Concrete Repair? It’s All About ROI! HMI REP Jun 17, 2013 0000 Evolving Technologies Suggest Entrepreneurs Should Relook At Concrete Repair As A Business Opportunity! Paul DelFino Concrete repair services specializing in lifting and leveling slabs have been around since the 1930’s. There has been and there currently is high demand for this service. There is possibly even more demand now since the passage of the American Disabilities Act. This law mandates the repair of trip hazards from sunken or heaved concrete in public areas. With literally billions of square feet of concrete in the US, many of the slabs are old and out of alignment, pitched incorrectly and in desperate need of repair. Whether it is governmental, commercial or residential, customers are looking for a cost-effective solution to their problem. PROBLEM SOLVING OPTIONS? Replace it or repair it? Concrete replacement has become expensive. It is simple math. Concrete contractors must make up to three trips to a location to replace a simple slab of concrete with removal, framing, pouring, removal of framing material and cutting. Add to this the ever growing problem of environmental constraints of concrete disposal. The replacement of a simple 10’x10’ piece of driveway, walkway, or pool deck can be in upwards of a thousand dollars. That is if you can find a contractor who wants to do a “small job!” Repair has historically been achieved by mudjacking or slabjacking. This is the process of injecting a mud/slurry mix under concrete slabs with a specialized hydraulically powered mudpumps to lift the concrete. Contractors merely drill 1 5/8” holes in slabs and inject the material under the slab which builds up pressure to lift the concrete. The technique allows contractors to lift, pitch and level any free floating slabs. Historically mudjacking or slabjacking has priced itself at ½ the cost of replacement. The interesting news here is that as the price of replacement has increased the potential for profit in raising concrete has risen dramatically. Repair options have been chosen more frequently due to lower cost. Repair contractors are on a job site for minutes not days and have a very low cost of material. WHY ISN’T EVERYBODY DOING IT? Up until recently entry into the slabjacking/mudjacking business was capital intensive and perceived as heavy labor work. Entrepreneurs need for mudjacking: Vehicle/trailer capable of carrying 2+ yards. of material Specialized slab raising pump Material mixer A yard to store material Heavy equipment like a backhoe to load trucks and trailers A Concrete Drill A Concrete Saw Add to this the fact that the work is labor intensive often requiring: Two man crews where one person is devoted to shoveling material into a mixer The muscling of equipment around job sites The jockeying back and forth from the mixer to the slab when the pump material hopper is empty. Hours per day to cleaning equipment and jobsites Mudjacking does offer a low equipment investment. There has been and always will be a place in the industry for mudjacking. Even though it is a good business model, it is seen as heavy contracting, hard work and not very sexy. WHAT CHANGED THE GAME? For over a decade companies have been utilizing polyurethane foams to lift, level and stabilize concrete slabs. With this technique contractors inject the polyurethane foam under the concrete slab. The expansion of the foam is what lifts or moves the slab. Unlike mudjacking/slabjacking the technician drills small 5/8” holes and fewer holes leaving a cleaner looking job. Over recent years new specialized polyurethane foams have been designed with optimal expansion characteristics, set up speed and adhesion to provide contractors with ideal control of the lifting process. Entrepreneurs need for polyurethane concrete raising: An enclosed contractors trailer housing a polyurethane system Polyurethane Material A truck to pull the trailer Indoor material storage A Concrete Drill A Concrete Saw Unlike mudjacking/slabjacking there is no: heavy equipment, no heavy labor, limited equipment maintenance/clean up and it’s GREEN! One man crew Light labor, pull a hose to the injection site Clean equipment in minutes not hours No jobsite wash-down required Ability to carry large quantities of material The system mixes the material on demand Yes the new process is more environmentally sensitive since recycled material is used to manufacture the foam and polyurethane breaks down under sunlight in landfills if the concrete is ever disposed. The polyurethane foam option is also permanent; it cures as a rigid foam that will not change shape. WHERE IS THE MONEY? Beyond all the benefits of: ease of work, a better quality repair and environmental sensitivity the polyurethane foam solution to concrete repair offers huge ROI benefits. Although the cost of material is greater (polyurethane foam vs. mud), productivity is the real profit driver while the customer benefits from small holes and less mess. In the past contractors had to carry 2 or 3 heavy cubic yards of heavy material to each job. Most could carry enough material for 2 residential jobs before returning to their base to reload. In contrast a barrel set of polyurethane components loaded into a trailer can be pulled by a low tonnage pickup and will do more jobs before needing to reload. Here is where the money is! Simply stated; if you can get the work, you can do more work in one day with 1 person saving labor costs. Polyurethane foam concrete repair can generate up to 3 times the ROI as historic alternatives. With the polyurethane concrete repair process, a trailer and material can be stored in a residential garage and an owner – operator – entrepreneur can work in a polo shirt and slacks vs. overalls. THE NUMBERS DO NOT LIE! This simple proforma compares the annual profit opportunity of a mudjacking/slabjacking trailer operation to a polyurethane foam trailer operation. (The Disclaimer & Notes– We all know that every proforma leads to a pot of gold. However this presentation speaks of the difference in the opportunities and is not a guarantee of success.) 200 Day Work Year Labor Wage of $9.00 per hour Marketing Expense at 5 % of revenue. Equipment Lease Costs are daily at prevailing rates with a 3 year $100.00 buyout lease option. The amount charged for the work completed will be a condition of the market the service is offered it. THE TAKEAWAY! In today’s world where: Entrepreneurs are looking for the next opportunity to start a business with a low cost of entry and real ROI, which they can operate from home, Parents are looking for businesses with potential for their graduating and unemployed children, Entrepreneurs are seeking a no employee business with the uncertainty of future health care costs and obligations, Veterans are seeking opportunities upon return from overseas deployment, it may be time to take another look at Concrete Repair as a Business Opportunity. The demand is there and the ROI potential is compelling. If I am half wrong – It is still a WINNER! Paul DelFino is a principal of the consulting firm Opportunity Inc. For nearly two decades he has assisted entrepreneurs in growing their businesses, responding to economic downturns and merger and acquisition activity. His publications include “Avoiding Skewed Entrepreneurial Strategies”available from all on line booksellers.