Anyone who’s launched a new business knows the startup phase can be brutal. The investments of time and money, the lack of sleep, the long days, the time spent focused on work instead of family — all of these things add up to ensure many businesses fail to make it past their first year.
Michael Cox of PalmettoINSITU got his business over the startup hump. The Charleston, S.C., geotechnical firm just celebrated two years in business. National Driller spoke with Cox about what it takes to strike out on your own and how to distinguish your company in a crowded field.
Our conversation is edited for space and clarity.
Q. First of all, what is PalmettoINSITU? What do you do and what type of clients do you serve?
A. PalmettoINSITU is a high-tech drilling company. We utilize state-of-the-practice geotechnical exploration tooling to provide soil properties or parameters to geotechnical engineering firms, who then take that data to use to determine foundation design for roads, bridges, high-rise buildings, industrial plants or expansions in schools, hospitals and the like.
Q. What is your background?
A. I worked for S&ME for about 13 years after graduating from technical college with an associate in civil engineering technology in surveying. It kind of gave me the foundation to understand what was happening around me. From there, using the experience I gained working on sites from nuclear power plants to dams and other facilities, I then pursued my bachelor’s and master’s degrees to tie up loose ends from endeavors that I had started at a younger age.
Q. What types of rigs do you have in your fleet?
A. All of our rigs are high-tech, custom-built rigs that are designed specifically for cone penetration testing, if you will. It’s the type of test that we run, and there’s several tests that run using the same equipment. But that’s the overall umbrella name, if you will, for the technology that we use.
Q. When you say “custom,” you had these built, or did you guys design and build them in house?
A. They were built for us. We have further modified them, customized if you will, to better meet our needs.
Q. PalmettoINSITU just celebrated two years in business. What made you strike out on your own in such a capital-intensive business?
A. Basically, working at S&ME was an honor and a privilege, as an understatement. I learned so much, and gained such valuable insight and information from some very intelligent folks. But I chose to move on for, I guess, my inner self — that it needed a bigger challenge. This is just a marriage of exactly what I enjoy doing — the high-tech part and the hands-on part of the process just completely engages me personally. And then, I guess a good answer would be I just sought a bigger challenge for myself, and the capital portion of it was why I didn’t sleep for the first year in business.
But it took literally all of the savings that I had accumulated for the first 20 years of adult life, I guess — numerous instruments of savings there, some family help and a lot of just hard work and putting money in the right places, reinvesting it correctly I think has kept us going at this point. ... The monies that we have earned and used just reinvesting back into the company correctly have helped us maintain our stability, if you will, financially.
Q. What types of challenges did PalmettoINSITU face during the start-up phase?
A. It started basically with my completion of grad school and saying, “Well, now what do I do with this, and how do I pay it back?” It started with basically a 140-page business plan that I filled in the blanks, if you will, developed and using that as a guide to maintain a direction and realizing that that paper, it really was a recipe. So the challenges were finding funding, finding the right equipment, understanding the market dynamics, the people who I would be working with, working my clients, and then just daily tackling each setback or pitfall as they came. There were so many “no’s” that were presented, I guess, from the financing standpoint, that it was very discouraging. But perseverance and not accepting “no” was really the biggest challenge.
Q. Have those challenges shifted or evolved going into your third year?
A. It’s still not accepting “no.” But finding a way to meet the needs of the clients. You don’t so much hear the word “no” now, as you just don’t get a response sometimes from folks. I have basically continued to evolve the company to meet the current, or the more present, state of the practices in the “green” revolution and just addressing the current needs in helping our clients understand the technology and the benefits of it, and what we can do to help them be more efficient and, in turn, be more profitable.
An example, is we recently were able to show a client that, in lieu of doing a labor-intensive testing program for post-improvement of a building site or a construction site, we were able to take those two weeks and compress them into two day’s worth of work and were within $85 of what they budgeted. So it significantly improved their time to publish their report and also freed up manpower to be able to be on site for other reasons.
Q. A business can’t do everything. Is there any kind of self-assessment you’ve had to do as a startup to understand what your weaknesses are, and make a plan to fill in those blanks?
A. That’s kind of where the prior experience has paid off in knowing what my weaknesses are and what my strengths are. Then, using my strengths, I’ve been able to adapt to challenges. So, if something, for pete’s sake, on the drill rig breaks down, can I repair this in a way that’s going to be safe and correct? If, in my gut, it says, “Don’t touch it,” then I don’t. It really is an intuitive process to look at and say, “Yeah, I’m comfortable with taking this hydraulic pump apart or not,” and that would be “no.”
So, I guess the answer to that is knowing my capabilities and then knowing, yes I can open some of the instruments up and look inside and see if there are general issues with them — is there moisture or corrosion on a connection that is easily remedied, or is this something that’s going to have to go back to the manufacturer for repair? ... I think the best quick answer, short answer, is an intuitive process to know your limits and then seek out the help where a problem exceeds your capacity. ... You have to lose all vanity and just say, “Um, I have no idea,” and accept that and find the help and either learn how to do it, be taught, or bring somebody in to do it for you. That’s the general theory, if you will, that I kind of go by.
Q. You have a pretty detailed “Process and Payment” section on your website. How important is having clear terms to the success of a business?
A. That is a very sticky situation because the subcontracting industry says I’m considered in the AEC [architecture, engineering and construction industry] to be a subcontractor. It depends on the state, really, that you’re working in as to how quickly you get paid. We try to negotiate and stick to the net-30 terms, but we are often squeezed to what the client’s terms are. It’s based on state law that, personally, is skewed to the owner of the project. South Carolina state law is a little biased, personally, so we convey that upfront and we follow up with numerous invoices and conversations if, say, a payment is starting to run late. But, knock on wood, we’ve been blessed that the clients we’ve taken on have been vetted enough that we’ve been paid within a reasonable amount of time.
So, there is a vetting process that I do before taking on a client, if you will. Even having these terms up front, I want to understand who I’m dealing with and that helps a little.
Q. I know a business, particularly a sub, can live and die on cash flow.
A. It’s a huge deal. Cash flow is a huge deal with the subcontractor. ... It’s personally unfair how it’s seen and I’ve had conversations with some very large companies that expressly I said it was not fair that a small business is having to finance the work of a $200-300-million a year producing company, and I have to wait 45 to 90 days to be paid for something that they’ve probably received a down payment or a third — some form of compensation to get started. And yet, they want me to, in my view, finance their work without interest.
That is why I say it’s “very sticky.” So you have to be very fiscally responsible and try to maintain as much cash on hand as you can because repairing anything in our industry typically starts with three zeros — from $1,000 to $5,000, $6,000 for just a single repair. It can be insane.
Q. And it’s not like you can earn money without your equipment.
A. And that’s one of the core principles we have, is that going back to the reinvesting with the monies we’ve made over the first two years. From the start, [our goal] was to develop and purchase redundant equipment so that we’re always able to show up and always able to be there to do the work that is asked. So far we’ve been able to maintain that practice. We intentionally have redundant everything that is possibly imaginable to keep us going. There are very few things we don’t have a backup for, and those are typically instruments that are extremely reliable or can be loaned to us, rented to us, if you will, in an overnight manner.
Q. Is there a particularly interesting or challenging project you can talk about?
A. A public infrastructure project that is public knowledge is the Interstate 85 and I-385 interchange that is currently being renovated, or soon to be renovated, but it’s in the works or in the design mode. We did an enormous amount of dilatometer work; that is a specialized test to give a very specific soil parameter. That intersection of those two interstates is in the Piedmont area of South Carolina and so it’s very difficult to know if you’re hitting rocks or if you’re just in a stiff layer of soil, because you’re pushing an instrument into ground that is literally $6,250 and if you hit a rock and it goes askew, then you’ve just broken that instrument off the end of your drill string.
So we were asked to do this project and it took us, I believe a couple of moves, a couple of different iterations to complete it because there was work that we could do during the day and some work that had to be done at night. ... There’s somewhere on the order of six or eight small bridges, some bridges that will span, I believe it’s six lanes of I-85. We basically did the dilatometer, or DMT, work for that project and the complications of it were, obviously, to work inside of traffic control and around high-speed traffic without being mowed over by somebody texting and putting on their makeup at the same time, and still delivering on the product.
We were able to complete nearly 20 of these dilatometer tests to depths that they were typically expecting. There were a few that rocks showed up at a little more shallow depth than expected. But it was successfully done through just knowledge and experience, and just having the wherewithal of all of our surroundings — being in traffic and having the right rig to be able to move easily. This area, there were numerous iterations of loading the rig, moving it to a different spot, unloading it, doing a few tests, loading, going to another spot. Numerous times that we had to go through that cycle to complete this project. ... That was particularly interesting, just because of the moving in and out of traffic, and dealing with the confines of traffic control and having to move with them and working with so many different companies to execute the exploration plan of the engineer. There’s a lot of coordination that they did — the engineering company did — to get the right folks on scene, but then for us to coordinate and move and keep the operation moving.
Q. As a startup, how do you distinguish yourself in a market with other, longer-established players?
A. Great question. ... There are many companies that have this technology. More now than when I first entered the industry 15 years ago or so. But what I guess, for us, it’s just sticking to those core values of having extra tooling, understanding that when we show up that we’re there to complete the job that day in a safe manner and as quick as we can. It’s always showing up and respecting what the client and the property owner request of us while we’re there. But always, always showing up is what is very important. Communicating with our client, letting them know for whatever reason what’s going on and, I guess, transparency with our actions.
But then we have acquired a number of clients at this point and, to borrow a phrase from Hollywood, we try to maintain a tiny wall, if you will, between each client and what we do for each client so that we don’t allow somebody to learn something by what we are doing for another company. So, discretion, redundant tooling and always showing up are what I really think are our core values that have helped us maintain a bit of an advantage, or just a distinction. There are people that are independent exploration firms that do similar work and have been in the market way longer than I have, but for me it’s very important to always show up and always communicate with the client, even if sometimes it seems an exceeding amount of emails or whatever. I’m very transparent with what I’m doing with their project.
Q. A small business like yours can sink or swim based on the strength of the team, from the field personnel to the receptionist. What qualities do you look for in employees?
A. It is that same showing up every day early and being willing to basically get your hands dirty. Drilling is not a hands-off type of work, and so you have to have a very specific personality. High-tech drilling is a bit different than traditional drilling, so you have to be a little more tactile, have more finesse, if you will, because you can’t break out a bigger hammer to make something work. You have to be a little more careful. When I am talking with people or looking for an employee, I’m looking for somebody that can show restraint and intelligence — all while willing to stand in the marsh with mosquitoes biting your eyeballs. ... The mental challenge of heat and our natural environment where we’re working can be a challenge, so you just have to have the capacity to manage the mental aspect of the work, and then the physical aspect of the work as well.
Q. Looking back over two years, what advice would you offer someone thinking about striking out on their own like you have with PalmettoINSITU?
A. It just goes to, don’t accept “no” as an answer to anything. From the first job I took outside of high school, [my work] has taught me to never take “no” and always understand there’s more than one way of doing anything. … Seriously, you just cannot take “no” for an answer and you have to be very organized and be ready for any situation, anything — you will never know what tomorrow’s questions will be, or challenges. You just have to be mentally prepared for anything.
Q. Is there anything I’ve missed, or anything else you’d like readers to know about you or PalmettoINSITU?
A. The biggest things about us are the disciplines of showing up, doing the right thing and ... probably the only additional bit about us is we actually make an effort to practice what we put on paper as far as environmental impacts and the like. When we go onto a site, we try to respect the project and the owner’s property, knowing that a bulldozer’s going to come in and likely clear cut the whole site. But until that happens, we keep the areas that we travel across the site clean. We clean up after ourselves and we just respect the property and the owner for that property.
