By Gary Stern
Investor’s Business Daily
DES PERES, Mo. — Imagine if a company created a product that saved lives and filled a product niche. Helping society is fine, but can it be profitable?
That was the dilemma faced by Clifford Adkins, CEO of ARC Products, a privately held company based in Des Peres, Mo., that develops products for disaster preparedness.
Fifteen years ago, most people ignored emergency equipment. But after 9/11, Hurricane Katrina, a rash of tornadoes and overseas tsunamis, interest in disaster products spiked. “In the event of a disaster, and you couldn’t be reached by the fire department, how would you get out of your building if you couldn’t walk out?” Adkins asked.
But niche businesses face special problems. They need to grab enough customers to keep growing despite appealing to limited markets.
After spending 20 years as a sales exec at Anheuser-Busch, then- 45-year-old Adkins accepted a severance package in 2003. But he wondered what he’d do for the rest of his life. He had five children and couldn’t retire.
In 2003, he launched ARC Products with a friend (whom he bought out after a year) who had a prototype for a product called a deer sled.
After hunters shot a deer, the carcass was typically removed by dragging it across the forest floor. This usually mangled it.
ARC’s deer sled was made of plastic, weighed less than 10 pounds, was manufactured and assembled by several local vendors and sold for a modest $25 ($30 in 2011). “All we did was the selling and distributing,” Adkins said.
The product debuted at a trade show in Las Vegas in 2005. It was sold to outfits like L.L. Bean and outdoor seller Cabela’s. But something happened at the show that changed the course of his business.
A Marine’s insight
A Marine on leave from duty in Baghdad asked Adkins if his company could produce a human sled that could remove soldiers in combat. “Soldiers are being shot on the street, and we don’t know how to evacuate them,” the soldier told Adkins.
Since Adkins’ father was an engineer and he himself was a design buff, he tinkered with a prototype in his garage. He devised a light-weight plastic sled with a tethered rope and a braking system.
Adkins named it the Med Sled: an evacuation device that allows a 150-pound person during an emergency to drag victims who weigh 250 pounds to safety. The sled measures 36 inches by 90 inches. It comes with a strap and weighs 9 pounds. Patented in 2006, they sell for $300 each, comparable to the cost of fixing a broken office window, he says.
In 2006 he applied for a $500,000 Small Business Administration loan to capitalize the business. The process was laborious. After several delays and rejections, he eventually gave up. He ploughed $180,000 of his savings into the company to produce inventory and get the Med Sled up and running.
In its startup phase, Adkins served as Med Sled’s prime salesman. He’d cold-call the director of emergency preparedness at large hospitals and say, “Do you have your own evacuation equipment? If a major disaster happens, how would you remove your patients if the fire department couldn’t get to you?” The pitch resonated.
Just two years after launching in 2007, ARC was selling 3,300 Med Sleds annually and generating $1.2 million in sales. By 2011, revenue had surged to $5 million. He hired a general manager to run the business, and expanded the staff to 11. It included six sales workers, a controller and a business development manager. Adkins spends his time designing new products.
ARC sells a bevy of products. They include evacuation medical workstations, inoculation workstations, and cart evacuation bags. But the firm’s flagship Med Sleds contributed 90% of its $5 million in sales in 2010. Med Sleds’ target markets are hospitals, which generate 75% of its revenue. Nursing homes make up 20% and schools 5%. Most hospitals buy about 400 Med Sleds for every 1,000 rooms.
Selling to the military has been tricky. ARC developed a military sled with a 100% vertical lift, which can remove soldiers from a sewer, cave or manhole. But the military version faced competition from rivals. It took a year and a half for sales staff to make inroads with military buyers.
Cold calls work
Though ARC sells online, Adkins says most sales are spurred by cold calls to hospitals and forming relationships with staff. To sell Med Sleds, “you have to be close to customers, train them, and be there for them. Every hospital is different,” Adkins said.
Growing the business will be tricky, says Jane Applegate, author of “201 Great Ideas for Your Small Business.” “He has a limited number of potential clients and buyers. Most of his energy and marketing should be (focused on) who’s going to buy and how to reach them,” she said.
Applegate also says generating news stories is a way to boost business. “If the product was used in a rescue, it’s perfectly positioned to get press coverage,” she said.
Adkins thinks Med Sled is primed to tap new markets such as corporations and real-estate owners. “We believe every public facility has a responsibility to get people out of a building in an emergency,” Adkins said. Of course, that could trigger more business his way.
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