Perseverance heated up his revenue
October 2007. Dick Youngblood, Small Business. Star Tribune

After struggling for four years, Paul Smallwood hoisted revenue of his heating-and-ventilation business from $180,000 in 2005 to $2 million in 2006. Photo by Dick Youngblood

After four years of scrambling to find a business focus, engineer Paul Smallwood finally hit the jackpot. He's found success working on government buildings.

Just 18 months ago, Paul Smallwood's company was a struggling, one-man operation that had generated less than $180,000 of revenue after four years of him jumping from one business idea to another in search of success.

Whereupon, he shifted his focus one more time in April 2006 -- and scored!

Smallwood's FlowSense Inc., a Maple Grove company that handles commercial and industrial heating, ventilation and air conditioning (HVAC) installations, grossed $2 million in 2006, 11 times his revenue total the year before.

And with 2007 revenue at about $3 million by the end of September, and $1.5 million in contracts awaiting approval, he figures his year-end total could approach $5 million.

Chalk one up for relentless determination, not to mention creative entrepreneurship.

It doesn't hurt that a friend who owns a larger general-contracting company has formed a joint venture with Smallwood to help him with project management and, when necessary, financing for the larger jobs that are coming his way. Smallwood, né Nguyen Thai Ha, is a Vietnam native whose status as a minority has qualified him for state and federal minority small-business assistance programs and made government his principal market. He bridles a bit, however, when folks suggest that that's the only reason his business is succeeding: "Preferences aren't much good if you can't do the job," he said.

Kathy Meyer, owner of Meyer Contracting in Minneapolis and Smallwood's partner in a new joint venture, agreed: "He has the [technical] expertise, and he's a good marketer," she said. "He just needs some help to let him blossom."

For the better part of five years, however, the blossom mainly had withered.

Smallwood, 47, is a mechanical engineer with 10 years experience as a Westinghouse design engineer, as a marketing specialist for McQuay International's HVAC controls and as a sales agent for Honeywell's industrial controls division.

Laid off in 2000 after Honeywell's merger with AlliedSignal, he decided that the broad training he'd gained at "some of the best companies in the world" might be translated into his own business.

In 2001 he began doing design engineering of manufacturing process controls, ranging from temperature controls for a Pillsbury baking system to test equipment for a 3M abrasives division to ingredient-mixing controls for a Schwan's ice cream plant.

But that business grew slowly, so he added an engineering headhunting service, then later began doing indoor air-quality assessments and selling carbon monoxide detectors to contractors and building managers. And in 2003-04 he won contracts to manage electrical and mechanical installations for renovations at a Honeywell plant in Plymouth.

The result was discouraging: 2004 revenue was just $147,000. But there also was good news. Late in 2004, Smallwood was certified for the Small Business Administration minority assistance program.

In search of products to sell the government, he went to the federal procurement website and found a Defense Department request for bids on a biometric identification system that offered iris, fingerprint and facial recognition.

Smallwood was inspired. Given growing concerns about terrorism and identify theft, "I thought this would be the gold mine," he said. It wasn't.

He assembled the requisite equipment and won a $50,000 federal contract. Then he spent all of 2005 trying to promote another sale -- and failed.

"People were interested, but they just weren't ready to buy," he said. By the end of 2005, his revenue stood at a meager $177,000 and it was clear his shotgun approach to entrepreneurship was a failure.

But he persevered, and the break came in the spring of 2006, when he was approached by the General Services Administration (GSA) about retrofitting valves and refinishing boilers at a GSA building at Fort Snelling. It was the payoff for successful mechanical design and installation projects he had done for several agencies.

And it led to a flurry of HVAC projects, including projects for the Navy, Air Force and Minnesota National Guard units at Fort Snelling, the U.S. Fish and Wildlife Service in Morris, Minn., the Environmental Protection Agency in Las Vegas and the U.S. Marine base at Quantico, Va.

Many of those organizations, plus the Minnesota departments of corrections and natural resources, have been repeat clients "after we proved ourselves and won their trust," Smallwood said.

For example, the largest project in 2006 was a $500,000 HVAC job at the Veterans Affairs hospital in Lebanon, Pa. That, in turn, led to a $1.4 million project in 2007 managing a major electrical upgrade at the Pennsylvania hospital.

Thus, it appears that Smallwood is on his way, and his banker, Jack Johnson, at the Highland Bank in Maple Grove, is delighted: "He's a marketing genius," he said of Smallwood. "And he has a real knack for finding a niche."

It just took a while.