The Trials And Tribulations Of Starting A Manufacturers’ Agency From Scratch (Part 2)
The Second Year: Opening the Office
For the entire year of 1992 we developed business plans, strategized about how we would go to market, worked on budgets, and in general tried to get our act together on what we thought we could do well (or at least better than some). We also moved out of the city into a resort area near the city (18 miles) where we could get a larger house with a full floor dedicated to the business. The prior owners had run a business from the house and the upper floor was customized with 25 incoming phone lines, several built-in computer workstations, custom cabinets designed for pendaflex files for file folders and built-in bookcases, a separate bath and an outside entrance.
The business was still sitting and was costing more money. We now had dedicated fax lines, office telephones, taxes to pay, and space set aside for the office. We were also dealing with lengthy commutes as we waited for layoffs. We each expected layoffs due to the slow business conditions in the market we were in, and we planned to use the severance pay, along with our savings, to fund our startup. In October one layoff came with extensive severance pay, so market research was now a full-time job (although unpaid).
We decided we wanted to be both a manufacturers’ representative and a general engineering contractor for several reasons. In years of selling, we saw that a lot of the customers really like to have you service what you sell. Many of the smaller companies in the marketplace don’t have the service personnel available to service smaller units, even if it were costeffective to come from the East Coast. Both having service backgrounds, we were already in a position where we could technically handle the service work, and in addition we had scores of friends who had been caught in the layoffs when our former employer moved out of the state, and who were now available as independent contractors to do the engineering, field service, labor, and project management services needed to support the customer base.
We developed a resume database of independent contractors to cover the areas where we could foresee that we would need expertise. In addition, because the four western states where we planned to work all required a contractor’s license in order to bid installed equipment, we could envision that our suppliers would need us to bid as a prime contractor while they obtained their own licenses. We didn’t want to lose work because we didn’t have a contractor’s license. A customer is much more comfortable with a vendor who has a detailed technical knowledge of the equipment, so we felt that our technical backgrounds would be a major boost with our client base. My partner began a night construction management course at Cal Poly to ensure that we were on top of all the newest issues in construction.
The series continues next month.