Cupcakes versus water well drilling

“Barriers to entry” is a marketing term that sounds sophisticated, but all it really means is, “How hard is it to get into a business?” Barriers to entry are simply those things that keep someone new from entering a market.

Barriers to entry take many forms. One of the most common is simply a high amount of capital ($$$) required for someone new to enter a market. The airline industry is a good example here. Related to a high amount of capital is scale, or how large does the business have to be in order to be profitable. The automotive industry is a prime example. Other barriers to entry are an entrenched and loyal customer base (think Starbucks or Harley Davidson), or even legal and regulatory hurdles (think liquor stores).

Obviously, if you’re already in a market or industry (the marketing books call this the incumbent), you want the barriers to entry to be high in order to keep competition out. But if you are starting a business (that’s the entrant), you want the barriers to entry to be low. However, the problem with markets with low barriers to entry is that in the long-term, it’s very difficult to make a profit. That’s because even when you’re first, everyone quickly sees that youDrilling day2’re making a profit and it’s easy for them to jump in.

Here’s a great example: cupcakes. Cupcake shops have been all the rage the last few years. But I ran across an article the other day about the “cupcake bubble”. Come to find out, the cupcake market has reached saturation and even been overbuilt in many regions. Many shops are going out-of-business. There just aren’t enough people to support all those cupcake shops.

So why a cupcake bubble? Because the barriers to entering this market are so low. There are always hurdles to starting any business, but opening a cupcake shop in the scheme of things is pretty easy. So, lots of people saw a profitable trend with low barriers and jumped in. But as a result, it became difficult for most of them to make a profit over the long-term.

So what does any of this have to do with water well drilling and the water systems industry? Well, if you’re a professional water well contractor, the barriers to entry for someone who wants to enter your market are fairly high. It takes specialized equipment that represents a significant capital investment. It also takes specialized expertise and knowledge and experience to be successful. There are also regulatory barriers dealing with licensing and DOT regulations. And chances are you have a loyal customer base.

The point is that not everyone can do what we do as an industry and what you do as a water well contractor. We are unique. And when you couple that with the value and quality of the product we deliver at a very reasonable cost, you start to realize that once again, we’re in a great industry.

No stone unturned

photoI’ve talked about differentiating your business before (Why you?) – that is, how does your business stand out from your competition and deliver a higher level of product and service?  Here’s another simple, but great example of a business doing exactly that.

The pizza business is very competitive. Just think of the number of pizza restaurants in your neighborhood. And although some might argue, pizza is pizza. So, how does one pizza business differentiate itself from all the others in such a commoditized market?

Enter this pizza restaurant (EOC stands for East of Chicago) located in an area that, as you may have guessed, is heavily agricultural. The last few weeks have been planting season, which mean long days in the fields for the farmers and their crews. Those guys get hungry, but don’t have time to go into town for lunch or dinner.

This pizza business has identified that unmet need and offered a solution. By offering “delivery to your tractor”, they’ve not only differentiated themselves, but expanded their customer base. If the sign simply said “WE DELIVER”, it probably never would have occurred to these customers that they could have fresh pizza for lunch, instead of the usual alternative of brown-bagging it.

Think of this example in terms of your water systems business. Are there opportunities and ways of reaching customers right under your nose that you haven’t thought of?

By the way, do you know what the other side of that sign says? “WE ALSO DELIVER TO THE BALLPARK”.

Throw water on it

That’s a picture of an empty pit stall at the Indianapolis Motor Speedway. In a couple of weeks, at the 97th running of the Indianapolis 500, each of the 33 pits will have two of those five-gallon buckets filled with water to throw on a potential fire.

waterPit fires are relatively rare in racing these days, but they do happen. In the heat of competition, cars leave the pits with fuel hoses still attached; fuel gets spilled onto an exhaust, etc. Fire is always a concern and during the race, there will be plenty of firefighters in Nomex suits close at hand with the equipment to handle any contingency. However, what strikes me is that in the midst of this high-tech sport and modern firefighting, the first line of defense against fire is a 5-gallon bucket of water located in arm’s reach. No special training required.

I remember a scary incident a few years ago during a pit stop in which burning fuel ended up in the cockpit of one of the cars. Before the driver could even get unstrapped, the pit crew had that cockpit filled (and the driver covered) with water from those buckets. The fire was out and the whole thing over in literally seconds. The driver was uninjured and actually went on to finish the race, albeit very wet. What could have turned into something disastrous was averted by the simplest of technologies and actions.

To me, the lesson here applies to just about all safety equipment. The best safety measures are those that are the simplest. Vision and hearing protection, safety vests, hard hats, seat belts, and even pocket voltage detectors are all highly effective, but simple devices.

Secondly, safety is best executed by the people and equipment closest to the situation. The key to the situation above was having those buckets within reach of the pit crew. It’s been said before, but no matter how effective a safety device is, not having it close by or not using it is the same as not having it at all.

Do as I say, not as I do

Franklin Electric, along with others, has always promoted the value of periodic check-ups on private water systems. These involve not only having the well water tested once a year, but encouraging homeowners to have their entire system checked on a regular basis. The end goal is to identify issues before they generate an “out of water” service call at the most inconvenient possible time.

That’s good advice, but the reality is that periodic maintenance simply doesn’t happen very often in our industry. That’s always amazed me and I’ve always said that if I were fortunate enough to have my own private water system, it would be very well maintained – It’s a critical system and I wouldn’t leave it to chance. Along these same lines, I’ve been astonished and somewhat dismayed many times on how little homephoto (5)owners know about their water systems.

Fast forward to just a couple of years ago when I was in my own basement changing the air filters in the heating and air conditioning system. Hidden away next to the blower unit is a Little Giant VCMA condensate pump. Today, I can tell you its model number and that it was manufactured in 1998. But until then, I had never taken any notice of it. As a matter of fact, what actually caught my eye was that it looked just like a product that I had just seen at a Franklin P/HVAC seminar.

In that same Franklin seminar, the periodic light maintenance of condensate pumps was emphasized in order to prevent “silly failures” like stuck float switches due to accumulated dirt and dust. So there I was, the proud owner of a Franklin Electric product that I had not only never serviced over the course of five years, but didn’t even realize I owned (Little Giant was acquired by Franklin Electric in 2006).

Granted, my 15 year-old Little Giant condensate pump isn’t quite as critical as a water system. But if it fails, there’s water in the basement and no air conditioning. I was leaving that to chance, just like all those homeowners that never have their water well systems checked.

It’s said that we are all ignorant, but just about different things. As homeowners, I’ve come to believe that’s especially true. And we all ignore simple maintenance, but just on different things.

Innovative thinking

Schaefer notesI received a gift this week, a really meaningful gift. In the process of preparing to move to our new corporate headquarters, someone discovered one of our company founder’s original engineering notebooks, and I was given the privilege of leafing through it.

For those of you who don’t know much about our company history, Franklin Electric was founded in 1944 by two men with a shared entrepreneurial spirit. One of those men was Edward J. Schaefer. Graduating with a degree in electrical engineering in 1923 from John Hopkins University, Mr. Schaefer worked for General Electric for a number of years before he and T. Wayne Kehoe started this company and named after Benjamin Franklin. Today, we’d call the Franklin Electric they founded  a “start-up”.

Mr. Schaefer was always thinking, inventing, solving. Within a few years, he had patented the first reliable submersible motor designed for residential use, and Franklin Electric submersible motors were soon providing a better way to deliver groundwater than other solutions available at the time. Even today, despite many improvements added along the way, Franklin Electric submersible motors still retain much of Mr. Schaefer’s engineering design and thinking. After retiring as CEO in 1985, Mr. Schaefer continued to work essentially full-time at Franklin Electric until his death in 1991 at the age of 90. Over his lifetime, he was awarded over 80 patents.

Looking through the pages, I was in awe. Reviewing page after page of meticulously handwritten notes, I pored over  calculations, graphs, and drawings on electrical motors, their properties, and how to improve them. I found myself steeped in history–and in the presence of a true visionary. Here’s a glimpse of what I saw:

  • A page of differential equations on the “ACCELERATION OF MOTORS” from January 21, 1929.
  • A page of notes and calculations on “REVOLVING FLUX WAVES IN MOTOR ROTORS” dated January 3, 1930.
  • An entire section labeled “MOTOR ACCELERATION KINEMATCS” from 1943.
  • From 1973, several sheets of notes and calculations with the title, “BIMETAL THERMAL TIME DELAY GATE SUPPLY FOR THE TRIAC WINDING CONTROL.” (This is the basic design for the BIAC switch still used today in Franklin Electric 2-wire motors.)

The list goes on and on. The book is packed with designs and calculations done with only the benefit of a slide rule–no pocket calculators, no computer-aided-design.

Open any business publication or advertisement today and you’ll see terms like entrepreneur, innovation, and forward thinking. Today they are part of our accepted business vernacular. Personally, I doubt if Mr. Schaefer ever used the word entrepreneur; I understand that he considered himself to be an electrical engineer first and foremost. But his pages of notes over 44 years remind us that innovation and entrepreneurship are not new. In all fields, our innovations today stand on the innovations of others. People like Edward J. Schaefer brought us this far. It’s our job to do the same for the next generation.