Soluto: How a construction company scaled up after 70 years

32 million euros expected this year, up from 2.7 million euros in sales in 2018. Additionally, ongoing funding worth millions from a venture capitalist to tackle expansion in the DACH region. What sounds like a typical scaleup story is actually the latest development of a company founded in 1947 that now operates under the name Soluto.

He acquired two construction companies at the age of 19

In the late 1980s, when he was 19 years old, Martin Zackler became the owner and managing director of the company – and not only that. “Even though I wasn’t really interested in the construction industry, I inherited two construction companies,” he tells Broadcaston in an interview.

“There is only one person responsible for bankruptcy – myself”

He had to file for bankruptcy on his second company in 1996 at the age of 26. The Spectacular bankruptcy Construction company Magulen Holding AG, which relied on a large client as a subcontractor, was unable to cope with losses of millions. “Then I had the most important learning of my life: there is only one person responsible for bankruptcy – myself,” says Zackler, “and I really became an entrepreneur.” He understood how to do it differently.

Pivot to 20 million euros in annual sales

It was successful in the second company. But in the construction industry, one thing is to cut costs. “It’s not a pleasant environment,” the businessman said. In 2012, the company had annual sales of 20 million euros. Zackler decided to change the business model.

“My wife and I were Christmas shopping in New York at the time. The city was hit by Hurricane Sandy in the fall and ads for Belfor, the world’s largest fire and water damage restoration company, were all over the subway. “I knew then: I wanted to do it too,” recalls the entrepreneur.

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“If someone needs a bathroom in their new apartment, we have a four-letter answer: No.”

Zagler explains the new direction with Soluto succinctly and succinctly: “We only work in extreme cases after fire and water damage. Then, for example, we do a complete bathroom with flooring, tiles, painting and all the trimmings. On the other hand, if someone needs a bathroom in their new apartment, we have The four-letter answer is: No. You only work this way if the insurance company or property management company covers the costs.

20 to 4.5 million euros in sales

The pivot was definitely a challenge. “Sales dropped from more than 20 million euros initially to 4.5 million euros,” says Zackler. It was one of the few years the company made a loss – 200,000 euros. Additionally, about ten percent of the workforce was segregated. “I asked the employees at that time: Do you want to be part of the new route? 90 percent wanted it, ten percent didn’t. “That’s how the problem was solved,” said the businessman.

“At the end of the day, I’m a tough businessman.”

For him, this is clear: “It takes courage to do something like that. But at the end of the day I’m a tough businessman. I had already thought of everything. Finally, Zackler did not stop at this calculation. The next big step happened in 2017. “An insurance company offered us the opportunity to become a structural contract partner. “But we have to grow a lot to do that,” says the Soluto boss.

Billion dollar market in Austria

Solution: A franchise model. In 2018, the company brought on board its first two franchise partners. Soluto currently operates three of its own and eight franchise locations with a total of 250 employees – and expects sales of the aforementioned 32 million euros this year. “We are currently the fourth largest fire and water damage restoration company in Austria with a market share of 3.2 percent. We handle around 15,000 claims every year and are completely independent of the economic situation,” says Zägler. The market has a billion euros per year – only in Austria.

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Germany introduces this year

This is where the calculation for the next planned growth step comes into play. The annual market size in Germany is around 8.7 billion euros. Starting with Bavaria and Baden-Württemberg, the franchise network is expanding there this year. Switzerland and France are next on the agenda.

Funding Millions – “Expansion really costs real money”

Soluto has now secured a seven-figure round of funding from revenue-based financier Tauros Capital. “We invested 2.7 million euros in the first three years in setting up the franchise system. The expansion actually cost real money. “But we are now at a level where traditional bank financing is not possible,” says Zackler.

Greater investments in digitization

Capital is not only flowing into the expansion of the franchise organization, which has now received the Franchise Award four times from the Austrian Franchise Association, of which Zackler has been chairman for a few weeks. Digitization requires more money for entrepreneurs: “Our business is currently changing radically. We now do a lot of things via smartphone and use AI-supported scheduling systems. We built our own app for our employees and now use our own IT staff.

“You don’t have to have your first heart attack at 50 to be an entrepreneur”

Zackler sees himself ready for the upcoming growth steps, for which he is also considering further financing — for example through crowdfunding. What’s important to him in all of this is that he and co-author Irina Pfafal wrote in a book “Do it differently! Fun and success as an entrepreneur”: “It can be fun. It can be cool. You don’t have to have your first heart attack at 50 to be an entrepreneur.