A TRIUMPH OF HUMAN SPIRIT (And Business Expertise!)
January 28, 2010
Buried in a $150,000 hole, Ed Valot clawed his way back, then turned his business into one of the fastest growing electrical companies in the country. What can you learn from his remarkable story?
Ed Valot needed help, and by the end of 2004, he finally convinced the one person who doubted it.
Himself!
At times, there was no money left over for him to draw a paycheck, so Valot would do what he always did … put everything he bought on credit cards and hope to pay it off. Then there was the year he hit the mother lode … paying himself $100,000 at the end of the year. He thought he’d arrived!
But he hadn’t!
Valot had started Universal Wiring in Houston 15 years ago by doing service, but 80 percent of his business had become construction and commercial. He often worked holidays to keep up and routinely found himself chasing after general contractors to be paid up to a year after a job was completed.
A Cash-Flow Nightmare
“It was really not a good situation,” Valot said. “I would be waiting to pay my suppliers until I got paid by the GC, and, obviously, that wasn’t the way they operated.
“I realized that was not the way I should be operating, either.”
Not surprisingly, Valot’s financials were a mess. His accounts receivables were $100,000, his cash flow was a nightmare, and he was $150,000 in debt.
At the end of 2004, he attended an Electricians’ Success International® Profit Day to learn more about how the organization could help him end a feast or famine existence, create wealth and have a life outside the office.
He was a newlywed working 60 hours a week or more, and had a baby on the way. He liked what he heard at the Profit Day in Houston, joined ESI, and attended his first Expo in February 2005 to implement ESI’s management practices and tools.
In socializing with other contractors at the meeting, Valot realized he had a lot to learn.
“The good news was that I was really fired up to turn things around and make a go of it,” he said. “The bad news was I realized there were so many things I didn’t know … I had no idea how to run a company.”
Because he could not afford the hotel where the meeting was held, Valot stayed at a cheaper place a half-mile away. He walked to the meeting site each day, sometimes in the rain.
Developing A Turnaround Plan
- From those humble beginnings, ESI helped him develop a turnaround plan based upon the following:
- Improving his cash flow - The most immediate remedy, of course, was to collect his account receivables, which he undertook with a vengeance. Ultimately, he was able to collect all but two percent of them, writing off the rest. That immediate boost put him on the fast track by the end of 2005. Residential service, which would make up the bulk of his work going forward, meant he also got paid immediately.
- Pricing correctly - Because he had not understood his costs to show up at a customer’s door, Valot significantly under priced his services. He immediately adopted ESI’s Straight-Forward Pricing® Guide to increase his charges to customers. Even though he discounted these new rates on occasion, his average ticket went from $120 to $220 immediately.
- Valuing every phone call - Valot’s office manager, who answered the phones, was cranky and often acted like he was doing customers a favor by scheduling a service call. Valot let his manager go, and hired his wife to answer calls, training her through videos from The Success Academy®.
- Creating the right image - Valot’s overall strategy relied upon him not being the lowest-priced option, but the best value. To be worth more to the customer, he had to establish the right image. It would start with the simple things – shoe covers, drop cloths and uniforms – and graduate to include nicer, wrapped trucks.
- Stronger marketing - Valot immediately adopted many of ESI’s proven marketing programs for his own use and they made a significant difference in his company’s growth.
- A commitment to training - Universal Wiring made a commitment to invest in training from the academy. One of the things Valot was disappointed about was his technicians’ inability to up-sell customers beyond the immediate service call. He wanted them to look for needs beyond the call. Based upon training, the company improved its conversion rate of phone calls to service calls to 80 percent. Remember the average ticket of $120 in 2004? In 2008, it grew to $750.
- Understanding the financials - Valot got into trouble because, despite having an accountant, he did not pay attention to his financials. No longer. He now religiously tracks his financials every week, and by doing so, can identify problems earlier.
There are still business challenges today, Valot said. As his company grows, he still struggles to hire the right people, and to motivate them. But the bottom line looks remarkably different than it did in 2004.
He paid off the last of the $150,000 in debt in 2007, and bought himself a new truck and his wife a new car. That’s been the only extravagance, though. He strictly controls his expenses based upon formulas that ESI has given him.
His revenue growth has been nothing short of amazing … 30 percent, 48 percent and 45 percent in the years 2006, 2007 and 2008, respectively, with profitability between 10 percent and 15 percent. Based upon his last few years, and early results this year, Valot expects revenue to grow 30 percent to $1.7 million with a 15 percent profit in 2009.
It all began in 2004 with a never-saydie attitude, a willingness to change, and an understanding that he needed to find a better way – for him, his wife, and their family. Today, there’s Camile, 4, and Evan, 18 months.
He is 42 now, with an appreciation for where he’s been – and where he’s going.
“I learned that in this business you have to be moving ahead,” Valot said. “And if you’re not performing, you have to do something about it.
“Hopefully, sooner rather than later.”
If you would like to know more about Electricians’ Success International®, call toll free at 1-800-795-7817.
