Small businesses then and now.

The year is 1945 and a man has just returned home to Texas after serving in World War II. He returns to a strange and different postwar American dream. When he joined the U.S. armed forces four years earlier, he left a backbreaking, albeit steady, job that had seen him through the most difficult years of the Great Depression.

His first job during the Depression was heating coal pitch over a wood fire in a 55-gallon drum, mixing it with used motor oil, tearing up rags and mixing into the compound to produce the forerunner to today's plastic roofing cement.

He was making 50 cents an hour and glad to get it. Then he had a chance to go up the ladder, literally, and jumped on the opportunity to enjoy a 25-cent-per-hour increase in pay by becoming a roofer's helper, stocking slate bundles on the tops of two-story apartment houses.

This required not only carrying up the 90-pound bundles of slate to the roof edges and keeping three or four crews supplied for eight hours, but the possibly even more difficult task of repositioning the heavy, wooden 32-foot extension ladder between buildings.

At the end of the first day, the boss told him that he would have to be replaced if he could not keep the crews better stocked. The second day, the man started stocking the slate on the roofs at 4 a.m. and stayed well ahead of the roofers, but got chewed out for putting too much weight on the roofs.

He found a suitable medium between the size of the stock piles and the allowable amount of weight the roofs could hold, and mastered his new job, which eventually led to even a better job as roofer making $2 per square for installing roofing, plus even more for the sheet metal gutters and flashing work.

Postwar America

After World War II, the American construction industry and trades changed dramatically. Slate roofing had been replaced with composite shingles; simple sheet metal work was now specialized into segments such as architectural, roofing, industrial, and a new and rapidly growing segment called heating, ventilation and air conditioning, or "HVAC" for short.

So this man and his wife decide to start their own HVAC business after using money from the federal G.I. Bill for a course in air conditioning and refrigeration, and a small loan from their local banker.

Many of the small "Mom and Pop" HVAC shops of the late 1940s and 1950s had similar beginnings. It was also common for "Mom" to work at an outside job to provide income for the family during those first and often lean years.

Today, there are tens of thousands of these sheet metal shops that have endured five decades of business challenges and have developed into the foundation of the American HVAC and sheet metal business.

The changes that these "greatest generation" veterans and new business owners faced when they returned from serving overseas in the late 1940s are similar in many ways to the challenges that their offspring, who now run their shops, are faced with today. Rapidly changing sheet metal marketing, management, technology, and perhaps most importantly of all, cash flow.

A few small shops from the 1940s have grown into huge sheet metal operations and will continue to grow and be even more successful, but the vast majority of shops that started then or in more recent years and have survived are successful in their own comfortable world of manageable size and predictable income.

Capital issues

While there are a lot of very successful high-volume sheet metal operations, unless it has an exceptional amount of operating capital reserves, a single big job gone awry can destroy the company.

So where does that leave the average Mom-and-Pop shop? Let's look at the possibilities.

First, to grow or not to grow is the question. Controlled growth with minimized risk is the key. Most growth opportunities, relative to operations, are dictated by local or regional economics, market forces and competition. However, many shop owners can increase their annual volume by increasing their marketing territory.

To minimize the risk that comes with growth, several key areas, such as operating capital, must be properly managed. For example, operating-capital reserves can be greatly leveraged by buying out the full joints, fittings and connectors on large jobs. In fact, the fastest-growing players in the sheet metal industry today are the noninstalling duct manufacturers that can supply virtually every component of the largest projects with high quality and guaranteed delivery schedules. And good credit can buffer any subcontractor billing delays by offering 30-day invoicing after delivery to the jobsite.

Another key area that must be 100 percent functional is the estimating productivity values used for bidding. Misleading or erroneous estimates, especially when a company starts to bid larger-than-usual projects during a growth phase, can create difficult circumstances at best, and impossible situations at worst, even for smaller shops only seeking moderate growth. Be sure of your estimating data by continually challenging, proving and improving it.

So can Mom-and-Pop shops compete, survive and prosper in the new millennium? You bet they can, and many will. Careful growth in the early years will pay off every business day for many such shops. Nothing is going to stop them now, not economics or changing technology.

It will take more than that to mess with Mom and Pop.

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