The notion of running his own company entered the mind of Albert “Allie” Waguespack III some three years ago while looking for ways to make pumps run more efficiently for a refinery outside of New Orleans. It’s not that there was anything wrong with his job. The work was interesting, paid a good salary and Waguespack enjoyed working with fellow LSU engineer graduate Sina Zarei. But after a decade of working in industry, Waquespack got the itch to become his own boss.
Opportunity came knocking when, after almost disappearing from the market, propane resurfaced as a clean energy source. Waguespack recognized the market potential new technologies presented and, in 2014, seized the opportunity to revive a long-dormant family business, Vacherie Fuel.
“Not knowing anything about propane, I thought Allie was crazy when he told me he was leaving,” Zarei says. “We kept in touch and, a few years later, I came to the same point: Did I really want to work for someone else my whole career?” In mid-2015, Zarei joined Vacherie.
Vacherie Fuel is a propane supply and bottle exchange company. Operating out of a main facility on River Road in Thibodaux and another facility in Vacherie, the company’s services include cylinder exchange, and residential and commercial delivery and refill. They provide services for recreational and commercial uses, from agriculture to transportation.
While Waguespack and Zarei are relatively new to Vacherie Fuel, the company itself is not a new venture. Founded in 1940 by Waguespack’s great-grandfather, Leonard Waguespack, Vacherie Fuel is the oldest propane company in Louisiana. The company is named after the town—between Gonzales and New Orleans, and across the Veterans Memorial Bridge from Gramercy—where it started.
When the company was founded, propane was the primary fuel source for heating and cooking in homes and businesses. The company serviced rural areas of St. James Parish, made bulk deliveries to customers, and provided installation and maintenance services. In the 1970s, however, production and use of natural gas increased and utilities started providing natural gas, and demand for propane declined.
“That pretty much killed the company,” Waguespack says.
Recognizing this, the Waguespack family moved on and started other companies, including Waguespack Oil Company. Yet, even though Vacherie Fuel generated no revenue, the family chose not to sell or close the company.
“It was the oldest recognized propane company in the state, so they didn’t want to get rid of it,” Zarei says. “But, they thought it was a dinosaur and, to an extent, they were right. Lucky for us, though, they didn’t sell the company.”
In less than three years, Waguespack, who serves as president, and Zarei, who is executive vice president, have transformed the company. They have gone from 15 propane exchange locations to 130, and have doubled the company’s revenue every year. Luck, however, had little to do with it.
FIND A NICHE
When Waguespack decided to revive Vacherie, the competition in southern Louisiana consisted of two national companies doing propane exchange.
“Allie knew we’d have to distinguish ourselves from the competition to grow the company,” Zarei says. “If we did what the company was historically founded on, we weren’t going to be competitive, especially after the company had been dormant all those years.”
In an effort to distinguish itself, Vacherie Fuel began marketing tanks with 18 pounds of propane—about 20% more propane per cylinder than the competition, or, as Waguespack says, “an extra crawfish boil.” The industry standard is 15-pound cylinders.
“Our competition does not fill each cylinder to capacity,” says Zarei. “Because the cylinders aren’t clear, people can’t see they’re not getting a full cylinder. But, our tanks are heavier and people notice that.”
Fluctuating propane prices are the reason for the competition’s lower volume. Retailers who sell the cylinders don’t want a constantly changing price on the propane tanks. So, to keep the retail price of a cylinder constant, the competition reduced the volume of propane in each tank as the price of propane significantly increased in 2007. Vacherie Fuel, however, consistently fills their cylinders to capacity, regardless of the current cost of propane.
“We made the decision that we’re not going to make higher margins, but we’re going to be honest,” Zarei says.
STAY TRUE TO YOUR CUSTOMERS
Vacherie’s approach helped the company build relationships with local retailers, who sell the company’s cylinders as local propane cylinder exchange vendors. Recognizing that no local propane cylinder exchange vendors existed in the region, Waguespack tested the concept in family-owned convenience stores. Within two years, Vacherie Fuel was in more than 100 locations.
“I get 20 percent less (in a propane cylinder) at a big box store, but I can get a full tank if I go to a locally owned company,” Zarei says. “That’s our selling point to our vendors—it gives them the edge to compete against a Wal-Mart or a Winn Dixie.”
Rouses Supermarkets, in particular, has been instrumental to Vacherie’s success.
“Rouses gave us a chance,” says Zarei. “They gave us our first big opportunity to service 20 locations. That was a changing point for our business.”
Zarei adds that being a locally owned company improves Vacherie’s marketability.
“In Louisiana, there’s a lot of pride in local businesses,” he says. “We help and support each other. The store owners we work with are like family—we don’t want to let them down. They can call Allie or me any time and we respond—they don’t get a recording.”
That type of service matters to Donny Rouse, CEO of Rouses Supermarkets. “Being a smaller company where the owners are involved every day makes a big difference,” he says. “We always like to give local companies a shot to succeed against some of the national players. Their product is excellent and their service is excellent. They’re a great company and we enjoy working with them.”
Vacherie entered the Baton Rouge market less than a year ago. “As Rouses has grown, they’ve given us opportunities to grow with them and that’s been invaluable,” Zarei says, “but, we’ve still got a lot of work to do to grow in Baton Rouge.”
Currently, Vacherie Fuel’s market extends to Hammond, but the company has plans to expand into the Northshore and New Orleans.
KNOW YOUR STRENGTHS
Although they did not have experience running their own company, Waguespack and Zarei found that their engineering experience and education were strengths.
“When we were at LSU, we had to take courses in fluid mechanics and thermodynamics, which may not seem relevant to running a company,” Zarei says. “But, an engineering education teaches you how to be critical thinkers and how to take a complex problem and break it down into steps.”
Further, their experience working in sales strengthened their communication and presentation skills and gave them confidence to speak up. Yet, Zarei says it’s also important to acknowledge your weaknesses.
“Neither of us has a finance background,” he says. “We found ourselves spending more and more time on accounts payable. We knew this was a weakness, so we found someone who could help us and outsourced it, leaving us to focus on other aspects of running the company.”
BE PATIENT … AND REINVEST
One thing Waguespack and Zarei focus on is reinvesting in the company.
“Almost all the revenue goes right back into company,” Waguespack says. “We’ve had to make sacrifices, but by being patient and investing back into the company, we’ve been growing cautiously. We can only grow if we reinvest in the company to get better equipment and more staff.”
A primary area where the company is investing is in state-of-the-art facilities and in equipment to automate washing and painting the cylinders.
“When we make a delivery, we don’t know the condition of the cylinders we’re getting back. They could be damaged or rusted—it’s a pretty corrosive environment down here,” Waguespack says. “We started doing everything by hand—scraping the cylinders, spray painting. It’s a very labor-intensive industry, which is why there are only two national companies in our market.”
From the beginning, Waguespack and Zarei set a goal to automate as much of the work as possible, increasing efficiency and reducing labor-intensive tasks. Drawing from their engineering experience, they identified machinery that could wash and paint the cylinders more efficiently. “We’ll just need an operator to watch and maintain instead of doing the work,” says Zarei.
KNOW YOUR LIMITS
After hitting the ground running, there’s a temptation to pursue rapid expansion. Yet, Waguespack and Zarei realize the importance of growing within their limits.
“We’ve been fortunate to meet the demands of customers when we still don’t have all the proper equipment,” Zarei says. “We were cruising along in our careers (as engineers) and now we’re in the shop sweating and scrubbing bottles. So, we still need to operate more efficiently. The challenge is to control demand and not overpromise. If we take on a lot of new customers too quickly, our service will go down.”
The hope is to build on Vacherie Fuel’s success by identifying target opportunities in new service areas, further improving operational efficiency, and continuing to grow with locally owned grocers, hardware stores and convenience stores.
As they look to the future, Waguespack and Zarei say they are honoring the past, as well.
“We debated changing the name of the company—we could have come up with a lot of cool, locally themed names,” Zarei says. “But, at end of the day, we kept the name because we wanted to keep that tradition going. We’re proud of that.”
While the road hasn’t been problem-free, Vacherie Fuel’s success can provide a blueprint for others.
“There was stress starting this,” Zarei says. “We didn’t know if it would work. It was a huge financial decision—a lot of entrepreneurs can relate. I asked myself, ‘What’s the worst that can happen?’ There’s a different answer for everyone. I knew I could always go back to being an engineer. But, if I hadn’t taken the chance, I would never have known if we could have made Vacherie Fuel a success.”