When Arthur Mabbett and a partner founded an environmental consulting company in 1980, he faced record-high inflation and staggering interest rates. He quickly found that no bank would even lend him money -- so he scraped and scrounged to get Mabbett & Associates running. (Originally called Mabbett, Capaccio & Associates, until Mabbett bought out his partner in 1992). Business is never easy, but Mabbett says his perseverance has been key to his success, landing his business on the Inc. 5000 six times since 2010. Here, he shares how he made it through the rough spots -- and how other business owners can learn from his example, especially in today's uncertain economic environment. --As told to Rebecca Deczynski
In life, you're faced with a myriad of challenges and opportunities, and some of the opportunities, quite frankly, you have to create yourself. My whole life, I wanted to be a dentist. And when I was a junior pre-med student at the University of Massachusetts, my advisor sat me down and said, "You'd be a lousy dentist." I asked him why, and he told me I had to figure it out myself. But I couldn't. So eventually he told me: "I can't see you in a dental operating room with your hands in someone's mouth for seven to eight hours a day, without meaningful conversation."
I paused for a moment. I'm a bit of an extrovert and a people person, and I told him I appreciated his honesty. I asked him what I should do instead. And he told me I should go into the environmental field, because it was a growing field of the future. This was 1968.
I ended up going to Rutgers University on a full scholarship as one of the first U.S. EPA [Environmental Protection Agency] scholarship recipients. I was there for a little over a year and a half, and the Vietnam War was still underway. Then my draft number came up. Long story short, I went to the dean of the college and told him I intended to serve this country, but I wanted to put my education to use.
I ended up getting a direct commission into the U.S. army as an environmental science officer -- a brand-new military occupational specialty. On New Year's Day, I landed in Hawaii, where my job was to make sure that we had no negative impact on the Hawaiian environment, the economy, or tourism. A two-year assignment became a three-year assignment, a three-year assignment became a four-year assignment, and eventually it became a career.
Then in 1976, my commanding officers at the U.S. Army Environmental Hygiene Agency told me, "Art, you've got to get out and start your own company -- you have the ability, not only as an engineer and a scientist, but as an independent business person." I left active duty, but stayed in the reserves for another 13 years.
I joined an architectural engineering firm in Cambridge and started that company's environmental, health, and safety group. Then, four years later, the company was no longer interested in addressing environmental issues like hazardous waste and pollution. So I decided it was time to leave and start my own business.
I remember I went home one night, shortly after making that decision, and my wife seemed quite upset. I asked her what the matter was, and she told me we were going to have another baby -- we already had two children, one five and one three. I called my old colonel at the army and he told me that he'd have me back on active duty in three days if my business didn't work out. So I knew I had a safety net.
I wrote a business plan and shopped it around to all the banks I knew. But interest rates were north of 20 percent. There wasn't one bank that would lend us a revolving line of credit for cash flow purposes. We had no external financing, but we did have a good reputation. I launched the business with my partner, Bob Capaccio, who I eventually bought out in 1992 because we had different visions for the growth of the company. A lot of my old clients came with me, and my wife and I scrounged together every penny we had. I also spoke to some clients to get advances on projects. I think we generated about $100,000 -- I cashed in everything I could get my hands on. We had hot dogs and hamburgers for a couple of years, because I knew I needed to take care of my staff, which started with about seven people. It took about three years for us to feel more stable.
I remember early on, we needed office furniture. I looked into the classifieds in the Boston Globe and found that this denim company, Faded Glory Jeans, was moving their manufacturing overseas, so they had everything in their office for sale. I reached out, told the caretaker about myself, and he offered to give me about $150,000 worth of furniture for just $5,000. My employees and I rented U-Hauls and loaded everything up.
Throughout the years, there have been plenty of challenges. It's a challenge when manufacturing businesses and governments have budget restraints in the environmental industry. When governments and private industries are hit with a downturn of revenue or sales, they don't necessarily go above and beyond what's required by environmental regulations, which have really driven the environmental industry over the past 40 years.
Globalization also really impacted American industry. Around 2005 to 2008, we lost about 60 percent of our manufacturing clients because so many businesses moved production overseas. At the time, we primarily worked for private companies, so that made a big impact. But around that time, President [George W.] Bush also introduced two new small business classifications: veteran-owned small business and service disabled veteran-owned small business. We qualified, and that helped us to really bolster business. Around 2009, we also entered the federal sector, which is about 75 percent of our current sales. Shortly after that, we made the Inc. 5000 for the first time, in 2010.
I really believe the way an individual has managed his or her business will determine how successful they are during recessionary or inflationary times -- and I do believe we're going to have a tough couple of years ahead of us. Many owners of small businesses tend to pull out an awful lot of cash from the business each year. I think those people are going to have to look at their expenses. There's going to have to be some consideration of salary reductions, starting at the top, not the bottom. In our 42 years of business, we've never had across-the-board staff salary reductions. And even during Covid, we've been able to pay bonuses and give people raises. In 2020, we were down about $500,000 to $600,000 in sales. But then, in 2021, we had a record year.
Leaders have to make the commitment to keep their company moving forward. It may not be the time to invest in new opportunities, but to look at what you can do better, or more efficiently? How can you increase your margins? So many businesses are tied up with getting the job done that they don't take a step back and look at the strategic status of the business.
And you really do have to think strategically, all the time. And you have to think about people -- the strength of our firm is based on the fact that our 75 people work together, hand in glove. My oldest client right now is a client that I started working with in 1977, even before I started Mabbett. You can't take clients for granted, and you absolutely have to work -- and work to strengthen relationships. Over 80 percent of our clients are repeat. You have to build a strong foundation like that so that when times get tough, you can get through it.
I love what I'm doing. I truly enjoy being a steward of the environment -- I'm an environmentalist, an Eagle Scout, and an outdoorsman. I enjoy working with my colleagues and our clients. Our vision statement is to be the company that's helping to take care of the earth's problems, to right the wrongs that have occurred over the past centuries. I look forward to coming to the office everyday and mentoring young people. And if I can continue to do that, if God gives me good health and I'm competent enough to do it, then I will continue to do it. It's not because we're making millions of dollars -- it's because I want to see my grandchildren inherit a world that is better than the one I inherited. It's a sense of persistence that drives me.