How one scale-up doubled in size during a downturn

With its unique location, Mexico has its fair share of geopolitical and social challenges. As a result, running a business in the country requires patience and long-term vision.

In 2024, the country’s construction industry took a hit as public works spending contracted by almost 32 percent. It recovered somewhat to post a smaller decline of five percent in 2025 year-on-year, according to the bank BNamericas. Meanwhile, inflation has raised prices by 4.59 percent and fuel prices have increased more than 21 percent.

Leopoldo ‘Poli’ Montelongo is experiencing these challenges firsthand. He has grown Hemoeco in Guadalajara, Mexico, from a small construction-equipment rental shop to a scale-up that employs 250 people and brings in US$35 million in revenue. But he has kept his company’s performance steady despite a steep decline in his sector.

He has used the Scaling Up platform since 2020 to double the size of the company and expand it to eight branches across Mexico, from Tijuana to Cancun. He acknowledges this hasn’t been easy.

"In Mexico, we have turbulent times and good times. We don't have stability," Montelongo explains.

Nonetheless, while expected market growth is only one percent, the entrepreneur is targeting three percent growth for 2026. He has also avoided any layoffs.

He is pulling it off by focusing on four decisions every company must get right – People, Strategy, Execution and Cash. He has placed a strong emphasis on Execution and living the company’s core value of ‘Make it happen’.

Staying ahead of change

Montelongo began working in the construction-equipment rental business when his father opened a rental shop in 1991. Twelve years ago, when that company was divided into two, he became the owner of one business and focused on growing it.

He began using Scaling Up in 2020 during the COVID-19 pandemic, creating a One-Page Strategic Plan that the company renewed two years later with a 20-year vision.

"The most important thing is working within," he says.

To make the most of the Scaling Up platform, Montelongo and his leadership team tapped the Growth Institute's online learning platform. They are using it to outrun the challenges in the marketplace today.

"The things that worked from 2021–2024, they are not working anymore, which is heavy growth, a lot of investment in assets," he says. "This year, we know what's going to happen and we are very scared of that, but we have time to solve it."

Embracing premium pricing

Hemoeco specializes in renting light equipment, such as wheelbarrows, as well as medium equipment, such as compressors and lighting. The company’s strategy focuses on delivering exceptional service that justifies premium pricing.

"We know that there are companies that really appreciate getting the service that they are being offered, getting what they paid for," Montelongo says.

Fulfilling that promise means ensuring on-time delivery of equipment and resolving 85 percent of service calls within 24 hours.

With the industry facing bribery scandals, Hemoeco has also opted for full transparency. It publishes its pricing online to bring this to its customers.

"We are the only company in Mexico that publishes our prices by the day, by the week, or by the month in our website," Montelongo says. "Anything that the customer wants, they can have it within minutes, because of our transparency."

Betting on regional diversification

Hemoeco has focused its strategy on ‘three Mexicos’ – the manufacturing-driven north, the economic heart of the country in its center and the tourist-heavy south.

This brings necessary diversification. Each region has an economy of its own that thrives or declines based on exchange rates, government policies and global economic factors.

"Sometimes we are growing in the center, and we are diminishing in the north," he says. "The south was very favored in the last few years, because of the big infrastructure projects, which are gone, so half of the market disappeared. We are always balancing these three areas."

To make strategic decisions months ahead of competitors, the company relies on its proprietary system SCORE (Sistema de Control de Rentas). This system handles functions such as setting dynamic rental prices.

"We've been developing it for 25 years, and it’s house-made, but it’s something that gave us the future," Montelongo says. "We see online what’s happening now and the trends for the future."

Such decisions about the future can only be made with a solid team, with long-term employees, and Hemoeco pays wages 20–30 percent above market rates to incentivize retention of the best people.

But the company expects high performance in return – employees have individual key performance indicators to meet. They're not on their own, however.

Hemoeco invests three percent of its revenue in technology and devotes two percent to training programs.

"We spend it so our people become more professional," Montelongo says.

Building a values-driven culture

Hemoeco has built a distinctive culture, which it has described in a document Montelongo shares with his team.

Its seven core values are: Learning Mode On; Wellbeing; Make It Happen; Become Cracks (Mexican slang for becoming a standout performer); Collaboration; Transparency and Truth; and SERVEX, or service excellence.

Team members are known as collaborators and are encouraged to participate in decision-making.

"We are a service company," Montelongo says. "Ninety percent of our revenue comes from services, so we have developed standards and world standards we are following to give a service of excellence."

The culture has helped to attract people devoted to service and weed out those who are not.

"The culture is so strong that people that don't fit into the culture cannot stay," he says. "There is a commitment to live the values."

Learning Mode On mandates that employees dedicate 10 percent of work time to learning. The policy initially faced resistance but has proven transformative for the tech team.

This approach to professional development has also helped attract and retain up-and-coming talent. Montelongo’s C-suite includes a CFO, COO, CRO and CCO aged between 27 and 33.

"What it took them one day to develop, now with the technology and Learning Mode On, they do in one hour," he says.

Keeping cash flowing

Hemoeco derives 90 percent of its revenue from rentals and the other 10 percent from equipment sales. Montelongo never understood the nature of his business until he used the Cash Flow Story platform.

"I never knew that my business was a financial business," Montelongo reflects. "I thought it was a rental business. For the last 30 years, I've been suffering with cash flow, and finally, I understood that it was a self-inflicted problem."

That realization has shaped how he runs the company. He has focused on eliminating cash drains, including interest rates that can climb as high as 100 percent, and building predictive cash flow models that forecast with 95–96 percent accuracy, giving him a clear view of problems before they arrive.

"If you keep the cash flow running, this business can go on forever," he says.

To connect with a Scaling Up Coach and explore ways to strengthen your cash flow, click here.