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THE CHALLENGE WINNER: SANDBERG LABS

Mother Nature's curveball no match for novice entrepreneurs Add to ...

When Angela and Justin Quinton decided to get into the agricultural testing business, Mother Nature was quick to throw them a curveball. The Quintons bought Lethbridge, Alta.-based Sandberg Labs in January 2010 – just in time for Western Canada’s wettest spring in four decades.

Come June, farmers throughout the region began sending in crop tissue samples. Levels of nitrate – vital for plant growth – tested pitifully low, leading some clients to question the new owners’ methods. So the Quintons dispatched samples to four other testing labs, all of which returned the same results.

But before that, they panicked. Phil Sandberg, the previous owner of Sandberg Labs, pointed out that this meteorological disaster was an opportunity for the couple to prove themselves to skeptical farmers.

“When the weather’s bad, that’s when they need you the most,” says Ms. Quinton, whose company provides services ranging from soil testing to crop monitoring for hundreds of customers, including small and large farms, agrology businesses and pet food manufacturers. “That’s when they need to know exactly what’s going on in their soil.”

Having survived this early trial, the Quintons still face a formidable business challenge. By the end of 2015, they aim to make Sandberg Labs the biggest and most accessible agricultural testing facility in Western Canada. Their goal is to almost double annual revenue to $1-million by boosting capacity, modernizing the lab and expanding services. To get there, the winners of the Challenge Contest, sponsored byThe Globe and Mail and Telus Corp., will use their $100,000 prize to upgrade processes and equipment.

Outside bucolic southern Alberta, Sandberg Labs’ 15 employees serve customers in B.C., Saskatchewan and the Northwest Territories. Mr. Quinton, the president, works with many of the company’s larger clients, while his wife manages soil testing and does the paperwork.

“We inherited a dinosaur with a great customer base,” says Ms. Quinton, 39, who must turn clients away because the lab is running at full tilt. “There’s such a great need out there but with the current setup, we can’t meet it.”

The Quintons were smart to recognize that need. In 2006, they returned to their native Alberta after seven years in Silicon Valley, where Ms. Quinton ran a small homeopathy practice and Mr. Quinton was a product designer for San Jose-based Cisco Systems Inc.

An electronics engineer who grew up on the family farm near Lethbridge, Mr. Quinton stayed with Cisco but took on a new role. As a quality auditor for the computer networking giant’s contract manufacturers, he visited factories in China, Mexico and Poland.

In early 2007, Ms. Quinton began working as a part-time technician at Sandberg Labs on the invitation of Mr. Sandberg, a friend who had founded it in the 1970s. Her new boss needed the help: Sales had surged 18 per cent that year after the few other agricultural labs in southern Alberta moved to Calgary, where they switched to industrial testing to serve the booming oil and gas industry.

While getting to know the business, Ms. Quinton watched this development with interest. But for all the signs that Sandberg Labs had a niche of its own, she also saw frustrated customers going out of province for services it couldn’t provide.

Laid off from Cisco, Mr. Quinton joined the company in 2009, when Mr. Sandberg was getting ready to retire. Convinced there was a big market for agricultural testing, the Quintons used their life savings and some bank financing to buy Sandberg Labs. “Our thing was, ‘Can we make this a first-class lab that can be there for the agricultural community?’ ” Ms. Quinton recalls.

She and her husband didn’t hesitate to make changes. In a move than brought them much new business, the Quintons switched to a different method of testing soil phosphorus levels. They also cut costs and automated nitrogen, phosphorus and sulphur testing – a change that saved time and improved accuracy.

However, the new automated equipment has left the Quintons squeezed for space in their 3,000-square-foot lab. Rather than move to new premises, Mr. Quinton explains, Sandberg Labs will reconfigure its existing workflow.

To do that, he’s applying 5S, a Japanese organizational system that pares the workplace down to essential items and designates a place for everything. In addition, Mr. Quinton is using lean manufacturing principles to reduce transit times, thereby increasing billable hours. For example, he plans to move the lab’s grinding operations – currently spread throughout the building – into a room of their own.

Sandberg Labs’ shopping list includes bigger ovens, so it can accept more samples, and a modestly priced laboratory information management system that will let it post key customers’ results online. “Ideally, we would like to be in a different space, but we need to bring the volume up first,” says Mr. Quinton, 37.

Adam Crutchfield, a director of the core operations practice at PricewaterhouseCoopers’ Calgary office, says it’s important to think carefully about equipment, technology or process changes. But when a company makes a change, Mr. Crutchfield adds, it should be quick and comprehensive. “If you do a little bit without addressing the whole, you can end up with small improvements, but you don’t see progress in your overall process.”

Besides purchasing new equipment, the Quintons should consider paying down any debts, says Doug Patton, small business area manager for the Vancouver suburban district at the Bank of Montreal. Holding cash in reserve will also help them weather a downtown – and even capitalize on it. “Can you buy stuff on sale?” Mr. Patton asks. “Can you go out and buy a competitor and then expand your business that way?”

Mike Michell, national director for small business at the Royal Bank of Canada, suggests that Sandberg Labs do some modelling to determine which of its services yields the best and most sustainable return. “Whatever they invest in now should hopefully fund their next project as well, so they want to make sure it’s longer-term,” Mr. Michell explains. “When will it be self-sufficient and actually grow cash flow?”

Once they increase capacity, the Quintons will launch a marketing strategy that includes a new company name. They’ve also left room in their budget for one piece of therapeutic equipment – a gong that Sandberg Labs’ young employees can use to clear the air on stressful days.

“Sometimes things get pretty hairy here, just from the volumes we’re trying to push through and our limited resources,” Ms. Quinton says. “At times it’s frustrating, and it’s like, ‘Man, I could just really bang a gong right now...’”

Advice from the judges

Our three judges weigh in on how Sandberg Labs can take its business to the next level.

Technology

“While they're growing their capacity, how do they make sure the business keeps coming in? One thing that's super easy and really overlooked these days is good old paid search [advertising]. If they were to buy a few search terms and target the geography that's specific to their category, a lot more people would find them online when running searches. It's the sort of thing you can try and test without spending a heck of a lot of money.” - Stuart MacDonald, chief marketing officer, FreshBooks.com



Marketing strategy

“I would want them to run a revenue-and-profitability analysis on their market segments and figure out where most of their business is coming from. And then they'd have to make a decision: shore up the weaknesses or play to the strengths. I'm a bigger fan of playing to your strengths if you're trying to grow. So if they figured out that 70 per cent of their business is coming from big and small farms, I would push like mad there for while. I would let the phone ring for other business – and if it came, I would service it – but I would spend all my time, money and energy marketing to the one or two segments that generated the most profit.” – Mark Healy, partner, Satov Consultants



Public relations

“The first step is a revamp of the website. The current storyline on the website focuses on a long list of services. That will never drive a successful PR campaign. Leverage the stories of your most innovative customers and share them on your website, and with trade magazines and well-regarded blogs within the farming community to drive further credibility. As a small business owner, never underestimate the power of third-party endorsements. You could have the most innovative product in your industry, but if no one is writing about it and validating its value, no one will take notice.” – Mia Pearson, co-founder, North Strategic





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