Mike Kratz, owner of Kratz Aerial Ag Service Inc., was the only person to start a business in his town last year. He describes how he carved a niche for himself in this entrepreneurial vacuum.
What's it like to be an entrepreneur who is truly peerless?
On March 1, 1997, Mike Kratz, of La Moure, N. Dak., started a company. Kratz Aerial Ag Service Inc., he called it--the "Ag" standing for agriculture application. Folks outside the Farm Belt might not recognize that term, but even a New Yorker might guess what it describes. Mike Kratz is a crop duster.
That, however, isn't why he's the subject of our story. Kratz's real distinction has nothing to do with what he does, nor even with his launch of a company to help him do it. It has to do with where he launched that company--and with the rare fact that (according to our available data) throughout his community and its environs he was the only person, over the course of 1997, to launch any kind of company at all. Starting a business is a lonely enough undertaking even when some of your neighbors are up to the same thing. So what do you suppose it's like when you're one of a kind? When you can't count on peer groups (heck, no peers), mentors, financial advisers, or available workers? And who in North Dakota's start-up wasteland might Kratz look up to? Kratz wouldn't know an entrepreneurial hero like Steve Jobs if he were standing in the middle of a plowed field flagging down his plane.
Think being an entrepreneur means feeling that you're different from everyone else? Well, given economic events in La Moure, Kratz literally is different from everyone else. Or so we thought. The truth, it turns out, is more interesting.
La Moure is a farm town--population 970 and dropping--in the arid southeast quadrant of the state. Wheat, corn, soybeans, sunflowers, and potatoes are grown here. If you want to describe La Moure's economy, you might choose a word like declining, as the locals do. As Kratz concluded a year ago, it's an economy that offers opportunity nonetheless. How he came to that decision--how he evolved into an entrepreneur--is a simple, logical story, not unlike a thousand other start-up tales.
Kratz had worked since 1983 as a pilot for another crop duster. "I was working for a guy who wasn't offering customers what they needed," he explains. "His business, to me, hadn't changed much at all since he started it, 30 years ago." Kratz left his boss and set out on his own.
"Being in business for myself is actually easier than flying for the guy I was flying for," he says, "because I have control."
Though La Moure is undeniably in a state of decline, there's "enough room for my business to expand," Kratz says. He has about 100 accounts and covers a 100-mile radius. (The rules of commuting change when you do it in your own airplane.) "There are some guys out there who don't give the farmers what they want. They do a shoddy job," Kratz explains. He, on the other hand, strives to give customers "the best available service at the best price possible." That's how viable businesses are built, he reckons.
The bulk of Kratz's business--and his growth--has come from four potato farms. A few are located far enough away from the town's small airport that Kratz's competitors were reluctant to handle them. "I went to two different areas where nobody wants to go. After I was there, the farms grew. My business grew with them," he says.
Potatoes have become Kratz's niche. "I'd like to take care of more fields in general, but I think it's good to keep adding potatoes because that's what we specialize in," he says. Potatoes promise consistent revenues, because they require spraying on a five- or seven-day schedule, depending on the amount of rainfall, from the end of May through the end of August. Other crops don't need such routine attention.
The whole arrangement seems to be making sense. And the notion of a crop-duster-cum-entrepreneur is quite fitting, really. Entrepreneurs think of themselves as mavericks, and what could be more maverick then buzzing above the prairie in a single-engine plane?
But what about the peerlessness--all those consequences of being a start-up founder in a place devoid of a start-up culture? As it happens, that is where our hypothesis derails. The New Economy in La Moure may not look the way it does elsewhere (no angels, no venture capitalists, no enterprise forums). But then in La Moure the New Economy doesn't feel particularly new in the first place. This is a region where entrepreneurs have always resided and survived and (sometimes) thrived. Despite its fallow times, La Moure isn't the least entrepreneurial place on earth. It may be closer, in spirit and in history, to the most.
Mike Kratz does business the way his family has always done business. In a community of farmers, the pressures of running a small venture are not exotic. Everyone has a few employees--farmhands and the like--and so everybody has a payroll to meet. For decades La Moure has needed an infrastructure in place to serve its small businesses.
Farm Credit Services helps Kratz with his taxes and reviews his books on a monthly basis. About 30% of Kratz's collections are handled by the local chemical company that sells him pesticides. The other 70% are followed by Kratz's wife, Janelle, who helps him do the payroll, using QuickBooks software on a PC. When he needed financing, Kratz had no trouble getting a $600,000 loan from a bank in town, using his farm as collateral. "It wouldn't be so bad if you didn't have so much interest to pay," Kratz says--although the interest rate on his loan is only 8.5%.
Much of that seed money has already been spent; crop dusting is an expensive enterprise. Kratz owns two planes, which he bought for a total of $525,000. He spent $40,000 last year on a global-positioning-system service so that he and his pilots can avoid crop-dusting errors called "skips." Seven satellites will send his pilots detailed mapping information in the cockpit, giving the program a margin of error of only three feet. While all that may sound awfully high tech, for Kratz the tools are necessary for doing a better job than his nearest competitors.
Last year Kratz grossed about $400,000. Earnings were minimal and were plowed back into the business. He'd like to push his gross to about $500,000 so that he could take out a good salary for himself and his wife. He'd also like to invest in new equipment--$250,000 for a turbo-prop engine, for starters. "Financially, I wish we were doing a little bit better," he admits.
Still, Kratz is happy with his decision to start his own company. "It was a boyhood dream," he says of being a crop duster.
"Sometimes I wish I just worked for somebody else," he concedes. "But I won't. I want to stay in it. It gives you the freedom to make your own decisions."
What reward could be more entrepreneurial than that?
Mike Hofman is a reporter at Inc.
MIKE HOFMAN was previously editor of Inc.com and a deputy editor at Inc. magazine, which he joined in 1996. The site was nominated for a National Magazine Award for Digital Media in 2010, and was named the best business website by Folio Magazine. In 2006, Hofman was part of a team of writers nominated for a Webby Award for best business blog. He lives in New York City.