He helps company find profits in niche
SMALL PRIVATE COMPANIES, Michael P. Wilkerson, Richmond Group LLC
- July 29, 2011
Construction was one of the hardest hit industries during the recent recession. As housing and commercial projects plummeted, so did the livelihoods of the developers and the many companies they supported.
But one company — Richmond Group LLC, a holding company for four construction-related firms — continued to thrive even as so many others in the construction industry went belly up. Through the efforts of CFO Michael P. Wilkerson, Richmond Group’s gross revenue growth has exceeded 300 percent over the past five years.
How did Richmond Group grow while others plunged into the red? By following two simple rules of business: It focused on a niche and reduced debt to increase profits. Richmond Group’s main product is called a Morooka, which is essentially a dump truck on rubber tracks, often used in the natural gas industry to clear land for pipeline installation.
“They go back into areas where you can’t get other equipment. Natural gas pipeline has gotten us on the map, and now we’re trying to figure out where else these machines can be used,” says Wilkerson, a certified public accountant.
The natural-gas industry wasn’t hit as hard by the economy as other construction-related fields, and that lessened the blow for Richmond Group. Demand remains strong for the Japanese-built Morookas. “We are sold out of everything we have coming into the country through October,” says Wilkerson.
The company will place a $10 million order for more Morookas early next year. The machines are rented and sold through Richmond Group’s network of dealers in the U.S., Canada, Central America and Mexico.
“Fortunately in our industry, we are pretty much in a niche market with our Morooka machines, and we were able to keep those sales up and do a lot of creative things to keep our dealers happy,” says Ronnie Byrd, Richmond Group’s co-owner.
But specializing in a niche product is only part of the reason Richmond Group has continued to make a profit. From 2009 to 2010 alone — one of the hardest years of the recession — the company’s revenue grew by 23 percent. At the same time, Wilkerson reduced the company’s total bank debt by nearly 50 percent by selling off part of the company’s rental inventory.
“We cut our fleet from a little over 200 machines to about 130,” says Wilkerson. “It took some of the pressure off of our monthly obligation to the bank.”
Richmond Group has four operating entities: Dominion Credit LLC, Dominion Equipment Parts LLC, Morooka USA – East LLC and Morooka USA – Rents LLC. Since 2007, Wilkerson has led three of those companies to the Virginia Chamber of Commerce’s Fantastic 50 list of fast-growing companies. Two of the three companies won in their categories.
“I certainly don’t take credit for all the things we did,” says Wilkerson. “It’s a team effort, and you’ve got to have a buy-in that everyone can follow.”