Buying an established business instead of starting one from scratch can be very enticing. After all, it allows for quicker entry into the market and comes with benefits such as a solid customer base and access to trained employees.
That said, acquiring an existing company isn’t exactly risk-free, with common hurdles ranging from having to make a sizable upfront investment to discovering hidden issues.
For Dallas-based entrepreneur Ernest Cubit, who acquired A&B Aluminum and Brass Foundry in 2020, the challenges were more unusual. Not only was he new to the metal casting industry, but three months after the acquisition, the pandemic set in. This is when Cubit’s decades of managerial experience paid big dividends.
eWay sat down with Cubit to talk about the ups and downs of his journey and how he plans to triple the size of his company over the coming years.
How did you end up acquiring A&B Aluminum and Brass Foundry? And why metal casting?
My wife and I bought the business. It was the first time we ever worked together. I’ve only been in metal casting for three and a half years since we bought it, and the business has been around for 55 years. It was up for sale, and it was something we thought we could grow. So far, it's been an interesting ride.
I worked in heavy manufacturing before. Metal casting is very different but not as complex. At the time, I was looking at doing something different. I had done corporate America for over 34 years and worked for various firms throughout that time, mostly with large companies that were greater than a billion dollars in revenue. I only worked for one small company for about four years.
How did you come across the company?
In the US, we have several listing sources that people can sign up for. And these listings normally are for businesses that people are looking to get rid of. I get daily notices about different businesses that are up for sale, and it doesn't cost anything to join.
But you have to understand yourself if you want to go down this path. You’ve got to get a handle on who you are, what you have to bring to the table, and what you're willing to do. Entrepreneurialism is a big responsibility; it’s a big leap. Even though I was in the corporate world, I was in leadership roles most of the time. When you're in leadership roles, there isn't much of a difference. You’re still losing sleep but for yourself.
Did you expand the company in those three and a half years?
We’ve grown the company by 20% so far and we're looking at other acquisitions. This was the first company we bought, but it wasn’t the first acquisition I’ve ever made because I worked with large corporations, and we used to do it there too.
With this company, we took over all the assets, employees, factory, and customer lists. On any given day, we have about 10 to 15 full-time employees. Customer-wise, we’re turning around 200 to 300 customers throughout the year. But the people we reach out to are probably about 2,000 to 3,000 a year, mainly through email campaigns.
What helped you to grow the business by 20%?
All of it really comes down to customer service. And that's why we’re using eWay, to help take that to another level. It comes down to being responsive and conscientious when you're talking to a client. It's hard to be consistent. It's not hard to say it or do it; it's hard to do it day in, and day out.
Most of the customers are going to tell you what they need and what isn't working. You need to be able to document that and communicate it up to the chain, and then communicate with the customer what's going on. Typically, they're going to be easy to deal with as long as you're able to communicate with them on a routine basis where everything is.
With that being said, we’ve also put together an email campaign that constantly keeps those customers aware that we’re still around. Newsletter and email campaigns help. I see them more as a nice inexpensive reminder, not necessarily as a deal maker.
If we send out an email campaign to 1,000 people, we’ll have virtually zero spam and probably a 30% to 40% open rate. Our goal is to let people know we are here. We’ve now picked up the newsletter frequency to about twice a month and eventually, we’ll take that up to once a week.
In what exactly does eWay CRM help your business?
Where eWay comes into play is helping toward customer service, particularly in the deals and project space. That’s where we probably use eWay the most, in tracking deals and tracking a deal once it becomes a project. eWay wants you to create a deal and then depending on what stage it’s at in the deal pipeline, it becomes a project.
That's part of what we’re getting from eWay – the ability to easily track deals and turn them into projects. We do use Microsoft Office 365, and it integrates with that fairly easily. Our main goal is how do we keep up with those clients as they contact us and be more thoughtful and conscientious about reaching out to them in a routine manner. I do believe the eWay CRM program can be used strategically toward realizing your goals.
Which parts of the US do you supply? Do you focus on specific regions?
We supply nationwide. But probably most of the work we do ends up being in Texas because of the sector we're serving currently, which is a lot of swimming pools and landscapes, and because the weather here is conducive for that.
A lot of people don't need products for swimming pools and the related equipment that we do in a [cold] place like Chicago for example. But they’ll use them in Carolina and Florida. The effort is nationwide, and it will probably get bigger.
We mainly supply products for swimming pools and landscapes, for both residential and commercial projects. Here in the US, many people put a lot of money into their backyards. A lot of our customers are large pool builders or landscape contractors. Some of them are landscape architects and contractors all in one; they design and construct the backyard as well.
Typically, we’re going to be in areas where people's homes are greater than USD 750,000. It has to be a pretty high-end house here in the US for people to want to spend money to do what they do. So, the sector is relatively narrow.
What were some of the biggest challenges that you faced, especially after acquiring the company?
The first thing we had to do was to stabilize the company. Unfortunately, when we made that acquisition, it was January 2020, and we were in COVID three months later.
Did you regret the decision then?
Not really, I kind of knew how the government would react based on how they did to the 2008 crisis. So, I wasn't too concerned about that. What I was more concerned about was keeping my employees, how to keep them fed and keep money towing in, and how to do those types of things without breaking the bank.
That was my very issue. Because you know you’re going to get through it as long as you can stay alive.
So how did you survive this storm?
Well, we got lucky. After about two weeks, we were considered an essential business to be open. In the US, the government decided at the time which businesses needed to stay open and which ones did not. And we were an essential business as well as all pool contractors. All construction never stopped in the US. We took small steps, and by June we were back by about 80%.
We were fortunate that we were able to continue. I think our revenues were 5% higher at the end of 2020 than they were in 2019. What happened was that the number of people who were working in the backyards concluded that since they were going to be working from their homes, they wanted to have nicer backyards.
Can you tell us more about the 3D printing service that you offer? Did this come with the company, or did you introduce it?
We introduced it. It’s several types of 3D printing. One of them is where you take an image and convert it to some type of 3D object as you’re going through the design process. The idea was for me to go out and find outside suppliers and contractors who could develop 3D for us. The reason why I wanted to go outside was because the technology is still moving, and it didn't make sense to invest a lot in the equipment unless you’ll be using it every day. We don't use it every day. We probably use it every month.
Has demand been increasing for these 3D printing services?
Yes, it has and the reason that demand is increasing is because of the speed the technology offers. You can create a lot of things in 3D and use it as a template for clients to see different ideas pretty quickly, and then you can decide whether you want to take these ideas to the next level of production.
We do green sand metal casting. So, what 3D does is it allows us to create a pattern with the client in mind, and from that pattern, we can cast what they want. It helps you develop a prototype for that pattern, see if the client is pleased it with, and if they’re not, it’s inexpensive to destroy that prototype and create another one. And they can go back and test several different things relatively inexpensively.
Quite a bit is already addressed on the drawing before it ever starts. Quite a bit is already figured out when you look at the drawing. When we do the 3D printing, it's just small details that may not have shown up and or been as obvious in the drawing as you had originally thought. So, you figure those out and print them out again, and you can do that in a relatively inexpensive manner.
You’re clearly staying ahead of the game in this field. Does your wife actively work with you or is it just shared ownership?
My wife works with me. She has an IT background, particularly in database management, because we have something like an ERP system that’s designed for the foundry industry. She is the CEO of the organization and I’m the COO.
Anybody else in the family that is helping you?
The kids help when they can, but we pay them directly, just like outside contractors. The oldest one is coincidentally an engineer in material science. He’ll help when he can, and so will the second child who has a finance background.
How do you see the business in 10 years?
In 10 years, I want us to triple in size. If we could do that, it would be pretty good. That's our real goal, how do we grow it and keep it going, turn it into something that’s very strong and reliable, and have fun while we’re doing that.
Has this experience encouraged you to consider other opportunities or acquisitions?
We’ve created a sister company – an online retail business called The Metal Casting Store. Because most of what we sell is for other businesses, but we do have people occasionally who want the retail side of the product, so we’re going to be pushing more on the retail market next year. That business has been formed; it’s a complete startup from scratch. That will be an organic growth to help augment what we already have. So, we do see other opportunities that fit nicely with what we do now.
Would you say running a business is a different experience from anything else you’ve done in the past?
No, it’s similar in many ways. I would say it's about 80% or 90% of what I was doing before as far as responsibilities. The only difference is that you're the owner, so the buck stops with you. But most of the things I was dealing with before were the same – I would come up with new ideas and ways to approach the business. I’d have a team of anywhere from 20 to 200 people working for me.
When you're a general manager or vice president running the business, all the responsibility falls on your shoulders; it doesn’t go to the CEO, it comes to you. You’re normally executing your idea, and when it hits the snag, you normally know most about what's going on. So, it wasn’t a lot different from what I’m doing now. The revenues were different. Where I was before, the smallest revenue was USD 5 million. But that’s because they were established companies.
At this stage of my life, I’ve been leading for a long time. For a lot of people who have become entrepreneurs in their 20s or 30s, they’ve never done this. They don’t have a clue because they weren’t given that responsibility at a relatively young age, so they learn as they go through it.
Amidst all the pressure of running a business, what keeps you going every day?
When you have employees, you have some responsibility towards them that you have to be willing to absorb. And then you've got responsibilities to put food on the table for your family and the lifestyle you have.
The other thing is, you’ve got to be willing to go have fun and learn and do different things. That's where I think the business lends itself, in that it hits all three categories. There's always something going on, always something new.
I personally wanted to reduce my amount of travel. I was able to do that significantly and just focus on the business at hand, enjoy my home, and the area around us. Previously, I had been traveling quite a bit on the plane. Now, my company is only 25 minutes’ drive from my home. So, it grounded me quite a bit, which was a good thing.