COVID-19 and construction series: West U.S. region

Paul Wurth:

You are listening to The Building Code a podcast by Buildertrend where we talk, all things technology and construction. Be sure to stick around to the end of the episode where you can find out how to be a part of The Building Code crew. Let’s get it.

Welcome again, to another episode of “The Building Code.” You are tuned into our regional series, looking back at 2020, specifically talking about COVID-19 sure we’re all tired of it, but it is a good time to reflect. And today we have on, in our West region, Brett Lott from Brett Lott Homes. Welcome Brett, to the podcast.

Brett Lott:

Thank you. It’s good to be with you.

Paul Wurth:

Very happy to have you here and thank you for spending some time with us. We were just talking before we hit record that Brett, you’ve been with Buildertrend for seven years, going on eight years here next April. And I want to thank you truly from the bottom of our hearts, the owners, the employees of this business. It’s what keeps us in business and we really appreciate it. So, thank you very much.

Brett Lott:

Yeah, you’re welcome. It’s been a great experience for us.

Paul Wurth:

That’s great. Mutually beneficial. So, obviously, Brett, we reached out to you because of your link with Buildertrend, because of your unique, I guess, profile in Washington State. We wanted to hear from you about what it was like to find out that this COVID-19 situation is happening to navigate the first few weeks, which was chaos for everybody. But then we want to hear about how have things changed? But first, I think it’s always important for you to set the table of who is Brett Lott Homes. Can you give us a rundown of your profile?

Brett Lott:

Okay. Thanks. We’re coming up on our 30th anniversary that we’ve been in business and my father was a contractor and my father-in-law was a contractor, and I vowed that I would never be a contractor. And my father-in-law, in the late eighties, kept pestering me about building some homes and I finally relented. And from there, it started to be a really good experience for us building homes. So, we’ve grown conservatively on purpose, and we don’t have a desire to be the greatest, biggest builder or anything, but we want to do a really good job of what we do. And so, our growth has been conservative. We’ve got three additional employees besides my wife and myself. And so, we stay small so we can stay intimately involved with each of the homes that we’re building.

Paul Wurth:

Wow. So, you vowed never to be in construction. There are probably people listening to this who had the same experience that you did. But for me, let me know why? Why growing up with a construction father and grandfather, did you say no way for me?

Brett Lott:

For us, so in the Tri-Cities area, we have the Hanford Project. And during those years, it would all depend on the budget, the government budget for the Hanford projects, all set and the government would say, okay, we’re putting millions of dollars into the Hanford Project, and the construction would go absolutely crazy. And people would come from all over the country to this area. And then all of a sudden, one day they would say, okay, we’re cutting the budget, and literally, it’s like turning off a faucet. And then all of a sudden, everything was just dead, including construction. And so, I watched my father and father-in-law go through these boom and bust cycles and it was crazy. Then it was hard. And I just thought, I’m not going to be that guy. I just want to get a job, going to stay consistent and didn’t want to go down that road.

Paul Wurth:

That makes sense. What was the Hanford Project? I don’t know about that.

Brett Lott:

It’s a nuclear facility. They had three nuclear reactors and now that kind of morphed into some other things. And now there’s a huge cleanup, waste cleanup, where there’s a lot of money coming into the area and the area has diversified. So, there’s lots of different things that are feeding the economy in the area besides just that big government project.

Paul Wurth:

So, it’s similar to what we probably experienced the last 10 years in North Dakota, they started fracking there, and people flooded that area to get jobs there, but also everything that came behind it, housing, things like that. And so, that kind of up and down is similar to what you’re talking about?

Brett Lott:

That is probably a really good example. It’s just like crazy, no one has a place to live. They don’t even have a place to stay in a hotel to a week later, literally people are taking their keys down to the bank and walking away from their homes.

Paul Wurth:

Wow.

Brett Lott:

It was just that kind of craziness. I just wanted a good job. I didn’t want to be in the fray, and my father-in-law kept pestering me because the economy was good. And so, we started and kind of started slow and conservative and I’m really grateful. It’s been a really good experience.

Paul Wurth:

That’s a great story. So again, just for the audience, you’re in the Southeast part of Washington. What city are you guys based out of?

Brett Lott:

The Tri-Cities is referred to, so Pasco, Kennewick and Richland.

Paul Wurth:

Okay. Got it. So you’re not in the Seattle urban center, you’re not in the Portland urban center. You’re in more of a rural area right now.

Brett Lott:

No, we actually have control over our city.

Paul Wurth:

Yeah. There’s a shot at Seattle there.

Brett Lott:

So, the Tri-Cities, we have the mountain range. And so, we’re literally desert. We get like seven inches of rain a year, where Seattle’s wet and green and everything. So, it’s a very different part of the state.

Paul Wurth:

Yeah. That’s good to know, because I think everybody thinks right away, Seattle, Wash. You had a good segue into COVID-19 because when you said you have control of your city, that could go a political route, let’s not go there. We’re going to stick within construction here.

Brett Lott:

That’s a good idea.

Paul Wurth:

But let’s just call it as a marker when mid-March hit, and we realized that this is a real thing, and everything started shutting down, and your local governments started making these mandates, can you just recall that time and tell us a little bit where your head was at and what was happening with your business?

Brett Lott:

Well, for us, really talk about a step into the unknown and to step into the dark. And so, we really quickly went down into a shutdown in our state, and there was a list of essential and non-essential businesses and residential construction was deemed non-essential. So basically, we had to shut everything down except for what we needed to finish, to not incur spoilage. So, if we’re in the middle of framing, we could finish the framing and still put on a roof and some siding. But we got to a point where a lot of the jobs just had to be shut down. So, that was a pretty unknown, scary time for a little while.

Paul Wurth:

Yeah.

Brett Lott:

And it was billed as a short period, flatten the curve a few weeks. And so, it wasn’t long after that. I don’t know. I don’t know, I forget the timelines. But a little while after that, that we were able to move the construction to a different phase. So, we were able to continue in the construction with a long list of restrictions.

Paul Wurth:

Yeah. Yeah. This is, again, we’re doing a whole series of every region of the U.S. We’re going to get Canada, Australia and New Zealand, but I don’t know the exact number of States, but Washington was only one of only a handful that deemed construction, residential construction, not essential. The government that made that decision in Washington, what was the reasoning behind that when every other state, the majority decided that it was?

Brett Lott:

I’m still trying to figure that one out myself. The best advice that I have had from this whole process is actually came from our local HBA executive. And he just said, Brett, do not try and make sense of this. And so, there’s just a lot of things we’ve just had to learn, just like we can’t try and figure out why or what makes sense. So, we just have to roll with the punches and do our best with what’s thrown at us.

Paul Wurth:

Yeah. I think every small business in these last 10 months, I think the common thread is that because there was no like top level mandate that the unfairness and the different rules that came down, it probably is the most frustrating thing. I can’t even imagine building your company for 30 years and then having this because you’re close to the border a few miles away, maybe another company can continue construction. So, can’t even imagine how difficult that was. So, you guys navigated the first part, it opened up a little bit. How has it been since then? What are some of the things that you guys have had to endure or pivot on that you can look back now and talk about?

Brett Lott:

I think one of the things that we’ve learned through this whole process is the ability to adapt and change quickly. So, literally, one week it’s one thing and we’ve got some changes to make, and we’ve got to have different things on the job site. It could be a couple of weeks later and something else is going to be a little bit different. So, we’ve just really had to roll with the punches and adjust to the changes that come to be able to have everybody going and working and do everything. We’re waiting on things this very next week, that’s going to change possibly what we do. So, we just never know what that’s going to be.

Paul Wurth:

Yeah. We’re recording this on January 5, 2021, and that’s kind of crazy to think that you’re still in that bit of a flux. I know you have a smaller team, you and your wife, and then three other employees.

Brett Lott:

Yep.

Paul Wurth:

Do you feel like you had to adjust or systematize your internal communication because of this rapid change, or how did you guys navigate that internally to say, hey, this is how we’re going to stay on the same page and move forward with these new regulations?

Brett Lott:

It’s really a good question. We’re all really good communicators. And so, we just had to sit down and say, okay, here’s the list of the rules that we’ve got to go by, and then we just need to adjust. So, whatever we’re doing on the job sites or in the office, for us, I think a big part of it is, is that we’ve just had to turn a lot of things to virtual. So, anytime a client says, hey, we need to talk about something, it’s going to be a virtual meeting.

I will say one of the great pluses of Buildertrend is that it has allowed us to have a set schedule. We lined the jobs out on a schedule, and we are fanatical about keeping that schedule on Buildertrend accurate. So anytime a homeowner or a subcontractor looks at that, they’re going, okay, I believe that schedule because it’s a real schedule. And so, by doing that, we’re able to keep the job sites specific to the subcontractor that needs to be there. So, there’s not all of a sudden three subs showing up one day, and there’s a whole bunch of people on the job site, and we’re not keeping our social distancing and stuff like that. So, it allows the subcontractors to be in more control of their social distancing and following their rules for their company.

Paul Wurth:

You bring up a great point. Over the last 14 years, I’ve talked to our companies and one of the things I’ve seen a mistake is that you set a schedule and then you don’t keep it up to date. And so, you deteriorate the subcontractor’s confidence in that schedule. It’s kind of like your reputation, right? You build it up and if you screw it up once, you’ve lost it. I have to believe that confidence in a schedule is the same way.

Brett Lott:

Oh, absolutely. It’s kind of like a bank of trust. It takes a lot to fill it, it takes one thing to empty it. And I’ve had subs come to us that are working with other builders that use Buildertrend, and they’re kind of like, yeah, I don’t trust their schedule. I don’t even look at it. When I get notifications. I just delete them because for one they’re changing all the time, and there’s a temptation that you say, oh, well, this guy finished the day early. We’ll just change the schedule.

And all of a sudden, 20 people are getting notifications. And then the next day it’s like, well, they took a day longer, so now we change it again. So, we’ve just resisted the temptation to not change the schedule unless it’s really, really necessary. And then we make sure, if it does, what’s going on will reflect that so a trade partner can go on Buildertrend, they can look at the schedule and then they can flip over to the photos and the photos are going to reflect what the schedule is. And so, they’ve got two witnesses there to say, okay, yep. The siding is on, the roof is on, the schedule says that. I believe it, and I know when I show up, it’s my job and there’s not going to be another sub there still hanging out for a couple of days.

Paul Wurth:

Yeah. That’s great. I don’t think we talk about that enough that it’s really a job of the company to make sure all that stuff’s true so you can instill confidence and that makes the whole thing go down. And one cog in that wheel, there’s an issue there. Now, just with scheduling and this might be getting too deep into Buildertrend, so you don’t make those small shifts, do you guys kind of use float days or sort of bake in days between subcontractors, so if one does finish earlier, you don’t have to change the schedule and/or vice versa if one’s late?

Brett Lott:

No. A little bit, but not too much. So, what we’re doing is we’re kind of massaging the schedule a little bit in the background. So for instance, if a framer says, hey, I’m going to be done three or four days early, we might call the plumber and say, hey, if you want to get in there a couple of days early, it’s available. And if you don’t, we’re going to keep the schedule, but if you want it. And so, they might jump in a little bit early and they’re going, oh great, because we had a day that we were looking for something to do, which is not likely, but then they can do that. But we don’t change the schedule on Buildertrend because everybody starts, then you start the notification start going out, and it gets kind of annoying for everybody to keep getting those notifications.

Paul Wurth:

Yeah. That’s a great tip. That’s a great tip. We actually did add some float days as a new feature here late last year, early this year. So, if you’re just in that talk to your Buildertrend rep. They can definitely show you that. But that’s a great tip as well. So, you guys had a pretty tight communication between the five of you, which five of you is really interesting. How many homes a year do you do?

Brett Lott:

We’re probably kind of in the 15 to 20 homes a year range.

Paul Wurth:

Wow. So, that’s good volume for a small net group, which means you probably had to be really efficient to begin with. So, this COVID-19 thing didn’t throw you too much for a loop. When you talk about your clients, so their uncertainty, how did you guys approach your clients, your messaging about all the changing that’s going on within your state, your messaging about maybe delays, and we talked about delays and vendors and suppliers could possibly happen? Did you have a blanket message for them or were using sort of a vehicle to do that?

Brett Lott:

So, yeah, because it’s so unknown, our message has really been more verbal than a written saying, hey, this is our disclaimer. But multiple times along the way, every time that they asked, so what’s this, or what’s coming up, or what’s the schedule, and to say, well, this is what we’re trying to work for, but everything’s an unknown. And so, we’re trying to help them understand that there’s a lot of things that come and that are changing the schedule or delaying the schedule.

And it’s not just that the governor’s coming in and saying, okay, we’re shutting down things. It could be well, okay, well now we’re not getting appliances like we could. Light fixtures are an issue. A sub calls up and says, hey, someone in one of the crews has COVID-19, so we’ve got limited crews now, and that’s changing their schedule. So, we’re just in a constant state of flux with those things. And we just keep communicating that to the client and just saying, you have to understand. And they have been very understanding. They get it, they’re in the middle of it, too. They’ve got kids in school. They’ve got their issues that they’re dealing with, with their own work. So, they’re pretty understanding that that’s changing and fluxing all the time.

Paul Wurth:

Yeah, that is one of the positives that I think has come out of this crisis, is that truly everybody’s in it together. Everybody’s being affected by it, subcontractors, clients. So, I have to believe that your clients that maybe four or five years ago might have been a little prickly about the schedule and the timing, and I’ve got my kid’s graduation coming up. I want to be in the home by then. Is it fair to say that they’re more understanding now?

Brett Lott:

Yeah, they are, absolutely. One of the nice things about Buildertrend is we have that schedule, so they can see. And we don’t let them see the whole schedule for the very purpose. If we let them see the whole schedule, what are they going to do? They’re going to go to the last day and in their mind is going to be burnt that last day. And when it comes and there’s slippage in the schedule, they’re going to go, what happened? What went wrong? And so, we let them see a couple of weeks in advance. But again, we’re very quick to communicate. So, if something is delayed, we’re giving a message and saying, hey, just so you know, this has come up. And it’s in Buildertrend messaging, we’ve got a record of it. They respond to it, the realtor can see it. Everybody that’s involved can see it. So we’re all collaborating on it together. It’s just not a quick text that is forgotten and not seen by everybody.

Paul Wurth:

That’s great. A lot of people have talked about how this crisis has pushed the inevitable technology revolution that businesses need to go through, whether that’s Zoom, whether that’s understanding that yes, everybody should be on that Buildertrend message, or we should be doing daily logs for contact tracing and sort of tracing who is on the job site that day. Is that fair for your business? Did it push you in that direction at a faster pace?

Brett Lott:

Definitely. All of a sudden, Zoom or virtual meetings became quickly, very quickly, we had to become proficient at those, and we did. And one of the things I think, I guess for me personally and for our company, we’ve always had to, over the years, we’ve had to change with the times, right? So, you’ve got to remember 30 years ago, when I started business, there was no cell phones, there was no email. So, if you wanted to make a phone call, it was through an office or home phone or a phone booth with a quarter or a dime or something like that. And so, we’ve really keep having to keep up with technology has been really important. So, we’re like the first ones with a website. We’re definitely involved in social media and those kinds of things. So, it wasn’t a big step for us, technology wise, because we decided to do that throughout time.

Paul Wurth:

Wow. That’s great advice. And I take your point because if you started your business five years ago, this technological shift you have to make probably isn’t as big of a administrative system wide thing you had to do because you started 30 years ago. But you’ve made a commitment to being okay with change. Change is not scary, change is good. Let’s stay with it. So, that’s a great point. Yeah. You guys have a great Instagram page and you can check out Brett’s website, brettlotthomes.com. A great website, with some really neat homes on here. So, I guess you were set up for success in that way because that was sort of the ethos of your business, is not be afraid of that change. As you look to next year or even some changes you’ve made this year that you’re going to keep, are there any things that you guys are thinking about as a business that, yeah, that wasn’t fun to go through, but maybe this is the way we’re doing it now?

Brett Lott:

I don’t know, that’s a good question. I work. We’ll just be excited to get through.

Paul Wurth:

Right.

Brett Lott:

Get onto something else, right?

Paul Wurth:

Yeah. I know.

Brett Lott:

I think it’s pushed us definitely in the communication arena. That has just been keen within our company, but with our clients and especially with our trade partners. And again, that’s where Buildertrend has played a key role. I can’t even imagine. This is not an advertisement. A contractor in this day and age and era in time, especially with what’s going on right now, how they’re doing that without something like Buildertrend.

Paul Wurth:

Yeah, that’s obviously great to hear it’s not an advertisement. Not that I’m not going to clip that and use that by all means, but I appreciate that.

Brett Lott:

It’s true. If someone asked me in the last 30 years, if they said, so what’s the most significant thing that has happened in your business? And we’re considering internet and cell phones and stuff like that, it would have to be Buildertrend because of what it’s allowed us to do in the business and watch and monitor and communicate. It’s been excellent.

Paul Wurth:

That’s awesome. Alright. Well, episode’s over. We’ll end on that note. I’m just kidding. No, that’s super, super generous of you to say, and people talk about what’s your why as a business, that’s our why. So, that’s really great to hear that that’s coming through for you. One thing that you had mentioned that I’m just thinking of now is that I think what COVID has pushed construction companies like you to do is communicate better, but almost educate. You have to educate the client about how one thing affects another thing with the supply chain. And if this doesn’t come for four weeks, which is normally two weeks, that delays this other part. Is that fair to say as well because it’s been highlighted how these chain of events can really affect everything?

Brett Lott:

Yeah, absolutely. And they don’t know. And it’s not like they build a house every couple of years. There may be some of those clients out there, but this was maybe one or two times in their whole life they do this. They don’t know. So, I think our feeling is if you don’t educate the clients and communicate with them and help them understand what’s going on, somebody else will. And generally, that they’re going to find that online, they’re going to search for it. And it’s probably not going to be the information that you want them to have. So, either you do it or someone else is going to do it. So it’s important for us to do it.

Paul Wurth:

That’s a great point. Either you do it, and you educate them the way that you build, or they get the wrong information and then there’s some miscommunication between you and your client. So, it’s a great takeaway.

Brett Lott:

It can be hard enough already. There’s a lot of armchair contractors out there, want to go online and check everything out and think that they might be able to manage the project better than you do because they’ve found it online or something.

Paul Wurth:

Right.

Brett Lott:

So, it’s important to build that trust and to have that communication with them, to help them understand how we do things, right? Because they’re using us. It’s just not what everybody else does, this is what we do and they’ve chosen us for a reason and they have some confidence in us. And so, we need to just continue to build that trust so they can have that confidence.

Paul Wurth:

I love that. That’s a great takeaway for everybody who’s listening. Yeah, I call that the HGTV effect. Maybe it’s not great for contractors. Consumers love it, but maybe it sets some unrealistic expectations for you builders out there.

Brett Lott:

It’s tough because you look at any of those programs, most everything they talk about is negative, well look what this happened in this home. And so, we’re kind of dealing with that. And so, they kind of approach it with everything they see in some bad contracting experience, and you’ve got to watch them or else they’re going to do something that they shouldn’t be doing.

Paul Wurth:

Yeah.

Brett Lott:

That’s why building, I think when you build your brand and you are finding ways, you become the top of your market. So, when people are out there looking and they’re doing research or asking friends, you want them, by the time they come to you, they already have a pretty good perception of what that is. I’ve met with people before and I say, well, let me tell you a little bit about my company, and they’re going yeah, no, I’m fine. We pretty much stalked you online, so we know everything about you. So, we’re just ready to go ahead and get started building.

Paul Wurth:

That’s awesome. Yeah, social media is powerful for that and your website. That’s great. Maybe we should have a TV show that says America’s best contractors and start highlighting all the good things that our clients do. I’ll put that in the idea file for you.

Brett Lott:

There we go.

Paul Wurth:

Alright, Brett. I want to be conscious of your time. Thank you so much for joining us. I do want to give you the opportunity. Anything else you want to talk about, your experience as it relates to COVID-19 and your company’s experience or what your outlook might be?

Brett Lott:

I don’t know. I would say probably we need to keep coming back and realizing that our employees, and our trade partners are our greatest asset, and the people that work for us and the trade partners are an extension of not only the company, but me personally. So, our expectations are pretty high and it’s important for us to treat them that way. So, as we’re communicating with them, we’re educating them on these things that they’re responding well and taking care of things like they should be, like we would want them to be.

Paul Wurth:

That’s great. A renewed focus on your employees, a renewed focus on your subcontractor/vendor relationships and making sure they understand that they’re an extension of you. That’s a great takeaway, as well as just that creating your own profile online so people know who you are and that education of the client. Tons of great stuff in this one.

Brett Lott:

Thanks.

Paul Wurth:

Brett, thank you so much for joining us. Thank you for your kind words about Buildertrend and being a loyal client for this many years. We’re really glad to hear that all things considered, you guys are still in there and fighting. Let’s hope for you in the Washington state, all the contractors there that we can get some normalcy there soon, and we wish you obviously the best in 2021.

Brett Lott:

Thank you. We appreciate that. We’re looking for some more normalcy too.

Paul Wurth:

All right. We’re hoping for that as well. Thank you, and we’ll check in down the line.

Hello, Dave, welcome to the podcast. We have Dave Leff from Leff Construction.

Dave Leff:

Good morning.

Paul Wurth:

Thank you very much. It’s morning where you are. You’re obviously on the West Coast, because you were to be a part of our West series for the regional look back at 2020. We very much thank you for your time and filling out the survey. And we were talking just a little bit before we started recording. It sounds like you have a unique story, like many others. And so, I’m really excited to dive into that. Before we do that, for those who have never heard of you or your business, do you want to give the audience just a recap of who you are and what you do?

Dave Leff:

Sure. So, we are a residential design build company. We’ve been in business. I founded the company 43 years ago.

Paul Wurth:

Wow.

Dave Leff:

We’ve been around for a while. We do some new construction and the rest of our work is typically higher end whole house remodels. We’re up in wine country in California, just north of San Francisco. And it’s an area where there’s quite a few expensive homes and a destination for people to move to. And so there’s a market for us for high-end remodeling. The other big thing about us is we are now an employee-owned company. About a year ago, I sold my company to my employees via an ESOP. And so, we’re now a hundred percent employee-owned.

Paul Wurth:

And how many employees you have?

Dave Leff:

Right now, we have somewhere around between 27 and 30. It varies depending on the size of the field crew.

Paul Wurth:

Yeah. So, that size, and we’ve talked to all sizes of companies. Somebody does two employees because they sub absolutely everything out, including design and all of that. Sounds like you do quite a bit in-house, both with people in the field and your design team, right?

Dave Leff:

Yeah. We have a design staff consisting of three architects and two interior designers. We don’t do any competitive bidding. All of our work is negotiated design-build work.

Paul Wurth:

Okay. So, let’s dive into last year because you brought up a couple of interesting things. So, you were working obviously on this ESOP, giving over the ownership of your company to your employees. That’s essentially an exit for you. It’s a way a business owner exits their business, correct?

Dave Leff:

Right. That’s correct.

Paul Wurth:

And so, you’ve been working on this a lot. I heard you speak about this on another podcast, Remodelers Advantage. So, Dave, you go through all of that, which I thought was super, super interesting. So, I am listening to other podcasts out there. But that just doesn’t happen overnight. So, you had that in the works, right?

Dave Leff:

Right. We’ve been working on that for almost two years, talking about wanting to get it going. And then the COVID-19 really slowed things down.

Paul Wurth:

Yeah, that’s what I was going to ask. So, did you get that announced and launched pre-March 2020, or did it have to happen afterwards?

Dave Leff:

No, it happened in the middle of last year.

Paul Wurth:

Oh, wow. So, just add some more stress onto it. So, let’s talk about last year because I think you’re going to have a different story than many have heard on this podcast. And just to recap mainly what we’ve talked to so far, are companies across all over the United States and Canada. We’re also going to go down to Australia and New Zealand. So far, everybody we spoke to had almost a record 2020. After the pandemic hit in March 2020, obviously there was a month or two of just sort of unknown and a little stop of everything. But after that, almost everyone we talked to, had a record year. Not the case for you.

Dave Leff:

No, that’s partially because California shut down earlier than most states and we had a very, very strict protocol that we had to follow and very restrictive requirements. So, the result for us is that we were pretty much dead in the water for the second-quarter, March through June. And it was really just, we basically had to just stop, we weren’t working anywhere. We were not allowed to work in occupied homes. We had to follow a very strict protocol on job sites, that made it difficult, if not impossible, to work on some projects, and people were just reluctant to do anything.

So, our design died, all of our design staff weren’t working, our field were off work. I mean, the PPP Program helped us out a lot with that. And it was really not until after Memorial Day, that things started to turn around but still, we were not allowed to work in homes that were occupied. So, that limited our work to either, new homes or second homes or homes that people weren’t living in. So, for us, a lot of our projects are second homes for people from San Francisco or Silicon Valley. So, there were a few projects we could work on, but the third-quarter things picked up again.

But then we’re really dependent on our design staff to be designing projects that we can then build. And since the designers weren’t working in the second and the beginning of the third quarter, by the time that the projects that we did have were finished, we didn’t have a new set of projects to start in that fourth quarter. So, the net result for us is that we were about 40% below our revenue projections, in our prior year revenue.

Paul Wurth:

Wow. So, how do you deal with that? I mean, let’s just make it a really simple question. How do you deal with that? As a business owner, I have to imagine you have a ton of pressure to keep people employed, keep your team or the owners of your business now, running. I mean, what did you do?

Dave Leff:

Well, the PPP program allowed us to keep paying people. Fortunately, we had cash reserves that allowed us to cover a lot of the months that we weren’t working. We just dealt with a year, where we weren’t making it, I mean, it was profitable, but just barely. But the good news is that, and we can talk about …

Paul Wurth:

Yeah.

Dave Leff:

… not the past, but the future. But the good news is that it has now picked up. So, now we’re experiencing what a lot of other companies across the country, were experiencing last year.

Paul Wurth:

That’s good.

Dave Leff:

Because we are very busy now, and the projects have gotten bigger, average job size is probably doubled from the beginning of last year.

Paul Wurth:

What do you contribute that to?

Dave Leff:

It is all about people moving into the area because they’ve learned that they could work from home, and they don’t need to be in the city, they don’t need to be in Silicon Valley, they don’t need to be in LA. They can move up to a much more desirable place to live, buy a home. They’ve sold a home where they’re coming from, they have cash, they’re buying homes, and they’re remodeling them. And a lot of our projects are creating home offices inside homes or building detached home offices …

Paul Wurth:

That’s awesome.

Dave Leff:

… as part of a larger remodeling project.

Paul Wurth:

Yeah. I have a feeling we’re going to see a lot of that. If you have a good size lot, it makes life, especially where you guys are at, just to walk outside in the morning, go to some detached office and that can still be your place because it is hard to work in your home.

Dave Leff:

That’s right. It’s harder than working at the office.

Paul Wurth:

Yeah, exactly. So, that’s really interesting. So, you’re seeing in general, your city is Sebastopol, is that how you say that?

Dave Leff:

That’s right.

Paul Wurth:

Okay. So, you’re saying that’s around Napa or that is in Napa?

Dave Leff:

Well, it’s not in Napa. Napa’s in Jason County.

Paul Wurth:

Okay.

Dave Leff:

We’re in Sonoma County.

Paul Wurth:

Sonoma, okay. So, both Napa and Sonoma are seeing this, what people talk about, this migration of these people moving to these areas, right?

Dave Leff:

Yes.

Paul Wurth:

It’s like a gold rush for you?

Dave Leff:

It is. Yeah, it is.

Paul Wurth:

That’s awesome.

Dave Leff:

It’s a silver lining, that’s for sure.

Paul Wurth:

Yeah. I mean, because you mentioned that, especially where you’re from, if you’re selling a home in LA, if you’re selling a home in Southern California or even San Francisco, and you had that home for five or 10 years, you’ve made a lot of money. Right? And so, then you’ve got this bunch of money, and you’re going to go buy a property that’s less than that and then you got a bunch of cash reserve left over. Wow. It’s going to be in construction where you’re at.

Dave Leff:

Yeah.

Paul Wurth:

That’s awesome. Well, that’s really great to hear. And so, looking to 2021, are you going to be having to add your team, or do you feel like you guys can handle the volume or what’s that look like over the next year?

Dave Leff:

We are currently in the process of adding to our design staff and our field staff.

Paul Wurth:

That’s great. And everybody talks about a labor shortage in construction, I think we all feel that for the tradesman. Is that the same when it comes to design as well or is that a little bit easier for you find?

Dave Leff:

Oh yes, it is, definitely. Yeah. I mean, it just means that we’re going after people that are working somewhere else.

Paul Wurth:

Okay.

Dave Leff:

We’re recruiting because there’s no one. If you’re not working now, there’s a reason.

Paul Wurth:

Yeah. That’s exactly right. So, you’re headhunting right now?

Dave Leff:

Right.

Paul Wurth:

Alright. Well, all those construction companies in and around you, better watch out.

Dave Leff:

Well, any and everyone’s doing it, too.

Paul Wurth:

Yeah. No, I understand. So, you had mentioned you’re in California and at the outset of the pandemic, you had more restrictions than I would just say, most. The majority of U.S. out there, those are coming down from the governor. If you read the news, those things haven’t let up all that much. Is that correct? Or are you seeing a little bit more flexibility in what you’re able to do in a construction job site?

Dave Leff:

It hasn’t let up too much. And the reason why we’re having the good beginning to this year that we are, is really because almost all our projects are unoccupied homes. Because it’s still very difficult to work in a home where families are living.

Paul Wurth:

Yeah.

Dave Leff:

Just because of the requirements for the job site protocol.

Paul Wurth:

California is notoriously tough to begin with, with all of the red tape and environmental things that you have to go through. You see a lot of that in Southern California, do you find the same restrictions where you’re at?

Dave Leff:

Oh, definitely. And we’re just so used to it.

Paul Wurth:

Right.

Dave Leff:

I just can’t believe when I go into other states and talk to other builders, how easy it is to get things done in some other states.

Paul Wurth:

Yeah. I was trying to stop myself a little bit because I didn’t want to make it seem like, I just said, you have a gold rush going there. I didn’t want competition to go, and you’d be afraid of that, but nobody’s who’s never built in California is going to go there and succeed.

Dave Leff:

They’re not going to want to move from Texas to California.

Paul Wurth:

Yeah. It’s a whole different ball game you’re playing there.

Dave Leff:

Yeah.

Paul Wurth:

Well, I think that it’s really great to hear, that this year is going to be good for you guys. I have to imagine, that you guys have really doubled or tripled down on your virtual communication then? Due to both the type of work you do, people moving in may not even be living there yet second homes but also, the pandemic and some of the restrictions you’ve had there?

Dave Leff:

Yes. That was something that we started in the beginning, to develop. I mean, we tried doing virtual sales calls, which was not very successful. So, we ended up doing a lot of outdoor sales calls. We are pretty much doing all of our design work and presentation work to clients, virtually. Buildertrend has been a great resource for us just because we’ve started doing all of our clients selections or material and finish selections, via Buildertrend. It’s given us an organized vehicle, to stay in touch with our clients, to communicate through Buildertrend. We use the scheduling module a lot because anything that we can do that makes the virtual communication work better, is something that we treasure.

Paul Wurth:

Yeah, for sure. And I guess that’s an interesting topic. I typically stay away from diving into Buildertrend just because there’s a ton of information about Buildertrend trend out there. I think people listen to this podcast for the exact things you’ve been saying, just hearing your story. But I think it is interesting that, how long you’ve been with us. So, how long have you been, I have it at 2018, does that sound about right for you, March of 2018?

Dave Leff:

Yes, yeah.

Paul Wurth:

Well, let me set this up. So, typically, a construction company can’t just go all in on Buildertrend. I mean, we have 29 major features, and it’s really dependent upon what’s important to you when you sign up, and it’s more of a gradual build thing, in terms of learning the features and getting them incorporated into your company. Do you feel like once the pandemic hit, it was a push for you to go, what else can this thing do? Because we need to be doing stuff virtually now.

Dave Leff:

Yes, that’s exactly what happened. We were looking for any way that we could improve our virtual relationships with our clients. And we have a showroom at our design center, which we couldn’t use. So, we had developed an online showroom and a process for creating virtual showroom and helping people to make their selections. So that, we were able to bring Buildertrend into that, and it was just perfectly set up for us to do that. We don’t use the financial ends of Buildertrend just because we’re on an accounting software that Buildertrend doesn’t talk to, so we use both of those, but for anything that we can, we are. As we learn about what we can do with Buildertrend, we’re incorporating as much as we can.

Paul Wurth:

That’s good.

Dave Leff:

One thing we’ve found, is the virtual change order, signing of change orders virtually, and it was really helpful.

Paul Wurth:

Yeah. So, I’ll plug this. I don’t know when this is going to air, but as you know, the International Builders’ Show is our biggest show in our industry. Have you typically gone to that show?

Dave Leff:

I’ve not gone to that show, no.

Paul Wurth:

Okay. Well, when it comes back online, I recommend it. Although, you’re not an owner anymore, you don’t have to worry about that stuff. Maybe just send to some of your other owners. But it’s a huge show, right? For first time in its history, it’s going online, totally virtual. So, we won’t be there our 15th year in a row, but I’m doing a class and the class was talking about, changes you need to make in your workflow or processes of business, due to COVID-19, obviously, a lot of that’s virtual. One thing I talk about is daily logs, how you should be constantly doing daily logs for your clients. It’s a great way to communicate what’s going on with the job site. Do you guys utilize daily logs yet?

Dave Leff:

Yeah, we do.

Paul Wurth:

Okay.

Dave Leff:

Actually, that’s another thing that we are using.

Paul Wurth:

Yeah. That’s a good one because it’s so easy for your team just to say, here’s what happened this week. Here are a couple of photos even a video. If you’re not doing videos yet, video walkthroughs, that’s a really good tip. And then you can collaborate and communicate with the client on that.

Dave Leff:

And the photos, we use those.

Paul Wurth:

Yeah.

Dave Leff:

It’s just the way of organizing the photos on Buildertrend is really helpful.

Paul Wurth:

Yeah. Well, that’s really good to hear. I mean, to be completely transparent, we’re just really happy that we were there at a time that our clients really needed to start using it. I mean, nobody uses Buildertrend 100%, prior to the pandemic, we might have a group of people who do now, which is really great. That being said, we add new things all the time, so be on the lookout for more features that are going to help out here in 2021.

Dave Leff:

Yeah, I think, now that you say that the International Builders’ Show is going to be virtual this year, I will make a point of attending.

Paul Wurth:

Yeah, there you go. First time, look out for my class, Mobile Project Management on the Go, that’s the last I’ll plug it, but there’s going to be some great keynote speakers, great education sessions there. So yeah, make sure, maybe you can carve out some time for you and your team to check it out. I guess, at the end, the last one I’ll say is that, first of all, great to hear that you’re going to have a great year. That’s always something we’re really excited about for our clients and really appreciate your time here. As look back at how you survived this last year, that was difficult. Do you attribute a lot of that to being in business for 43 years and going through the ’08, ’09 and all the different ups and downs that you’ve seen in construction?

Dave Leff:

What we really learned from COVID-19, just reinforced something that I always knew, always talked about, and that is that, cash is king.

Paul Wurth:

Yep.

Dave Leff:

And we’ve been around long enough, we built up enough of a working capital, that it allowed us to survive through the really tough times. But whenever possible, keeping six months of overhead in cash, allows you to get through these kinds of things. So, that’s one of the lessons that I got out of COVID-19. The other thing that I think is going to carry on after things turn around is that, we learned that some of us can work from home and it works fine, it works effectively. And I think that we will probably see some of our designers and some of our admin staff, continuing to work from home, which means that we need less office space.

Paul Wurth:

Yeah. That’s a shared lesson that we learned at Buildertrend, too. I mean, I don’t know that we were hesitant to let people work from home, but it just wasn’t necessary. And so, when you’re finally pushed to do that, and I’m sure you can maybe feel the same way, you go, oh, wow. They’re just as productive, maybe in some cases, more. And again, there are some benefits of the business, to that.

Dave Leff:

Right. The other big issue that that came with COVID-19 is how it interrupted the supply chain …

Paul Wurth:

Yeah.

Dave Leff:

… and created problems for subcontractors as well as our vendors. So, one thing that has changed, that I think that will continue into the future is that we can’t count on things being delivered when they say they’re going to be delivered or subcontractors availability when they think they’re going to be available. So, our approach now, is to get as much of the materials onsite or close by, before we start a project because our schedule is critical, and we can’t count on things, being able to project accurately when we’ll have our cabinets.

Paul Wurth:

Wow. That’s a huge shift. So, you guys try to get almost all product onsite or close to the site or in hand, where you’re in control?

Dave Leff:

Right. Well, if we have an absolutely confirmed delivery date, then we can work with that. But yeah, much more so than in the past, we would get things delivered into our facility or into the job site before we start.

Paul Wurth:

Okay. So, that might delay the start of the project, but that’ll ensure, when you do start that project, that you can be much more consistent when you’re communicating with the client about progress and when they’re going to eventually be in?

Dave Leff:

That’s right. Yeah.

Paul Wurth:

That’s a great tip, take that away listeners. If you can do that, order it all up front. You don’t have to have a warehouse or anything, right? You’re just storing it on the job site?

Dave Leff:

Yeah, no, no. We would use the client’s garage whenever possible, and we have a small storage area. I mean, we have a yard that we can store things in.

Paul Wurth:

Okay. That’s a great takeaway, great tip. Thanks, Dave. It’s been really amazing to have you on the podcast. 43 years of experience is always good. We’ve already gotten a couple of gems from you, so we definitely appreciate that. Obviously, it looks like being in this business for this long, you were maybe not ready for it, but you were prepared for what last year threw at you.

Dave Leff:

Yeah.

Paul Wurth:

And a little tip for the young owners out there, do not buy that truck this year, throw some money in savings, get six months of working capital.

Dave Leff:

That’s right, yeah.

Paul Wurth:

That’s a good takeaway.

Dave Leff:

Yeah.

Paul Wurth:

Well, I appreciate it so much, Dave. I’m going to let you get back to your day. Thank you for joining us on this regional podcast series. If anybody wants to learn more about you and your business, I’m sure you have a website?

Dave Leff:

Leffconstruction.com.

Paul Wurth:

And do you guys have any social media that you like to do, Instagram, Facebook?

Dave Leff:

We do. We have a full-time marketing person and I don’t know much about everything she’s doing. But yeah, we have Facebook and Instagram.

Paul Wurth:

Awesome.

Dave Leff:

And all the other stuff.

Paul Wurth:

All the other ones. Well check out the website, if you want to learn more about Dave and his business and give them a follow on their social media, it’s good to give everybody follows and encourage that. So, thank you again, Dave. Really appreciate the time, and we’ll talk to you later.

Dave Leff:

Well, great talking to you. Thank you.

Paul Wurth:

You bet. Thank you again for tuning into this episode of “The Building Code.” Make sure you subscribe and like, wherever you listen to podcasts. Also head out to Facebook and join the Building Code Crew, and finally, drop me a line at podcast@buildertrend.com. We want to hear from you, suggestions on guests or topics, anything. Thanks so much for joining and appreciate you.