Small Business Makeover: Zap Diamond Tools

After earning a law degree in Brazil, Paulo Lins moved to Florida in 1996 to further his education. There was just one problem. At the time he didn’t speak English, so after two weeks at the University of Florida, they gave him his money back and wished him well.

Lins was familiar with construction work, so he started All About Pavers in Miami, installing and maintaining pavers. Along the way, he noticed the cutting tools he bought were cheaply made and didn’t last. After the recession tanked most of the paving business, Lins began researching high-quality diamond blade cutting tools used for concrete and stone.

In 2012 he cleared out a second bedroom and founded Zap Diamond Tools, supplying blades, bits and tools to hardware stores and construction companies. In 2014, he had $750,000 in sales. This year, he is on track to reach $1 million. Now in a Pompano Beach warehouse, the company has seven employees.

There are about 200 U.S. distributors of cutting tools, with about a half dozen competitors in Broward. Many sell the same products, under different brand names.

The challenge is trying to differentiate Zap from the competition to build his brand, Lins said. “We’re getting product from the same suppliers” and rebranding, he said. “I don’t want to just exchange money. I want to build a brand.”

Lins uses blades with the highest concentration of diamond. It makes them more durable, but the higher price tag often scares customers away. He believes he needs to educate end users on the smarter buy. Early in 2015, he trademarked names of several blades to help in marketing efforts but is not sure where to put advertising dollars. He has 70 percent of his business in the United States and 30 percent in Canada, and would like to expand in the Canadian market.

Lins asked the Miami Herald for a Small Business Makeover, and the Herald brought in Broward SCORE, a nonprofit with volunteer counselors from the business community who mentor small business owners. The SCORE tune-up team was led by David Harris, director of marketing, Greenway Golf Course Management, whose expertise is operational management, fiscal controls and marketing. Other team members were Rosie Taylor, CEO of Rosiemedia, whose expertise is web development, social media and online marketing. Emmanuel Okwor, project director at Grelite Corp, whose expertise is real estate development, construction and management consulting; and SCORE mentor John Armbrust, who specializes in accounting, finance and administration.

Here is the SCORE team’s advice:

Write a business plan: You need clarity, Okwor said. Create a blueprint and determine your target market. “What makes you unique? Figure that out and build your customer base around that,” he said. “Do you want to be a wholesaler or a retailer? You can’t be everything to everybody.” Figure out what makes the most sense financially and go after one target at a time, Okwor said. Think about your customer makeup, Armbrust said. “It’s always your biggest customer who will put you out of business,” he said.

Educate consumers: Zap’s blades last longer, but they cost more, and many consumers just want the cheapest blade, even if ultimately it increases overall job cost. Taylor suggested a marketing strategy to educate customers and show them the bottom line. “Put a case study on your website of how a more durable blade can save money over a cheaper blade,” she said. Market by educating, with educational and safety videos on YouTube, making it the place to go for industry information, Taylor said. Use your email newsletter and blog to educate customers about industry trends and news, she said.

Overhaul sales calls: Zap’s five sales people hustle the phones, making about 2,500 calls a week to prospective customers. “The challenge is to get past the gatekeeper and get to the decision maker,” Lins said. Harris said “You need to find the guy with the big picture in mind, rather than the guy who is trying to do it as cheaply as possible.” He said a business database service like Data.com, which offers a free trial, can help pinpoint the right people. Okwor said the sales force needs to work on building the customer base with new customer acquisitions in new markets.

Differentiate yourself from competition: Lins said many competitors have been in business for decades. He needs to find a way to convince customers to leave their comfort zone and try him. Harris said building a relationship can help customers get past the cash-versus-quality issue. Look at the potential return on investment of sponsoring a breakfast or gathering for customers at a trade show, to help in relationship building, he said. “If you’re going to send out a sample, print the customer’s first name on it, and it will less likely get thrown away,” he said. Build a rewards program to increase customer loyalty, Taylor said, and a referral program with small gifts like hand tools or lunch coolers with a Zap logo.

Expand strategically: Zap is adding a line of sinks this year, to help sales when outdoor construction is slow. Lins also sees an opportunity with core bits used for soil testing. Harris said Zap might need a sales force divided by category. “You may need to create a subsidiary for the new sink line, so that you can raise capital, keep branding clean and keep it away from the main money-maker if the new lines don’t work out,” Okwor said.

Have a marketing plan: Zap did a direct mail piece of 10,000. Taylor said a series of postcards could help educate. An app could help flesh out what different blades do. Okwor said before developing an app, try out the interactive tools on the website, to see if they take off. Build personality and cut through clutter by developing a clear image or personality, Harris said. “If you want relationship-driven sales, you need to create a personality people will remember,” he said. Harris suggested creating a character to go with the company name, to help people remember the brand. “If you create a branding image it will spice up your marketing,” he said. Find illustrators/designers at elance.comor 99designs.com, Taylor said.

Fine-tune website: “There are so many suppliers, what makes you different?” Taylor said. “All of you have your secret sauce, even if you’re selling the same product.” Make the site more mobile-friendly, so people can search on the go, Harris said. Create a microsite for the most popular blade brand, the Hurricane, or for your store, Taylor said. Make your website a resource for industry information, rather than just a catalog, she said.

Use social media: Gather testimonials, hold contests and giveaways. Have a photo contest with customers using Zap blades and give a prize to a fan of the week, Taylor said. Encourage reviews and start discussions about industry news. “Customers are looking for resources and guidance,” Taylor said.

Keep up on financials: Look at monthly reports. Think about a line of credit to have a capital infusion for big orders, if you don’t have cash on hand, Armbrust said. If you add product lines, think about how you will financially handle storage needs, especially for an untested product, he said. “Don’t over-expand to a new space,” Armbrust said.

Lins said he learned a lot from the makeover process. “My idea is to build a brand, and build a reputation for an honest company with a good product, so people will come back again,” he said. “They gave me a lot of information to go over, and a lot to think about.”

This story was originally published August 2, 2015 at 9:40 PM with the headline "Small Business Makeover: Zap Diamond Tools."