Growing up, I knew two things for certain. First, I knew at an early age I wanted to be an entrepreneur. I didn’t know what an “entrepreneur” was; however, as I look back, I can remember setting up goals and plans for mowing lawns to earn money. The irony was that I was actually creating miniature business plans.
Secondly, thanks to my father who was a flooring subcontractor, I learned to work hard, always give it your best effort and do it correctly the first time. These two factors led me to the life work I have chosen: the co-founder and owner of a commercial flooring contracting business.
Fortunately, the learning and growing part of the equation has continued throughout my career, and I decided in 2001 it was time to start a flooring business grounded in my principles and beliefs. The business is JDS Flooring Associates LLC in Londonderry, N.H. At the time of this decision, I was working with Dave Gibson at another flooring company and I asked him to join me as a partner. Our skills and interests were nicely aligned, and having worked together for a period of five years prior I knew he would be a great choice to assist me in this venture. I guess we were correct—as this year JDS Flooring Associates celebrates 15 years in business, and Dave and I have been working together for a total of 20 years and counting!
Lesson #1: Opportunity is Knocking
Like many businesses, JDS Flooring Associates started with a strong market trend. In 2001, the homebuilder market in New Hampshire was literally booming! We could see the opportunity growing annually and we were excited to establish JDS Flooring Associates as the market leader in the new home construction market. The time was right to “lean forward” and focus the growth of the business on the builder and development market.
I personally had spent the better part of the previous 12 years focusing on this market and it was certainly our strength as a company. In New Hampshire, as in many states, the housing market was so strong we had little reason not to push forward with our strengths in that market. Most of these homes were primary residences. At the peak of our business in 2006, we had completed just shy of 600 homes! At this point, our business was approximately 75% builder and 25% divided between contract, property management and residential replacement.
From the beginning, we did work in the commercial market; however, it was primarily light commercial and Main Street projects. With the housing market so strong, we had little reason to push into commercial. We also did not have the correct facility for expansion, and we had been searching for a building that would let us grow into that market. Not to mention, we did not have the staff to manage the work effectively.
The commercial business was always on my radar, but first we need to be prepared to take on the challenge. In 2005, we aggressively began to look for a building to purchase, but it was a challenge with limited available space in the area. In 2006, we found a parcel of land and built a 10,600 sq. ft. facility that was completed in 2007 and is still home today.
Lesson #2: Welcome to the Recession
Everything was going well for JDS Flooring Associates. It seemed our new efforts had worked out perfectly. So in 2007, in addition to the new building, we also opened a separate high-end design center to expand into the residential replacement business, window treatments and the fabric business. I knew that, historically, when the builder business slowed down, the replacement business usually thrived. However, in 2008, a HUGE lesson was coming our way!
We had made significant investments and our capital investments took a toll on our financial reserves at a higher level than we had planned. However, we had solid momentum—the design center and the new location both appeared to be going in the correct direction. Then, in 2008, everything started to slide downwards. All facets of the industry were quickly drying up; not only the work, but also the margins.
As you can imagine, this was quickly becoming an issue. Our immediate thought was to add an estimator and to go stronger into the contract market. However, commercial was also struggling. It was slowing down quickly and pulling down a bigger part of our cash flow. We had always been financially disciplined with the business and we believed we had enough equity and cash for the slow period. However, the slow period came much faster than we thought and it lasted significantly longer than anyone could have imagined!
We fought this battle for another couple of years until it became apparent that the industry as well as the economy was more depressed than was anticipated by anyone. We literally hit a wall: our builder business was now only a small portion of what it had once been; we had closed the design center; our commercial business was struggling; and the property management business and the replacement business was very weak. There seemed to be little hope. It was hard to believe that in three to four years, the industry, the economy and JDS Flooring had become so depressed.
In the fall of 2010, it was time to change the entire business and take action. I terminated all employees who were not absolutely necessary and downsized from a peak of 15 people to five people! I decided we needed to go back to what we did best and what started the business originally.
First, I decided to stop bidding and/or quoting large commercial work. I knew we needed to be better structured financially and to have a better team to manage contract work before we re-entered that market. Our CFO, Jill Bourne, and I went through absolutely every cost and eliminated anything and everything that was not a necessity.
I personally took over the remaining contract work and managed it to drive the most value. I was back in the front line sales position for virtually all work. Dave focused on the ordering, shipping, warehouse and scheduling of crews. Scott Harris, who has also been with me for close to 20 years, took over all the builder and property management accounts that remained. And Laura Burns, our designer, handled any and all of the business that walked through the doors and/or called in.
The business was now downsized to half of what it was in 2006. We were extremely efficient once again, we got our arms around everything and we managed from a solid position. Slowly, these actions allowed us to improve the cash flow and establish a firm financial business. The net result is that in 2012, we actually had a solid year and began to grow once again.
Lesson #3: Rebuilding the Business
After taking some time to reflect on the first go-around with contract work, it make sense for me to learn how to be a better contract flooring player. I decided to speak with a few general contractor friends and customers who were willing to share their systems and best practices. I asked specific questions about their management principles and what areas of the logistics plan they stressed in order to stabilize and grow.
I spoke with owners, project managers, their estimators and their supervisors in the field and listened to how their projects went through the entire process. I decided if we were to be a strong contract player, we needed to structure our company in a similar manner. We slowly added a contract team and implemented the systems I had learned. We structured our process with an estimator, Mike Greenwood, and then added a project manager, Karrie Scipione, who also focused on contract sales. In addition, we added our warehouse manager, Joe Reardon, and continued to build the team with training on a continual basis to this day.
By the end of 2013, JDS had developed a strong contract division and the core of the business was running smoothly. The builder business was continuing to get stronger while property management and residential were doing better. Now JDS had built back about 50% from when the downsizing began and we had a nice growth outlook for 2014. The revenue and cash flow were strong, we were discounting all vendors and the future appeared bright. We felt the revenue forecasted for 2014 was on target and it allowed for future growth if we chose to add project managers and/or supervisors. I was satisfied that we had built the business to an optimum level and we did not plan to grow beyond the 2006 levels.
In mid-2014, one of our local competitors closed their doors and we were able to attract a very experienced manager, Ed Meyers, to JDS Flooring Associates. Ed was deeply entrenched in the commercial business in Southern New Hampshire and he gave us a strong opportunity for additional growth. Now that JDS was structured and financially prepared, we decided to grow past our original 2014 revenue goals with Ed’s support while not losing sight of the disciplines we had created.
We also added two supervisor positions that are active in field management as well as scheduling. Strong management, strong cash flow and a good company culture allows the team to work together effectively. We finished 2014 with 46% growth from 2013 and to our surprise we surpassed our 2006 revenues. However, the business now had a much different look. Close to 70% of our sales was contract. JDS had rebuilt to become a contract flooring company.
Training and building our systems continue to be, and will always be, part of JDS’ future. Recently, we implemented “operational meetings” every morning which became necessary as our project load increased. The “ops meeting” goal is to complete within one hour a review of all the contract projects, labor demands and review upcoming work. If needed, we may stay later and focus more energy into a single project with the PM and whoever else is needed. We also will do a quick review of customer service items to ensure all issues are being handled accordingly.
As the managing partner these meetings allow me to sit and listen to our team and focus on where the new needs will be. I look for items that may need a change to process more smoothly. As these items are identified, we write them down on a dry eraser board and create and plan for the issue. The next day, we take the first five to 10 minutes to discuss how to implement the plan.
We try to limit our discussion to one new change per week. This has been great for the team as we continually build our policies and procedures manual. I recently held a two-day training program for nine of our employees and we brought in an outside project manager training company. The goal is to continually train our team and increase best practices.
For JDS Flooring Associates, commercial projects now represent 75% of our 2015 business with the balance of our revenue remaining in the builder, property management and replacement markets. Our commercial projects range in many areas: healthcare, assisted senior living and smaller clinic/emergency care facilities. We continue to work in education with most of the activity in private schools and colleges/universities in our area. We work in hospitality and offer a “service package” to local hospitality facilities through which we can work around a direct sale to the end-user (a common practice in hospitality) by handling the complete project management including material handling, QA and installation.
While there are many opportunities to add services to our portfolio (maintenance, moisture mitigation, epoxy, polished concrete), we have decided at the current time the opportunity costs of investment outweighs the returns. We have learned not to just jump at the next “bright shiny object” which seems exciting.
Last October, JDS Flooring Associates joined Starnet Commercial Flooring, a cooperative of commercial flooring contractors throughout the U.S. and Canada. We are delighted to be members of Starnet and are already seeing the benefits of this association. We were able to attend Starnet’s Fall Membership Meeting in Boston in late October and were very impressed with the quality of the Starnet members and the excellence of the education offered at the meeting.
In the spirit of sharing best practices, we are looking forward to Starnet’s training programs and industry insights. In addition, we are committed to create stronger working relationships with the Starnet Preferred Vendor network. Already, many of these vendors are strong partners in our business, but we will grow our revenue within the network going forward.
Lesson #4: Strong Company Culture
As we look forward to this year, I am focused on several important areas for the business. Most importantly, we need to maintain a positive culture within the JDS Flooring Associates team which is a culture of teamwork, commitment and collaboration. Our team is what makes JDS Flooring Associates who we are. You are only as strong as the people around you, and I can honestly tell you our team is incredible. We are all dedicated to providing a positive customer experience on all projects.
In addition, we operate with a “family first” policy; our employees never place their work responsibilities over their family needs. Both Dave and I follow this policy with our families and we want our employees to do the same. As long as no one takes advantage of this policy, it works and we believe our employees are more effective at work with this knowledge.
Finally, as is the case throughout the commercial flooring industry, I am extremely concerned with the national installation labor shortage. We are working to identify future installers who can support our business long-term. Specifically, we are sourcing military personnel who entering the workforce after their service. The combination of discipline and organizational skills necessary for success in the military become an outstanding platform for success in installation, and we are already seeing success by recruiting people with this background.
We also have an individual focused on our relationships with our subcontractors. We have both hourly and subcontractor installers. We try to always offer the best training opportunities for our installers and we plan to offer more training programs supported by the manufacturers going forward. Ultimately, it is always important to remember that the installation is more important than anything else. We stress that the goal is to “Finish Strong” on everything we do. And to always remember the customer experience trumps all.
Speaking for the entire JDS Flooring Associates team, we are grateful to work in a dynamic industry and look forward to a strong future for this business. We have learned many lessons over the past 15 years, some of which were challenging. However, we have emerged as a stronger team who enjoy the work and enjoy working together. For us, the future is bright!