Small Wonder

Nov. 1, 2014
Small western Montana water treatment company proves that small businesses can still have a big impact

About the author: Williette Nyanue is associate editor for WQP. Nyanue can be reached at [email protected].

Like many small water business owners, Montana native Archie Thomas, president of Kinetico Quality Water of Missoula and Ravalli, began his career in the family business. Surprisingly, his family business was not water.

“I originally led a plumbing/electrical business. I’m a master electrician and a master plumber licensed in the state of Montana,” Thomas said.

After working in the electrical field for more than 20 years, Thomas decided to make a career change.

“I simply looked at the water treatment business and thought it had better long term potential,” he said.

Four years after starting Kinetico, Thomas closed his plumbing/electrical business for good in 1996, and gave his full attention to his water treatment business.

Water Problems & Solutions

Kinetico Quality Water provides services to more than 200,000 people in western Montana. Covering a territory that includes Missoula, Rivalli, Sanders and Big Horn counties, the company services primarily residential customers, but supports a few commercial customers, including hospital systems and National Institutes of Health research laboratory facilities.

Water quality concerns in Kinetico’s expansive territory range from iron to hardness to arsenic.

“The water varies a lot from location to location. Even wells that are within 200 to 400 ft horizontally [from one another] have different characteristics,” Thomas explained. “Variability is the thing that is unique in this area.”

To address these concerns, the company relies on Kinetico equipment, which is non-electric and non-demand, as well as a few other manufacturers for ultraviolet applications.

“It is a matter of finding the manufacturer that makes a specific piece of equipment that fits a problem, and then coming up with standardized methods of dealing with these various water qualities,” Thomas said.

Quality Versus Quantity

According to Thomas, about 95% of the businesses in Montana have five or less employees, and Kinetico is no different. But even with just five employees—two service technicians in the field, one outside salesperson, an office manager and Thomas—Thomas is not pressed to find more employees.

“My focus is not more employees. My focus is on more dollars per employee using technology,” Thomas said. “We’re coming out of a recession. But like everybody, I’m not sure how much confidence we’ve got in it. I’m not interested in having more bodies unless they are really well trained.”

Lessons From a Recession

The recession was hard on Kinetico Quality Water, but in hindsight, Thomas said that the company is better off because of it.

“This particular recession was very, very severe, but it had some positives,” he said. “There’s nothing like going through a recession to look at all of your business elements and saying, ‘I can do without this.’”

Thomas credits the recession with helping make the company leaner by exposing where it needed to better control costs and focus investments. Today, he said, the company is doing roughly 20% more business than 2007, with about 30% fewer employees.

“I don’t mean to say that it wasn’t, or isn’t, without strain, but I really do think we’re doing a more efficient job [now], and if we take what we learned from the recession and apply it, I think we are going to be a hell of a lot better of a business going forward than we were in 2007,” he said.

The recession also helped the company’s rental business, which Thomas noted has grown tremendously over the past six years. In addition to bringing in consistent income, Thomas said that the growth of the company’s rental business has improved its service culture.

“If you are renting out equipment and you are not servicing that equipment right, the customer will give it back to you, and as a result, you either correct it or you go out of the rental business,” he explained. “I think that’s something else the recession has taught us. It’s wonderful to go out there and sell equipment, but if you put all of the details together, it’s best to have a good balance between rental and sales.”

Training & Technology Investments

Today, Kinetico Quality Water is investing heavily on technology and training. As a small company, Thomas recounted some of his difficulties providing employees with the wages they need to maintain the standard of living they want.

“I don’t provide any healthcare for my employees because I can’t afford to, but I do everything I possibly can to get money to them so they can pay for their healthcare bill,” he said. “It’s getting tougher and tougher to supply [a middle class lifestyle] for the people who are working with us everyday, and most of the reason why, I don’t have control of.”

Thomas noted that investing in technology and training helps companies make more revenue while controlling costs.

“Technology should make it so that the employee can focus on what the technology can’t do,” he said. “If we can make a more productive employee, that employee can produce more revenue per hour put in, we can make more money and he can make more money.”

Some of the technologies that the dealership uses include laptop computers in the vans, a flat-rate billing system, and a digital camera to take photos at each installation to help with service and liability down the road.

In addition, Thomas said that he is committed to having quality employees, beginning right from the hiring process.

“If you hire a guy that’s got all the skills in the world, but he can upset and tick off any customer he talks to, you probably can’t train that attitude out of him,” Thomas said,  “So I hire on attitude and train on skills.”

Thomas also revealed that he never stops training, sending his technicians to computer training as well as to factory schools to keep up to date on the latest technological advancements.

Advice for Small Dealers

As Thomas looks to the future, he is keeping his goals for the company simple.

“I’d like to see 10% growth a year with my cost not going up over 5%,” he said. “There’s a tendency to ask how much are you going to grow without asking how are you going to control your costs so that when you grow you can benefit from the money you make as opposed to just handling more money.”

For small business owners like himself, Thomas provides this advice: “Don’t assume that because you know water treatment, you know anything about the business of running a water treatment company. There is an absolute disconnect between the technical ability to do something and the business of business ability to make money at doing that, so get a good business education, ” he said. “The other basic question that I think people should start with is why are they in business. There’s nothing wrong with running a business where it’s one person and you have the time you want and you make enough money for what you want. If that’s what you want, great. Don’t agonize and be frustrated because your business [is] not what you read about in some business book.”

About the Author

Williette Nyanue