Cash-flow crunch confines Toronto container business
Giant Container Services
12 Stoffel Drive, Etobicoke, M9W 1H8
Shipping container sales
7 years in storage services, 3 years in container sales
New, used, and modified shipping containers
Partnered with Humanitarian Mobility International
Though his family has been in the industry for 65 years, Daniel Kroft wasn’t interested in joining the trucking business. Instead he chose to study architecture and design, with hopes of one day pursuing his passion for creative builds.
When he was lured back to help the family establish a portable storage business in 2003 after graduation, he thought it would be a brief pit stop. But when customers began requesting modifications for the shipping containers they sold, Kroft found an opportunity to work alongside his family while still maintaining his creative outlet.
Today, Giant Container Services provides new, used, or modified shipping containers to companies such as Lockheed Martin, Nike and Wal-Mart, and have gained a reputation for their ability to convert a shipping container into just about anything.
“We built a solar powered, 10-foot, fully-functional kitchen,” says Kroft, now company vice president, sitting behind his desk at Giant Container Services’ head office near Dixon Road and Highway 401. The company has also worked on a number of projects within the city for the municipal government and the TTC, and it is currently converting two shipping containers into a bat cave for researchers and students at the University of Toronto.
Nearly 60 per cent of the business is now comprised of selling new and used containers. Of those, about 40 per cent require unique modifications.
In 2013, the firm ditched the trucking company altogether to focus 100 per cent on containers, “which was the best move we ever made,” says Kroft.
While sales have been strong, Giant Container Services often finds itself in a cash flow crunch. Kroft says it typically takes a minimum of 45 days between filing an order and receiving payment, during which time new orders require upfront capital.
“A lot of bigger customers, issue (purchase orders), and they won’t even put a deposit on the materials or anything. So we have to go out and invest our funds in all the materials — from the shipping container to the steel to any materials that the inside is being outfitted with,” explains Kroft. “As these orders come in they stack up, and it’s a lot of funds we need to push out and wait to collect on.”
Kroft invested his own money to help the business pivot away from the shipping industry, and has even had to sell the company’s trucks at times to keep it afloat.
“It puts me in an uncomfortable situation because I have to worry about my employees,” he says. “I want to make sure we have the best possible working environment, and that they’re never jeopardized by my customers or the funds I’m receiving. I make sure they get paid before I do.”
According to Devon Cranson, president and founder Cranson Capital, a Toronto-based boutique investment firm with a focus on small- and medium-sized business, the only way for Giant Container Services to manage its cash flow crunch is with outside investors.
“They’re going to have to give up some ownership. It’s really the only way you finance a business that doesn’t have any assets or cash flows that can be funded by a third party,” he says.
But Kroft is weary of bringing outsiders into his family-run business.
“I’m just not open to that at all,” he says, particularly after one investor sought equity in addition to gougingly-high returns on a loan. “If we have to grow organically and it’s going to have to take another 10 years, than that’s what we’re going to do, but I refuse to pay ridiculous interest rates.”
Having struggled to secure bank loans in the past, Kroft believes “it’s going to have to be a slow process,” but one that he’s prepared to wait out.
Kroft hopes that a new partnership with Lowes, which will help the retail home improvement company become the first big box store to sell shipping containers, will ease the cash flow crunch in the future.
But in spite of those white knuckled moments when Kroft needs to come up with funds to fill new orders, the company has been growing steadily, thanks in large part to online marketing and social media.
“With our young team here, they all understand it and how important it is,” says Kroft. “Funny enough, my father now does too. He’s one of the only 63-year-olds you’ll see hash-tagging five things in every Instagram comment.”
With online marketing yielding about 15 leads a day, Kroft is confident that he’ll have a successful business to pass on to the next generation.
“I kind of feel blessed that I was able to go work for my family,” he says. “It’s something I would love to pass on to my kids and see where they can take it.”