Ford Reiche and his partners have used a tried-and-true, four-step process to evaluate business opportunities at Safe Handling, the bulk transportation company on Rodman Road. They followed that process in 2005 to launch Safe Handling Solutions, a manufacturing division. Here are the key questions any business should ask before expanding:

• Is this something that might be a good business opportunity?

In 2005, globalization was in full swing and how companies transported materials was in flux. Costs were increasing, and the world was becoming aware of greenhouse gases for the first time, Reiche said.

Many of the products being shipped were made of water (paint, 55 percent water; soap, 75 percent water). Why pay for the weight of water?

“We saw that need and decided, ‘We have the trucks, the chemists, the facilities,'” he said. “We needed to figure out a way to put water back in the product.”

The idea was to get customers to ship dry, powdered materials via rail and reconstitute them into their final form at the Auburn facility. From there, the products would be trucked to customers.

• What are the things that can go wrong and how can those risks be managed?

Investing in a new division without any guarantee that it would fly could have destroyed Safe Handling, Reiche said. A new facility with its permits, construction costs and the personnel to run it would have cost about $6 million. Reiche said the company was committed to keeping costs down, revenue up and remaining financially secure while trying to launch a new division. What it needed was a customer and outside capital.

• Having identified the obstacles, what needs to be done to eliminate them?

“That requires creativity,” Reiche said. “This is the essence of what keeps us out of trouble.”

Reiche found a customer who was willing to commit to a five-year agreement at a fixed price that guaranteed $15,000 a month income for Safe Handling Solutions. The customer got cheaper shipping costs and a five-year commitment that Safe Handling would not offer its capacity or services to any competitors. The customer further agreed to pay $200,000 of the $600,000 equipment costs needed for the new venture.

Then – reversing decades of Yankee stoicism – Reiche asked for a government grant to pay for 5 percent of the cost of the building.

“The public benefits so much from a successful company,” he said, citing studies that show $7 flows into the local economy for every $1 earned.

He also secured all the necessary permits for the new division.

“Then we we hit the bank,” he said. “We had a little cash in our pockets from the customer and the grant, and had a large company agreeing to pay us $15,000 a month.”

They got the loan.

• Lay everything on the table. Is it still something we want to do?

Reiche said the process leads to plenty of dead ends, but it works. In this case, it took a year to work out the manufacturing process and another year to arrange the financing, but today that division brings in $3 million a year.

– Carol Coultas

Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.