Dick Youngblood
Star Tribune
Published Sep 1, 2002

The essence of entrepreneurship is the ability to spot an opportunity and the willingness to dive after it despite the risks. Say howdy to the poster boy for the genre: Dave Anderson, 55, who faced unemployment 20 years ago when his longtime employer went out of business. Despite limited capital and zero experience, he concluded that it was the ideal time to go into business for himself.

The result is Bay & Bay Transfer Co. Inc., a Rosemount-based trucking company that has been growing at an annual clip exceeding 25 percent since he bought it in 1989. And recession or not, there's been no sign of a slowdown. Anderson's route to success, you might say, has followed the roads less traveled: His nose for opportunity has led him into a lucrative series of niche markets that have hoisted Bay & Bay's annual revenue from $1.1 million in 1989 to $4.3 million by 1995 to $18.5 million in 2001.

This year the company is on track to gross nearly $25 million. That doesn't count about $400,000 in revenue from Anderson's leasing company, which has invested $4 million since 1999 in tractors and trailers that are leased to Bay & Bay's contract drivers. The company, which had six trucks and 13 employees when he acquired it, today has 80 employees and 120 contract drivers. Its fleet, including company-owned and leased equipment, totals 200 tractors and 300 trailers.

The secret is Anderson's niche strategy: "We've grown because we focus on markets with specialized needs and are willing to invest in the extra equipment and labor to meet those needs," he said. Better yet, "our niches bring a premium price, but are too small to attract big competitors," Anderson said. Included on the list are dry bulk materials such as sand and fertilizer; office furniture for schools and hospitals, and wheeled products such as lawn mowers, golf carts and all-terrain vehicles.

Lost job=opportunity Anderson, a workaholic given to 12-hour workdays that begin at 5 a.m., started out in the diesel-repair business in 1982 after the Burnsville trucking company for which he'd worked as a diesel mechanic for 13 years succumbed to the pressures of deregulation.

"I thought about it for about 30 minutes, then leased [his employer's] facilities," he said. Anderson Diesel Truck Service was in business the next day. Anderson's wife and business partner, Lois, was not thrilled: "When I told her I'd lost my job, she started to cry," Anderson recalled. "Then, when I told her we were starting our own business, she really got scared." She had good reason: Neither had any business experience, which is why they started taking night courses in business at the Dakota County

Vocational Technical School.

But Anderson had a good reputation among local truckers. His former employer had augmented its trucking income by servicing trucks owned by other companies, and he retained those clients. Business got so good, in fact, that he bought a used truck tractor in 1984 for $4,000 to muscle clients' trailers around the yard outside the repair shop. That's when opportunity started hammering at his door.

Bay & Bay Transfer, then a repair client that specialized in hauling dry bulk materials, occasionally ran short of rigs to meet demand. So Bay & Bay's general manager began asking Anderson to use his newly acquired "yard tractor" to help fill the holes in the schedule. Smelling opportunity, Anderson hired a driver, invested $4,000 in equipment to unload bulk materials from Bay & Bay's pneumatic trailers and arranged to lease his tractor back to the trucking firm. In the ensuing four years before he finally acquired the company, he began buying Bay & Bay's rigs and leasing them back to the owner, who was winding down the business on the way to retirement.

Business diversifies From the beginning, the bulk business thrived. Area foundries required mountains of sand; Morton International and Cargill Inc., hired Anderson to haul their salt products and fertilizer clients were spread across the state. There was just one problem: Bulk materials were largely a summertime business, which meant a lot of down time for expensive equipment. That's why Anderson was so ready to open his checkbook when he got a phone call in 1990 from an area broker.

"He said a manufacturer of office furniture for schools and hospitals was looking for someone with air-ride trailers [equipped with suspension systems that ride on air bags] to deliver product," Anderson said. "I told him I didn't have any, but I darned soon would." Whereupon he lightened his bank account by nearly $80,000 to acquire six air-ride trailers. Then he arranged to take over the general freight business of one of his repair customers that had gone under. Suddenly, Bay & Bay was up to its hubcaps in the so-called pad-wrapped general freight business.

In 1999, Anderson hired a general manager with experience hauling ATVs for Polaris Industries. Over the next two years, he invested about $60,000 in the specialized ramps and decking needed to move wheeled products and today counts Arctic Cat, Toro and Polaris as clients. By 1998, however, Bay & Bay had outgrown its Burnsville location, and the next year Anderson split the operation and moved the headquarters and general freight operation into a new $2 million, 19,000-square-foot facility in Rosemount. That mortgage, plus the inefficiencies created by such rapid growth, persuaded Anderson to apply the brakes this year while he paid down debt and focused on cost reductions.

That's not working out too well, however: Instead of the 20 to 25 percent gain he'd projected, the business appears headed for a 30 to 35 percent jump."When a customer calls, you don't tell him no," he said.

Dick Youngblood can be reached at 612-673-4439 or at yblood@startribune.com.
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