Past Winner Stories
Gradex
www.gradexinc.com
Thomas Dapp's strategy for launching a company without capital, employees, or orders proved to be a winner.
Gradex, Inc., the excavating firm he started in Indianapolis, bid on jobs. When it won a contract, Dapp rented equipment and hired temporary workers to run it. When the project was complete, he returned the equipment, laid off the workers, and bid on another job.
"Gradex" reflected not only the nature of the work, Dapp says, but also the "Great Expectations" he had for his company.
As work became more steady, he bought equipment and hired full-time employees.
The company's future was threatened, however, when a subdivision developer left the state owing Gradex a balance equal to a third of its annual volume.
Dapp embarked on legal maneuvers that resulted in a finding that the developer's bankers had to pay the debt.
He found himself in a similar situation a year later-a major corporation abandoned a project owing Gradex a sum that, again, equaled a third of his volume. A negotiated settlement enabled him to stay in business.
A more serious financial crisis several years later forced him to liquidate his equipment. A Gradex loan was backed by a guarantor who owned companies that had also borrowed money. The guarantor combined the loans into a single entity for tax purposes. When the guarantor's companies failed, Dapp was responsible for paying his own and the other companies' debts.
It took him three years to make the payments while he gradually rebuilt his equipment fleet.
But a new crisis loomed-the recession of the early 1980s, when super-high interest rates devastated construction markets. Dapp looked for work as far away as Pennsylvania and Colorado to keep his crews working and to meet payments on equipment loans.
Another factor in Gradex' growth has been its policy of separating itself from the large number of smaller contractors in the business by bidding projects that were larger or more difficult.
It has also expanded by bringing major support functions in-house. When the company's bids were delayed because pipe installers had not submitted their costs to Gradex for inclusion in its bid on a project, Gradex started installing pipes itself. When its equipment-service needs could not be met by outside firms, it opened its own repair and maintenance shop. Difficulties in getting its equipment moved from project to project resulted in the formation of Gradex' own transport company.
Dapp's firm is now the largest excavating contractor in the state, owning 300 pieces of equipment costing up to $700,000 each. It has 240 employees, has handled projects in 10 states, and bids on several jobs every day.
Despite its size, it remains a family business with lean management. Dapp's wife is corporate secretary and manages special projects. His son and daughter are both active in the company.
The headquarters staff consists of only four managers and seven clerks overseeing 70 to 80 projects a year.
Dapp experimented with diversification into other lines of business. But he decided not to go in that direction after he recalled his first job with a mini-conglomerate that engaged in so many activities it was shortchanging operations with the greatest profit potential.
Dapp says his approach is to "put all my eggs in one basket and then watch the basket."
Gradex, Inc., the excavating firm he started in Indianapolis, bid on jobs. When it won a contract, Dapp rented equipment and hired temporary workers to run it. When the project was complete, he returned the equipment, laid off the workers, and bid on another job.
"Gradex" reflected not only the nature of the work, Dapp says, but also the "Great Expectations" he had for his company.
As work became more steady, he bought equipment and hired full-time employees.
The company's future was threatened, however, when a subdivision developer left the state owing Gradex a balance equal to a third of its annual volume.
Dapp embarked on legal maneuvers that resulted in a finding that the developer's bankers had to pay the debt.
He found himself in a similar situation a year later-a major corporation abandoned a project owing Gradex a sum that, again, equaled a third of his volume. A negotiated settlement enabled him to stay in business.
A more serious financial crisis several years later forced him to liquidate his equipment. A Gradex loan was backed by a guarantor who owned companies that had also borrowed money. The guarantor combined the loans into a single entity for tax purposes. When the guarantor's companies failed, Dapp was responsible for paying his own and the other companies' debts.
It took him three years to make the payments while he gradually rebuilt his equipment fleet.
But a new crisis loomed-the recession of the early 1980s, when super-high interest rates devastated construction markets. Dapp looked for work as far away as Pennsylvania and Colorado to keep his crews working and to meet payments on equipment loans.
Another factor in Gradex' growth has been its policy of separating itself from the large number of smaller contractors in the business by bidding projects that were larger or more difficult.
It has also expanded by bringing major support functions in-house. When the company's bids were delayed because pipe installers had not submitted their costs to Gradex for inclusion in its bid on a project, Gradex started installing pipes itself. When its equipment-service needs could not be met by outside firms, it opened its own repair and maintenance shop. Difficulties in getting its equipment moved from project to project resulted in the formation of Gradex' own transport company.
Dapp's firm is now the largest excavating contractor in the state, owning 300 pieces of equipment costing up to $700,000 each. It has 240 employees, has handled projects in 10 states, and bids on several jobs every day.
Despite its size, it remains a family business with lean management. Dapp's wife is corporate secretary and manages special projects. His son and daughter are both active in the company.
The headquarters staff consists of only four managers and seven clerks overseeing 70 to 80 projects a year.
Dapp experimented with diversification into other lines of business. But he decided not to go in that direction after he recalled his first job with a mini-conglomerate that engaged in so many activities it was shortchanging operations with the greatest profit potential.
Dapp says his approach is to "put all my eggs in one basket and then watch the basket."