Bruggeman Lumber Inc., Hopkinton
The Iowa Small Business Development Center helped the owners of Bruggeman Lumber find new sources of financing so they could restructure the company’s loans to improve its cash flow, plus provided additional, specialized counseling to get the company back on the right track.
Bruggeman Lumber Inc. is a saw mill business in Hopkinton, Iowa owned by Arnie Bruggeman and Bill Wiezorek. The company purchases timber and logs to process and sell to specialty companies that manufacture furniture, coffins, and dimensional lumber for larger lumber suppliers. The company has five profit centers: the saw mill, veneer logs, pallets, dimensional lumber, and kiln-dried lumber. Arnie and Bill purchased the company in 2005 from a bank and were successful in their first two years of operation but ran into significant cash flow problems during the economic downturn in 2008 and 2009.
Because the company was in distress, the Small Business Administration (SBA) contacted the Iowa Small Business Development Center (SBDC) at Northeast Iowa Community College in March of 2009 to see if the SBDC could help the company find sources of financing and restructure its loans to improve cash flow.
The initial meeting between the owners and Terry Sullivan, SBDC Regional Director, highlighted many other issues the company needed to overcome. These included company layoffs of ninety percent of its employees, the need for additional working capital, and the owners’ inexperience in operating a manufacturing facility. The owners also needed to contact their customers to see if they would start placing orders again when production restarted. To complicate things, the company’s current bank would not extend additional credit and their search for other bank financing had not been successful.
The SBDC provided many hours of specialized counseling covering the operational aspects of manufacturing, personnel needs and interviewing, banking relations and bank needs for financing, accounting systems, market research, plus an honest SWOT analysis of the business and each individual owner’s abilities and practices. The SBDC helped the owners develop a realistic, workable business plan and pro forma statements for the bank, plus attended their bank meetings and interviews and met with them afterwards to coach them on how they could make their next presentation better. Terry also helped Bill and Arnie find a qualified operations officer and a new bank that would partner with their present bank to help restructure the company’s debt. The entire process took about fifteen months to complete.
Arnie and Bill obtained an SBA-guaranteed working capital loan from the new bank, a guarantee from the original bank, and refinanced ten outstanding loans into three loans. The new loans have fixed rates that are half of what the original loans had been, saving the company thousands of dollars in monthly payments.
Bruggeman Lumber recommenced operations in September of 2010. The company hired Roger Gibbs as their Chief Operating Officer; he specializes in manufacturing, has a strong background in accounting, and was willing to take a risk on making the company profitable again. As of March 2012 the company hired back 17 of their 30 laid-off employees and when the company achieves full production they intend upon hiring back the rest of their laid off workers. By March 2012 sales were at $2.7 million and growing and the economic impact of the company on its surrounding small towns is huge.
Bill and Roger commented, “Without the SBDC’s out-of-the-box thinking to refinance this company we wouldn’t be in existence today. With SBDC help we are now contributing to our communities and the state.”
The owners and officers of Bruggeman Lumber continue to meet with the SBDC to review financials and progress and will come back to the SBDC whenever they have ideas to grow their business further. If you would like to contact the company, you can call 319-465-7083.