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Entrepreneur: Couple invests in lab, gets return from dedicated help
JAMES WOODCOCK/Gazette staffFaced with losing their jobs, Steve and Kathy Smit took matters into their own hands and bought Northern Analytical Laboratories Inc., a commercial testing lab. The Smits split duties that have enabled them to provide quality service and retain quality employees. “Before we started, Steve and I agreed that he would be the business manager and I would manage the technical aspects of the company.”

Gazette Staff

After spending several years working together in a Billings testing lab, Steve and Kathy Smit found themselves in a tough spot.

The lab's owners operated several other labs around the country and money for upgrading equipment was slow in coming. There was also a feeling the owners were ready to sell the labs, or close them, putting the Smits and their co-workers out of work.

In 1999, the Smits pooled their savings and, with an SBA loan, bought Northern Analytical Laboratories Inc.. Their co-workers became their employees and many of them stayed on.

Steve is the lab's business manager and Kathy handles the technical aspects of the company.

"By splitting the challenges and employing each of us in our field of expertise, we can meet the challenges and have the benefit of a supportive and interested partner," Kathy said. "Neither of us is overloaded in our areas of responsibility, so we don't get overwhelmed."

The lab at 602 S. 25th Street in Billings can be reached at 254-7226. Here's what else the Smits had to say about buying and running their own business.

Nature of the business: We are a commercial testing laboratory with an emphasis on analysis of environmental samples like soil, water and industrial wastes. We also analyze samples collected from workplaces to assess employee exposure to chemicals and other agents which may be present in the workplace air. Our employees include chemists, an engineer, lab technicians, lab assistants and administrative staff.

Why start this business? This particular lab business was started about 1962 and was owned over the years by several consulting engineering and environmental science firms. The most recent owner operated 12 labs similar to this one across the U.S. The parent firm was not interested in making the capital investment in the equipment needed to stay current with lab technology so they set out to sell or close their lab facilities.

Where did start-up funding come from? We used personal savings and borrowed from our retirement plans and the Small Business Administration through Wells Fargo Bank.

How long have you been in business? We bought the business on Aug. 4, 1999, which was also our 20th wedding anniversary. Our wedding anniversary have never been the same.

Biggest challenges in running the business? Keeping up with managing employees, technology, finances and client needs is our challenge. With constantly changing environmental laws, improvements in analytical chemistry, tax law, employment law, expectations of clients and competition from other labs; a mom and pop organization with 20 to 25 employees has to "run to keep up."

What was done to overcome those challenges? Before we started, Steve and I agreed that he would be the business manager and I would manage the technical aspects of the company. For instance, we provide health insurance, a retirement plan, vacation and personal time off as part of our employee benefit package. He has developed written policies for administering these benefits and has obtained good, affordable insurance plans for our employees. He manages the payables and receivables, business contracts and our banking. I am available to review those with him and act as a sounding board, but he's responsible for managing those aspects of the business.

I am responsible for communicating with our clients, offering current analytical chemistry services that are useful in the marketplace, employing the right people with the right education and experience to provide a good service, buying and maintaining equipment to support our work and planning our future needs.

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What is being done to expand the business? Before we bought the business, we wrote a five year plan. That plan included our capital investment plan for purchase of new and technologically current equipment. In a modern laboratory, the services you offer are limited by the capability and sensitivity of your instruments. So, each year we've been in business, we've purchased new instrumentation to expand or improve our current services. As we update the five-year plan, we examine the needs of our clients and select new services to offer which triggers a change in the capital investment plan and a number of other aspects of the plan.

Your worst business mistake? That's a difficult question because our philosophy isn't about mistakes, we tend to call them "opportunities for learning and improvement." One of the things we learned was the importance of having good cash flow. When we started the business, we borrowed enough operating capital to cover our monthly payroll and expenses for three months. That was just enough to get by. Our advice to a new business is to get as good as you can in predicting your cash flow and make sure at start-up that you have enough cash to meet your needs.

Advice for someone running a business? Value your employees, truly the human resource is the important one! Monitor your cash with care. Find a good accountant, attorney and banker. Use their knowledge to help you make decisions - they are your consultants in their areas of expertise and can provide you with the benefit of their experience. In other words, listen to your experts.

Number of workers? We employ about 25 people in our busy season and 20-22 during our slow periods.

What's your five-year plan for the business? We want to grow a moderate amount by offering some new lab services but we aren't ready to announce those as yet. We plan to stay current in the technology of the services we offer, pay off our business loan and provide opportunities for our employees in their fields of expertise and interest.

A question you would ask other entrepreneurs? Are your employees as committed as our employees? Recently, one of our clients needed fast service because of extraordinary circumstances on a construction project. The sample couldn't get to Billings until 10 p.m. on a Tuesday night, our business hours are 8 a.m. to 5 p.m. Monday through Friday. When I asked a staff member if he could help get the work done he said "That's my bedtime but I'll come in anyway!" We know our staff comes in on weekends to "check on things" and they never say a word about it - that's the commitment they demonstrate to our clients. So I ask other entrepreneurs - are your employees as outstanding as ours?

If you weren't doing what you are now, what would be your dream job? Steve would be on the pro walleye fishing tour and I would be a farmer.

“Entrepreneurs” appears regularly in the WorkWeek section. The feature will help readers become familiar with new businesses, as well as educate others in the challenges of starting a business. If you have been in business for at least one year and would like to tell your story, please contact:Chris Jorgensen Billings Gazette 401 N. Broadway Billings, MT, 59101 657-1311, office 657-1208, fax

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