Strength in Numbers

Drain Doctor of Southwest Missouri discovers coop-etition as a way to get through tough economic times and build strength for the future

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It’s said that timing is everything in business. And when the timing isn’t just right, all it takes is a little creativity to make things work. Just ask Fred Stewart.

Two years of healthy growth in his new company, Drain Doctor of Southwest Missouri, told him it was time to expand in 2008. He bought equipment, hired more employees and added services – just in time for the recession. “I saw it coming in March,” he says. “I had already bought the new equipment and signed the contracts. The backhoes were already delivered.”

One key step Stewart and his company took to get through a tough time was to form alliances with other businesses with related specialties – even if some of those firms’ services competed with his own. It’s a concept sometimes called coop-etition.

The approach has helped him increase profit with a smaller, leaner staff and put himself in a strong position for the turnaround he knows will come.

Simpler life

The onset of recession wasn’t the first time Stewart has had to change his plans. His search for a new job outside of the corporate world in 2006 didn’t go as he intended, either.

Before moving to Missouri, Stewart worked for a drain cleaning franchise for 12 years, including three as manager of the excavation and industrial division. “I just decided to come out here and live a more simple life,” he says.

The job search didn’t go well: “I was much more qualified than every manager I spoke to, so nobody would hire me.” Then he and his wife, Tracey, learned that Drain Doctor of Springfield was for sale. So, instead of having a job, he found himself owning a 10-year-old sewer cleaning and waterjetting company in Rogersville.

The new Drain Doctor of Southwest Missouri grew quickly. Before the Stewarts took over, the company had just completed its best year with sales of $235,000 (2005). The Stewarts took over in June 2006 and did almost $275,000 in their first six months. The next year saw the company grow to nearly $600,000 in sales.

In 2008, they added plumbing services and Perma-Liner cured-in-place pipe lining, became licensed to install and inspect conventional and advanced septic systems, and hired employees to do the work. They also added an excavation division and expanded the service territory from one county to cover five counties around Rogersville, including Springfield and the popular tourist area of Branson.

By June, the company had matched its 2007 numbers and was on track to do $1.2 million in sales. Then came August.

Screeching halt

“The phones just stopped ringing,” says Stewart. “It had nothing to do with us or our service. It’s just that nobody had money.” They still did $725,000 that year, but the sales they lost had been expected to fund the expansion.

Stewart admits that the smart business move would have been to start cutting staff right away, but “I felt that wasn’t right. When I die and stand at the pearly gates it’s not going to be, ‘Well, you made an extra two percent profit this year so you’re allowed in.’ It’s going to be about how I treated others and the impact I had on their lives.”

The Stewarts maxed out their credit lines waiting for the economy to rebound. “I really felt responsible for my guys and their families, and I did everything in my power, including self-sacrifice, to keep them working as long as I could,” he says.

He weathered the storm until the end of November, when he had to lay off about half his workers. “At that point, I just did not have a choice,” he says. “We were hurting.”

Employment fell from 11 to 5, including the Stewarts. He now plans to keep it that way, not because he has given up but because he has found a new way.

Power in numbers

“We’ve revamped the company in a lot of ways and changed how we do business,” says Stewart. With the core group of managers and service technicians, Drain Doctor now hires out much of the work to subcontractors, including other cleaning, plumbing and excavating companies who used to be the competitors. “We run the jobs,” says Stewart. “We stay onsite and run every aspect of the job.”

Through coop-etition, Drain Doctor has built “great relationships” with other companies who two years ago would have competed for the same jobs. “Now we all work together,” says Stewart. “I don’t have the burden of a large payroll every week. I don’t have the overtime costs. And I don’t have to worry about having jobs next week to keep everyone working.”

He has found three key partners for the new approach: Tim Smith of S&S Pumping Service, Josh Nelson of Nelson Excavating, and Ted Wilcznski of TCM Environmental.

“We get septic pumping calls every day,” says Stewart. “Instead of opening a pumping division and losing a friend over profits, we give that work to Tim. He gets calls for drain cleaning and septic installations and sends the work to us.” Besides referring work to each other, the four companies hire each other if they need help on jobs.

Stewart says all the companies love the arrangement. “It’s helping all of us through slow times,” he says. “They’re keeping their crews busy, we’re getting jobs, and 20 people are working every day.”

Better still, all the companies are making money in the middle of the recession. “We all find ourselves growing,” Stewart says with obvious enthusiasm. “We’re advertising again and we’re caught up on our debt. We’re coming out of it as better people and better companies because we’ve decided to let that whole competition aspect go and have chosen to work with each other.”

The most interesting outcome for Drain Doctor? “We have half the people and we’re making a higher profit. It’s amazing.” The company is earning a higher net income from savings in areas like vehicle maintenance, GPS tracking, fuel, insurance, payroll, uniforms, cell phones, office supplies, and accounting.

Stewart realizes that when the economy recovers, the coop-etition may go out the door. “I’m sure someone is going to jump ship eventually,” he says. “But until that happens, there is safety in numbers, and four companies working together can be a lot stronger than one who chooses to stand on his own.”

No time for the bunker

While the recession made it necessary to be careful with spending, Stewart tried hard to keep his name in front of customers and maintain his presence in the community. “Instead of the high-dollar television commercials in the Kansas City Chiefs games, we did more community radio advertising to get more bang for our buck,” he says. “We went to the home shows where I knew 20,000 people were going to see our booth.”

Knowing that people like to work with local firms, the company got a phone number specific to each city where it does work. “We support the local youth teams through fundraisers and booster clubs,” Stewart adds. “We’re at the Kiwanis meetings, and we joined all the Chambers of Commerce and go to all the meetings. We put floats in the parades. We’re part of the volunteer fire department, and we have guys who do volunteer work for emergency medical services and disaster relief groups.”

For Stewart, the most important aspect of surviving the recession is that there is no animosity from the people he had to lay off. “We still talk,” he says. “They understand what had to be done. They understood that if I didn’t do it, there was no tomorrow for any of us as far as business was concerned.”

Those former employees still recommend Drain Doctor. Some have opened their own companies and send work Stewart’s way – but only kinds of work they don’t do. A former Drain Doctor employee doing drain cleaning isn’t about to give up a job to Stewart, and he won’t give up a job to them. “Business is business, after all. We all have families to support. But we’re all benefiting by cooperating.”


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