Success in construction takes a fine blend of craftsmanship, business acumen, intensive industry knowledge and relationship building. Often, contractors that have evolved from small teams to mid-sized companies share some similar characteristics, including top-notch hiring and retention policies, a commitment to quality and honesty, and being a common name in their markets through networking.
Companies with driven leaders at the helm can achieve growth. Take it from these three contractors, which have powered through economic hardships, labor shortages and tough competition to make it to the next level.
In 2007, Brent Eaton and Jon Pfeifer resigned from their lucrative management positions with the largest roofing contractor in Alaska to venture out on their own. Tired of the corporate oversight, they left their stable careers to start from the bottom—beginning Anchorage-based E/P Roofing in Pfeifer’s basement with just one truck and a ladder.
For the first year, Eaton (now president) and Pfeifer (now commercial estimator) chose not to pay themselves; instead, they reinvested profits into the business.
“They were committed and in a fortunate position prior to leaving their previous company,” says Corporate Secretary/Contracts Manager Steve Glines. “They made sure their personal finances were in place before they started so they could weather the storm and make the sacrifice and commitment to put everything back into the company.”
In just more than a decade, the company has grown to earn $6 million to $10 million in annual revenue, split between approximately 80 percent commercial work and 20 percent residential work (200 houses) each year.
Plus, E/P Roofing is now a major competitor of the larger company Pfeifer and Eaton left.
Building Relationships At first, it wasn’t easy to convince the contractors working on larger projects to give such a small company a shot. Instead, E/P Roofing accepted smaller jobs to prove its ability to complete high-quality work.
“Eaton and Pfeifer focused on leveraging the relationships they had built over the years to restore confidence about their abilities,” Glines says. “They wanted to prove that contractors could trust them and should give them a shot even if they weren’t with the big gorilla roofing company.”
It took less than two years for E/P Roofing to establish itself as a top roofer and begin securing larger projects. Now, it relies on those relationships almost exclusively for new work.
“We spend little on advertising, contrary to some local smaller companies,” Glines says. “We are dependent on quality work; word of mouth has been very good to us.”
Hiring In 2007, Eaton and Pfeifer hired who they considered to be the best roofing superintendent in Alaska, a couple of experienced foremen, and Glines as office manager. Then, they bid on as many jobs as possible. It didn’t take long to secure enough work to begin hiring an experienced team.
“A lot of that success went back to Eaton and Pfeifer and their relationships,” Glines says. “Once we were up and running big projects, a lot of talented roofers gravitated to us.”
They also implemented policies to keep employees working year round—not an easy feat in a state that is covered in snow for half of the year. Though E/P Roofing completes some new construction during the winter, contractors typically aim to complete building shells by the fall to finish the roof before the harsh winter months.
“Every fall, you do everything you can to book winter work to keep the top people working. Winter is when they either go to the beach or to the unemployment line, so if you can keep good talent working throughout the winter, they will stay with the company long term,” Glines says. “That’s through the culture we built and paying for what you get. We’ll take some money off the top and we may not make as much of a profit, but we can keep our guys working.”
Future Growth Anchorage’s economy is heavily tied to oil. If the value of oil is low, fewer jobs are available due to a lack of pipeline-related tax revenue, which provides much of E/P Roofing’s work through state and municipal projects, such as schools and jails.
Becoming less dependent on Alaska’s oil economy and moving into new territory are some of the reasons Glines expects to see geographic growth to the Pacific Northwest.
“We want to continue to grow, but we won’t realistically double in the next 10 years because Alaska’s infrastructure is only so big,” he says. “We have looked at work in the Northwest and bid on some jobs in Washington and Oregon.”
When Seattle-based SSI Construction opened its doors nearly a decade ago, COO Mike Schultis and CFO Meridith Sundberg had no idea how low the economy would go. Schultis and Sundberg worked together at a previous company and decided to make a go of it on their own. They started SSI Construction, with Schultis heading up estimating and project management and Sundberg leading the financial side of the business.
“Like a lot of new business owners, we had the grandiose idea that we would start a company and it would be great,” Schultis says. “The reality set in quickly that we were settling in for a marathon and not a sprint.
“Not being able to count on picking up 40 percent of your bid was expected, but it was picking up 3 percent to 5 percent of the bid. When you have that dramatic cut in the sales projection, it has a heavy impact.”
Instead of giving up, Schultis and Sundberg decided to think positively. They began laying groundwork for the future by making strategic partnerships with property owners and developers. They built a strong internal staff and processes, setting up systems that would lead to success when work picked back up.
“Starting at the beginning of the recession was a benefit for us because we learned to get by on nothing, so we were in a good situation when it bounced back,” Schultis says. “Other companies had to adjust to lean principals, but that was already the reality for us.”
The recession also taught SSI Construction to be cautious about developers and subcontractors, many of which unsuccessfully weathered the recession. SSI Construction quickly learned to avoid situations that could lead to nonpayment or nonperformance issues.
Persistence paid off, as the company withstood the storm and now has a backlog that is double to triple what it was just three years ago.
“We have a year’s worth of backlog right now and our customers are willing to wait, which is a testament to how we built the company,” Schultis says.
Finding Niches One of the keys to SSI Construction’s success has been the ability to adapt to the market and the company’s strengths. Instead of creating a business plan and sticking to it no matter what the circumstances, Schultis and Sundberg decided to alter the model through the years to take advantage of strategic opportunities.
At first, the company focused on residential construction. However, it soon realized that market was overly saturated, so the company began focusing on multifamily. Today, SSI Construction completes 80 percent multifamily work and 20 percent commercial construction.
The company also began with a traditional general contracting model by self-performing almost all work. Now, the company subcontracts 99 percent of the work, according to Schultis. It keeps management in-house, but subcontracts out tasks such as concrete and framing work.
“The initial model wasn’t sustainable, so being able to adjust and be nimble was essential to making it long term,” Schultis says.
SSI Construction also took advantage of a less-tapped niche in its Northwest market. With so many large companies such as Amazon and Microsoft, many general contractors spent all their time bidding on those mega-projects.
Instead, SSI Construction focused on small projects more suitable for a mid-size contractor, which presented many opportunities.
For example, SSI Construction regularly works for Pike Place Market in Seattle, which often requires complex repairs. As a result of that project and many others, SSI created a reputation for excelling in historical renovations and tough shell projects, such as envelope and structural repairs.
“We like to take on crazy projects where we have to say, ‘how will we do that?’” Schultis says.
Hiring During the company’s beginnings, SSI Construction couldn’t procure enough work, but had no trouble finding a large pool of overqualified skilled craft workers. Today, the company experiences the exact opposite problem: a year of backlog but a lack of people to complete the work.
Unique to the Northwest labor market, potential employees are available, but they are usually young and inexperienced. That shouldn’t present a problem, except those young and inexperienced employees expect six-digit salaries, largely due to being located in the hub of the tech industry and competition with the salaries of employees working for companies such as Amazon and Microsoft.
“There are bodies out there, but they are under-trained and under-skilled, while expecting the salary of someone who has been doing the work for 20 years,” Schultis says. “There’s a misalignment between knowledge and wages.”
In response, SSI Construction hired a human resources manager to help improve its hiring process and find talent with reasonable expectations. “The challenge still exists, but she has greatly improved our process for seeking talent that is more in alignment with our company culture and expectations,” Sundberg says. “She also has greatly improved our process for training them once they are hired.”
Building Relationships SSI Construction believes it doesn’t just build buildings; it builds a community around the company as well. It works hard to invest in creating long-term relationships with employees, vendors and subcontractors, and one way to do that is through enhanced training.
“We invest a lot of time in training and helping our subcontractors grow with us,” Sundberg says. “Without them, we wouldn’t be here and able to grow.”
SSI Construction’s primary subcontractor started with just six employees. But with SSI Construction’s help creating internal processes and a safety culture, the company now employs nearly 30 people and the two firms currently work on 15 jobsites together. As a result, the subcontractor fully understands SSI Construction’s processes and jobsite protocols.
In addition, SSI Construction participates in a number of associations, including Associated Builders and Contractors (ABC). “We take the associations we’re members of to heart,” Schultis says. “We don’t do it just for business; those associations represent things we believe in.”
Future Growth Now that the economy has been in full swing for a few years, SSI Construction has its sights on additional growth. Sundberg predicts the company will double or triple from its current state, but understands the importance of responsible growth. “You can go out of business from having too much, so there’s a methodical process to determine what projects we take, when we take them and at what price,” Schultis says.
SSI Construction also is considering geographical growth to increase its current 150-mile territory.
Hawkins Electric Service marks its 100th anniversary this year—and there’s much to celebrate. With economic highs and lows, entering new markets and changing technology, it’s no easy feat to remain successful, much less grow, for a century.
Hawkins Electric, based in Laurel, Md., was created by Jay C. “Pop” Hawkins with a focus on residential electrical services at a time when the national grid was expanding. He soon began completing appliance repair and service work. He rode from house to house on a bicycle with a basket on the front to hold the necessary tools and supplies.
From the beginning, Pop Hawkins ran the company with an emphasis on taking care of the customer and always doing the right thing.
Today, that’s still the No. 1 priority for current owner Eric Shatzer and executive vice president Todd Shatzer, who are brothers.
“We always do what we say we’re going to do, and we always treat people how we would want to be treated by being courteous and kind,” Eric says. “It’s important to do the right thing.”
The Shatzers’ father, C. Nevin Shatzer, went to work for Hawkins Electric in the 1950s. It wasn’t long before Nevin worked his way up the trades and became a master electrician. In 1972, he purchased Hawkins Electric with two partners and later bought out both partners.
After their father suddenly passed away in 1995, Eric and Todd took over the business. At that time, the company consisted of 50 full-time employees and focused on lighting and retrofit projects. Once Eric and Todd stepped in, they decided to move heavily into the multifamily market, an arena Eric was experienced in due to his history in construction. The company also began doing large custom homes, new commercial projects, and multifamily service and renovation work—all while sticking to its roots and continuing to respond to residential service calls.
The move into new markets was successful, with revenue and employees doubling during the past 10 years. In 2008, multifamily accounted for about 40 percent of Hawkins Electric’s business; today, it’s 80 percent.
“This market segment isn’t going away because millennials want to be more urban,” Todd says. “We felt like it was a market segment that would stay strong for a long time, and as millennial homeowners age, there’s always the opportunity for service and renovation work.”
Building Relationships It wasn’t easy for Hawkins Electric to break into the multifamily market. Its success is largely attributable to networking opportunities and relationships.
For example, Eric befriended a president of a local large general contractor, and after spending a few years building trust, the general contractor awarded Hawkins Electric an opportunity to work on a 300-unit apartment building—the biggest in Hawkins Electric’s history.
Knowing this was the company’s chance to prove itself in the market, Eric and Todd took a few steps to ensure success. They hired more than a dozen qualified employees in support roles, subcontracted out underground portions of the scope and worked with suppliers to extend lines of credit to purchase the large amount of materials needed.
The job was completed successfully and the general contractor immediately hired Hawkins Electric for another large project. With that, the company had its foot in the door of the multifamily market.
That general contractor also spurred growth for Hawkins Electric via involvement in the ABC Metro Washington Chapter. “Joining ABC and developing relationships through the association was key to opening more doors,” Eric says.
They joined a number of additional associations geared toward the multifamily market. “We made a strategic decision to specialize in associations that focus on the multifamily market and tried hard to build those relationships,” Todd says.
“On many nights, my team and I would go to after-hours networking events. We also would participate in different committees. That is key to how we built the business; we built relationships for portfolio managers to call us.”
Todd and Eric began finding mentors and participating in forum groups with non-competing members from local businesses through ABC and Independent Electrical Contractors. Eric also joined a local CEO peer board to share ideas, solve problems and help hold each other accountable.
“By joining the group, we had people we could sound things off of, talk about best practices with and help each other grow,” he says.
Future Growth Hawkins Electric currently focuses on the Washington, D.C., and Baltimore markets, but is aiming to move into multifamily projects in the Southeast. The company also plans on taking advantage of emerging technologies such as battery storage, solar technology and commercial green energy technology.
“I read a book years ago that said if your company isn’t growing, it’s dying,” Eric says. “Because of that, we have made the decision that we are going to have controlled growth year after year.”
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