Out of the Ordinary

How to turn a no-growth roofing business into an Inc. 500 company

Here, presented for the first time anywhere, is Tom Tjelmeland's foolproof fast-growth strategy: enter a mundane, low-margin industry, situate your company in the middle of nowhere, and fall through a skylight every now and then. Follow those steps, and you've virtually reserved yourself a spot on the Inc. 500 -- and a permanent pin in your ankle.

Now let's give the strategy a label: dumb luck.

Indeed, what else could account for T&K Roofing Co.'s ranking as #483? It certainly didn't get there by investing heavily in R&D or discovering a new segment of the market. Buy a used van, grab a beat-up ladder, and you, too, can be a commercial roofer. The most common tools of the trade practically date back to the days when people scrawled messages on cave walls: a pair of scissors and a screwdriver.

Well, then, did some rising tide lift this little raft of a company, boosting revenues over a five-year period more than 700%? The most obvious explanations seem to fall short. A building boom, for instance, might have fueled the company's growth -- but Ely, Iowa, and environs could hardly be described as a metropolis, bustling or otherwise. And it isn't as if T&K has the market all to its lonesome; one of the country's 20 biggest roofing contractors lives practically in its backyard. Even Tjelmeland (pronounced Chell-ma-land), who founded the company on April Fools' Day of 1962, seems at a loss to explain the phenomenon. "I figure I'm a pretty ordinary guy," he says.

But step inside the offices of T&K, named after Tom and his wife, Karen, who is the accounting manager, and you begin to suspect that ordinariness lies in the eye of the beholder. It sounds subtler than it is. Instead of dripping with -- and reeking of -- tar, T&K's roofers wear clean and crisp uniforms; out back sit the company's white trucks, perfectly aligned and surprisingly shiny; personal computers hum away atop most desks. "I have only a high school education," says Tjelmeland, whose round face is bordered by Abe Lincoln-style whiskers, "so I've had to pick up where I can just to survive."

Changes at T&K Roofing, he claims, haven't been inspired by the works of such management gurus as Peter Drucker or Tom Peters -- though they very well could have been. Tjelmeland has little time for study: he's simply trying to stay ahead of more and more competitors and to satisfy increasingly demanding customers. Not so long ago a journeyman could spend $4,000 on an ad in the Yellow Pages and count on the work coming in steadily. No more. Once the domain of tradesmen, roofing has become a complex and unforgiving business: let your marketing expenses, labor costs, or collections slip, and you will take a fatal fall. "If we did business the way we used to," says Tjelmeland, "we'd just be subject to the odds."

Like so many Inc. 500 companies, T&K plans to boost those odds not by becoming the next Polaroid or Xerox but by striving to be better in as many ways as possible. T&K and others like it focus on mastering the learning curve of execution.

That curve rises ever steeper. Leaks, once the bane of every roofer's life, are the least of Tjelmeland's worries. His ability to stay in business hinges on coming up with inventive responses to a host of crushing pressures: aggressive competitors, increased computerization, the need for marketing. As construction drops off and companies become more timid about expanding, he faces an even tighter squeeze. "The realities of this business have changed," says the 49-year-old. His competitors -- the ones who are still around -- have wised up as well. To attract customers, it takes something more than a fair price or even a quality job. T&K's growth relies on the creativity and imagination Tjelmeland and his managers bring to it.

"What we're doing is a risk and a gamble," says Scott Appleget, marketing director. "But to us, the roofing business was a lump of clay waiting to be molded."

One of these days, I'm going to ditch this SOB boss of mine and set off on my own.

Such has been the vision -- if you can call it that -- of many a roofing entrepreneur. Tjelmeland, though, "wanted to make the company big enough so I wouldn't have to go out on those roofs," he says. He achieved that goal after just five years. Because Tjelmeland focused on more lucrative commercial and industrial jobs, rather than residential work, his rise owed much to a scarcity of worthy competitors. By setting slightly higher quality standards, he attracted the kind of loyal customers who didn't even want to see a quote. Tjelmeland gladly obliged, taking away aftertax profits of as much as 15% on sales that soon reached $400,000 a year. His marketing costs consisted of paying his phone bill so that customers could get through.

The business practically ran itself -- or at least it might have, had Tjelmeland been the type to sit back. But he was constantly going to seminars and listening to speeches, picking up whatever ideas he could and trying to figure out how to apply them to the business. It wasn't easy. Often roofing seemed almost oppressively simple. The crews went out; the roofs went on; the bills got paid. It seemed the company wasn't big enough for all his sophisticated, if scattered, notions.

Restless, he directed his interests into other companies. In 1977, after becoming among the first to buy a microcomputer in neighboring Cedar Rapids, Iowa, he grew enamored of the flawless monthly statements he could produce. In fact, Tjelmeland was so taken with them that he decided to start a consulting business to help other small businesses set up systems to control inventory, calculate payroll, and monitor accounts receivable, among other functions. Data Management Inc. employed four people when it debuted in the summer of 1982, but by the time it was up and running, accounting firms and consultants had discovered the same niche. Eventually Tjelmeland sold his customer list for about $10,000, recouping roughly 25% of what he had spent on the two-year venture.