Iowa PowderCraft, LLC
Iowa PowderCraft — 12 Lessons for Aspiring Entrepreneurs
John and Colleen Thompson are doing it right at Iowa PowderCraft, a new growth business in Clear Lake, Iowa. Iowa PowderCraft provides metal finishing services, including media blasting (surface preparation) and powdercoating — a form of dry paint that is electrostatically bonded to and baked onto metal for greater durability and longer lasting finishes than wet spray paint. The Thompsons opened in December 2013 after completing the NIACC John Pappajohn Entrepreneurial Center’s Launch & Grow program.
Some business lessons:
- Ask for help. John and Colleen started with a visit to the NIACC Small Business Development Center (SBDC) in the John Pappajohn Entrepreneurial Center. Then SBDC Director, Ted Bair laid out a plan to plan and the Thompsons listened. One key piece of advice: interview others in similar businesses in other cities and learn what works (and what doesn’t). Entrepreneurs’ biggest weakness is they don’t know what they don’t know. Learning from others who have “been there and done that” takes less time and money and produces better results than learning the hard way. So-called “Peer Discovery” teaches things you don’t know about customers, pricing, marketing and sales, operations, financing and more. Peers who are not direct competitors are often remarkably willing to share. John and Colleen discovered also discovered new friends through the process.
- Research before opening the doors. John and Colleen followed through with almost two years’ of research, interviewing and visiting other powder coating operations around the country. This included even working for free in several operations to really understand tools, systems, and operations. The result? John and Colleen had a good operational bible of what to do and what not to do before designing their own operation to incorporate best practices.
- Launch & Grow — writing the business plan. John and Colleen as mid-career entrepreneurs didn’t assume they knew it all. They participated in the NIACC Pappajohn Center’s Launch & Grow program. This ten week process produced a business plan incorporating the research in the format banks and investors expect to see. The resulting business plan helped secure debt financing and created an ongoing management tool so the owners and lender would know if things were on target or off. Being off-plan is an early warning to make running changes before it’s too late. Instructor, Michael Brown, and Pappajohn business coach Dan Winegarden, helped shape and focus the plan and marketing messages.
- Build a strong banking relationship. The Thompsons shared their research and financial projections in the form of the business plan with their bank, Clear Lake Bank and Trust. The Thompsons listened for potential issues so they could answer any bank objections in advance. Banks want to get repaid. The narrative of the business plan was consistent with the story told by the numbers in the projections. Objections were anticipated and answered. The Thompson’s forward looking financial projections (pro forma financial statements) were based on real world experience of peers, giving the bank confidence that John and Colleen could make the numbers come true.
- Clear, consistent, professional branding. John and Colleen were conscious to develop branding that conveyed their objectives not the small starting point. The professional image of the corporate logo is carried across all paper, web, buildings and vehicles.
- Professional facilities and operations. Just as important, the new or newly remodeled facilities and operations are consistent with the professional, service-oriented image conveyed by the branding. The buildings are clean, well-maintained and organized. The cleanliness of the shop floor conveys the quality and attention to detail in products and service. Perfect finishes can be ruined by a missed spot of rust not properly removed in media blasting, or oils not properly cleaned from bare metal or by dust and dirt. A dirty shop warns of a poor quality result in this industry. The Thompson’s assured their first-rate facility attracts high quality customers that expect high quality finishes and service.
- Sales don’t happen by magic. Making quality stuff is hard. Selling stuff is harder still. Customers don’t all show up day-one. Sales require pre-loading the marketing funnel and constant work. Prospective customers don’t all say, “Yes,” on the first approach. Planning for the resulting ramp-up and investing in marketing that leads to sales is essential.
- Persistence. Owers as salespersons have to have the fortitude to hear, “No,” and keep going, and even come back to potentially hear, “No,” multiple times before getting to, “Yes.” Being an entrepreneur is hard work and emotionally challenging. The Thompsons stuck with it and when issues arose they worked through them. The business plan is not static. The market always responds and so must entrepreneurs to changing circumstances. The Thompsons worked through pricing and cost issues to understand their “sweet spot,” where they were both competitive and profitable. They responded to what customers said they needed, especially predictable production and deliveries.
- Competing on more than price. Being the low price producer is not a path to success. Even being a low-cost producer is not the best way to long-term profitability. Successful companies sell something more than low-cost. Iowa PowderCraft emphasizes quality and timeliness of service. John’s experience in logistics and scheduling enables him to wrap pick-up and delivery and predictable production schedules to the underlying services of media blasting (surface preparation) and powder coating (metal finishing).
- Remember owners get paid last. In that ramp-up period before cash-flow positive and break-even, the Thompsons understood employees got paid before owners.
- Know what you’re good at — and what you’re not. John and Colleen opened the doors seven months ago with one other employee. They’ve grown to fourteen employees by hiring smartly. John and Colleen focus on sales and marketing and strategic planning. They hire expertise from accounting to material handling, media blasting and painting. The Thompsons know the business and can do almost any aspect of the work, but focus their personal time and efforts on those things that make the biggest impact on long-term success. An entrepreneur in a new business will have to learn new tricks, but be careful assigning to yourself things you hate to do or for which expertise is essential. And remember to keep asking for help. When Iowa PowderCraft needed an OSHA compliant safety plan, NIACC helped again with experienced staff.
Iowa PowderCraft’s owners are an overnight success because they worked for more than two-years in advance of opening to develop a workable plan. In the last seven months they’ve worked the plan to deliver on the promise. The results? Ahead of plan. Rapidly growing revenues and operations. Profitable. Adding jobs. It doesn’t happen by magic. Success is a result of planning, hard work and working smart.
Duggan Tax Service
Mary Duggan, CPA and Owner
20 Ninth Street, NE
Mason City, IA 50401 (Cerro Gordo County)
641.423.4431 or 641.424.6197
Description of the Business
Most people don’t enjoy spending their valuable free time preparing their income tax returns or doing the bookkeeping for their small business. Mary Duggan, owner of Duggan Tax Service, offers the solutions for these problems plus two additional precious commodities – time and peace of mind. In January 2007, Duggan acquired the existing client base of Jess Harris Tax Service (a very reputable business in North Iowa) after Harris retired from a 30 year career with the Internal Revenue Service and 17 years in private tax practice. Prior to opening Duggan Tax Service, Mary worked for several other local accounting firms.
Duggan was referred to the North Iowa Area SBDC by her banker after her business start-up loan was declined due to her poor credit. The North Iowa Area SBDC was able to help Duggan develop a business plan and also look for alternative sources of funding.
Duggan was informed of the NIACC John Pappajohn Entrepreneurial Center (JPEC) Revolving Loan Fund opportunity. The NIACC JPEC was awarded a Rural Enterprise Grant from the United States Department of Agriculture Rural Development to create the revolving loan fund. The program is designed to assist with new business development or the expansion of existing businesses. In March 2007, Duggan Tax Service received $10,000 in funding from NIACC JPEC Revolving Loan Fund.
Results of SBDC Assistance
Since Duggan’s first visit to the North Iowa Area SBDC, she has completed a very thorough business plan and received funding to advance her business. With the acquisition of Jess Harris Tax Service, another much needed accounting business will thrive in North Iowa. Mary has also graciously offered to mentor other aspiring entrepreneurs and several referrals have been made by the North Iowa Area SBDC to Duggan Tax Service as start-up entrepreneurs are searching for an accountant to assist them in developing their bookkeeping system. Ultimately, the North Iowa Area SBDC provided Duggan an opportunity to reinstate her CPA designation that had lapsed due to personal issues and fulfill her dream of opening her own business.
Quote from Client
“The guidance and support I have received from the NIACC JPEC and SBDC has been invaluable throughout the acquisition process. The loan allows me to start my business with a strong financial foundation.” – Mary Duggan
Latham Hi-Tech Hybrids LLC
Description of the Business:
Corn is big business in Iowa, but high technology corn is becoming an even bigger business. Third generation seedman John, along with wife Shannon and brother Chris Latham seized an opportunity to begin supplying corn seed with multiple traits to farmers across the upper Midwest and formed Latham Hi-Tech Hybrids in 2004. With a motto of “brings world-class technology home,” they have become one of Iowa’s fastest growing family-owned seed companies. In April 2006, the Lathams turned to the SBDC of North Iowa for help accelerating and preparing financially for rapid growth.
In Mason City, the SBDC is housed inside the John Pappajohn Entrepreneurial Center on the North Iowa Community College Campus. This setting offers huge opportunities for collaboration with other JPEC members, including the North Iowa Business Accelerator, Iowa Workforce Development, North Iowa Venture Capital Fund and Wellmark Community Venture Fund. By utilizing all the assets at its disposal, Ted Bair, the SBDC Director was able to help John, Shannon and Chris Latham refine all aspects of their business plan- marketing, financial and operations. He also critiqued and helped them prepare their presentation for the Venture Network of Iowa and submission of their business plan to the statewide Pappajohn Business Plan Competition contest.
Results from SBDC Assistance:
- Successfully penetrating a five state region
- Met sales plan for 2006; exceeding plan in 2007 (years run Sept to Sept) with continuing triple digit percentage increases.
- Presented to the Venture Network of Iowa, drawing the interest of Venture Capitalists and Angel Investors
- Placed 3rd out of 87 entrants statewide in the Pappajohn Business Plan Competition, winning a $10,000 prize
- Awarded $100,000 in funding from the Wellmark Community Venture Fund
- Accelerated hiring plan. On track to add at least 1 new sales pro-rep employee every other month in 2007 with ultimate goal of 45 employees by 2010 earning in excess of $75,000 annually.
Quote from Client:
“We faced the same problems every new company faces. Although, we had the background, the connections and the education to be successful, we needed to supplement it with the skill and experience of the North Iowa SBDC in the Pappajohn Center at NIACC. We were given access to capital sources and to a network of specialists that shaved years off the execution of our business plan. No one did the work for us, but because of the NIACC-JPEC SBDC, the work we did was much more effective.” John Latham, President, Latham Hi-Tech Hybrids LLC, Sheffield, Franklin County, Iowa