Adapting to the market

Some gutter installers respond to economic downturns by slashing prices and cutting costs, hoping to ride out the storm and then return to business as usual. But others use tough times to improve their operations, adapt to changing markets and position themselves for future growth.

Since its founding — during a recession — in 1982, Colorado Seamless Gutters has developed into a “one-stop shop” for customers throughout the state’s Front Range and southern Wyoming. Residential and commercial gutters and products of every description are available, along with gutter protection, deicing systems and gutter cleaning services.

“But we’ve altered our business mix over the years according to how we can best leverage our strengths to fit the opportunities in our market,” reports founder and co-owner David Blanchard. “In the earlier years, our business was split between residential retrofit and new construction. Then as we grew, much of our work centered on tract homes. Now over the past five years, we’ve emphasized commercial and high-end residential projects and become subcontractors for many of the area’s major roofing companies.”

Co-owner Jeff Drugmand further explains how “in the past we did gutters for a lot of tract homes. Yet profit margins were low and so we got into custom homes. But that brought up another issue. With tract homes there’s a natural flow of work so that we didn’t have to go out and sell new jobs every day. If we were transitioning out of a reliance on tract-home projects, how could we replace that workflow?”

Drugmand experimented with yellow-page advertising to generate custom home jobs but the medium failed to produce a sufficient volume of leads. So he began making the rounds of home shows through the greater Denver area and other cities along the Front Range and engaged a consultant to assist CSG with its Internet marketing. The company redesigned its websites and embarked on such online outreaches as an email newsletter, a Google Maps campaign and a search engine marketing program.

When these efforts started yielding encouraging results, however, another question confronted company owners. “At the time,” Drugmand continues, “we had 40 employees. That was an appropriate number when our focus was on tract homes. But it was more crews than we needed to do high-end residential gutters and commercial gutters.”

Trimming the workforce from 40 to 25 employees took some care. Installing gutters on custom homes and commercial buildings requires experienced crews, says Drugmand, “and we had to retain a core of knowledgeable employees to ensure we could successfully market ourselves to very demanding customers.”

As Blanchard puts it, “Our people are craftsmen, not kids. Most of our employees have been with us a long time — and to keep them, we provide benefits including a health plan, 401K program and paid vacations.” They earn those vacations, he says, by performing some 3,000 projects per year and generating more than $3 million in annual volume.

On the Grow
Times were about as bad in 1982 as they are today in 2010. “I’d been working about five years for a Denver-area company that, among other things, installed gutters,” recalls Blanchard. “It was my first job after college and I progressed from installer to estimator. Then I was put in charge of the gutter division and we grew from one truck to four. But as the recession hit us, my company considered selling the division. Rather than lose my livelihood, I joined with a partner and offered to buy the gutter operation.”

As it turned out, Blanchard’s employer was not serious about selling. But he had done so much research on running a business of his own, Blanchard and his partner decided to go ahead and take the plunge. “I started Colorado Seamless Gutters in 1982 out of my own garage,” he remembers, “and might have been crazy to attempt a startup during a recession. But I had two things in my favor — the competition in 1982 was pretty shoddy and the recession ended later that year.”

By the late 1980s, Blanchard bought out his original partner. In the ensuing years he steered CSG from an initial focus on new construction and retrofit jobs, then to tract homes and now to its current emphasis on custom homes and commercial buildings. Later he took on new partners in Jeff Drugmand and Tyler Hayes.

“CSG has been a family business from the beginning,” states Blanchard, “and the dynamics between the three co-owners have worked well because we were friends before we were partners — and now we’ve all grown up in the business together.” For his part Blanchard takes the lead on administration while Hayes heads up sales and Drugmand is skilled in operations and marketing.

Looking back, Blanchard believes he succeeded in his startup because he brought a varied background to the venture. “Many gutter company owners began as installers and so they have trade knowledge but not business knowledge,” he explains. “But I didn’t come up through the trades. My college degree was in sociology. Then my work experience included the business side of the gutter business, as well as the installation.”

Now looking ahead, Blanchard says the company’s three owners are in their 40s and 50s “and we’re just starting to think about the long-term and whether we might sell the operation to our employees when it’s time for us to retire. But until then, there’s so much potential in the gutter industry that we haven’t tapped.”

Drugmand himself has been in the gutter business for more than 25 years. One reason he and his partners have postponed discussion of long-term plans is because “we’ve finally found a business model that’s working for us, a model that’s really coming all together for us just in this past year. We’ve found our niche and are poised for growth.”

Carving Out a Niche
One reason for optimism is the fact, reports Blanchard, his company now sustains 80 percent of its sales through repeat business and referrals. Another is the company’s 12,000-square-foot headquarters facility in Lafayette, Colo.

Eight years ago the company consolidated its former Denver and Boulder offices into a single, centrally located facility with ample room for a custom sheet metal shop and for stocking every gutter color that customers could want. “Having our own warehouse,” notes Drugmand, “has allowed us to expand our sales beyond basic white and brown.”

K-style gutters are offered in sizes ranging from 4 to 7 inches, in 17 painted aluminum colors and 24 painted steel colors. Five-inch fascia-style gutters were added to the CSG product line in 2006 and come in aluminum, Galvalume, and copper. The same three metals are also used for CSG’s 6-inch seamless half-round gutters.

“Everybody sells K-style gutters,” reports Drugmand. “So about 10 years ago we became one of the first installers in Colorado to offer seamless half-round gutters. Today we do two or three half-round projects per week. Then a few years ago we added the fascia profile that is popular in the Pacific Northwest but not well-known in Colorado. It was a chance to introduce another option and now we install at least one fascia gutter system per week.”

While aluminum dominates the retrofit and new construction market nationwide — and copper is the metal of choice for many custom homes — Drugmand says that Galvalume steel accounts for about 70 percent of his company’s installations. “With so much snow, ice and hail in our region — and with such wide variations in temperature — the added strength of steel is often a wise choice for people in the Front Range,” he notes.

To offer such a variety of products Colorado Seamless Gutters uses multiple suppliers, including Weather Guard Building Products for gutter systems and accessories, and Classic Gutter Systems and Good Directions for rain chains and specialty items. “I order inventory once a week and plan to turn over our stock every month,” Drugmand adds. Meanwhile, the in-house sheet metal shop can fabricate custom flashings, collector boxes, scuppers, downspouts, box gutters and chimney caps.

Because gutters in Colorado’s Front Range and mountain communities must stand up to high loads for snow and wind, CSG offers state-of-the-art gutter protection and deicing systems.
After field-testing numerous protection products, CSG choose the LeaFree system from GP Industries and recently became exclusive Front Range distributor for GP’s newest LeafX system. Both products are sold in 14 colors and LeafX is also available in copper.

CSG is particularly proud of its innovative deicing system that helps customers combat ice build-up and damming. “Our system is self-regulating,” explains Drugmand, “so that it prevents icicles and ice dams from forming in the first place.” Power output is automatically adjusted to accommodate changes in outside air temperature so the CSG system delivers the exact amount of heat required.

“Traditional ‘heat tape’ solutions use conventional resistance wires to create heat,” continues Drugmand, “similar to the way filament in a light bulb creates light and heat. And that’s also why they tend to burn out in just a few years. But our system uses two parallel ‘bus’ wires separated by a conductive carbon polymer. The polymer increases conductivity, and thus produces more heat, as the temperature drops. And conversely, it decreases conductivity as the temperature rises so that less heat is generated.”

CSG crews install about 30,000 feet of its deicing system each year. Because the system is self-regulating, it uses electricity more economically than conventional heat tapes and, CSG claims, lasts 10-15 years longer. The company has even combined heat tape and gutter covers for a unique Heated Leafproof Gutter Protection System that garnered the “Hot Product” Award at the 2009 Colorado Garden and Home Show.

Gutter cleaning, maintenance and repair programs “provide a service many homeowners want, provide a good profit margin and build relationships with customers so that they turn to us when gutters need to be replaced,” continues Drugmand. Rather than use a leaf blower that creates a mess of debris on the ground, crews scoop out large debris by hand and use a water hose to thoroughly flush out fine sediments and unclog downspouts. Homeowners can choose Silver, Gold or Platinum gutter maintenance programs for periodic cleaning and inspection.

Given the wide array of products and services that CSG offers, each of its crews develop their own specialized expertise. “One crew might be an expert in installing heat tape, another in gutter protection, and another in copper,” states Drugmand. “Since all of our crews don’t have to be experts in everything, it keeps things manageable and ensures our customers get true experts for a particular service.” And diversification means CSG can keep crews working year-round.

“The gutter industry is a dynamic business,” advises Drugmand, “and you’ve got to constantly stay on top of it. Your marketing also must be cutting-edge. For example, does your company have a Facebook page and a YouTube page? In a down economy you’ve got to do your market research and then spend money on marketing, because you can’t wait for the phone to ring. But if you do, then while your competitors are pulling back, you can be cultivating new relationships with new markets.”

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