Posted: April 05, 2011
Colorado success stories: Ayuda Management Corp.
Under-promising and over-delivering are keys to government contractor's successDavid P. Mead
Editor's note: This is another in a series of Colorado company success stories as told by CEOs and business owners.
Maria Vogt and Sonya Yungeberg are co-owners who lead Ayuda Management which provides services to a select client base in the areas of general contracting/construction management, construction defect repair, homeland defense consulting/security system design and installation, and environmental consulting.
The company became a Small Business Administration 8a-certified minority business contractor in 2006. Today, a significant portion of its business is in projects with government entities. The company has grown from $275,000 in revenues in 2006 to $25 million in 2010. They will be featured panelists at the ACG Denver Rocky Mountain Corporate Growth Conference on April 27-28.
When I recently met with the two partners over lunch, they collaborated on the responses to my questions about the business. I was reminded how well they work together. Over the last five years, they have developed a close business partnership that has been a critical ingredient to Ayuda's successful growth.
Your operating philosophy seems unusual for a government contractor.
We operate with a few basic principles: We do what we say we'll do. We under-promise and over-deliver. We focus most of our energy on building clients for life. Our processes, hiring, reward systems, and training are centered on the belief that delivering high quality service to our clients leads to repeat business. We stress to all of our people to put client interest before profit. We reward our employees not based on profit, but on customer satisfaction. We feel that, if the customers are pleased, profit will follow. We like working with the Federal government. We understand the Federal systems and procedures and perform well in that environment.
You have an unusual sales compensation system. You don't reward for generating new customers, but for repeat business with existing customers.
It bothered us in previous companies that the emphasis was always placed on getting the next new customer, but not necessarily on doing the best job for existing customers. So we decided that we would reward our people for getting repeat business with existing customers. This puts the emphasis on maintaining excellent relationships, encouraging strong, open communication, and a commitment to over-delivering on the current projects. Clients have responded. When they are pleased with our performance, they want to offer us opportunities on newer and larger projects.
Has the recession caused any bumps for you?
There was one... very large bump. In 2009 we had a client that went into bankruptcy leaving a large balance unpaid. We still owed the subcontractors and suppliers. We recognized that how we handled this problem was a defining moment for our business. We wanted to do the right thing - to pay everyone. So we met with all the subcontractors as well as our bank and had a direct, open, and honest discussion about what we thought we could do. Everyone bought in to the plan. Our bank and our bonding company could not have been more supportive. It took us over a year but everyone got repaid - it was over $1 Million.
Taking a $1 million out of your pockets must have been painful.
We took a hard look at every expense and really tightened our belts. We decided we could answer our own phone calls for a while. It was actually a good experience because it forced us to really re-examine our overhead and expense structure. We feel really proud that we were able to make everyone whole.
What are the keys to continued growth over the next five years?
We want to expand our services and revenue in the Federal marketplace. We are exploring the development of a teaming arrangement that has been sanctioned by the SBA. This is a "mentor-protégé" relationship with a larger firm with a greater geographical footprint so that Ayuda can meet the qualifications for larger federal projects. We would operate as a joint venture on a project-by-project basis. This relationship benefits both companies since the larger firm would be able to bid on projects with an 8a-certified firm, and Ayuda would have greater capacity to be able to perform these larger projects. The selection of the right industry partner for such an intimate relationship is a critical decision for us. We are looking for a company that has a similar culture and commitment to the customer.
I have to ask you about your partnership. What makes it work so well?
We genuinely like each other and respect each other. We think it also helps that we have different strengths and skills- Maria's background is in construction and business development, while Sonya is a civil engineer and very knowledgeable about project management. We operate by consensus. We agreed that if one of us ever strongly disagreed with a decision, that was probably a good reason to reconsider.
David P. Mead, President and CEO of The Mead Consulting Group, Inc., has 30 years of experience growing technology, healthcare, education, manufacturing, distribution, and services businesses. The Mead Consulting Group, Inc. www.MeadConsultingGroup.com, founded in 1981, specializes in working closely with the CEOs and business owners of mid-size companies (revenues from $10M to $250M) to help them create value and leverage business strengths to take their companies to the next level. Mead Consulting, with headquarters in Denver, has over 40 senior consultants focused on Colorado-based businesses. Dave can be reached at (303)660-8135 or firstname.lastname@example.org.
David Mead is President of The Mead Consulting Group, a consulting and advisory services firm, based in Englewood, that has been helping Colorado companies grow since 1981. The firm's 40+ senior consultants with operating backgrounds assist Colorado-headquartered companies with strategic growth and execution, improving profitability and cash flow and maximizing value at exit. Dave is the past Chairman of ACG Denver and a long-time Board member and is on the Board of Young Americans Bank. Contact Dave at: meaddp@MeadConsultingGroup.com or (303) 660-8135.