Diversifying can save a bottom line

Filed under: Focus |

Karen and Bobbie Moore dropped in on the Colorado Springs SCORE office in 2002 to seek advice about the future of their four-year-old company, Mountain Scapes Equipment, a small-engine and commercial-equipment repair business.

The drought had severely impacted their business, and their commercial lease was about to expire. They had discussed diversifying their services and pursuing their ultimate dream of owning commercial real estate, Karen Moore said. But the two wanted guidance before they determined the next step.

“Snow blower repair was our only business in the winter, and, without the snow, we faltered during the winter months,” Moore said. “The spring and summer just didn’t carry us through.”

The couple – Bobbie Moore had retired from an 18-year career as a mechanic with Springs Transit, and Karen Moore worked full time at MCI until this summer – started their business venture in 1998 with a focus on commercial repair. They added residential repair to increase the bottom line, and Moore said the residential business eventually accounted for 40 percent of total business. However, a lack of rain in the warm months and a scarcity of snow in the cold months kept lawnmowers and snow blowers in storage sheds.

On their first visit to SCORE (free business counseling that is sponsored by the U.S. Small Business Administration), the two encountered counselors Ralph Peters and Bob Church. “As part of our brainstorming session, Ralph and Bob showed us an ad from a broker who was selling Hickman Trailers (a trailer repair and hitch-installation company that originated in the Springs in 1955), and we decided to look into it,” Moore said. The trailer repair company proved to be a good fit with their current business, and, in May 2003, a year after their first conversation with the SCORE counselors, the Moores bought the Hickman Trailer business.

“We wouldn’t have done this had it not been for SCORE, and I don’t think we’d even be in business today if they had not advised us and helped us through the process,” Moore said. “We worked independently to get everything together, including new financing, but they directed us. It was a tough process.”

The financing included a sizeable U.S. Small Business Administration loan, which covered a commercial build out. Karen and Bobbie Moore had realized their dream: to own commercial real estate. Their plan was to merge the Mountain Scapes operations to the Hickman Trailer site located on 31,000 square feet of land at 2290 S. Hancock Expressway, but the 3,100 square-foot building and part of the landscape needed work, Karen Moore said.

While they added a 30-by-30 foot showroom to the front of the building, restructured the parking lot and in Moore’s words “reorganized the entire shop for better efficiency,” they managed two sites from May to August.

Although the build-out was a huge endeavor, the Moores said the value and visibility of the property significantly improved. “Our signage is in process, and we created a new logo and a new Web site to pull the two companies together,” she said.

“They used the loan wisely,” Ralph Peters said. “When we first visited with them their situation seemed dismal. We gave them the information about Hickman Trailers and made several onsite evaluations, but we didn’t get into negotiations. Although we spent a lot of time with them, and mentored them through the process, they came out of the doldrums and moved forward on their own. I admire them, and I am proud of what they’ve done. They are young and happy and had the guts to get out and do it.”

The combined business is booming because the owners took the risk to diversify, expand and get out from under a dismal situation. The new company, MSE-Hickman Trailers and Equipment has revenue of between $800,000 and $1 million its first year, Moore said. “If it hadn’t been for the build out, we would have seen even more business growth,” she said. “But we’ve doubled our business – which was $300,000 to $500,000 the last year as Mountain Scapes.” The number of employees increased from two full time and one seasonal to five full time and one seasonal, and a couple of those employees work both sides of the business, Moore said.

“This last year has been great,” Moore said. “Business has been wonderful because we were able to balance out the two companies.”

Product diversification and, in this case, the pursuit of a dream to own commercial real estate, reigned over Mother Nature. Snow and rain may still affect the seasonal small-engine repair business, but it is no longer the sovereign measure of success.

- Marylou.Doehrman@csbj.com