Equipment World Digital Magazine
Issue link: http://read.dmtmag.com/i/748269
EquipmentWorld.com | November 2016 9 Let's call him Mac. I met Mac on a recent visit to the Southwest, as part of our continuing editorial emphasis to get our butts out of the office and out into the field where real life happens. As the saying goes, "A desk is a dangerous place from which to view the world." Mac is president of a concrete and asphalt con- struction services firm. After spending a lifetime in the field, he's been at the helm of his com- pany – which has outside owners – for just more than a year now. This is a guy who can look every one of his crew members in the eye and tell them he's been there. As he puts it, "I grew up eating dirt." His Deere dealer introduced us. Mac is relishing his leadership role, but he's got a big problem. "We're in an incredibly tough industry and in perhaps the toughest segment of that industry," he says. "And we're running along at net 2 percent profit, if we're making money." To put that in perspective to his leadership team, Mac uses a Vegas analogy: Would they go to the blackjack table and bet $100 to get $2 back? That 2 percent return colors everything, and has a direct impact on what he calls the three essentials of his company: employees, vendors and clients. "I've got to have all three aligned; if I don't have one, I can't take care of the other two," he says. As a result, cash flow is a weekly dance. "When I submit a bill, my billing cycle is 65 to 70 days out, and 90 days if I'm a sub to a sub," Mac says. "Every Friday, I have to meet a $150,000 payroll. If a vendor insists on being paid in 30 days, well…" All of this plays directly into how he manages his fleet, made up primarily of backhoes and Ford F-550s. "A vendor absolutely has to un- derstand my business, and not just from a sales standpoint," Mac says. What doesn't work with him is this all-too-common sales pitch: "Hey, we got a deal on a backhoe today. Do you want to buy one? No? Okay. We'll check back in a couple of months." "I do business with people who want to know if there is something they can do to help, such as put a piece of equipment I could use in their rental inventory," he says. "I can't afford to buy it, but maybe I can rent it, or do a rental pur- chase. I need a vendor who's willing to work with us, who wants to help me find a way." And even with extremely tight margins, he's willing to pay extra for the service that results from such a relationship. "I'll pay them $200 more a month in rental fees because of what they bring to us," Mac says. "And remember, at net 2 per- cent, that $2,400 extra is real money to me." In the end, Mac believes that he needs his dealer "more than they need us. I treat them the same as our employees. They are that important to us." He pauses, and then says: "I think we see the future in each other." on record | by Marcia Gruver Doyle MGruver@randallreilly.com Life at net 2 percent