Ralph Pokorny has seen his share of economic downturns in his 64 years. A recession in the early 1990s led him away from other business ventures and into the damage restoration business. In 1995, Pokorny opened Restoration Xperts, Inc.
The company handles emergency restoration work after natural disasters, as well as mold remediation and structural repairs. Restoration Xperts has 10 employees in its Deerfield Beach office, and uses contract laborers as needed.
Over the years, Pokorny, a general contractor, has seen the business peak and ebb. The company reached $4 million in sales before the 2008 downturn, then fell dramatically. Revenue plunged, and Pokorny cut marketing efforts and his salary. He and his second-in-command parted ways, and debt mounted.
“It was a growth industry in a growth market, and now it’s a shrinking industry in a shrinking market,” Pokorny said.
But Pokorny sees hope on the horizon: 2014 is shaping up to be a good year, with $1.7 million in sales and growing momentum. Over the past year, he replaced key staff members and implemented a new computer system he hopes will improve efficiency.
“I’ve been off my game for three years. Now I’m getting back on my feet,” he said.
Pokorny 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 included David Harris, director of marketing, Greenway Golf Course Management, whose expertise is in operational management, fiscal controls and marketing; Jeff Manz, owner of Freedom Force Financial, who specializes in information technology, financial planning and small business lending; and Russell Thompson, a Sunrise attorney with expertise in manufacturing operations, marketing and accounting.
About 95 percent of Restoration Xperts’ business is paid by insurance companies, which presents a problem when it comes to cash flow, Pokorny said. Instead of a 30-day turnover, 120 days is common, and often denied insurance claims mean unpaid invoices for a year or more. The most profitable jobs are emergency restoration and mold remediation, but that makes up only 40 percent of his business. “It’s the easiest to do, the easiest to get paid, and the hardest to get,” Pokorny said.
Harris said a change in perspective and realigned management structure could help fuel success.
“You have many of the right things in place. But you need to realign and readjust to see future growth,” he said.
Here are the SCORE team’s recommendations:
Finalize a business plan: Pokorny would benefit from the strategic planning process of a long-term business plan, Harris said. Flesh out the overview you are using and create a three-year plan for your business, he said. Pokorny said he will work on completing his plan.
Determine your target market: Figure out who you want to reach to bring in business. Is it the end user? Is it plumbers who can give you referrals? “If that is not clearly defined, then you’re just throwing money around,” Manz said. “Who are the parties that can send you work? Identify them and put dollars toward that.” Thompson said to narrow the target market down to whatever is most profitable and efficient. Pokorny said referrals from others in the industry have delivered solid leads, and he will explore ways to reach out to that segment.
Differentiate yourself from competition: Identify why customers choose Restoration Xperts over its competitors, Manz said. Survey recent and current customers about what brought them to you by providing a short questionnaire on service calls or on phone inquiries, Harris said. “Your customers like to know that you’re interested in their opinion,” Thompson said. Pokorny said he would think about ways to incorporate surveys into client calls.
Strategically plan marketing messages: After you learn why customers come to you, develop marketing efforts that play on those strengths, Thompson said. Try specific keywords that differentiate you from competitors, Manz said. Use Google’s free keyword tool, www.googlekeywordtool.com, to discover the words that customers are using to search for restoration companies, and use those words prominently in your advertising and website content, Harris said. “Let your customers tell you what your marketing message should be,” he said.
Ramp up marketing efforts: Pokorny stopped marketing when he became strapped for cash. Harris said if most sales leads are coming from potential customers searching the Internet, he needs to resurrect those efforts. “Get back into SEO management,” he said. “It doesn’t have to be pay-per-click. It’s establishing yourself as an expert.” Pokorny said he will continue pay-per-click advertising and will add SEO marketing to the mix.
Examine where marketing dollars are going: Make sure you are getting the biggest bang for your buck, Manz said. For example, if you’re not getting a lot of calls from people seeing your trucks, don’t spend a lot of money on truck signage and wrapping. “If that’s your lowest return on investment, spend the least amount of dollars there,” he said. Manz suggested updating the website to include a call-to-action on the first page and doing a demo video about the business for the website and YouTube, which has become an important search engine. Pokorny said he has found measurable success with Internet marketing, so he will spend his dollars there.
Resurrect referral networks: Pokorny started his business through personal relationships and referrals, but found that cultivating those relationships took a backseat to operations. The SCORE team suggested he resurrect efforts to develop strategic alliances with professionals who can refer business. Create a strong referral program and prioritize reach-outs to professions that currently produce the most referrals, such as plumbers, property managers and public adjustors. “You have to make that part of your marketing strategy,” Thompson said. He suggested attending networking groups or holding educational events. Pokorny said he will look for groups that have a strong potential for leads.
Hire an outside marketing person: Pokorny was already planning to make a sales/marketing hire. The SCORE team suggested the new hire handle outreach to possible referral sources, as well as follow-up on leads generated from inside marketing, such as website and phone calls. Harris said the candidate should have stellar networking and appointment setting skills. Manz suggested that Pokorny initially work closely with the hire to gauge effectiveness and tie compensation to measurable goals using a business strategy called “management by objectives” from Peter Drucker’s book The Practice of Management. Pokorny said he will look for a well-rounded person who has the potential to grow with the company.
Streamline hiring: Pokorny wants to add high-level personnel to his team. Harris said instead of using inexpensive ads on Craigslist, consider joining LinkedIn Premium, which can allow him to post jobs and use search terms to identify potential candidates. “That’s the best way to hire top-notch managers,” he said. “Running ads on Craigslist is fine for day laborers, but not for executive types.” Manz suggested the hiring site Indeed.com. Pokorny tried Indeed, and found the quality of his candidates improved.
Restructure debt: Restoration Xperts has a loan and credit-card debt averaging 11-percent to 12-percent interest. Thompson suggested asking the lender to roll the credit card debt into its loan to lower the interest rate. Manz suggested using equipment as collateral for a lower-interest loan to increase cash flow. “You need to find out your cash flow needs and figure out how to fill those needs,” he said. If large, mainstream lenders are unwilling to extend a small business credit, marketplaces of smaller, secondary commercial lenders such as regional banks may be an option for temporary lines of credit, Manz said.
Plan an exit strategy: Pokorny would like to phase himself out of the business in the next few years. He would like to hire someone who can help manage and eventually take over the business. “I need a second-in-command to take over some of the decision making,” he said.
The SCORE team advised first developing a clear plan and job description. Harris said to give the hire the ability to earn part of the business, so he or she will have the bottom line in mind.
Manz said to have a backup plan. “If something goes wrong, have a plan to pull it out of the fire before it gets consumed.”
Fully utilize existing technology: Thompson suggested getting employees trained on the company’s new computer system and start entering sales projections and more specific data.
Start a budget-based planning and management system, he said. Use an accrual-based accounting method to get a better view of profitability by job, Thompson said. “If you want to sell your business one day, have five years of audited financial statements and a monthly budget,” he said.
Carry insurance: Because the success of many small businesses depend on the health and wellness of the owner and his or her ability to serve customers, Manz suggested “key person” or “business continuity” insurance to provide cash flow if Zoporky becomes ill.
Pokorny said he learned a great deal through the makeover process.
“I can’t convey enough how much I appreciate the assistance,” he said. “It’s great to talk to guys who understand business, and who know it from different perspectives.
“It reaffirmed a lot of my ideas, plus reaffirmed some things that need to become more important.”
The client: Restoration Xperts, 1130 S. Powerline Road, Suite 101, Deerfield Beach, handles emergency restoration work after natural disasters, mold remediation and structural repairs. The company has 10 employees and uses contract laborers as needed.
The experts: David Harris, director of marketing, Greenway Golf Course Management, whose expertise is in operational management, fiscal controls and marketing; Jeff Manz, owner of Freedom Force Financial, who specializes in information technology, financial planning and small business lending; and Russell Thompson, a Sunrise attorney with expertise in manufacturing operations, marketing and accounting.
The challenge: To grow management infrastructure and strategically manage operations.
The advice: Finalize a business plan. Identify a target market. Increase marketing efforts strategically. Resurrect a referral program. Make key hires. Identify ways to manage cash flow. Create an exit strategy.
Based in Washington, D.C., SCORE is a nonprofit with more than 12,000 volunteers working out of about 400 chapters around the country offering free counseling to small businesses. There are seven chapters on Florida’s east coast, including Broward SCORE, with more than 60 volunteer counselors.
Counselors from Broward SCORE meet with small business owners and offer free one-on-one counseling as well as dozens of low-cost workshops, such as “Supercharge Your Website” on Tuesday and “Build Your Brand” on Wednesday. See more under “Local Workshops” on broward.score.org.
How to apply for a Small Business Makeover
Business Monday’s Small Business Makeovers focus on a particular aspect of a business that needs help. Experts in the community will be providing the advice. If you would like a makeover, concentrate on one aspect of your business that needs help — corporate organization, marketing, financing, for example — and tell us what your problems are.
The makeover is open to companies in Broward or Miami-Dade counties in business at least two years. Email your request to rclarke@MiamiHerald.com and put “Makeover” in the subject line.