Fast-growing truck-parts maker feels ‘out of control,’ learns to regain footing
By Beth Ewen
Craig Kruckeberg unfolds a plain white sheet of paper that he always carries and passes it around the table.
The first line is the sales figure achieved in 2004 at the company founded by his father: Spray Control Systems Inc. in Blooming Prairie. The company makes plastic truck accessories and goes by the nickname “the Minimizer,” because its original product was a plastic fender system to minimize spray from big rigs on the highway.
The first line: $3,703,929. Figuring a 28.61 percent annual growth rate, the single-spaced figures go on for 17 more lines, until 2015 and this eye-popping sales goal: $58,978,459.
Kruckeberg’s sales manager typed up the sheet. “I tell him he’s out of his mind,” says Kruckeberg, Spray Control’s president, to commit to paper such ambitious goals. “I’m turning gray and I’m only 40.”
So far the company is keeping the pace. “We’ve had 26 to 27 percent growth each year for the last five to six years,” Kruckeberg says. “We’re up 42 percent this year, compared to last year.”
And while the growth is great news for any business owner, the success is starting to freak him out. “We’re out of control,” Kruckeberg says. His winning entry to the Upsize Growth Challenge was a request for expert help in getting a handle on growth, “to keep from bankrupting the company.”
‘Not bad for a truck driver’
Kruckeberg says he and his father, a truck driver who had his steel fenders banged up one too many times and started the firm in 1984, never expected to be a $5 million firm, not to mention one with a $50 million sales goal by 2015.
“We never thought we’d be here. I remember when we hit $100,000 a month in sales, we went to dinner. That was huge,” Kruckeberg says. “I went to cooking school, I admit that. I’m clueless, I really am. My father says, not bad for some truck driver, and I say, hey, not bad for some cook.”
The experts assembled to help the Upsize Growth Challenge winners agree with the “not bad” part of Kruckeberg’s comments: His firm is in excellent financial shape, say the finance and operations experts.Kruckeberg says he prints out full financial statements every day and takes them home. “Every day?” marvels Duane Thompson, a partner with accounting firm EideBailly in Bloomington.
“The financial statements are strong. The accounts receivable systems are tight,” Thompson says. “You’re on the right track, but as it grows keeping control is the issue.”
He recommends that Kruckeberg add internal control systems, with checks and balances that are more formal than the current one-man rule at the company.
Kruckeberg says he himself is cheap on most things. Several times during the workshop he calls various fees and charges everything from “highway robbery” to “insane.” The prices that advertisers charge him for ads are ridiculous, he says, as are the interest rates that bankers ask for.
He likes to rib fellow business owners in the Twin Cities for their high-priced real estate.
“Those guys laugh at me in Blooming Prairie, wondering why I stay there,” Kruckeberg says. “I stay there because I look at you people here and say, you’re insane. I have 15,000 square feet and I pay $4,000 a month,” he says.
Kirk Hoaglund of Clientek, host of the workshop in St. Anthony Main in Minneapolis, laughs. “That’s how much we pay for this table.”
Kruckeberg says at first he thought the salary his newly hired operations manager wanted was way out of line. “I couldn’t believe what he wanted to make,” he says. After only a few weeks on the job, though, “every day I walk in and bow to him.”
Thompson points out the benefits of benchmarks, standards in the industry or businesses in general, which are available through trade groups, bankers, accounting firms, and so on.
Then Thompson gets to another notable feature of the company’s financial statements: “He’s got a tremendous amount of cash. He’s got $1.2 million in cash sitting in the bank.”
Rick Wall, CEO of Highland Bank of St. Paul, recommends bringing on high-level financial advice as the best way for Kruckeberg to regain control. “With the kind of growth you’re projecting, that’s key. I tell you from our own business, when we went from a poor CFO to a superior CFO, the change in our business was dramatic.”
Wall points to the company’s sales projections. “You sound like a believer that it will happen, but it’s putting in some of the infrastructure” that will make such growth possible.
Kruckeberg balks at the cost. “I’m beginning to realize that not everybody will work for $32,000,” he says.
Counters Wall: “You may be able to buy somebody part-time for that.” Or he could obtain financial advice from the CPA firm he’s retained.
Michele Vaillancourt, head of the emerging companies practice at law firm Winthrop & Weinstine in Minneapolis, also suggests part-time people, such as retired CFOs who do not want a full-time position.She also recommends forming a board of directors, especially because the only other people on Kruckeberg’s board are his parents, and they’re trying to get out of the business by this summer, and they never meet anyway.
“It does help to have somebody else to look at things,” says Vaillancourt, the Upsize Growth Challenge legal expert. “I know a guy who is semi-retired and is a CFO experienced with startups.” How do you find them? “Ask your attorney. Ask your accountant. You need someone at a higher strategic level.”
‘Toys for trucks’
Kruckeberg says he’s considering starting to grow through acquisitions, targeting the many small manufacturers of plastic parts in the developing “toys for trucks” segment of his market.
“Truck drivers are becoming like Harley owners,” Kruckeberg says, wanting to accessorize their rigs. Many small job shops make different accessories for these drivers. “These little guys need to come together. We’d buy them all up.”
Elin Raymond, president of The Sage Group in Minneapolis and a marketing expert, counts this as Kruckeberg’s most promising market, and urges him to both add e-commerce capability to his Web site to lure this customer, and to reposition his brand away from “the minimizer” and toward generic “truck accessories.”
The technology team of experts, too, urges Kruckeberg to add to his e-commerce offerings. His parts business, especially, which makes up about 10 percent of sales, should be automated, says Craig Vosper of Clientek.
Kruckeberg doesn’t want to lose the personal contacts he has with customers, though. Many truck drivers will call at the end of the day, and like to chat about their trucks or their trips.
“You’ve got a high-touch business,” Vosper agrees. “Make sure your technology will not take away from that, but help it to keep going.” For example, Spray Control would benefit from a system that pops up detailed customer information on a screen whenever someone calls.
Mary Korthour, telecom expert with Eschelon Telecom, urges him to “bite the bullet” and spend what’s needed on a technology system that can grow with the company. “You have an aggressive growth plan, which is very exciting, but make sure it’s scalable,” she says.But it’s Rick Wall of Highland Bank who becomes even more adamant that Kruckeberg beef up his company’s financial expertise if he decides to acquire.
“It becomes even more important to bring in high-powered financial strength. That will take you a long way. Acquisitions, that’s a really significant way to make or lose your rear,” Wall says.
Craig Kruckeberg, Spray Control Systems Inc.: 800.248.3855; craig@minimizer.com; www.minimizer.com
