Duraserv

Consistency Is Key At Southern Acquisitions

Released: September 7th, 2012

According to statistics from the Loading Dock Equipment Manufacturers (LODEM), the loading door segment of the material handling industry dropped by more than 45 percent from 2008-2010. The door industry dropped even more. Even in the face of such a precipitous drop, Southern Acquisitions, a loading dock and overhead door distributor based in Farmers Branch, Texas, was able to continue a run of success that started upon its founding ten years ago. “While our revenue dropped by 11 percent during that period, our operating earnings did not. We have grown every year we’ve been in business,” says Vince Sullivan, president. Not bad for a distributorship that formerly was a branch of a manufacturer, concentrating primarily on volume for its plants.

Southern Acquisitions was established in August 2001, when Sullivan was president of United Dominion Industries’ (UDI) Dock Products division, which included dock and door brands such as Serco, Kelley, TKO and APS. UDI was on the verge of being acquired by a large conglomerate, and the new buyer was looking to divest a few of the new holdings and focus on manufacturing. It wanted the dock products division to sell its four branch offices in Dallas, Houston, Atlanta and Windsor, New Jersey. Being president of the division, Sullivan was in charge of the sale. He sold the branches to Jamie Gibbs, a former business partner, with the intention of maintaining the sales volume of the manufacturing plants, yet having the branches focus exclusively on distribution, sales and the customer.

It wasn’t long before Sullivan realized the branches’ business potential, and at the end of 2001, he joined forces with Gibbs to fulfill the opportunity. “Jamie and I knew there were some opportune targets for acquisition as well as opportunities for organic growth in the distribution market,” Sullivan recalls.

Taking advantage of those opportunities, however, would require a change in approach for the new company. “As manufacturers, we were very volume-focused. We were good at getting orders, but we needed to learn how to take care of the customer after the sale,” Sullivan recalls. “To succeed as a distributorship, we needed to become intensely focused on the end-user—on service, parts and growing the after-sale end of the business.”

Service Focus

To do that, the company concentrated its planning on building the service business. “We lived and breathed service. That meant investing in the right equipment, determining our manpower needs for service and installation, and making all those decisions that we had not previously focused on,” Sullivan says.

The approach worked. Within ten years, the company now has 11 locations—the original four plus facilities in Austin, Fort Worth and San Antonio, Texas; Milford, Connecticut; Sterling, Virginia; and Baltimore, Maryland. Doing business as Southern Dock Products in Texas and the Southeast and as Just-Rite Equipment in the mid-Atlantic and Northeast, Southern Acquisitions is now the largest distributor in the United States for 4Front Engineered Solutions (Kelley and Serco loading dock equipment) and Rytec high-speed doors. The company also distributes Wayne Dalton commercial doors and has achieved President’s Club status as one of its top distributors.

But the company’s most important offering is service. In fact, the service department has its own set of financial statements separate from the sales department and the consolidated statements. “The service business is the profit foundation of the business,” Sullivan says. “We measure the service department profit exclusive of any parts contribution and challenge our service department to excel in manpower management. Parts profit hides the labor management aspect, and we want to make sure that we’ve got the right amount of labor and proper scheduling to do the job right. We have an internal productivity formula that helps us benchmark each branch’s service operations to see how we’re managing our people, and we compare each branch’s results to the others every month.”

The benchmarking Sullivan mentions is a critical piece of the company’s success. To manage its rapid growth, the company’s management team stresses consistency across all branches and the creation of efficient processes. Katy Chandler, director of process improvement, joined the company eight years ago to implement and oversee many such operations.

The business is centrally administrated from the Farmers Branch headquarters, but each location is responsible for its own sales, service and installation operations. To maximize efficiency, the company emphasizes consistent language on work tickets throughout the organization. “It’s a little thing, but it helps us keep track of everything across each branch and know how to identify problems for customers,” says Chandler.

“I always tell our salespeople that I didn’t see too many people lining up on our doorstep today to give us a lot of orders, so that means we have to go out and find them.” – Vince Sullivan

Continuous Customer Contact

Such focus on the customer is evident in Southern Acquisitions’ adherence to its mission statement: “To be the most trusted sales and service distributor in our market.” To get a better sense of the statement’s impact on customers, a company executive visited 50 top customers. His only request was, “I’d like you to tell me how you feel we act relative to what we say in this mission statement.” He presented his results to roughly 80 employees at Southern Acquisitions’ annual kick-off meeting in January. The results were so eye-opening that every salesperson in the company now must call on their top 50 customers and ask the same question. “It was amazing the feedback we got into how the customer thinks,” Sullivan says. The initiative continues a policy of continual contact with customers, beyond just the technicians and salespeople. A program called Customer Connect requires office-based sales or service coordinators to visit at least two customers per quarter. Each coordinator must write up a report of their visit and send it to Sullivan, Chandler and local management. “We do that so that our customers know that we are deeper than just the salesperson who calls on them,” Sullivan explains. “We want to build relationships so we can become their preferred vendor.”

Of course, building relationships does involve salespeople and technicians too. “Our technicians have more interface with the customers on a day-to-day basis and have built up Southern’s credibility,” Sullivan says. The technicians are trained to identify places for improvements at customer sites—not pile up billable hours. “Our technicians are not paid on piece work or for ramping up a customer invoice. We feel very strongly about that,” Sullivan says. “We encourage them to identify safety or operational deficiencies at a customer site, and then to pass those on to our sales or customer service reps.”

To train technicians to look for sales opportunities, Southern Acquisitions sales staff periodically rides around with the technicians and points out things to look for. “The salespeople concentrate on raising the technicians’ visual awareness, indicating things like dock bumpers in need of repair or doors that don’t seal,” Sullivan says. “Then, the salespeople help teach the techs what to say about our planned maintenance programs to engage the customer.”

Chandler helped create a process to make sure the suggestions brought back by the technicians were given the proper attention. “At first, it was a challenge to circle back and let the techs know what became of the information they gave us,” she says. “Now we have a sophisticated quoting system in place that allows us to track the leads that come from the technicians. We report back to them in our weekly safety meetings to let the technicians know their work is being addressed.” Another aspect of that quoting system tracks the mandatory sales forecasts created by each salesperson. Salespeople are required to give a new order forecast on the first Monday of each month to try to predict with reasonable certainty what orders will close each week of the month. The forecast is updated and discussed each week in the local sales meetings on an order-by- order basis to track the progress. “I believe that practice has added to our sales due diligence and intensity,” Sullivan says.

Of course, new orders are hard to predict, so Sullivan and the team make a point not to put too much emphasis on the actual numbers. “We don’t beat them up if they don’t reach their forecast or for lost orders,” Sullivan says. “We’re more concerned about them putting in the front-end effort, proper record-keeping and fast follow-up. We say we can lose an order on product or price, but we will not lose it by not being diligent and following up properly and quickly with the customer. That’s become one of our sales mantras.”

Forecasting and benchmarking play a role on the service side as well. Each week, every service division rates itself on productivity and invoicing and turns in a scorecard to the corporate office by Monday morning at 9:00 a.m. “They know what their break-even point is, and they know what their expense-run rate is. They have an easy, predictive method for knowing their projections for that month,” Sullivan says. “The key to the service business is scheduling, pricing our labor correctly to the scope of the work, and then applying the appropriate manpower and expectations to complete the job. We’re pretty good at predicting our earnings and our manpower needs within monthly cycles, and that’s been the formula for our success here.”

Company Culture

Coupled with that formula is a company culture that fosters a sense of camaraderie, openness and hard work. “Even though we are a market leader, we compete as the underdog,” Sullivan says. “I came in to work early today, about 6:15 a.m., and the parking lot was already full. Our people are really out there hustling. When I see that, it makes me proud and I just think, ‘Not too many people are going to be beating us today.’ I always say to our salespeople that I didn’t see too many people lining up on our doorstep today to give us a lot of orders, so that means we have to go out and find them.”

Southern Acquisitions prides itself on its open-door policy. For example, the company announces its business plans and results at an annual kick-off meeting in front of employees, customers and selected guests. Virtually everybody on staff, from customer service to those answering the phones to credit and collections people, have a variable compensation based on the company’s success and the individual’s functional performance. “We’re pretty transparent in terms of sharing information about how we’re doing as a company. We share more than most privately owned companies,” Chandler says. “Everyone has ownership over how they contribute and how their performance impacts the overall company, and that openness helps build a culture where people are motivated to contribute.”

With that mindset and work ethic in place, good things are ahead for Southern Acquisitions. Ten years after founding the company with opportunities for acquisition and organic growth, the strategy remains the same. “There are a lot of undercapitalized dock and door distribution companies out there, many of which don’t have succession plans,” Sullivan says of acquisition opportunities. “We remain always acquisitive within our own markets and on a contiguous basis looking for businesses to acquire.” In May 2011, Southern announced the acquisition of the Overhead Door Company of New Orleans, a 67-year-old business in Louisiana. “The Overhead Door Company of New Orleans has great market recognition, brand name and employees. We have relocated a senior manager from our Virginia location to lead the division and integrate it with our practices and business systems,” Sullivan says. “We have high expectations for this market and are expecting this to be a great addition to the Southern team.”

In terms of organic growth, Southern Acquisitions established a three-year Operational Improvement Program with identifiable goals in each functional area: sales, operations and administration. “We feel that this program will further improve our performance based on its concentration on service revenue improvement and end-user penetration,” Sullivan says. “We are halfway through our program timetable and have made significant gains. Our program status is updated in a quarterly newsletter that goes to every employee, in which they see their respective division standings as compared to all other Southern Acquisitions business units.”

As to be expected from a successful operation like Southern Acquisitions, it’s always on the lookout for improvement. If the past is any indication, that formula for success will continue to reap rewards.

Find the article here at The MHEDA Journal.

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