Expanding with Market Demands

When Roman Albert attended a luncheon where mall managers complained about how poor their sweeping service was,“It got us to thinking that we could provide that service,” says Albert.

Albert researched the market to discover the requirements to get into the business. “I talked to several of these mall managers and had four to five contracts before we bought our first truck,” says Albert. “I was 27, maybe 28 years old when I approached the manager at Utica Square and he said, ‘Listen kid, I’m going to give you contractors one more chance.’ He flipped open a book and showed me a picture of a Schwarze. He told me that was the machine that he was going to buy and do it himself if we couldn’t figure it out. I told him that it was a good machine and that I had purchased one just like it. They were one of our first customers. We were able to keep their business for several years until it become more cost effective for them to do it themselves.” Albert has been listening to the market ever since.

As his company, Lot Maintenance in Tulsa, OK, has evolved, they stopped sweeping parking lots two years ago. “We still do a lot of sweeping with highways and larger street sweeping,” says Albert. “But in our market, it’s so easy to get in and out of the business now with lease purchase agreements; it keeps market prices unrealistically low. We’re a bigger company with many employees that have been with us for more than 20 years which means higher operating costs due to higher wages and our benefits program. That means we must focus on diversification.”

Diversification is Key

“The nice thing about diversification, is that when someone comes along and undercuts your bids, you can keep your legs under you,” says Albert. “That is especially true if you can run your business without incurring bank debt. We’ve never gotten into a situation where we get worked into a corner. I’ve seen that happen to guys—their credit goes bad, their equipment gets worn out and then they can’t take advantage when the economy improves. We achieved our slow and steady growth through cash flow, and haven’t had to access our credit line since 1995.

“Our first contract with the City of Tulsa was for sweeping. Then they had some issues with their in-house mowing and asked if we would be interested. So, we started mowing the highways in Tulsa and are now probably the largest mowing company in Oklahoma. We mow the highways along I-44 from the Texas state line to the Missouri state line. In June, we mowed more than 22,000 acres along our state highway system.

“Next came pipe cleaning and underground camera work for the city. Diversification has been the secret to our growth and success. We do a good job in one area and are asked to expand into other areas. Sweeping is now our smallest division. I think it’s a unique challenge to understand how businesses change, grow or fail.

“If we had tried to stay active in parking lot sweeping, it would’ve been difficult. I’d just as soon park the machines and not wear them out. When you sweep and break even, you’re just wearing your machines out. We focus on the larger contracts for street and highway sweeping.”

Lot Maintenance also does landscaping jobs for the city. “We just planted 300-400 trees and put in sprinklers around the stormwater retention ponds. The ponds have water in them about 2 percent of the time. The other times, they are used for soccer fields and other sport activities.”

The Cost of Doing Business

“We do a profit and loss statement every month on each of our contracts,” says Albert. “We identify those contracts that aren’t doing well and the ones that are. Without it, you’re managing blind. The weak ones get canceled. There are some clients that you just can’t afford to work for. Some managers think it’s their job to get $1 worth of work for 25 cents.”

Albert advises to never take a marginal job and to pay as you go instead of taking out loans, which has helped them weather the down cycles of business. With 60 employees, they’ve never had layoffs, even when it slows down in winter time.

“If we do end up with a bad bid for a good client, you have to finish the project,” says Albert. “These customers are business guys too and they understand. I’ll go to them and tell them that it was a bad bid and just ask that we get a shot at their other services. I’m not asking for them to give us the other services, just to give us a shot at it.”

Look for part 2 of this article in November’s issue where Albert talks about more secrets to his success.

Story by Jennifer Taylor

Resources

For More Information:
■ Lot Maintenance, www.lotmaintenance.com
■ Schwarze, www.schwarze.com

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