How can smaller labs scale efficiently while maintaining integrity? What do investors look for in a testing lab? And how can AI, LIMS, and cross-disciplinary teams support sustainable operations?
We spoke with Cheryl Bowden, VP of Operations at Metiri Group, about key considerations for investing in and operating contract laboratories, cross-training staff, and nurturing client relations. Her insights offer valuable guidance and time-tested practices for both investors and lab professionals in the environmental testing space.
1. What should one consider when investing in a contract lab business?
It’s crucial to select a lab positioned to capture growing demand and one that prioritizes developing its leadership. Evaluate the market carefully, considering current client demographics (local, regional, commercial work). Demand-driven niche markets tend to be more stable and profitable due to less volatility and competition.
It’s also important to define your investment strategy: Is it a long-term play, a rollup into a larger network, or a stepping stone for vertical integration? Look for growth tailwinds and market fit, such as a lab positioned to meet the rising national demand for sustainable air, water, and soil testing.
It’s critical to examine the financial fundamentals. Look for year-over-year revenue, focusing on profitability and cash flow, and watch out for unpaid receivables. I recommend reviewing contracts for liability caps and risks.
Ensure the lab has modern, transparent systems and agile technology. It’s all about being able to flex with the market. You can always invest in more specialized equipment once you see consistent demand. But at the beginning, agility is key.
Data quality and integrity should be assessed by reviewing audit reports and performance testing (PT) studies. Repeat findings pose a significant risk to the business and could result in unexpected costs or accreditation loss.
2. What current tools or measures can smaller environmental testing labs use to become more agile and expand their portfolios?
A major tool is a laboratory information management system (LIMS) that tracks samples throughout the lab, from external Chain of Custodies (COCs) through receiving and each departmental step. This system can be accessed by multiple functions within your laboratory.
An effective LIMS should include good data analytics, dashboards, and key performance indicators (KPIs) for real-time reporting. Monitoring these trends allows labs to quickly pivot based on insights and proactively address issues, such as instrument performance, before they lead to significant disruptions.
While having an in-house customized LIMS is ideal, it can be very expensive. For smaller labs, an out-of-the-box third-party LIMS—especially a cloud-based system—can be a cheaper and accessible alternative.
Client portals are also highly useful, especially for smaller labs that may have limited staff. These portals allow clients to request quotes, prepare bottle orders, and track sample stages, providing real-time information without constant reliance on lab staff.
Another measure is cross-training staff, crucial to developing an agile and efficient workforce that understands equipment maintenance, method development, and client-specific projects. At Metiri, we partner with local universities for seasonal staffing, which is another excellent way to gain flexible resources, create a candidate pipeline, and even access testing capabilities. This collaboration can also help labs understand the evolving needs of the future workforce.
3. Do you see artificial intelligence (AI) having a role in lab operations?
AI can be powerful for processes like troubleshooting, planning a study, or identifying matrix interferences. It could also be used in customer service to help clients understand what testing their project may entail. However, uploading client-specific or employee-specific data into a public AI platform is considered a red flag.
While AI can be an effective tool, it does not replace an expert team’s ability to create value as a trusted, reliable partner.
4. What core principles support labs and staff through major management changes?
In my experience, honesty, communication, transparency, accountability, collaboration, and a robust change management structure are incredibly important.
Clear communication at every level is paramount and fuels progress during change. Keeping people at the center of decisions, understanding what matters to them and how changes will impact them are all crucial practices. Robust change management practices, including proper documentation and updated SOPs, are a game-changer.
Labs should create a space where employees feel comfortable sharing input and feedback. Being proactive and honest, even about uncertainties and risks, and providing timelines for updates builds trust. Labs succeed when they build a collaborative and accountable culture, coupled with a strong, clearly communicated vision that is centered on clients.
5. How does cross-disciplinary agility make for better leaders in a lab setting?
Cross-disciplinary agility allows for a more critical focus on people in a traditionally technical industry. Leaders with diverse experiences can relate more effectively to employees in different roles, fostering trust and facilitating collaboration across departments. Experience across various functions—from technical roles to leadership—provides a deeper understanding of both employee needs and the broader industry landscape, which enables more holistic problem-solving.
Cross-training and developing a workforce that is agile, detail-oriented, adaptable to stress, and willing to be flexible is essential for running lean operations. Management should carefully consider the right mix of technical and people skills when promoting staff: Qualified candidates should possess leadership skills, and not just technical expertise.
Labs should continuously assess their workforce pipeline, determining whether to “buy” (hire experts), “borrow” (lean on consultants), or “build” (train existing staff) for future needs. It’s important to balance developing employees internally and bringing in outside perspectives to introduce new ideas and break existing patterns.
6. In what ways can legacy businesses preserve client relations post-merger?
Handling client relations post-merger can be challenging, as what originally attracted clients to the business (i.e., small size) may have changed. The best approach is proactive, transparent communication. Clients should learn about the merger directly from the lab first to avoid feeling excluded or forgotten.
Be honest about what will and won’t change, reassure clients that they will continue to receive necessary support and services, even if they look different. Work closely with customer service teams to understand each client’s specific needs beyond just quality data and turnaround time. Some clients may prioritize project management, regulatory expertise, responsiveness, or electronic data deliverables (EDDs). Labs often mistakenly assume why clients work with them, so truly understanding these differentiators is key, especially given market competition.
While competitive pricing is important, it should not be the sole focus, especially if it erodes capabilities, trust, and employee morale. Clients are often willing to pay more for reserved capacity, personalized customer service, or dedicated project managers.
If a client has a strict budget, labs should explore alternative, lower-cost ways to meet their essential testing needs. Ongoing conversations to understand and reassess client priorities will be beneficial in the long run.
7. What advice would you give someone looking to outsource testing to a contract laboratory?
To select a reliable contract lab partner, look for one that acts as a true partner and is responsive and focused on quality from day one. It can be helpful to call or email the potential partner to assess their response time and the quality of their answers to technical questions.
Ask for example reports and inquire about online portals and EDD capabilities if those are important for your operations. Consider location and logistics, as proximity impacts sample stability, turnaround time, and cost savings.
Above all, evaluate cost versus reliability. The cheapest lab isn’t always the most cost-effective in the long run. Build value comparisons, not just price comparisons. Just as clients should be selective with labs, labs should also be selective with their clients, prioritizing a good fit and ensuring their value proposition aligns with what the client truly needs. If a client is only looking for the cheapest and fastest, it may not be a suitable long-term partnership.
When labs prioritize customer needs—sometimes even turning away work that isn’t a good fit—it reinforces their integrity and builds a true reciprocal partnership.
Cheryl Bowden is Vice President of Operations at Metiri Group, focused on strengthening systems to prioritize customer service, enhance turnaround times, and increase efficiency across lab teams. Cheryl has over 20 years of experience in environmental testing, human resources, and M&A integrations at leading organizations like Eurofins Environmental Testing and Enthalpy Analytical, LLC.