Demolition Man

Ask Jamie Potter how his small business grows revenues each year, and he’ll tell you his answer is simple—by tearing things down.

Potter’s company, Los Angeles-based Cut Core Demolition Co., specializes in demolition, and site cleaning. A noisy but lucrative business, Potter’s company of 22 employees and five concrete cutting service trucks grossed some $3.5 million in 2002. Potter expects Cut Core to top $7 million for 2003.

Potter, 32, is no novice to running a business. The entrepreneurial spirit is in his genes. His father owned a small service and construction business in California, and Potter and his twin brother, Deontay, helped their dad run the company. In 1994, shortly after the Northridge, California, earthquake, the two brothers ventured out on their own and established Cut Core.

Later that year, however, Deontay decided to venture out on his own and sold his interest in Cut Core to his brother.

Using about $10,000 from personal savings to purchase equipment, rent office space, and advertise and enroll in a few business management classes at a local college, Potter began cold-calling potential clients and doggedly pursuing projects for his one-man operation.

“I did everything from answering the phones in the morning to emptying out the trash at night,” he says. Finally, after more than a few rejections, Potter landed a handful of small pilot projects, most of which were subcontracted jobs from larger general contractors. Unlike many small businesses that are often plagued with inconsistent cash flow, Potter says his company has been able to maintain a solid and steady cash flow and an accounts receivable rate of less than 30 days.

“I was lucky because I had a client who had the cash on hand and paid me in 15 days after a job was completed and invoiced,” he says. “I was able to meet my own obligations in a timely manner, purchase more equipment, and secure bigger projects.” One of the most expensive and essential pieces of equipment Potter purchased was a pulverizer. The heavy and awkward piece of steel is the lifeline of any demolition company. Potter says the machinery costs between $250,000 — $350,000. Cut Core currently has three and plans to purchase another by the end of the year.

Potter says about 80% of Cut Core’s revenue comes from demolition work, including concrete cutting, crushing, and core drilling. Revenues from recycling, however, are increasing, due in part to legislation in the state of California. Under California statute AB939, local governments must decrease the amount of trash and waste materials they send to landfills. The legislation mandates that 50% of trash and waste material be recycled.

As for the future, Potter says he plans to expand his business to northern California, Washington state, and Arizona. “There are plenty of opportunities out there for my company to continue to grow,” he says. “I’m not going to limit myself; I plan to explore all of them.”

Cut Core Demolition; 1575 N. Lake Ave., Pasadena, California 91104; 626-794-2120.