Kelsey Ramsden was facing a grave challenge. Her civil-construction business generated almost all its revenue from government contracts and, virtually overnight, the number of competitors bidding for those contracts had doubled. "It could have been curtains for us," says Ramsden.
Her company, Belvedere Place Development Ltd., had been making healthy profits for the previous five years building roads and bridges. But then, in 2009, the global recession pushed many private developers into bankruptcy. The earth-moving companies that had helped these developers build subdivisions started chasing government work to fill the gap—killing the margins on public-sector contracts. That left Ramsden, her firm's president, with a tough choice. Should she wait out the lowballers until some of them went broke or reinvent her business to pursue a new client base?
Ramsden chose reinvention. Over the next two years, the now 36-year-old mother of three successfully navigated an expansion into private-sector projects that propelled three-year revenue growth of 804%. By making dramatic changes to the way she does business, Ramsden did far more than avoid bankruptcy. She infused her company with a combination of size, sales growth and profitability that has ranked her No. 1 on the 2012 PROFIT/Chatelaine W100 list of Canada's Top Female Entrepreneurs.
The 14th annual PROFIT/Chatelaine W100 ranking of Canada's Top Female Entrepreneurs (for additional information about any entrepreneur's company, click on her name)
Although Ramsden's West Kelowna, B.C.-based company had no prior experience with the private sector, she did. Ramsden grew up working for her father's road building company—her first job was as a flag turner on the Alaska Highway—and she knew how to play the game. Now, her first move was to add an extra body to her four-person head office: a business development manager. Ramsden loved the technical side of "moving dirt" but knew that she wasn't a good fit for the relationship building that private-sector clients require.
"With government jobs, there is no relationship," says Ramsden. "It's all about who bids the lowest." But businesses often discuss jobs with potential contractors months before issuing a request for proposals.
Belvedere Place won its first bids for private-sector jobs on projects to build roads for subdivision developers. But Ramsden was wary of becoming reliant on such risky clients, so she had her business development manager target mining firms—and later, once Belvedere Place had secured the necessary safety certification, the oil and gas sector.
The business development manager knocked on dozens of doors and enjoyed striking success in getting mining firms to agree to meet with him. "People think of these big companies as scary," says Ramsden. "I learned that you just show up and ask to speak to someone."
It helped that the business development manager could provide glowing references from government clients for having completed projects to specification, on time and under budget. As well, he provided serious prospects with letters from Belvedere Place's bank and bonding company attesting to the construction firm's stellar reputation.
She had to decide whether to wait for lowballing rivals to go broke or reinvent her firm
Ramsden says one of the biggest challenges of her new client base was safeguarding her firm in case a job went south. She has hedged this risk by requesting letters from the client's bank confirming the client is creditworthy. As well, Belvedere Place pays legal bills as high as $10,000 per contract to ensure these deals are airtight—a breathtaking increase over the $100 norm for standard government contracts.
In order to avoid cash-flow crunches and limit the loss if a client stiffs Ramsden's firm, she gets clients to agree to pay for materials themselves. "I'm willing to risk my guys' time and my equipment time, but I can't afford to be stuck holding three kilometers' worth of 200-millimetre pipe," she says. "What would I do with it if someone hung me out to dry?"
Ramsden became aware of another change that her firm needed to make when she was signing one of her first contracts with a private-sector client and was struck by how loud the room was. As well as the handful of client reps in the room with her, four more were on the line from Japan and Vancouver. "I was used to signing contracts in a trailer somewhere, with just me and one guy from the ministry," says Ramsden. Now, from contract signing to job completion, there often are four times as many people involved. And all of them expect detailed updates at every stage of the project.
"We had to communicate more, and that started with me," says Ramsden. Rather than making short phone calls to clients or sending them one-line emails with specific pieces of information, Ramsden and her team provide clients with far more extensive accounts of the status of their projects and the next steps.
Depending on which projects Belvedere Place has on the go, the company now derives 60% to 100% of its sales from private- sector clients. It doesn't disclose its exact revenue, but it reached $25 million to $50 million in 2011, compared with less than $5 million three years earlier.
The firm's new focus has made its revenue not only dramatically higher but more stable. Belvedere Place used to live from project to project, says Ramsden, "so the biggest change is that now we have a book of work." These days, her company has jobs slated to begin as long as a year out.
That means Belvedere Place can offer more secure employment to its almost 70 heavy-equipment operators and invest more in training and equipment. And that, says Ramsden, has positioned her business to take another leap forward by bidding on private-sector projects on a scale that used to be way out of her company's reach.