They've grown over six generations from a row crop farm in far northeast Nebraska into a modern example of green, sustainable agriculture, tripling revenues since 2000 under the leadership of family patriarch Doug Garwood (pictured). And now, Cardinal Farms, a family-owned agricultural firm in Dakota City, has been named the Cornhusker State's Small Business of the Year for 2014 by the Small Business Administration. The company, run by Garwood, who serves as president and chief executive officer, and his son Scott, who serves as vice-president and chief operating officer, last May used an SBA loan to help finance a new $1 million fresh fish production facility.
Cardinal Farms was chosen as the state’s top small business based on its history as an established business, growth in number of employees, increase in sales and unit volume, response to adversity and innovation in products and services offered. They were nominated for the honor by Loren Kucera, Director, Nebraska Business Development Center, Wayne, and have been invited to attend the culmination of National Small Business Week in Washington, D.C., and will compete against candidates from all 50 states and territories for selection as the SBA’s National Small Business Person of the Year.
As part of National Small Business Week, the Small Business Administration will take the opportunity to highlight the impact of outstanding entrepreneurs and small business owners. More than half of Nebraskans either own or work for a small business, and these firms create about two out of every three new jobs in the state each year.
Cardinal Farms, which traces its family ownership back six generations to 1868, develops crops on 1,400 acres of northeast Nebraska farmland, and hauls manure through its trucking operation for global food conglomerate Tyson, Inc. With six full-time and six seasonal employees, they also offer pesticide-free, home-grown tasty tomatoes and cucumbers grown in its warm hydroponic greenhouse for sale in grocery stores throughout the Siouxland area.
The family business took a big step forming Cardinal Farms Aquaculture in South Sioux City, using an SBA 504 loan to purchase two enclosed systems of six 10,000-gallon fiberglass tanks each with a capacity to raise some 20,000 tasty Barramundi sea bass up to two pounds each to be sold to restaurants and grocery store in the area—and beyond. The goal is to expand to 24 fish tanks within a few years; the facility will add three additional full-time employees to the company workforce.
The 504 Loan Program provides approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization. These loans are made available through Certified Development Companies (CDC), SBA's community-based partners for providing 504 loans. This program calls for the participating lender to provide half the financing, with the SBA offering 40 percent of the costs financed through the CDC to help economic development, something Garwood strongly supports.
Garwood founded and presently serves on the board of directors of Siouxland Ethanol, where he developed an idea to help save the environment and provide fresh, Nebraska-grown fish. Two years ago, Garwood announced a partnership with a Maryland-based company to use cow manure and leftover grain sorghum from area ethanol plants to create algae. Using only sunlight as the energy source to create it, the algae would be used to make biofuel and feed the farm fresh fish.
“This unique enterprise will supplement the fresh fish market,” Garwood said, “which we believe is growing and underserved locally. There’s real potential here and a demand well outside the Midwest. Since our system is reliable and operates year-round, as opposed to an open-air pond, we can offer consistent taste and quality with our fish.”
“This is our home. This is where my children and grandchildren have been raised,” Garwood added. “This project is about investing in our community and will hopefully contribute to both our community’s, as well as my family’s economic well-being.”
The aquaculture facility also will use sustainable techniques, capturing the exhaust from the fish building to help heat the tomatoes in the hydroponic facility, saving heating costs and improving tomato production.
In addition to running Cardinal Farms, Garwood serves on several local community service and committees and boards to promote small business growth, and was crucial in contributing to the start of College Center, a joint venture between Wayne State College and Northeast Community College in South Sioux City. The center not only gives students an affordable value pursuing an education but provides area businesses and industry a well-educated potential workforce in return.
When she was a young girl, Tracie Malesa often played a game in her family’s electrical contracting business. She and her sister often would imitate her grandparents by holding imaginary business meetings of their own, pretending to schedule service calls and typing up little invoices, just to have fun.
There’s no playing around for her these days. Malesa grew up to run Du-Rite Electric, an Elkhorn-based family-owned company that’s seen revenues climb 25 percent over the past year, and should soon expect another $1 million in growth thanks to burgeoning federal contracting work and the rising popularity of green projects.
Getting involved with federal contracting jobs
Du-Rite Electric has served local metropolitan homeowners, builders and contractors since the company was founded by her grandparents in 1958, but becoming a contract holder of the General Services Administration schedule opened the company to work on government projects creating an additional revenue stream.
“The programs were for projects to improve infrastructures, and in most of those projects, electrical work would be needed,” said Malesa, who turned to the Procurement Technical Assistance Center at the Nebraska Business Development Center’s Omaha office for certification help. “We saw it as an opportunity for a new line of work we hadn’t done before.”
Contract work will prove crucial; while the company’s revenues fell along with the rest of the construction industry during the recession, “it’s beginning to climb again,” she explained, “although we do have to do more projects now to reach the same revenue because our profit margins have decreased.”
Some of those projects include retrofitting light fixtures with state-of-the-art LED systems and other electrical projects in the Edward Zorinsky Federal Building and the Roman L. Hruska Federal Courthouse in Omaha, the Robert Denney Federal Building and Courthouse in Lincoln and the Nebraska Games and Parks Commission.
“We’ve seen a big demand for retrofitting fixtures from the traditional metal halides to LED, which is a greener version of lighting,” Malesa said. “Customers are seeing savings in utility bills as well as noticeable differences in the brightness of their lights.”
And not just for those government jobs. The company retrofitted light fixtures in a handful of hangars at a private airport in Minnesota, and did similar work for Westroads Mall in Omaha. They’ve also snagged jobs installing large exhaust fans for Planet Fitness, area colleges, the Washington County fairgrounds and several large manufacturing plants in the area.
Then there are several in-depth remodeling jobs for fast food franchises in Omaha and Fremont. “From the lighting right down to the electrical outlets to plug in the fryers,” she said.
The company continues to take on residential jobs, too. Malesa said the company has found a niche working with outdoor pools, spas and kitchenettes, sunrooms and home automation systems.
Staying competitive in a challenging industry thanks to SBA financing
“We don’t do any advertising,” Malesa said, proudly. “All business is referral or word of mouth.”
Visit the Elkhorn site during the morning rush—and it is a busy rush--and you’ll see one shift returning trucks, equipment and tools as another checks in for their assignments that day. With a grunt or two they’ll load up their trucks and off they go to job sites all over the area.
Although the company is faring well overall, there are continuing challenges in construction-related industries.
“Up until two or three years ago, once we had an established relationship with a builder, we didn’t need to continue bidding with them,” she said. “Now, with the volatility in the industry, the contractors have to do more bidding as well.” Subcontractors in all specialties, Malesa added, are dealing with more bidders for each job.
Cutting costs for the company isn’t just a smart thing to do; for Du-Rite Electric, it was a matter of survival in that increasingly competitive environment. Restructuring the company’s debt load was the first step beyond survival to thriving; for that financing, Du-Rite was approved for an SBA 7(a) guaranteed loan through Omaha State Bank (now Core Bank) in August 2012.
“We cut our interest rate, which gave us more operating income and more room to move financially,” Malesa said. And with that more comfortable operating margin, Du-Rite Electric could handle larger jobs, completing its move from chiefly handling residential work to larger commercial projects.
The loan approval did one other thing, she added.
“After we got the SBA loan, we added three apprentices who were learning the trade,” Malesa said, growing the company workforce from seven to 10 employees. “We taught them our way of doing the work and our habits.”
Growing a farm team of qualified electricians
Even finding three apprentices to bring aboard was hard. Malesa claimed Du-Rite Electric actually has had to turn down projects “because we can’t find enough qualified electricians. There is a large pool of kids not even interested in going into the trades. You talk with other people in the trades you find most of them are so busy right now they are running behind schedule. Like us, they are finding it a challenge to add qualified people to their teams.”
Malesa is doing something about that. Du-Rite Electric is working with the Association of Builders and Contractors, an industry organization group, to promote career choices for high school and college-aged young people, especially a school for at-risk kids in Omaha, to open students to the idea of pursue careers in HVAC, electrical, plumbing and other trades.
“We’re seeing if we can offer something back to the community,” she added.
Malesa, who owns equal shares in the company with her parents, left the family business for a while to work for a debt management company, but when her grandparents retired in 2006, she felt the pull to return, this time to run things. She soon brought the operation up to date, replacing handwritten, green ledger books with modern spreadsheet software. Seeking SBA financing to restructure the company debt, hiring new apprentices, and pursuing government contracting opportunities isn’t just good business, either.
“My family name is on the line here,” she admitted. “It’s rough when it’s a family business … my dad, my uncles, my brother, my sister, we’re all depending on this business. It takes all of us to get a job done. From the time my grandparents started this company, it has been through cycles of good times and bad times. If we can figure this all out and survive, we will be stronger, better and poised for the future.”
What is this female, white-collar executive doing running an electrical contracting business in Omaha? Putting a valuable reputation built from 38 years of hard work serving neighbors, architects and builders in the area together with cutting-edge ideas in efficiency swiped from the button-down corporate world, that’s what.
And the result for D&J Electric?
“We punch above our weight class when it comes to large jobs,” agreed owner and operator Lori Buchanan.
'Does it feel right in our heads and our hearts?'
When Lori and her husband Jay searched a year ago for a small business to purchase, they discovered this small company tucked in a neighborhood southwest of 60th and L. Didn’t matter that they were a little out of the way; continual referrals from contractors and business owners familiar with the work of their skilled electricians filled D&J Electric’s schedule with remodel and restoration jobs, from multi-story office buildings, warehouses and restaurants to retail space and apartments.
Quite a bit to step into for Lori, a corporate human relations specialist, who left a leadership position with Mutual of Omaha in employee engagement and talent management for the challenge of running a small business. Jay left his job as director of global supply chain and logistics for Nebraska Furniture Mart to join her.
“Jay and I always have enjoyed talking about businesses, thinking about business and reading about business,” Buchanan said. “As we looked around for a business to buy, we sought one with a sustainable pipeline of work, asking ourselves, ‘are they in a good place, are they making money?’”
When the couple checked out D&J Electric, they found the company fit another of their personal criteria: “Does it feel right in our heads and our hearts? Does it feel like the business would be interesting and fun? You have to go a little bit on your gut instinct. And D&J had a healthy company culture, one certainly built by the owners but also by their long-term employees, too. This company has deep talent with tremendous capabilities.
Turning to the SBA to guarantee the deal
With D&J Electric’s owners ready to sell, Lori and Jay met with Omaha State Bank to lay the groundwork for a deal involving the purchase of the business’ three buildings, equipment, lift truck–and the considerable worth of the future cash flow the business could expect to generate. Then the deal hit a snag.
While the two were attracted to Omaha State Bank’s strong reputation and focus on investment in the local community’s small businesses, they were disappointed to learn the purchase would be held up temporarily as Omaha State Bank completed its merger with Centennial Bank, another locally-focused institution and the SBA’s Nebraska Small Lender of the Year for 2010, to form Core Bank. With the entire management team at Core Bank backing the purchase, all the way up to the bank’s CEO and president, they did suggest restructuring the deal under an SBA guarantee to manage around the banks’ merger activities.
Jay attended an SBA loan presentation seminar in Elkhorn to learn about the application process, and “put things in perspective.”
“We’re not a wholesaler, retailer or manufacturer, we’re in the service industry, so we didn’t have a lot of asset collateral,” he said.
“We negotiated hard on the property price,” Lori added.
Patience paid off, as the couple was approved for a 7(a) loan in August 2013 to purchase the business.
Common name at sites all over downtown Omaha
“We’re looking to be the “go-to” mid-tier contractor in the area,” Lori said. And the immediate future looks bright; in 2013, D&J Electric will report its biggest annual revenue in company history this year and recently brought five new employees on board, bringing the staff up to 40.
The company also specializes in upgrading electrical service for new equipment, often requiring advanced tech skills to improve the electrical service capacity for an entire building or that serve a single piece of equipment. They also do the brainy stuff for their clients, including job cost analysis and turning out detailed electrical drawings for design and build services.
D&J Electric is a common name at construction sites all over downtown Omaha; the biggest job for the company is found at the former Northwestern Bell Building, a multi-million job at 19th and Dodge converting the long-vacant 12-story, 380,000 square foot structure into modern, must-have apartments. Plans for the project, dubbed “The Wire,” for the 60-year old building’s history as a regional telephone headquarters, also call for commercial retail outlets on its first floor.
Then there’s similar electrical renovation work the company is doing for the four-story Fairbanks Building, the former Antiquarium, on Jackson right next to the Old Market, and a million-plus job on a renovation for a new apartment complex at 13th and Jones nearby. Add up work the company does with retail, office and large-scale apartment complexes, fast food and strip mall developers; like the “four retail stores” at the new Nebraska Crossing mall in Gretna. These are examples of our team’s deep “sense of purpose, intense focus, and performance that our customers have come to expect from D & J Electric” Jay said.
Message to their team: 'we have your back'
For D&J Electric, according to Lori, it’s the relationship the new owners have with their employees and clients which matters most of all.
“We don’t have the experience that our employees have in performing this specialized work,” Lori said, “so we do everything we can to support them so they are successful, which, in turn, will pay dividends for our client.”
Jay agreed: “Our message to our team is that “we have your back, and we support them.”
Upon taking over, they kept on the former owner as a key employee, depending on his years of experience deciding which contracts to take and which to take a pass; moreover, he provides much-needed and trusted continuity on current and future electrical contract jobs.
Then the couple met with each employee to discuss the core values and direction of the company. “Most businesses struggle without real buy-in from the employees,” Jay explained.
“We wanted to understand our employees’ capabilities and matching them with the jobs that fit,” Lori said. “There’s a real value in cross training and rounding out this talented team, because our future growth is based on the knowledge, skills and experience of our employees.”
That’s not a commitment they take lightly.
Take those five new employees. Three of them are first-year apprentices who are required to begin the educational process to become licensed electricians, and as long as those new hires keep their attendance and grades on track, the company will support these tuition expenses. Wellness and employee assistance plans are next.
There’s also a plan to put the seasoned employees in leadership positions on jobs to mentor the apprentices, giving the journeymen “ownership on a project, and real sense of challenge and responsibility,” Lori added. But there can be a problem with relying on a few key people.
“When it comes to putting people on a job, we often get ‘oh, put so-and-so on that job, he’s great at it,” she said. “That’s great, because that shows a lot of pride in the work to be the go-to expert. But we need those guys to be mentors, to bring along the whole team to learn that work, too, because we’ll need the depth. People can’t be all places at all times. If we are stronger all around, we’ll deepen our bench strength, improve our capabilities and performance. We believe the work at cross training will drive the sense of teamwork. We expect this to prove itself through the eyes of our clients and partners.”
Lori and Jay figure if they build a sense of teamwork, a culture of cross training, and bring their industry experience to guide more efficient ways of performing the company’s already strong reputation for quality work, D&J Electric will become not only a preferred employer for talented electricians in the area, but continue to improve its reputation as a high performance, quality driven organization.
After all, that reputation was a big part of the value of the business in the first place.
“At the end of the day our biggest concern is our reputation,” Jay explained. “If we’re going to have sustainable business model, you can’t live off it, you have to improve it while building that deep trust.”