Happy New Year

Greetings Customers & Friends,

Happy New Year to all of you. Wishing everyone a happy, healthy and prosperous 2025.

As companies grow, things change. Parkerville is experiencing some of these changes due to our growth in recent years. Regulatory pressures weigh heavy on small business owners, according to an article published in the Hartford Courant this past Sunday. According to the Met Life and U.S Chamber of Commerce Small Business Index for the 4^th quarter of 2024, about half of the owners and decision makers of small business say that handling regulatory compliance costs too much time and money, and that the trend is getting worse. Issues such as payroll, recordkeeping, DOT compliance, licensing, permits, taxes, cybersecurity, and safety (more on safety later) are all vitally important to the success of any business. The larger the company, the more protection is required. 51% of the respondents to this survey state that these requirements make it harder to grow their businesses. Many small businesses rely on subcontracting out some of these services, which of course adds to company’s expenses.

All small businesses face similar challenges. Here are some obstacles that we’ve recently encountered, and how Parkerville manages some of these things as we grow:

• Parkerville has been impacted by fraud a few times by having our checks stolen from our mail, washed/altered, and then cashed for larger amounts. Up until now, our bank has covered these incidents, but they have now instituted a fraud protection system that they charge us for, and will no longer cover these stolen checks. This transition has been a major distraction.
• We also had fraudsters hack into our email correspondence with one of our commercial contractors, which caused this contractor (our customer) to wire money into a fraudulent bank account thinking it was ours. By the time we caught on, the money was gone. Fortunately, our customer had insurance to cover the loss and they paid us.
• Due to the increase in this activity, one of our larger commercial customers required us to purchase a one-million-dollar cyber security policy to protect Parkerville and our clients as we work together. Just another unexpected expense.
• Parkerville outsources our payroll system to an outside vendor. It’s been that way forever.
• Parkerville is going live with a new operating system in February after one year of building the system and getting staff trained. A big project.
• Parkerville will be outsourcing our I.T. support early in 2025, due to the increased complexity of our system, as well as concerns related to cybercrime. 
• Parkerville has had to increase limits on our insurance policies because of the requirements of larger contractors that we work with.

However, it is not all gloom and doom. Things could be moving in a positive direction in 2025, at least that is what owners are hoping for. In this quarters index, more small business owners are expecting increased revenue, investment, and hiring than they were just a few months ago. This optimism is also reflected in another recent survey from the National Federation of Independent Business which showed the highest level of optimism among small business owners in almost 3 years. Parkerville is managed with a strong team and we expect reasonable growth this year.

SAFETY – Safety is our top priority. Nothing is more important. Parkerville has an excellent safety record which we are very proud of. We work hard to keep it that way. We had an accident at Parkerville about 8 years ago when one of our skilled workers was setting up a router with a large cutter. As was appropriate, he had the router unplugged as he inserted the cutter and tightened the collet. The router was on his bench, but what he didn’t know was that someone had compressed the trigger and engaged the lock button to keep the router trigger engaged. When he plugged in the router, it jumped and his instincts were to grab the router to prevent the machine from falling to the floor. The cutter hit his pinky fingers and came close to taking it off.

Fortunately, doctors were able to save his finger but his mobility is limited. During my 46 years in business, this is the worst accident that I’ve had in any of my shops. This accident caused Parkerville to lose all the discounts and credits which we had earned for good safety, costing tens of thousands of dollars in premiums over the next few years. After four years, enough time passed for the credits and discounts to be restored.

Companies are given a mod rate or EMR (experience modification rate) which reflects a business’s actual loss experience. It’s calculated by comparing the businesses actual losses to the expected losses for similar businesses in the same industry. If a company’s mod rate goes up, their workers comp premium will go up. A high mod rate can also prevent a company from being awarded a contract on large-scale construction projects. Big owners and their insurance companies don’t want careless, unsafe contractors on their projects. The risks are too high.

Parkerville has recently subscribed to a program with a safety consulting firm to help manage our overall safety program. With several forklifts, large vehicles requiring DOT numbers, heavy power and powerful machinery, our work environment must be respected. We are required to have documentation for all the products that we use in our manufacturing processes, known as MSDS (material safety data sheets) which inform our staff of the dangers and toxins in our raw materials. Everything from adhesives to every species of wood and everything in between.

I hope this offers a little insight on what some of the challenges are in running a small business. Keep in mind that the Small Business Administration classifies a small business as employing 500 people or less, so there are many variations with the needs of different sized “small businesses”. Parkerville currently employs approximately 26 people.

In closing, I think it is important to point out that Parkerville is like most other businesses of similar size. These are typical and common issues and expenses that are encountered in most operations. It is also important to note that we have a team of employees that work hard and smart every day to keep our costs in check. We negotiate hard for the products and services that we use and consume here at Parkerville, all to keep our sale prices as competitive as possible.

I think 2025 will be a good year. I hope to see you at the shop.

Sincerely,

David Harris, President

Parkerville Wood Products, Inc.