Netfloor USA designs and manufactures cable management access flooring – a raised floor that’s elevated a few inches to conceal and protect power, phone, and data wires running through a building. Founder Ryan Hulland says the benefit is wide reaching, allowing architects, engineers, and facility operators to more easily manage, conceal, and protect these ubiquitous cords. Before Netfloor USA, the options for these professionals were to dig holes in concrete or contend with wires threaded through the ceiling. It’s no wonder some of the biggest electronics retailers and manufacturers in the world are jumping on the Netfloor bandwagon!
Why did you start your business?
My background has nothing to do with Netfloor USA. I got a bachelor’s degree in economics. I thought I was going to work for some company, look at financial statements, and make important decisions. When I was in college, I started working for my mom. She owned her own company that worked in datacenters. She sold the cooling systems that kept server racks cold and the electrical systems that kept the power running on the servers. She was trying to think of ways to provide a full package to datacenters. One of the big pieces of the puzzle was the raised access floor.
When I was working for her, I had a meeting with a client. I got a tour of his datacenter, which was pristine. When I walked into his control center office, it was the dirtiest, messiest room I had ever seen, with laptops and cables and phone wires all over the place. I almost tripped on a phone wire! That experience really stuck in my mind. In the 40 or 50 years that datacenters have been around, they’ve been using raised access flooring. It hasn’t changed in all that time. It’s been 2-feet, 3-feet, or even 10-feet tall! I thought there had to be a better way. It really got under my skin. People in the datacenter industry know about and use raised access flooring, but there are so many other applications for it.
I started going on other sales calls and asking clients if they would ever consider raised access flooring in their control centers or in their offices. They always said they wouldn’t, because the ceilings were too low to raise the floor several feet. I had the idea to make raised floors that were only several inches high instead of several feet high. I also wanted the solution to have built-in cable management. That’s how the idea was born. I realized there was a huge opportunity, so that’s how I got my start.
How did you get the funds to get going?
My mom has always been a big believer in dealing with cash only in her business, so that’s the mindset I was brought up with. I started the business by investing the income I was making by working part-time for my mother. My wife worked two jobs to help us pay the bills. For about three years, we had to look at every penny that was going in and out.
I had decent personal credit and looked into business loans. They all wanted me to personally guarantee the loan. In the position I was in at the time, that wasn’t going to work for me. In retrospect, I think that might have hindered our growth a little bit.
Have you heard of business credit?
Yes, we use credit. We got to a point where our manufacturing couldn’t keep up with the demand. We got a several large orders, including one for a skyscraper with 20 floors of cable management flooring. I didn’t have anywhere near enough money in my bank account to pay the 40-50 percent that’s required upfront for manufacturing. I didn’t want to walk away, so I had to figure out a way to do it. At that point, I had to put aside my cash-only mindset and get a line of credit.
Managing the Business
What’s most challenging about running your business?
I feel that we have a great product that is very unique. Everyone who uses it loves it and realizes the advantage. But, not a lot of people know it exists. The biggest challenge is getting the word out there.
How do you finance your business to manage cash flow or growth?
Any small business has to focus on getting sales to meet payroll. The sales cycle in the construction industry can be very long. I was always of the mindset that a healthy company has as much money in the bank as possible, owns assets, and operates with cash only. I learned that if you want to grow, it’s not a bad thing to get a loan or take out a line of credit. If it’s to cover payroll from one month to the next, you shouldn’t do that too much. But if it’s to develop product or get a big order that can take you to the next level, it’s not a bad thing.
Do you use trade credit from your vendors or suppliers?
Our manufacturers require a percentage upfront (about 30 to 50 percent) and give us 30 days to pay the rest. The 30 days begin when the product is shipped. Since our product is heavy, it comes on big freight ships, which means it can take 4 weeks to get to our facility. So, by the time we get the product, we’ve had to pay for it in full.
What’s the biggest mistake you made in your first year?
The biggest mistake has been believing that other companies pay their bills on time. There have been a few situations when we have installed our product and then the customer decided they wanted to change something or the project was put on hold due to zoning issues. In those situations, it was a long time before we got paid.
What’s the smartest thing you did in your first year?
The smartest thing was when I checked my pride and switched from dealing only with cash to getting a line of credit. Getting a loan or a line of credit can help a business get to the next level, as long as you have a plan in place. It’s helped my company grow, cause we’ve been able to take on large orders and expand our business.
Pro Tip: Learn about your business credit scores and how they play into your chances of getting funding.
What’s the most rewarding thing about owning a business?
I could work an 8-5 job, and that would probably be easier and make more money, too. But, the most rewarding thing is being able to say that I built this from scratch. I’m really proud of it. The feeling that I created something is more important for me than any vacation or amount of money I could make.
What does the future look like for your business?
I get a feeling that there will be an uptick in construction, because we are getting a lot of inquiries about our product for new buildings – from libraries to offices. We are in the process of expanding our distributor network by signing on reps and distributors to sell our product so we have better geographical coverage throughout North America. Our goal is to keep growing.
What advice do you have for someone starting a business?
A lot of businesses start with one small idea that morphs into something bigger. It’s easy to get really excited about it. It’s important to make sure that even though you think you have the best idea in the world, you have a business plan that you look at and ask other people to look at to see if it makes sense. If you have that, you have a strong foundation.
You have to be passionate about what you do. The statistics are that so many small businesses fail within the first couple of years. You can’t be starting your own business because you want to be rich and you want to be sitting on the beach with a cocktail in your hand, posting on the Internet. It takes a lot of work – way more than if you were working for someone else. You have to be dedicated and motivated, because there’s going to be so many challenges. If you’re not going to be committed to it, you’re going to fail. If you are, you will get through the tough times.