Custom Stone Interiors, St. Cloud, Minn.

May 4, 2005

   When it comes to creating stone products, Tom Hansen and Mark Scheibelhut, the partners who opened CSI in mid-2001, are confident machine fabrication is the better way to go – because they’ve been involved in building the machines.
   Launching a new business without any customer base in an area that Hansen describes as, “granite central,” was a concern, though, especially since neither man had formal sales experience.
   As the company approaches its fourth anniversary, the partners have worked their way past the bugs that often beset new businesses. Last year CSI moved into its own 10,500 ft² building, they’ve hired someone to help with sales, and Hansen says they’re really starting to spread their wings.

DIFFERENT PERSPECTIVE
   Think that starting in business might be easier if you just knew a little bit more about what you were doing, or had a slightly different perspective? Scheibelhut and Hansen would tell you it’s still a challenge.
   Both previously ran businesses, although not in the stone industry. Hansen owned a sheetrock-contracting business for 11 years prior to college, and Scheibelhut held the position of general manager for a $31-million division of a major manufacturer in the graphic arts industry.
   Engineers by education and training, they’d also been a couple of the people behind some of the industry’s cutting-edge equipment.
   “We were both engineers at Park Industries,” explains Hansen. “Mark was the vice president of engineering and I was one of the design product engineers. I worked on both the Pro-Edge™ and the Wizard™. We got to know the industry that way.”
   A management change at the St. Cloud, Minn.-based manufacturer started Scheibelhut thinking about starting his own business. When he talked with his friend Hansen, the two men decided to take the plunge and open their own fabrication shop.
   Hansen admits that their years of experience talking with stone-shop owners about how to improve Park’s equipment gave them a broad look at the industry.
   “We had to figure out how their businesses worked so we could build better machines for them, so we got to know how the business worked,” he says. “We also knew that if we were smart about what we were doing, we could do well. And, we knew it could be a fun business to be in, and a challenge to turn out high-quality products.”
   Being engineers, the partners also put a lot of thought and planning into their new venture. They knew they had to balance the amount of money they had to invest against the level of quality they wanted going out the door.
   After about five months of planning, Custom Stone Interiors opened for business in June 2001 in 3,800 ft² of space with a Pro-Edge, a Wizard, a saw and one employee.
   “We probably did more planning than normal,” Hansen admits. “Not only did we plan out the size of the shop we’d need and the equipment, but there was also a lot of financial planning that went into it before we decided to go ahead. Our business plan was so thorough that the bank complained it was too detailed.”
   In the end, the two men agreed that if they started turning a profit by the one-year mark, they’d be okay.
   “We figured we had enough time before we went broke that we could start building a clientele,” Hansen says. “We started working toward that goal and did it, but it was pretty scary. I don’t know if we’d do it again.”

QUALITY AND SERVICE
   The partners may have been new in the ways of running a granite-fabrication facility but they did know one thing that’s gotten them into plenty of doors (and lots of kitchens and bathrooms): a commitment to quality.
   Probably because they knew that sales would be ta weakness, Scheibelhut started making cold calls to get their name out to possible customers. It’s an approach they still follow today, although about a year ago they hired Hansen’s brother, Peter Hansen, to take over sales and marketing.
   “Once we got our foot in the door through a cold call, we’d go and make a visit, and try to quote some jobs for the person,” explains Tom Hansen. “When we finally get a job, we impress the client with everything we do.”
   That “everything” includes a commitment to what the two men call “best-attainable quality,” as well as going the extra mile on customer service with 24-hour turnaround on quotes, eight working days from measure to install, and adding some finishing touches.
   “The quality of our work and the customer service we provide is enough to grow our business,” says Hansen. “One job turns into more; once you get a good name in the business, word spreads. Most of our growth has come from just plain old word-of-mouth.”
   The idea behind best-attainable quality is one that may set old-time fabricators’ teeth on edge, but Hansen says it comes from the belief that by using high-quality equipment and formal process-control methodologies, they can consistently and cost-effectively create a top-quality countertop.
   Of course, the partners believe that CSI’s situation is unique with a shop operated by engineers with specific experience designing stone-countertop machinery. That’s given them the ability to develop unique programs and operating procedures for their machines that provide a quality edge that can be difficult for their competition to duplicate.
   CSI’s quality commitment also led to an additional business. Knowing consistency is a critical attribute of superior quality the partners insist all of the arcs and sink cutouts be done using templates, as opposed to being done freehand. Scheibelhut says the templates insure dimensional accuracy not attainable by hand and maintains a very high standard of quality in the fabrication area.
   To achieve their goal, the partners designed arc and sink-cutout templates for use with the Wizard and similar radial-arm machines. A fortuitous stop by a tooling salesperson led to an arrangement where the templates are now sold nationally through Braxton-Bragg Corp. and Granite City Tool Co.
   While their technological expertise gives them an edge with their equipment, a lot of their approach dates back to the days when hand tools were the norm.
   “We want to be known as the high-quality shop in the area, and we like to impress people with the quality of our work,” Hansen says. “We do things that a lot of other shops don’t do because they don’t think it’s worth it to take the time, but we do.”
   For example, he says the shop takes extra care to match finishes, and the bottoms of overhangs are honed smooth. Often, it’s just little things, but when they’re done on an on-going basis it adds to the reputation of the shop.
   Some of it is simply attitude.
   “It makes a difference if they call and talk to somebody who’s cheerful and helps them out on every call,” says Hansen. “A significant amount of effort goes into educating the customer prior to the sale to minimize the possibility that the person will be surprised or disappointed by some normal or natural aspect of the stone. There are a lot of customer-service issues that come up in any type of business, and we try to stay on top of them.”
   Still another area to which the partners pay close attention is installation. Hansen says the company’s installers (they have the flexibility to send out one or two crews as needed) are carefully trained to provide the quality of service CSI wants to project, although some of it is simply scheduling.
   “We really don’t do anything that special, other than committing to taking the time a job needs,” Hansen says. “The shop is allocated whatever time is required to do a first-rate job, including time for all the little details, because it pays off in the long run with repeat work.”
   That’s about the only part of the schedule that’s laid back, though. The partners don’t see any problem turning around a quote in a day, as long as a would-be client can fax them some sort of sketch containing the basics on it. The eight-day turnaround on jobs is more of a challenge at times.
   “The volume goes up and down, of course, and sometimes the capacity gets maxed out and we have to really push it, but we’re still get the work done one way or another without compromising our commitment to quality,” Hansen says. “We set up our system to turn things around quickly. When we have work coming in at a relatively steady pace and it’s going out the door at the same pace it’s pretty slick.”
   Again, the partners’ engineering backgrounds help keep that part of the operation flowing smoothly. Jobs go in and out in the order they’re received, rather than having several jobs in various stages of completion, where Hansen says, “things get forgotten.”
   So far, the partners haven’t considered adding any sort of automatic tracking system to their shop, and as long as the work continues to flow smoothly out the door, the two men don’t see the need to exchange their own expertise for a high-tech information system.

MANAGING THE FLOW
   The fact that the partners are able to do turnarounds so quickly is even more amazing given the fact that they don’t normally stock slabs.
   “There are enough suppliers around here that we don’t have a problem,” Hansen says. “Some people say you can save money by stocking slabs, but for us it’s an inventory and space issue.”
   Instead, the partners simply make sure they know the stone for a given job exists and it’s ordered in a timely fashion. Given that most of the warehouses that sell slabs can deliver them in a day or two, Hansen says CSI will often order the slabs the same day a bid is accepted. That way the stone is on-hand by the time the shop has finished its field measuring.
   Since the shop is located less than 20 miles from the Cold Spring, Minn., headquarters of Cold Spring Granite Co., Hansen adds sometimes people will select their slabs first, and then look for a fabricator.
   “It’s more-typical that they’ll come to us and we send them out to look for slabs,” he says. “The real trick with managing the flow of jobs and slabs is keeping your information in the right place so you don’t forget things.”
   Along with individual homeowners looking for kitchen countertops, bathroom vanities and showers, and fireplace and whirlpool surrounds, the shop also works with building contractors and with cabinet shops who are subs on residential projects.
   “Locally, it’s traditionally been up to the cabinet people to handle the countertops,” Hansen explains. “They will either steer people our way or take care of it themselves, so they have an opportunity to have a say in the look of the project, and to also have a mark-up.”
   By comparison, when the company gets into projects in the Twin Cities area, the partners typically work directly with the contractor.
   “With the cabinet makers, we do supply them with sample boards, and some of them like to take care of the stone selection,” he says. “We’d just as soon take care of that ourselves; we feel we’re a little more versed on the pluses and minuses of different stones for different applications.”
   Despite the company’s location, natural stone isn’t the only material in which the company works. Cambria has its manufacturing facility less than two hours from CSI.
   “We looked at getting into quartz fabrication approximately two-and-a-half years ago,” says Scheibelhut. “After evaluating the various suppliers, we selected Cambria due to its unique U.S. market presence, superior color palate and excellent marketing program. It has been a significant contributor to our growth, and we like that we can provide quartz surface if that’s what the customer wants.”
   Customers come will come in and look at granite and switch to Cambria or vice versa, the partners say; since they supply both, their goal is to make sure the buyer has enough information to select the product that’s best for a particular job.
   The idea that the customer base for their products keeps on growing is an important one for Scheibelhut and Hansen, because they are definitely geared for growth. Late last summer, CSI moved into its own 10,500 ft² facility on four acres in a St. Cloud business park. While the added room is nice, Hansen says it’s only part of the reason for the move.
   “Basically, it was time for us to move if we wanted to keep growing,” he says. “We were growing pretty quickly and if we wanted to keep growing and add capacity we needed a larger facility. Plus, we wanted to build a custom shop where we could have the proper water and drainage.”
   The move also gave the company its first showroom. Hansen says it’s only a little larger than a residential kitchen, but it does give the partners the chance to show off their kitchen countertop work.
   Despite the expanded space and an employee roster that now numbers 11, the two men didn’t initially add new equipment. However, plans are to purchase another Pro Edge and another saw within a couple months, with a CNC router on the horizon before the end of 2005.
   “Once we start utilizing all that, then we’ll probably have to add on to this building,” Hansen says, adding the site was chosen to allow all that to happen.
   If anything, the partners are realists. Scheibelhut says they’ve worked for other companies where the growth came too quickly. And, despite their success, Hansen says they’re really about where they expected they’d be as they approach their fourth anniversary.
   They also expect the demand for natural stone and natural quartz to keep growing, but they know there’s a possibility that demand will slow.
   “We do see growth in the future, but we try to keep in mind that might not be the case,” Hansen concludes. “Success for us has been the ability to build a new facility and hire a few more people and start spreading our wings. We’re pleased we’ve gotten to this point this quickly, but if we can get done with a project and the customer says to his neighbor, ‘We love these guys,’ then we’ve done our job.”