He had already spent 17 years in the metals business, but with the economy still digging out of a recession, it was a dangerous time to be venturing out on his own.
“Let’s say I had some trepidation,” Ferguson says. “But I felt good about my customers. They were behind me. Even though they had been doing business with the company I was representing, they made it quite clear they were doing business with me no matter what name I worked under.
“When we did make the jump, we were able to take all the business we’d previously had and really expanded on it.”
Twenty-four years later, Ferguson Metals has survived two more recessions and last year posted revenue of $42 million.
Smart Business spoke with Ferguson about how to survive during hard times and why education has been the backbone of his business.
What is the biggest issue facing a company trying to grow?
You’re always going to have the problem with financing. You have to make sure your growth stays within your fiscal means.
That’s difficult because most of the time, you’re using leverage, and you have to be very careful. You have to be aware of market conditions and not be in the position where you’re too light and not able to cover yourself.
The first time you’re guiding the company and the country goes into a recession, that’s when you really see what you’re made of.
How do you handle recessions?
We weathered (2001) particularly well, but I think the reason for some of that was the ability to get through the recession we had right around 1990 when we were doing an expansion project. While you’re doing the construction, you’re borrowing.
Even though this place was not operational, we still had a payment to make. And everything was taking longer than anticipated. That made it difficult.
How can a company continue to grow during difficult times?
You have to ask, ‘Who are the major players? Who are their subcontractors?’ You break all these things down and go to what I would call the hot businesses, where the quantity is good and the markup is nice.
That’s key to what we do. Knowing the demands our customers have, and for what products and services.
How do you continue to grow Ferguson Metals?
Word of mouth is big. Over the last seven or eight years, we’ve adhered to the Malcolm Baldridge theory, which is the highest award of quality in this country.
We call it the roadmap to excellence. We feel if you are the best at what you do whether you’re in landscaping or playing baseball - if you’re the best, you will be recognized and have business because people want to deal with the best.
How do you attract and retain employees?
The normal way is to ask for referrals. Depending on the position we have, certainly we try to find acquaintances of people who already work here because they know we give them cash if the person works out.
They also know it’s a direct reflection on them, so they are very careful in who they recommend.
In terms of retaining, we have a liberal tuition program. Each and every person that works here for six months is entitled to a minimum of $3,500 a year in college tuition or training dollars.
We’re saying to people, ‘We value you. We’re committed to the process. If you’re committed to the time, we’re committed to the dollars.’
I’m a firm believer that with education and direction, people are able to achieve things they never thought they could before.
How has educating your employees benefited your company?
If I see something good, I steal it. One guy I know was talking to a buddy of his and knew this guy did a lot of training.
He was spending $8,000 in training. He said, ‘You’re spending all this money on training, what happens if this guy decides to leave?’ His buddy said, ‘What happens if I don’t train him and he stays?’
Think about it. I think we’ve raised the bar for our employees. We’ve raised the bar on things for them to accomplish. And that’s good. I want smart people around.
HOW TO REACH: Ferguson Metals, (800) 347-2376 or www.fergusonmetals.com