Building Your Business Without Breaking the Company’s Back
By Construction Executive
January 8, 2015
With the national economy poised to take off in 2015, many small to medium-sized construction firms will be looking to increase their volume of work, explore new markets, increase staff and grow their business models to make more profit. However, as many company leaders can attest, growth must happen wisely and intentionally. No one wants to make the mistake of overextending their finances and capacity—a trap a few executives will admit they fell into during certain boom periods of the 1990s and mid-2000s, and then found themselves in trouble when the good fortune dried up.
Construction Executive picked the brains of three medium-sized firms in different geographic locations to talk about best practices for contractors to grow responsibly amid the economic turnaround, challenges when expanding into new market sectors and building types, strategies for adding more employees, and ways to make stronger professional connections in the industry.
Marpac Construction, LLC, Seattle, a commercial contractor founded in 1995 that specializes in mixed-use construction, was not immune to the economic crash, despite strong demands for housing throughout the recession. The company rode out the downturn by diversifying its project mix into government and nonprofit work, while maintaining positive relationships with its previous clients so that it would be top-of-mind for smaller jobs.
“Our business is about putting people first,” says Sai Chaleunphonh, one of five Marpac partners who focuses on building client relationships while managing field personnel and IT operations. “Our business is more about service than product. We cultivate relationships and trust, and we’re all about return business. For example, if the owner wants us to build their boat dock, we’re going to do it, even though we usually build mid-rise complexes.”
Now, with another mixed-use housing boom on the horizon, Marpac Construction is looking to double its volume next year from where it was two years ago.
“With that, we’re looking to diversify outside of mixed-use as other markets follow suit—grocery stores, health care facilities and offices. And we’re going to stay local because that’s what we know. We believe that construction, especially on the subcontractor and supplier side, is relationship based. Through experience, we know what they can do; we know their deliveries and their products,” Chaleunphonh says.
Now under construction is a $14 million job called Hirabayashi, a mixed-use development that will result in six stories of new residential units as well as child care space. The firm is also working on Publix + Warehouse, a six-story demolition and renovation of a historical hotel property in Seattle’s International District. Marpac also recently completed the Lexicon Apartments, which consist of seven stories of market-rate apartments with two levels of underground parking.
“For us, the key to growing responsibly is the ability to deliver a consistent product,” Chaleunphonh says. “Right now the demand is outpacing the supply, meaning there’s a shortage of materials and skilled labor. All of that has an effect on delivery time and quality, and the availability of skilled people.
“In the economic boom, if we take on all this work and then we can’t deliver a consistent product, the client is not going to call us again,” he says.
Growing Teams at the Right Pace
Human resources will be the top challenge for all construction companies in the years ahead, especially those that foresee doubling their volume in 2015.
Marpac now has 35 people on staff and is looking to grow to 50 employees in the next year. With an influx of new jobs, the company needs to hire just about everyone: superintendents, foremen, carpenters and laborers.
With an overwhelming demand for skilled workers, companies are leveraging all the resources they can. Specifically, Marpac is tapping into professional apprenticeship and training resources provided through its membership in Associated Builders and Contractors (ABC), recruiting at job fairs at the University of Washington, as well as participating in events such as Youth Build that target a young audience.