however, success clearly whets Dixon’s appetite for more of the same. And while negotiating this tumultuous business terrain, he’s learned how to make the path a little smoother by hiring good people and delegating responsibilities, developing good relationships with equipment-leasing companies and keeping a tight rein on quality control.
Dixon has also shown an ability to capitalize on emerging business opportunities. It’s a trait that’s dramatically increased the size of the company’s fleet of equipment from just a dump truck and a trailer in 2013 to more than $1.5 million worth of iron. It has also diversified the services offered by SRD, which started out in septic system installations but now also does water and sewer line installations, horizontal directional drilling, trenching and cable plowing, hydroexcavating, road building and site preparation. The diverse customer base helps protect the company from cyclical market downturns in various sectors.
PASSION FOR BIG IRON
Dixon has been involved in excavation and heavy equipment for most of his life. His father, Jack, worked as a heavy-equipment operator and his step-father, Ben Potter, owned a septic installation company, both in the state of Washington. “Between the two of them, I literally grew up on heavy equipment,” Dixon says.
After working for his stepfather as a septic system installer, Dixon started doing excavating for mainline sewers at age 18. Then he got a job doing excavations for natural gas pipelines, which took him all over the country. But around 2010, he grew tired of all the travel and the extremely long hours. So he took a job as a foreman for a Montana contractor that did water and sewer line installations.
During that time, he met his wife, Jessica, who was raised in Williston. Within a year or so, the couple moved to Williston, where Dixon abruptly decided to start his own company in November 2013. “I just got tired of working for other people,” he explains.
With only $3,000 in savings to work with, Dixon established SRD (which are his initials, Seth Ryan Dixon) by renting a skid-steer and a mini-excavator, and installing septic systems. At the same time, he studied for and passed the state test to become a licensed water and sewer contractor. He also borrowed $13,000 from his in-laws and bought a dump truck and trailer. He paid off the loan in six months by installing septic systems and doing site preparation work.
Dixon kept prospecting for new clients. Later in 2014, he caught a break. After getting edged out by a more experienced contractor on a bid to dig footings for an expansion at a local big-box home goods retailer and stabilize its deteriorating parking lot, Dixon got called in to finish the work. That gave him his first taste of the challenges posed by rapid growth.
“That ramped us up from two employees to six or seven,” he says. “Also, it happened in late fall, so we had to hurry up to finish before the ground froze. As an owner, going from two to seven employees is a big leap both in time commitment and asset management.
“We had to rent a lot more iron, too, so we went from barely any bills to a lot of bills in a hurry,” he continues. “Logistically, there were a lot more moving pieces to keep track of, plus I also wanted to be sure the job was profitable and done right. I’m big on quality work.”
As Dixon talks about his business, two things emerge as factors in his company’s rapid growth: quality control and persistence. Doing quality work led to repeat business and word-of-mouth referrals. And persistence, in terms of continually but diplomatically reminding prospective customers that he was interested in doing more work, more often than not got his foot in the door.
“I’m big on quality all the way around,” he says of his standard. “And that’s exactly why we are where we are today. We make sure the product we’re turning over to a client is exactly what they wanted. No cutting corners.” As an example, he points to laying fiber-optic cable, now his company’s largest market, at a certain required depth.
“Some guys might say a certain depth is close enough and leave it at that,” he explains. “But even if the customer doesn’t know it’s not laid deep enough, I’d know. Furthermore, if another contractor came in to do some work later on and breaks the line we laid because it wasn’t installed deep enough, you get a reputation for shoddy work. You certainly want to be known, but not for that kind of work.”
The value of persistence was demonstrated in 2015, when SRD landed a job to perform fiber-optic line installations for a large communications company based in Montana. After installing a fireline (a 6-inch-diameter line that supplies water for fire-sprinkler systems) for the company in a building it owned in Williston, Dixon kept asking the company for more work, hoping to get into fiber-optic installations.
Satisfied with the fireline project, the communications company kept giving SRD small jobs — think of them as test runs. The business relationship grew to the point that now SRD is the company’s sole contractor for moving and reinstalling fiber-optic lines during road projects as well as new fiber-optic line installations, he says.
“It was a pivotal point for the company,” says Dixon, noting that approximately 80 percent of the company’s revenue now comes from this one client. “They also had a need for aerial construction (fiber-optic lines strung on telephone poles instead of laid underground), so we bought a bucket truck to fill their needs. Now we have three full-time aerial crews.”
DIVERSE CUSTOMER BASE
Providing an array of services allows Dixon to hedge against cyclical slowdowns in various business sectors. It also keeps equipment with the company’s name on it out in the field, serving as heavy-equipment billboards. “I hate to say no if we get a call to do something,” he explains. “So we keep adapting to customers’ needs.
“Keeping our services diverse is a big growing point,” he continues. “It puts us out there. If people need waterlines fixed or septic systems installed, I want them to think SRD. Plus, if fiber-optic died on us, we could go right back to building subdivisions (doing road work, site preparation, laying water and sewer lines and so forth). I can’t get rid of those core services because that’s where my roots are.”
Providing various services requires a diverse inventory of equipment. The company currently relies on a Vermeer P-1250 cable plow with a reel carrier and a trencher attachment for winter work; a Case 580 Super N wide-track backhoe; two mini-excavators, made by Komatsu America Corp. and Case Construction; a cable plow manufactured by Ditch Witch (a Charles Machine Works Co.); a Vermeer 10x15 directional drill; and a Case 6030 directional drill.
The company also owns a 1997 Ford F-800 bucket truck; a pull tractor made by Massey Ferguson (a brand owned by AGCO Corp.); a 1999 International dump truck; a Ditch Witch 350 small-service cable plow/trencher; a Case CX210 excavator and a Case 1850K bulldozer; a 1989 Caterpillar 613 scraper; a 1999 Sterling tractor cab; a 2006 35-foot end-dump trailer made by HILB; and two paving rollers built by BOMAG America (a Fayat Group company). A variety of trailers rounds out the fleet: They’re made by Lambert Tractor & Machinery Sales, Pace American, Trail King Industries, Econoline Trailers, Redi-Haul Trailers and PJ Trailers.
In addition, SRD owns a hydroexcavation truck built by Vac-Tron on a 1999 GMC 5500 chassis with a 500-gallon debris tank, a 350-gallon water tank, a water pump built by General Pump (owned by Interpump Group) and a 3,000 cfm blower manufactured by Roots Systems Ltd.
Buying and renting equipment has been one of the biggest stressors for Dixon. He had no credit rating when he started out, which made it impossible to obtain financing to buy equipment. The situation worsened a bit when he incorporated the company in early 2015 to separate his personal finances from the company’s (he had been operating as a sole proprietor). “As a result, on paper the company is only a year and a half old, so it’s still hard to get credit,” he notes. “Incorporating kind of kicked us in the shins financially.”
But thanks to good relationships with leasing companies and quick payments by his largest customer, which keeps cash flow up, Dixon is managing to obtain the equipment required to meet increasing demand from customers.
FUTURE LOOKS BRIGHT
Dixon expects continued growth for SRD, with even more emphasis on installations of fiber-optic lines. “I want to keep growing,” he says. Part of that growth could come from geographic expansion, he adds, pointing to a recent partnership SRD struck with a Minnesota contractor to replace older copper communications lines with fiber-optic lines in a small town in Montana.
“We’re sending three aerial crews and three underground crews,” Dixon says of the $4 million project, on which SRD will serve as a subcontractor for the Minnesota company. Dixon’s main customer asked SRD to do all the aerial plant work, but Dixon couldn’t get his company bonded for the project. So the Minnesota-based company obtained bonding and instead hired SRD as a subcontractor to handle the aerial work and install phone drops (fiber-optic lines that run up telephone poles from underground, then head over to residential homes).
Dixon says SRD got asked to participate in the project because of its track record for doing quality work. “It’s a big growing step for us,” he says, noting the project will take until winter to complete. “It shows that doing quality work really counts.”
Delegating job duties allows owner to focus on big picture
Many a contractor feels that in order to get things done right, they need to do it themselves. Seth Dixon used to operate that way until he acquired two unwanted partners in his business, SRD Excavation/Construction: stress and burnout.
Rapid growth at SRD pushed Dixon to a tipping point where he realized he couldn’t do everything. So he hired a secretary to handle invoicing and other administrative details as well as a company to process payroll. “Now I basically handle crisis management — make sure things are going right,” he says.
Dixon also delegated more responsibility to his right-hand man, Sanford Jones, the company’s head superintendent. “He’s the key person in our operation,” Dixon explains. “He’s always the first one there and the last one to leave. He’s also great with quality control and keeping projects going on schedule. In addition, he’s very reliable. If I ask him to do something, it’s done. I never have to wonder about it.”
Of course, delegating responsibilities to others requires good employees who can handle the extra work. And like so many contractors nationwide, Dixon struggles to find employees with the right experience, values and work ethic. “Finding someone with a construction background who’s also knowledgeable and wants to work, and doesn’t carry a lot of baggage, like drunk-driving convictions, is a nightmare,” he says. “Recruiting people is a real struggle.”
To recruit job candidates, Dixon says he has been trying outlets such as Facebook, Craigslist and temporary-employee agencies. “There’s a Facebook page called People of HDD Help Wanted,” he says. “It’s like a Facebook page for horizontal directional drilling employees around the country that are looking for work.
Dixon is also considering implementing production bonuses as an incentive to recruit new employees. In the meantime, one of his main strategies for finding quality employees centers on a volume approach. “I find quality employees through sheer volume of hiring,” he says. “I’m not sure how else to explain it — that’s just how it is.”