When Donald R. Simon founded Contractors Steel Co. in 1960, his goal was to provide fast service. To accomplish that goal, Simon invested $25,000 and hired just three employees. His first year in business, the steel service center had sales of $300,000. Forty-six years later, Simon’s goal remains the same, but Contractors Steel employs more than 300 people and posted more than $200 million in 2005 revenue. Smart Business spoke with Simon about Contractors Steel’s start-up and how he is continuing to grow the company.
Start small.
When we started the company, we didn’t have anything. I invested $25,000 into the business. I bought 25 tons of steel, a used truck and a crane. That’s how we started.
The challenge at that point was just surviving and seeing if we could make it through the first three months of a business based on the fact that we started so small.
Spread the word.
We’ve been in business since 1960 here in the same location. We’re pretty well-known here, but at the beginning, we had to use all kinds of advertising. I was the salesperson, and I went out and called on hundreds of thousands of people.
Once we got going and once people understood exactly what we were and what we could do, it got around that we were a good company, and we could handle people. Your name just gets around through referrals.
Expand into new areas.
We’ve already attempted to expand a number of times. We had ads running in steel magazines that [said] we were interested in expansion if anyone was looking to sell.
It’s a small type of expansion —we’re not buying any $20 million or $50 million companies. We look to expand into two different states on a small basis and then build from there.
We can’t just let all of our eggs lie in Detroit. We don’t know where Michigan is going to be going. We want to diversify.
Make cautious acquisitions.
We look at everything. We look at their finances.
We look at what they are selling. We talk to their people.
We do our due diligence to make sure that this is what we can support and work with. We look at the management end of it to make sure that those people are cooperative and looking for the same things we are.
Look out for your employees.
The key to a successful expansion by purchasing another company is personnel. Bricks and mortar are something that anyone can get or buy.
Personnel is what you need. We are looking at their employees to run this business and give them an open hand to do what they feel they can do the best.
We would oversee and we would add financially and support them any way we could in order to make them a better company. And then we would build on that. Someday we would add to what they already have to make ourselves more of a factor in their market.
Right now, we want to buy them and leave them alone. Let them do what they can do.
If they need support, then we will be there, but in the beginning, we like to think that they know better than we do how they run their business and how they have to handle themselves with their customers.
Provide exceptional service.
Without good service from the beginning to the end, you can forget success. We have been using just-in-time service since 1960. If you want to grow, you had better have good service, or you’d better look for a new job.
We, as a company, will ship steel any time a customer wants it. If they want it delivered at 12 at night, we’ll do it. If they want it on Saturday, we’ll do it. We do what the customer wants.
Service is something you got to give your customers. Everybody has the same product.
The only thing that distinguishes you from someone else is how fast you do it or the services that you provide that they need. We try to get every order that we have out the next day. You have to be just-in-time all the time.
When a customer says, ‘Hey, I need to have this at this time,’ you have to get it there. Without being service-oriented, you might as well cash your chips in and go somewhere else.
Plan for the company’s future.
I have very good people working for me and have had them for years. A good percentage of our employees have been with us over 20 years. I’ve had [employees stay for] over 30 years.
I’ve got people here who are chief operating people, chief financial people, managers and superintendents who have the responsibility of running this business. My role right now is I just oversee it.
If you don’t have good people by the time you’ve been in business 47 years and you don’t have people who can take over when you retire, you better look for something else. The people that work for me are active, upfront people, and they basically run the company with my direction.
HOW TO REACH: Contractors Steel Co., (800) 521-3946 or www.contractorssteel.com
