Manufacturing, Marcellus & Money
Filed under: Marcellus Shale, Profitable Growth, Utica Shale
The Shale Gas Boom is Kicking BTU!
What’s new in the shale gas business? Gas prices have inched up and no drilling-related seismic disasters have happened just yet. However, the overall impact of labor shortages, safety needs and environmental regulations are creating problems that smart manufacturers are leveraging into opportunities.
Ever since ISNetworld (a group that assists companies and organizations with contractor and supplier prequalification, management and monitoring) became the dominant third-party data administrator helping Tier 1 companies hire better and more intelligently, there have been higher standards for hiring skilled workers. Unfortunately, there is a growing chasm between the needs of the employers for skilled laborers and the capacity of the local workforce to fill the openings. Those manufacturers who have superior workers are booming.
There is also a growing rift between the creators of environmental, workforce and healthcare regulations and employers who worry that if they ask regulators for clarifications, they expose themselves to audits and out-of-court settlements. This, in turn, is causing an opportunity for third-party providers of information to create a shield for wary employers from overzealous regulators. “Safe” regulation counseling will be a growth industry.
Here’s news of how the shale gas sector is progressing and what new opportunities are emerging:
- Distributors and trucking firms serving stores and gas stations are shifting some of their capacity to serve gas well sites by directly supplying them with food and other commodities. What can you sell directly?
- After grousing why his lunch wagon business could not break into serving well-paid workers, an owner found his simple answer. The customers prefer their “Community Coffee” brand (which is an energy industry favorite from Louisiana) instead of his local Pittsburgh coffee. Upon switching to community coffee, his business is back on track. What can you sell homesick transplants?
- As more Compressed Natural Gas (CNG) pumps sprouting up at manufacturing sites to refuel converted vehicles, several companies are fabricating CNG tanks to be placed on vehicles to extend their driving range. What else does a CNG vehicle need?
- At every step of the way western Pennsylvania’s and eastern Ohio’s labor the shale gas boom is exacerbating already scarce labor shortages for open jobs. Employers are finding that seeking welders at fast-food–level wages has gone from difficult to impossible as they are competing for this skilled wage earner against $50,000-$70,000 permanent jobs. Who is stalking your company for your skilled workers?
- Those in the temporary staffing fields are finding that their customers are asking for shorter temp–to–hire periods so they can get these workers health care and other benefits. This in turn is causing smaller manufacturers to have to stay under 50 employees so they can avoid the Affordable Care Act ceilings and circumvent providing health care altogether. Are you scaled to stay below the radar or on the radar?
- Safety continues to be a dominant demand of buyers throughout manufacturing companies and all those in the shale gas supply chain. Tier 1 Companies are demanding safety experience, programs and clean records from Tier 2s and Tier 3s. Is your firm MSA compliant?
In sum, the shale gas boom will continue to spin off its economic benefits. Customers will demand more capability and capacity in terms of people, transferring of risks, controlling of costs and the reporting of safety information. The energy business has centuries of experience confronting risks, avoiding obstacles and getting their business done. How can your business participate in helping those already in the gas industry to get their work done through your resources, energy and business savvy? Start thinking….
Three Key Signs Your Shale Gas Opportunity is Growing
There’s an old saying, “It takes 20 years to become an overnight sensation.” Our confusing shale gas opportunity is a great example of this. Every day we hear “shale-chatter rants” on low gas prices, nagging environmental concerns and passive-aggressive government resistance; it’s easy to dismiss the opportunity. But there’s no doubt of three new signs of progress and many local firms are seizing their days now.
Here are the three inarguable signs and examples of local business exploiting these:
* It’s a Demand-Side play: Additional polyethylene Cracker plants are coming.
* Anticipated development of midstream pipelines: The Pittsburgh Airport signs a $500 million shale gas lease.
* Conversions to gas: Giant Eagle announces they will put compressed natural gas pumps in Get-go stations.
So what’s the good news and what does it mean?
* It’s a Demand-Side Play: Until domestic gas prices rise, gas is most valuable when it’s used near where it is extracted. And this is bringing good news daily to WPA. Up to two more polyethylene Cracker plants, beyond the one proposed for Monaca, are anticipated to be built in the WPA/OH/WV shale corridor. Each one of these plants, according to Mr. Jim Roddey, can create up to an additional 100 vendors-companies who will open locally to serve them.
* Anticipated Development of Midstream Pipeline: Consol just purchased the Pittsburgh Airport’s gas rights for a $50 million fee and royalties of up to $500 million. They know that pipelines will be built to justify their investment. What will the airport do with their windfall, which must be spent on airport projects? Beyond the expansion of the business park, there is talk of building a mass transit line between Pittsburgh and the airport. This will create many jobs, supplier opportunities and economically develop the corridor.
* Conversions to Gas: Giant Eagle is preparing to install compressed gas pumps in all their GetGo stations. Their bold move, plus that of independent players like Cleopatra Resources, is proving that the transition to wide-scale local consumption of WPA-drilled gas is underway.
While it hasn’t yet been 20 years whereby we can expect the shale gas boom to become our overnight phenomenon, our good news is undeniable. How can your firm take advantage of the short-term swell in those developing ways to consume gas locally? Put some thought into it. There must be at least one way!
Your Piece of the Marcellus Pie: Three Signs Your Dessert May Be Ready.
Filed under: Business Growth, Marcellus, Marcellus Shale, Pittsburgh
At this point, you know where to point your business to put food on your table. You know your core customers and target markets and can read the signs that tell they will or won’t buy more from your firm. For example if you:
- Sell technology to early-stage companies, you’ll pounce on those who get venture backing.
- Are in the building trades; you study the Dodge reports to see which owners and contractors are bidding jobs and work to get approved as a small or minority-owned business.
- Target the federal government, you are GSA and military-spec approved and watch what Congress is funding.
But now there’s all too much talk about the Marcellus and Utica Shale opportunity. If you’ll think of your core business as your “steak” consider the emerging energy sector as your “dessert.” While it won’t sustain your business it would be a very nice way to supplement your main “course.” So, what are the signs that its time to pounce? How do you approach this trillion-dollar segment especially when your services or products aren’t a neat fit with what gas drillers, landowners or energy companies buy?
First, here’s a quick review of Shale Gas 101. Watch and mimic the owners who are successfully targeting energy industry suppliers — and those who supply their suppliers, for example, trucking companies and those who supply their trucks. For more of a brush-up, visit www.marcellusshaleboom.com.
Here’s the next step: Learn the key signs when your business should pounce on its Marcellus or Utica opportunity? With gas prices down and environmental concerns up, what are your leading indicators that now’s the right time for your business to enjoy its just Marcellus desserts? Here are three signs (of many) that I’m seeing that might apply to your business.
1. Find Your Catbird Seat. Medium and small technology firms who can aggregate content and deliver it over the cloud are thriving. By exchanging information between “Tier 1’s” (CONSOL’s) and their Tier 2 and 3 suppliers, these firms are adding value in the safety, environmental, HR and any other field where compliance and record keeping is imperative.
a. Your Sign to Watch For. Watch for where and how the Tier 1’s are creating MSAs (Master Service Agreements) to manage their vendors. How can you become their go-between?
2. Hype Where’s The Pipe! Despite the apparent slowdown in drilling and gas prices, midstream pipelines are being built and furthermore, Hart Energy’s Marcellus Midstream Shows grow each time they come to Pittsburgh.
a. Your Sign To Watch For. Constructors announcing pipeline projects that move gas from local stockpiles to consumers can mean business for you. Watch what’s happening in your target markets. Pipelines create countless follow-on projects and potential work for your firm. The more piping that is sold, the more likely Tier 2 and Tier 3 shale gas-related businesses will bloom for you to approach and close.
3. This Isn’t Your Father’s Gas-Guzzler! Look who’s converting their oil or coal operations and vehicles to natural gas! And coal plants are closing or converting to LNG along with schools and residences. With impending new regulations for green trucks and the need to scrub diesel trucks, more and more gas is being used for local consumption. In rural areas, there is a kit being sold to convert a vehicle into a “hillbilly hybrid”
a. Your Sign To Watch For. Look for coal-related businesses. They need your help in “converting” their businesses to serve gas-fueled customers. Remember, conversions for consumption means the gas opportunity is growing regardless of the low price of gas because businesses are using LNG here and now.
Understanding the leading indicators of how the shale gas opportunity can benefit your business may not be critical to putting food on your table. After all, if your core business has survived this long, it’s likely to prevail regardless of whenever the local shale gas industry matures. But if you look forward to dessert, then consider put some of your “energy” into learning what signs point to your firm’s growth in the energy business.
What if the Far East Ran Marcellus?
Filed under: Marcellus, Marcellus Shale, Profitable Growth, Uncategorized
What’s more frustrating? Trying to devise new products you can introduce to the shale industry or counting all the obstacles you face to grow your business? Do you ever wonder how another culture or society might tackle your opportunity and challenge in the Marcellus Shale? Two recent experiences have me thinking about this. First, I just returned from a month’s travel through the world’s business shipping channel, the South China Sea, visiting 6 countries and witnessing how China, Vietnam, Cambodia, Thailand, Singapore and Hong Kong are succeeding despite wrestling with big problems. Second, I just saw the anti-Marcellus movie, “Promised Land” which, while entertaining, paints the shale gas industry and its opportunity as absolutely evil and the good people of Pennsylvania as painfully naïve.
So I was just thinking…what would happen if the Far East had the potential windfall of a shale gas opportunity and how would they exploit it? First, here are some of my observations on my first trip to the region.
- No matter which country I visited, everyone asked me the same question, “Is America going to avoid going over the fiscal cliff?” When I asked them why they are so worried, they say all they need America to do is to thrive as this benefits the whole world. When I asked, “What else do you want?” They said, “Nothing” they said, since they believe they are otherwise self-sufficient and accountable.
- As tensions ebb and flow between the Chinese and their neighbors in this historically volatile region, every country is focused on working hard and is hopeful that the New Year will bring good luck. Nothing more. Nothing less.
- The region’s economic winners, Thailand, Singapore, Hong Kong and China, succeed within tightly structured systems and under autocratic leadership, and yet their people yearn for the freedoms of choice, entrepreneurship, religion and lifestyle we take for granted here in the US. They don’t believe they have what they want so they make the best with what they are allowed.
- Whether it is truth or urban legend that the Chinese word “crisis” is a combination of the words, “danger” and “opportunity,” the incredible futuristic cities of Singapore, Bangkok and Hong Kong makes one’s head spin in wonder of how did they do it?
- Singapore’s corporate leadership in sustainability with economic growth based on energy and commodities.
- Hong Kong’s capitalistic perseverance is incredible in the face of China’s increasingly autocratic heavy hand.
- Bankok’s melding of modern ways with a benevolent monarchy and traditional Buddhism creates a most attractive culture and country.
So what lessons can Pennsylvania manufacturers learn from one of the world’s most competitive and challenging regions on how to seize our shale gas day? Here are some thoughts:
- Find opportunity in crisis. Transfer manufacturing know-how from serving coal and oil producers to serving gas companies. Some of these companies, like Consol is, itself shifting its operations from coal to gas.
- Make the best of what is happening within your culture. Exploit the local consumption of gas. With low gas prices, local PA manufacturers can benefit from using gas in their operations and by anticipating the needs of energy companies to convert their coal-fired plants to gas.
- Compete. As plastic-producing plants come on-stream, how can local job shops serve them and their down and upstream supply chain?
- Use our freedom and creativity to explore and improvise. Which manufacturing opportunities can be uncovered from the shale gas millions being spent in the transportation, infrastructure and construction sectors as they benefit from the building of pipelines?
Sometimes the positive examples of far-away regions are just as motivating and mind clearing, as they are practical and applicable. And sometimes the locally painful stereotypes exploited by Hollywood can be sufficiently antagonizing as to cause positive breakthroughs.
All I know is we have a great big opportunity that the rest of the world envies and is watching how we exploit it. I look forward to helping to identify the best in the Marcellus for every manufacturer in the region!
Marcellus Is Waiting for Your Technology
Filed under: Business Growth, Marcellus, Profitable Growth, Uncategorized
With all the hoopla about the Marcellus Shale, no one has talked about the role technology has played in making Marcellus a reality. It’s time someone did.
The fact is, without technology, the opportunities Marcellus has spawned would never exist. In all the talk about the cracking technology that drives natural gas extraction, we’ve overlooked that cracking came as a monumental, technological breakthrough.
But more to the point. It’s now time to hone in on how you can inject your technology into the Marcellus opportunity. And the best way to do this is to understand Marcellus not as a single, monolithic opportunity, but as three tiers of opportunity—direct, indirect, and induced. Look at it this way and you can find a way to inject your technology into serving this emerging-energy marketplace on your terms.
Let’s first take a look at how you can target the tier-one, direct opportunity, admittedly the riskiest of these three tiers.
In a recent conversation with the heads of supply-chain management for Seneca, Chesapeake and Range Resources, they all insisted that new vendors must first address a proven need they already have and then fill out a Master Service Agreement (MSA) before they can do business in the energy sector. Generally, a Master Service Agreement specifies generic terms like payment terms, product warranties, intellectual property ownership, dispute resolution, and the like.
They further emphasized that those vendors who stand the best chance of successfully entering the Marcellus market will:
- Focus on their Best and Highest Use (BHU). This means concentrating on what they do best, what they like to do, and what a market values and pays them for.
- Build on their customer base and not try to be a total-solution provider
- Avoid trying to grow too fast, if doing so risks jeopardizing their service levels.
- Under sell and over deliver.
One of the speakers also let it slip that if you’re going to serve the energy industry, you have to be ready to work at three in the morning, if needed, and to be on call and on-demand as if you’d been hungering for months to secure the piece of business you land
This tells me that an opportunity can exist for you to be ready to breakthrough with your disruptive technology if and when another vendor slips. That’s when you’ll most likely be able to leapfrog over any existing MSA and serve a client who needs you and will work with you.
Nonetheless, if you insist on going after the big boys, then keep reminding them of FUD–Fear, Uncertainty, and Doubt. The more you convince a purchasing agent of the downside of not solving their problem by going with your services, the more likely you are to appeal to their inclination to avoid personal career risk.
Next time, I’ll discuss the less risky opportunities in the indirect and induced tiers, where more opportunities exist for your technology.
Microseeps Enters New Markets To Spur Revenue Growth With Help From BGC
Filed under: Business Growth, Marcellus, Profitable Growth, Uncategorized
Background
Since Microseeps (microseeps.com) started in business in the mid 80’s, the company has specialized in providing niche, analytical services to the environmental and energy industries. These analyses have required technology and understanding not provided by the standard regulatory-compliance environmental lab.
Over the last 20 years, however, these analyses have become requisite procedures for determining biodegradation, effectiveness of remediation efforts and source-material determination. In fact, many of analytical technologies Microseeps uses have been integrated into federal and state environmental regulations.
The Challenge
Microseeps faced the challenge of bringing top-of-mind awareness about the advantages of its analyses to a broad regulatory, industrial and geographical customer base.
The Birol Growth Consulting (BGC) Solution
Andy Birol of Birol Growth Consulting (birolgrowthconsulting.com) helped Microseeps conduct field, market and internal company research and analysis. Following this, Tom Hill, Owner, launched a direct-marketing effort with online and off-line tactics to engage with state-approved laboratories across the quad-state, Marcellus shale footprint.
“This was a big step for our company to aggressively market to a specific, target prospect,” said Hill. “We’re excited to introduce this effort. Andy guided us to discover how we could follow our Best and Highest Use to enter this market, and take the right steps to grow our Marcellus business.”
As a first step, Andy helped Microseeps evaluate the current and future potential of its current and primary customer base–the environmental and energy markets. Customers in this market sector comprise other, environmental-testing labs and environmental and energy-consulting firms.
The study revealed a two-fold, market potential for Microseeps to tap, consisting of:
- Environmental-testing laboratories, with a market potential of $67.4 million, and
- Environmental and energy consultants, with a market potential of $324.8 million.
The second step involved developing a market strategy to expand use of the company’s analyses within its current client base and to broaden its industrial and geographical base.
Microseeps started by focusing on marketing to existing clients. This entailed reviewing how clients used the company’s analyses and dividing them into single-analysis users, single- project users, key labs and federal projects. The company segmented them further into users of compound specific isotope analysis (CSIA) and non-users.
Email, letter and phone dialogs, targeting 25 to 50 clients at a time, now outline the company’s services and its value. Microseeps tracks these efforts to evaluate their effectiveness and to monetize its successes.
The company also maintains an outbound, email marketing campaign to provide education and technical information to support the use of Microseeps services. This effort supports creating top-of-mind awareness of its services.
To round out these efforts, Microseeps has developed a shale-gas campaign replete with brochures, letters and emails targeted to prospects—laboratories and consultants– that service shale-gas development.
All of these campaigns will provide an opportunity to introduce chlorine, vapor and shale-gas isotope products as they come online.
Major Role for Inbound Marketing
Microseeps maintains three active websites. Microseeps.com functions as the primary site for the company and its services. Insituation.net is its technical and educational blog. And Marcellus-testing.com generates information on the shale-gas marketing website.
With the expansion of social media and growth in education and outreach to clients and prospects, Microseeps plans major updates to its websites in 2013. Website redesigns will focus on gathering information from the education and understanding activities of Microseeps services. Current outbound marketing campaigns will support these redesigns.
Results to Date
Thus far, Microseeps has taken advantage of low-hanging fruit, owing its Sales and Customer Service/Customer Care departments. In November 2012, the first, full month of its new marketing effort, the company generated over $40,000 in new business from existing clients. To date, sales from the shale-gas sector–Marcellus, Utica, Baken, Barnett and other shale plays– have resulted in sales of $100,000 annually.
These early results demonstrate that a focused effort had a hefty sales impact and gave management the confidence to start creating more proactive initiatives.
“With a great year behind us and our new Marcellus and other initiatives under way, I have high confidence that the coming years will continue to be some of Marcellus’s best,” said Hill. Andy Birol has been of great help not just in terms of developing our Marcellus initiative but also in helping us to refocus Microseeps on creating profitable growth for years to come. I look forward to a positive ROI on his and our efforts for years to come.”
Ten Real Examples of Western Pennsylvania Companies Making Money on Marcellus – Part Two
Filed under: Business Growth, Marcellus, Profitable Growth
In part one of this two-part series, I recounted how five companies have thrived and grown by serving companies that serve the Marcellus Shale industry. Read on to learn about five more.
Interstate Pipe and Supply, a wonderful Butler, Pennsylvania– based distributor of plumbing and water piping has boosted its business simply by following the growth of its non-shale-gas customers. These customers are growing because of the Marcellus boom.
For every dollar spent in the direct construction of natural gas pipelines, companies are spending many dollars to develop water and sewer systems for subdivisions and for septic, commercial and other piping infrastructure.
Interstate sets a wonderful example of how your customer’s growth can boost your own businesses profitability.
Campos, Inc., located in downtown Pittsburgh, is the region’s leading provider of consumer and B2B insight for corporate clients.
The firm has helped large companies learn about how customers and Western Pennsylvania consumers understand and feel about the shale-gas boom and the firms operating in this space.
By teaching those interested in the shale-gas boom, Campos has become the go-to expert and brings added first-hand knowledge and insight to those firms interested in entering this market space.
Constant Contact, the newsletter-based online marketing company, has made a concerted effort to bring experts such as myself in front of their audiences. As such I have learned to follow companies and do business with those specifically interested in reaching out to audiences I speak to.
Constant Contact shows how fruitful it is to provide local audiences with information on Marcellus to help them make money.
Jamestown Coatings Technologies, in Jamestown, Pennsylvania is a specialty-coatings company with technologies that attract firms whose metal products are challenged to perform to higher levels under harsh conditions found in the energy sector.
Michael Walton, the fourth generation of his family to lead the firm, has done a wonderful job of focusing and adapting to changing environments to make sure his family business continues to grow as it sees fit and to remain independent.
Multiple Western Pennsylvania chambers of commerce and small business development centers like the Sharon, Greene, Washington and Westmoreland Chambers and the Riverside Center for Innovation have invested in speakers like me to educate and inform their members.
They’ve learned that charging for educational programs reaps far more value than offering knowledge for free. Doing so ensures greater commitment of their members to growing their Marcellus businesses.
It’s easy to see that companies of all kinds are starting to grow their businesses through the Marcellus shale, even if they have no specific knowledge of the shale-gas industry.
What distinguishes them is their courage and forward-thinking approach to growing their business.
So what’s holding you back?
Ten Real Examples of Western Pennsylvania Companies Making Money on Marcellus – Part One
Filed under: Business Growth, Marcellus, Profitable Growth, Uncategorized
The only thing more authentic in Western Pennsylvania than doing business with locals is our love of hunting and the Steelers. And when it comes to something new like Marcellus and positive proof that the shale-gas boom is generating results for businesses, it’s important for me to talk about companies you know, buy from, or whose owners you live next to.
So let me invite you, in Part One of my Dynamic Business column and in Part two in the next issue to review ten of my client companies making money because of the Marcellus Shale gas boom. Doing so will reveal ten different ways to create growth for your company.
General Products and Supply Inc., based in Export, Pennsylvania and known as a custom formulator and industrial supplier of cleaning supplies, has learned how to balance its energy-based, customer growth while serving its current, non-energy customers.
Creating separate efforts to serve these two markets has given General Products the stability and independence that results from diversifying customers across two, separate markets.
First Niagara Bank recently debuted a Marcellus Shale Roundtable series featuring exclusive content in an intimate, owners-only environment. First Niagara knows that owners need help to develop and implement growth strategies with the support of a peer group and expert advice.
Microseeps, a Harmar, Pennsylvania based specialty laboratory, offers advanced tools for groundwater testing. The company has grown its business by selling to direct, indirect and Tier 3 companies.
The customers of Microseeps want to know more about the efficacy of the groundwater in the land they work on or live on. They also want to be aware of any impurities in the groundwater and the sources of these impurities.
Microseeps has done a terrific job of becoming the go-to third party by setting technical standards to help define water quality for their customers.
Menard USA, in Bridgeville, Pennsylvania, operates as a specialty subcontractor that provides ground-improvement services through its continuous modulus columns. These columns enable more efficient use of steel foundations and ultimately, the land itself. 
Menard USA has branded and differentiated its business to grow its margins. Specifically, the company has developed a series of educational Geo–Seminars to demonstrate to prospects and customers how their products outperform pilings.
WK Thomas, a construction-services firm in Butler, Pennsylvania has done a remarkable job of studying customers’ buying habits and of refocusing its offerings and services to meet new demand.
WK Thomas has grown its business dramatically by understanding that their steel-building business attracts companies interested in quickly erecting buildings to establishing physical presences in Western Pennsylvania.
What sets these companies apart is the ability of their leaders to recognize the value of serving companies directly involved in Marcellus drilling.
Regardless of Marcellus, WPA’s Small Businesses Are Still the Best Game in Town
Filed under: Business Growth, Marcellus, Pittsburgh, Profitable Growth
Ponder WPA’s small business history and prognosis before Marcellus. Pre-1980, Big Steel and other corporations paid big and fast–in 30 days. By doing so, big business financed their small-business suppliers’ growth and success. But in the early eighties, steel’s meltdown soured Western Pennsylvania’s economy and delivered the main blow that knocked small businesses out of their comfort zone.
Then, in 2007 the Great Recession challenged the very survival of small businesses as credit and demand dried up. Many survived, only by financing their big businesses customers in settling for payments up to 120 days. Fast payments by big business customers became a fond memory.
To cut their costs, big businesses started purchasing through third-party buying groups, further squeezing small-business’ margins in return for guaranteed, if only break-even customers.
To cut costs further, large businesses have outsourced functions. One employee now does the work of three and forces his small businesses vendors to work more and harder without getting paid for extra service.
In response, WPA’s small businesses have indulged their customer bases by providing too much value for the money and avoiding high-risk debt and expansion beyond low-risk, opportunities with existing customers. Deprived of margins for their extra services, too many small businesses have abandoned differentiating themselves to save thin profit margins. They simply don’t charge for needed research and development or for product or service customization. Consequently, small businesses have settled for “safe,” predictable results and abandoned selling and marketing high value for the money.
And now, the Internet has fulfilled its potential, enabling big companies to buy ever-cheaper goods and services worldwide. This has further disadvantaged small businesses. Finally, nonprofits and government entities, who, apparently view small businesses as merely their funding source, continually pressure small businesses to give, give, give regardless of what they need to survive or reinvest. Small businesses must do well before giving to do good.
Social responsibility and the green economy makes sense, but can’t substitute for small-businesses’ need to exchange real value for real money. Social entrepreneurism has never substituted for paying customers.
Going forward, WPA small businesses will succeed only when it exchanges its differentiated value with customers’ money who need them to solve their problems. Thereby, they can operate independently of large corporations, non-profits and government entities.
Small businesses can abandon serving big business at any cost, and serve customers who value their expertise and experience and pay a fair premium in return for these values.
They are free to rely on themselves and extend their comfort zones beyond serving only existing customers with under-priced, guaranteed products and services.
On this new path, small businesses are running on higher margins and charging more for improving the conditions and outcomes of their customers, especially the bigger bullies. Small businesses now offer charity and pro-bono services to those who value and honor it rather than demand and devalue it.
As the economy improves, small companies are hiring, investing, and thinking in terms of years not months. They’re running on lower credit lines and avoiding financing their customers. Hopefully gone are the 100-plus days of average accounts receivable. And small businesses are raising prices on unprofitable customers.
Small businesses know that the goodwill they’ve leveraged with larger companies may be fully depreciated. The big businesses they’ve served have declined, micromanaged as they are for high-volume sales and low margins.
Company buying behavior has also changed for the better. Customers now expect to pay more for what’s related to energy and transportation and for services tied to these sectors. Charging for these services shows that the worst is past, and that small businesses can take positive steps to succeed.
The key to further small-business growth is realizing that value is dynamic, not static. It matures and declines over time. It’s up to small businesses to fulfill customer needs as they emerge without relying on outside forces to improve their condition and to immunize them from value volatility. And that’s without even considering our impending trillion dollar Marcellus windfall!
Marcellus Lesson 6: What Can You Do Until Marcellus Heats Up?
Filed under: Business Growth, Marcellus, Pittsburgh, Profitable Growth, Uncategorized
When was the last time you’ve heard the old adage, “It takes 20 years to become an overnight sensation?” Lately I have been feeling this snappy line really applies to the Marcellus Shale boom! The inflection point when Marcellus really takes off won’t take a whole generation, but whenever the shale boom explodes, it will probably surprise many of WPA businesses just as any overnight success would. So, if you take this attitude, I suggest that waiting for a clear sign of when to invest your time, money and energy to grow your Marcellus business is a waste of your time and passion. Why? Because, just like all the breakthroughs we dream of and love to see, they never come exactly when or how they are expected.
For every positive sign like the new $1 billion Shell cracker plant, there are equally dismal predictions that the price of natural gas will never rise to make it profitable.
But I am an optimist (and there is far more evidence supporting an inevitable economic boom) so, as in all other parts of our lives, let’s be realistic and accept that we can never control the timing or the actions of others, but we can control our planning and our reactions to an expected boom.
So what reactions to an uncertain timing of the Marcellus Boom can we as business owners plan and control?
We can be deliberate in our planning and execute our intentional reactions, which, we should be doing anyway! So, if you want to know if you should grow your business when the shale gas boom hits, please ask yourself the following questions:
Do I have experience doing business in WPA?
- Do I need to find new markets and customers to grow my business?
- How many new customers have I met and sold in the last three years?
- Has my business reinvented itself under my leadership?
- Have my employees and I changed responsibilities and accepted new duties in the last five years?
- What new expertise have I recently gained in selling to the energy sector or any new industry?
I believe that energy money flowing into the WPA economy can mean opportunity for my business. I am growing convinced that the timing and the nature of the opportunity is not the real challenge that we as WPA business owners face. Instead it has much more to do with whether we can seize the moment, will we seize the moment and finally how will we seize that moment? Having these questions answered will make Marcellus work for you and your business, whenever it comes and whatever it looks like.
