Vacuum excavation contractors offer tips on what to do and what not to do when looking at growing a business
Knowing the right time to expand a business can be tricky, but the owners of both Davids Hydro Vac and J. Angelo Industries have found ways to make it look easy.
Chris Angelo, co-owner of J. Angelo Industries, has simple advice when it comes to expansion: “It all depends on how your phone’s ringing."
Davids Hydro Vac has grown from 11 employees and four trucks in 2012 to over 30 employees and 12 trucks this year. J. Angelo, which opened in 2015, has seen its business triple in the past two years and instead of just one truck between Chris and his brother, they each have their own.
SEEING BIG GROWTH
Mike Morehouse dreamt of having the biggest hydroexcavation company in the world when he and his wife, Heather, opened Davids Hydro Vac in 2009. Starting from scratch with a rented truck and a David versus Goliath mentality, his vision for prosperity seemed like a pipe dream.
Little by little, things came together for Morehouse. He rented a second truck in 2011 and hired an experienced vac truck operator. “I brought him on board, and we just kept working, doing what we knew how to do,” he says. “Then the next thing you know, there’s three trucks, four trucks, five trucks.”
Davids Hydro Vac now employs 30 and operates a dozen vac trucks, with two more arriving later this month. The company, based in White Bear Lake, Minnesota, opened a satellite office this past spring in Tea, South Dakota, a suburb of Sioux Falls. Morehouse plans to open a shop in Wisconsin shortly, and he scouted out prospects to the south, also.
“The only thing that holds me back is the banks and the lending,” Morehouse says.
Operating a smaller hydrovac operation on the East Coast is Angelo, co-owner of J. Angelo Industries of Wappingers Falls, New York. Angelo and his brother, John, opened the business in 2015 with just one truck and the desire to work their butts off. Business has tripled every year. Today, the brothers each have their own vac truck, and they employ two cousins as their helpers. Angelo says the company is the right size for them.
“We’re a family company, and we’re trying to provide the best service possible,” Angelo says. “It comes with being small. When you’re small, you’re able to talk directly with your customers.”
WHEN IS THE RIGHT TIME?
Angelo suggests asking one important question if a business owner is looking at expansion: “Do my clients need me to get bigger?” Good businesses can pick up on clues to determine the equipment, technology and personnel needed to fulfill their clients’ needs.
“If you’re in demand enough, then you have to add another truck,” Angelo says.
Emergency work fueled the expansion at Davids Hydro Vac. “It’s not the work between 8 a.m. and 5 p.m. that gets you the job,” Morehouse says. “It’s the work between 5 p.m. and 8 a.m. Generally, when they need these trucks it’s an emergency.”
FINDING THE HELP
Hiring and training personnel can be a big hurdle to overcome. Because so many young people are employed in the industry, a pool of experienced workers is lacking, and there’s no classroom to learn the skills.
“A lot more goes into it than just knowing how to turn your vac truck on and push a button. There’s none of the magic there. It’s not where we’re making our money,” Morehouse says. “We’re making our money on the guys knowing what they are doing in every situation.”
Morehouse looks for workers who are good with their hands, like physical exertion, and take pride in their work.
OTHER HURDLES TO OVERCOME
Before opening a satellite office in South Dakota, Davids Hydro Vac researched the competition in the area and the number of potential clients. Distance from their headquarters was considered also. Davids Hydro Vac currently sends one to two crews from Minnesota until locals are hired to operate the office, and the six-hour drive to Sioux Falls is manageable.
Securing the financing to cover payroll, equipment and facilities is another item when considering expansion. Getting financing for a $500,000 piece of equipment can be challenging, so it helps to have a great relationship with your lender. Morehouse offers some simple advice: “Pay your bills on time.”
Morehouse recommends shopping around for business financing and being choosy when purchasing or renting equipment. “I know what I’m looking for (in equipment). I literally don’t even have to see it,” he says. “Start it up and let me hear it, and I’ll tell you if it’s a good piece of equipment or not.”
Angelo says contractors will learn as they’re expanding the fleet. Contractors will also learn what maintenance needs are the greatest in vehicles.
KNOW THE INDUSTRY
When timing an expansion, Morehouse says it’s important to know what’s happening in the excavation industry and what’s happening in the world, especially in oil, gas and fiber optics, plus economic and labor trends. A storm on the other side of the world can impact the cost of doing business here.
No matter what size operation you want to expand, weigh the pros and cons before you act.
“If you take on more than you can handle your level of quality goes down,” Angelo says. “Keeping clients happy is first and foremost.”