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Ep. 1: The History of the Powell Companies

Spencer Powell | Apr 23, 2020 3:25:37 PM |

Welcome to the very first episode of the Building a Family Business podcast! In this episode we introduce you to the stars of the show: Wes and Brooks Powell and give the backstory on how they got started, as well as how they continued to grow their family business over the course of five decades.

In this new podcast, Spencer interviews his uncle and his father on their history in the construction business, and extracts value information and insights from their years of experience.

Listen to the full first episode here:



  • 1:06 Podcast overview
  • 4:06 How Brooks got into the construction industry
  • 5:38 How Wes got into the construction industry
  • 7:10 The Powell family backstory
  • 10:10 The history, beginning with H.H. Benson
  • 12:45 Three brothers: how was the work divided?
  • 14:45 Spec houses and permits
  • 18:30 What was the family dynamic like in the first several years?
  • 23:50 When the business changes as you are learning it
  • 26:00 Setting business goals
  • 27:15 Advice: find a mentor
  • 33:10 The importance of introspection
  • 37:14 What happened next? The economic downturn and the big split
  • 42:40 The evolution from direct mail to Builder Funnel
  • 46:55 Quick responses top industry changes
  • 52:54 Concluding advice
  • 58:05 Spencer's takeaways

 

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Resources

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Full Episode Transcription

Note: this podcast was transcribed automatically and may contain minor grammatical errors and missed words.

 

Spencer 0:01
You're listening to Builder Funnel Radio. This is the building a family business show with West and Brooks Powell. Let's dive in.

The Powell family construction business has been around for over 110 years. Over that time, it's evolved and been through four generations of the Powell family. What started as a new construction business building spec homes in the Seattle area, evolved to building communities, remodeling, building custom homes, and then getting involved with property management. Today the business currently owns and operates two retirement and assisted living facilities, several apartment buildings and does third party property management in the Seattle area with about 750 total doors under management. Over the last several decades, Western Brooks has seen it all when it comes to business evolution family dynamics in the construction industry. This is the show where I work to extract their knowledge and experiences to help you navigate family dynamics among other things in your construction business. Let's dive into the show. Hey guys, welcome back to builder funnel radio. I am excited because today is the first episode of a new show that we're gonna have here called Building a family business. And I'm excited about this one because we have several generations and decades of experience in family dynamics, transitioning the business moving through, I guess, different elements throughout the construction space. And also I'll have basically my my data, my uncle here with me and so we'll just kind of get to go off script a little bit and talk about some fun stuff. But I think that this show is going to be really valuable for you guys. We'll be able to share a lot of things that our family has gone through and my goal is going to be to kind of extract the knowledge here from from West and Brooks are joined joining me today so West Brooks, welcome to the show. How's it going today?

Brooks 2:04
Great. Thanks.

Wes 2:05
Well, thanks, man.

Spencer 2:07
Yeah, and so I figured a good way to kick things off is kind of introduce you guys and let our audience basically know who you are and kind of what your background is and what your history is. And a lot of times you're on builder, funnel radio, we start with how you got into the construction space. So, Brooks, let's start with you. How did how'd you get involved in all of this?

Brooks 2:31
Well, it was kind of interesting. The I got started back in boy when I was think 14 and I was old enough to actually scrap lots and that was one of my first jobs was scrapping lots and I have some very distinct memories of picking lumber out of the frozen ground and throwing them in the back of the truck and and progressed from that to learning how to do foundation to framing and just worked my way up through a lot of different positions within the construction business and ended up owning and operating our own construction business. Up until the last couple years.

Spencer 3:10
Yeah, and and just for some context, too. So you started when you were 14. So why were you scrapping lots, you know, kind of get the context there. Why, why that versus something else, you know?

Brooks 3:22
Well, I think scrapping last because that's something you can do with relatively little skill. It's, you can someone can point and say, go to that pile, pick up that lumber, put it in the truck, and someone will drive it away to the dump. And I think that's how, and I was, I like to earn money. So I was excited to try to get get some work, do something and, you know, I'm 55. So you couldn't, you couldn't work until you were 15 or 16 for somebody else. So that was something I could do, along with having a paper around. So that's, that's why I started scrapping loss and I didn't know anything at the time. Sure,

Spencer 3:58
yeah. And how about you, Wes, how did you you get into this mess as well?

Wes 4:04
Good question. So I'm five years older than bricks. So he's 14, I was 19. So my introduction to working in construction was a little bit different than bricks has been at too much different I started. Our grandfather was a builder, of course, and he liked to dump large piles of beauty bark on lots where he had just completed a house. And that was his idea of landscaping at that time, which was in the late 60s, early 70s. So my sisters and I would go out and face probably 2030 yards of bark and get on our shovels and start spreading that bark. So we do that on the weekend. So that was one of my first introductions. The other one was like rocks. I did scrap lots. I think I have stronger memories of cleaning out houses are scrapping them out to get them ready for typically for carpet and cabinets and things like that. So we're going through in this point out construction debris and vacuuming out, vacuuming out the the ducts and so on. And so that was my second introduction to construction, I guess just, you know, doing the grunt labor work that needed to be done around the construction site and slowly getting exposed to other parts of the business.

Spencer 5:25
Yeah. And you said it was your grandfather? Was he the one that started the the original business that's kind of morphed into what it is today?

Wes 5:35
Well, not not totally know. So and Brooks is better on the history than I am. But certainly, our grandfather's name was Cecil and Cecil was introduced to the business by his father in law, who was already in the construction space in the in the Seattle area. And so that's how Cecil got into the business. Cecil then brought his side into the business Monti who's our father. And, and then of course, we we moved into the business aspect as well. And our sisters were certainly involved in that building process. So one of the, the actually one of the neat things that that dad did to introduce us to the business was back in the 70s, we were looking at college. And so there's five kids in the family. So a lot of kids, and they like to go to college. And we're in the midst of what started out as the Boeing downturn in 1970. And so market had been pretty bad, slowly grinding our way out of that. And so the only way to make money for college at that time dad decided we should start building houses on our own. So all five of the kids build houses, we build spec houses. I framed my first house when I was 17. And basically were thrown out on a lot and here's a Here's a building permit, and here's someone help train you a little bit, kind of a lead foreman, and he would show us what to do every day, then we would do it. And then he'd come back to the end of the day and say, Hmm, that's a good, we're gonna have to rework that. And then we would fix it and move on. So that's really how we, we learned the building business specifically was that day to day process over a number of summers, right bricks was quite exciting.

Brooks 7:27
It was over maybe almost 10 summers, you know, from start to finish, you know, from the very first house that you guys built, probably in 76. And we were and we did it up until 85. You know, off depending on who was around to do stuff.

Wes 7:48
Yeah, so that first house I think sold for was a 39,000 or something. Something rectangle, just a little three bedroom, one and a half bath

Brooks 7:58
box. That was a nightmare. The plan

Wes 8:01
as the 960 plan,

Brooks 8:04
build a few of those

Wes 8:09
graduated houses that were slightly over 1000

Brooks 8:10
square feet. And we got to the 1210 plan a famous right

Wes 8:14
now the 1210. That was a, that was a killer plan.

Spencer 8:19
And so so basically it started with you said Cecil's father in law. And then it was and then he had Brooks maybe guide us through a little bit of like, back to the beginning and guide us through current just to give some context.

Brooks 8:33
Yeah, the so hh Benton as our great grandfather on our grandmother's side. So Cecil, his wife, Dorothy was a banker. And he came out with Great Northern Railroad in the early 1900s, as a real estate attorney, had quite a few kids and needed to make some extra money. So he got into developing in North Seattle and build apartments and houses and that went on from 19 No nine, up until in the 40s. And that's when Cecil, our grandfather got into the business after World War Two. And then that evolved into where we are today.

Spencer 9:13
Gotcha. Okay. And so really kind of fast forward and you said, you guys kind of got into college and we're building the houses. And that was a way to get through college. And then what happened then? Did you guys go just right into the business? Or did you take some other paths first, or how did that shake out? Well, I

Wes 9:31
certainly maybe I was first. So I, I graduated from college, and I decided that the one thing I did not want to do, based on my experience, scrapping lots and cleaning out houses was to become a builder. So I definitely look for some other opportunities early on. But within about a year, Dan asked me to do a market study for him for retirement community that we're thinking of building And since I had already done some market research work for another firm in the area, right out of right out of school, that seemed like a good fit for me. And that's kind of how I got introduced back into the business by doing that market study. And from there graduated into building spec houses over the next year or so. And then Brooks came in about four years later, five years later, and jumped right into the business.

Brooks 10:28
Yeah, I just jumped right in. Wes hired me as a construction superintendent, building houses running jobs. So that was, so I just when I graduated, I was already married. So I just jumped right in and started working right in the business.

Wes 10:43
And then two years later, we hired on our youngest brother tide, and then he came in and started doing the construction supervision work that Brooks was doing, and Brooks started taking over things around marketing and those areas. I was in charge of finding life. And coming up with the permits and working on the financing. And so we kind of split up those duties now work pretty well. So at this point you got,

Spencer 11:11
you know, the three of you as brothers in the business and you're all working with your dad. Monty. And so I'm always interested in how this kind of all shook out. You said, yeah, we kind of just split the stuff up, you know, and was it just that easy? Or did you think through like, Oh, yeah, you're gonna be doing this, I'm gonna be doing this. That's where our strengths are kind of just evolved naturally. How did that work out?

Wes 11:35
The answer would be yes. And

it was not a it was not a well thought out plan. I think when Brooks joined me, I was desperate to have somebody take over the construction process because at that point, I was doing that doing that entire process. Our dad was pretty busy with his building a retirement community. At that time, and so we really were building doing spec houses on our own. It was just the first me and then it was me and Brooks and then it was bricks me and Todd. So, anyway, I was, I don't know if you've ever read the book, e myth, but it's that idea. And the E myth by Michael Gerber, they start off with a story about a company that's just one person and then, you know, they get super, super busy and then they go, Oh, my goodness, I need somebody to do the books. Oh, good. Here, you do the books, and then they abdicate all responsibility to that person, and then they go off and do what they're gonna do. So that's kind of what we did. I mean, Brooks walked in the door, and I probably threw a pile of permits and plans and said, have fun, you know, go build these seven houses, and I'm gonna go look for some more lots.

Brooks 12:49
These seven houses are actually nine houses and they were all

Wes 12:52
totally nice. It was. Yeah.

Brooks 12:55
Here's nine customers and on yours, expect to feel like you Not so detailed. So yeah. Yeah.

Wes 13:05
So I think we've got to learn from that. So we started developing some systems and, oh, let's put together a spec sheet for the houses so we understand what we're building and they can actually moved from one person to another and that knowledge can be transferred. And so we started to put some of those systems in place. Yeah.

Spencer 13:24
And so I guess as you're going down this path, you kind of just got thrown into it. And it sounds like that was kind of the general approach initially, and it's just kind of trial by fire. Since your dad was busy kind of doing a new initiative, it was kind of like Hey, you guys gotta take this and run with it. I'm kind of curious I guess did was it all specs at the time or any remodeling? Or were you building communities or what was kind of the state of the business and what you guys were focused on for product?

Brooks 13:54
brick See, Brett, do you want to handle that one? there? Yeah, we were doing all in the term specs is referred to Is speculative homebuilding. And so it's shortened to spec, spec home building. And so we were doing all speculative home building, we would acquire the locks, get permits, pick the plans, and delivered a finished product. And when that house was done, we would get on the market. We might sell them before they were done and make a few modifications. But it was all single family detached construction in the suburban market around the Seattle metro area. And it was just we were West mentioned getting permits. And so we would be getting permits for 50 houses a year and in permit seem like such a hard thing to get. It might take a month to get a permit or something when when I taught and I exited the business. It was taken a year and a half to get a building permit. And so we're not we're not going to get into the housing shortage questions, which would be more political, but it was an entirely different business when it accident then when West nine came into it, for sure.

Wes 15:04
Yeah, that's that's very true. And I think that was really a large driver of cost in the Seattle area, for sure, was regulation. I think just in the time that I was getting permits, it went to seven months or eight months in the city of Seattle. One of the things that complicated our process, maybe more than for some other smaller builders, because we're definitely a small builder. We built anywhere from our goal was to build 36 houses a year, we went to do three starts a month. And I think at one point, we were over 50 in a year, and then other years, we might be down more in the 24 to 30 range, depending on the on the market. But one thing that did complicate our process is that we worked in a lot of different jurisdictions. So we're dealing with, I don't know, four or five, six jurisdictions, so they all have their own regulations, their own permitting process, and so on. So that that added a special spice

Brooks 16:02
to the whole thing. But it ended for context for folks is that in some states, they don't require building permits. Yeah, Dixon, so it's so I have builder friends across the country, and they'll say, Oh, yeah, well, I went down and got a permit today. And I'm, you know, my job drops. And I'm like, Well, that's it. 18 months process in, in some of our jurisdictions, and so yeah,

Wes 16:27
did you apply for that permit 18 months ago, so you could pick it up today? Or did you just, you know, walk down there.

Brooks 16:34
Get some places you don't even need a permit. So you

just, you know, the interest is different across the country. Yeah.

Spencer 16:42
Yeah. So as you guys were kind of, you're doing a lot of the the spec building and so at this point, you know, you two are in the business, Todd, your younger brother is in the business. What were some of the, I guess, more challenging components of working with your siblings And then maybe on the flip side to like, what are some of the most rewarding parts? Because I know I'm talking to a lot of construction companies every week these days and so many of them are family business, whether it's, you know, parents bringing in like a, you know, child into the business or there are, you know, siblings oftentimes brothers who co own the business different dynamics like that. So, maybe talk about some of those early challenges because I know those shifted and you kind of work through some things over time and you figure things out but kind of those first several years of working together What did you guys kind of uncover their

Wes 17:37
bricks Do you want to lead off with anything or

Brooks 17:39
I from your head, you know, having obviously the ability to look back at it good questions better that the you know, having the maturity at certain points in your life sometimes you wish, Oh, I wish I had been more mature or had more education around certain things around personality profiles or around just general business. So I came right it for me, I came right into the business right out of school with a business degree. But my business experience was very little, and I've never worked for anybody else. So probably out of that I experienced I would recommend, it doesn't hurt to have if you think you're laying or pass down for having your kids come into the business, having them go work somewhere else, for someone who's not a sibling, or a parent is probably a very good thing. So now I was the second one into the business. So Wes might have a different perspective. Or Todd might have a different perspective. or sister Heidi. perspective. Yeah.

Wes 18:46
Yeah. And that's true. We might mention it at different times, or sister Heidi definitely was involved in the business and worked in the business. And even our sister Laurie at times. Worked it in this we're talking about when we're really ramped up and building and doing different projects. So, but I would, I guess I would, I guess I would agree with that. Just it's always good to have an outside look at how other businesses operate, and how reporting structures might work. I think we were blessed in that the three of us got along really, really well. So there, we didn't have any knock down, drag out fights. There wasn't a lot of personality conflicts. But I think the idea of thinking about personality types is a good one that Brooks brings up you know, you can do disc profiles and things like that. But just knowing whether someone has a hard charger or someone is a more of a people pleaser, you know, what, is someone really, really good at detail, or are they not really good at detail? So it takes you a while if you don't know any of those things to figure out because the reason you're in the business is because your family, right? That's how you got into the business. It wasn't Because Oh, yeah, I just you know, I met this great guy Brooks or Todd or Wes, you know, and they're perfect fit for the business. You know, they have all this background, we did have background, we understood the business, we don't build houses before we actually started doing it in earnest, but, but to understand that you are basically trying to take people that are there because they're family members and put them into the right boxes. So trying to figure out first, what are the boxes? And then what's the right box for that person to be? And that takes a little while. I mean, bricks, would you say, based on you and Todd, you know, in terms of running a job, or being a construction supervisor, so if you don't mind sharing, what's your what's your personality profile?

Brooks 20:45
Oh, I'm in the disc profile.

Wes 20:49
Sir. Hi, Dee. So very dominant. charger, let's make decisions. Let's move on. And, you know, at that time, I was very much a high which would be more of a a people person, you know, people pleaser sort of thing, you know, wants everyone to get along Kumbaya. And then Todd is very detail oriented, you'd be a high C, very list oriented. So it started off in construction, I mean, in actually supervising, because that's where I needed him. But, you know, that wasn't his best spot. You know, he was really good at seeing vision and looking out in the future, and where do we want to be and what's going on with trends and let's make some decisions. And we're Todd was a very, very good construction supervisor. And that's where we ultimately ended up again, it was just trial and error. It took longer than it probably needed to

Brooks 21:43
just where where the market is and where the business is and where the economy is. And the only thing the whole time you're trying to, you know, you're you're trying to build the plane while you're flying. And you're sitting here going, Okay, well, the markets up, it's down, and you've tried to keep cash flow going in. And, and so it was an interesting.

Wes 22:06
That's an interesting point Brooks. Because if you think about the other factor, which is what's going on with the economy, what's going on with the marketplace, while you're trying to figure out a business at the same time, so your background is always changing. Right. So I think that's I think most business owners who are new to the business are, you know, fresh out of school or fresh into business. I think Brooks talks to these guys all the time, guys, and ladies who have businesses in the remodeling space who maybe have never seen a downturn and they don't know. You don't know what they don't know. And if you think you're super smart, because everything just happens magically and it works great and everything sells. You're in for a rude awakening at some point.

Brooks 22:56
Yeah, no, I think that's the, you know, we've been in you know, 10 year tenure cycle. So it's been pretty phenomenal. And, you know, it's, you've, the older you are, the more ups and downs you've seen, which then can make you less willing to take advantage of us, which is coming. But sometimes when you've just started, you've only seen one part of the cycle, then it makes it it'll make make it more challenging when as the economy moves up and down. And so as we've seen, it's very similar to in the 60s, you know, we had almost a 10 year cycle until 70, where everything was up, up, up up up after World War Two. And then when it was very volatile, from 70 until 8084 85, and then it was involved variables up and down every two or three years, and then again in the mid 90s, till we and then it was a big push up. So it does make it challenging when you're trying to grow your business, expand your business, and your On Well, I hit a million dollars worth of revenue this year, I'm going to 1.5 next year, and then I'm going to do three times that and grow, grow, grow. Well, that happens. You know, the economy goes up and down. And you know, I'm doing a million and I'm doing a million by now I'm doing 1,000,002 that I'm doing up down. And you're doing that while you're operating a business that has family members in it.

Wes 24:24
Right. And I think there's nothing wrong with setting goals. I think it's important to you know, set your goals and work towards those. But I think with time you realize, okay, I'm setting these goals. For as I guess an example would be for a while bricks and Todd and I, we would we would say, Okay, we have found, we have found the silver bullet, you know, we're going to build exactly 36 houses a year. And we're going to build exactly these three or four floor plans, because these are the perfect floor plans. And we're going to do that forever until we retire. You know, so this has been the night you J of guys in their 20s who don't know anything, so, and we were in a, you know, pretty, it was an OK market and we do that, but then one day, you know, just oh, I guess I guess someone shut off the spigot. And, you know, we're not doing 36 houses a year or 50 houses a year in market changes, and you're doing 24 houses or 20. And then you have to adjust to that. So I think I think of most if I had been given the advice, I guess it would be if I was just going back into the construction business started out my 20s. Again, full time doing that. I would definitely latch on to an older mentor around that. And sometimes that could be a non family member, I would say because, you know, certainly we had our our dad there, who if we were interested in listening, you know, we might have gotten some good advice from but he was pretty involved with the new project. If he was doing and he kind of left us to our own devices, for the most part. And so, you know, and you know how it is, you know, not so interested in listening to your dad all that much, but you can get a lot of good advice or, you know, we could have gone gone and asked our grandfather, you know, he was certainly around and retired and in could have added some good insight. Definitely thought to ask. Yeah.

Brooks 26:27
They thought we thought the acid offer

so well, it's true.

To your point was, which is, you know, getting advice from people who've been through the mill is super valuable. And that's where industry associations are great where people are, they're willing to are very willing to give back and say, Hey, I just got put through the grinder on this and it was a key part of my growth cycle. Glad to share that with you. You know, and if people think really give that information if you just ask. And now with the advent of being able to communicate, podcasts and a lot of these other avenues, it's so much quicker to get information to find information specifically.

Spencer 27:13
Yeah, I want to jump back to an earlier point we were talking about kind of the personality types with the you three brothers and then you said you brought a disc and you kind of started going through that. I'm curious just for for people listening that maybe haven't done that test or they are working with family right now. You know, it sounds like to some degree, you kind of just had a working mix, you know, you guys all worked well together and didn't have a lot of fights or disagreements. You all were different on the disc profile. So that maybe was a part of it. But I was curious to do you feel like it was more due to that. Like you just had the benefit of different personalities that ended up working together or was it like a common goal and you guys like that was just the most important you We're all working towards the same thing or, and then kind of recommendations for people like, Is it worth doing the disc and trying to do that early on versus just kind of winging it at the beginning? Looking, you know, looking back, you guys have talked about how you, you know, after you look back and go, Oh, yeah, maybe I would have changed a few things.

Brooks 28:19
Oh, yeah, I would have changed a lot of things. Yeah.

That's 2020 hindsight. Yeah.

Spencer 28:25
Well, it is 2020. So

Brooks 28:27
it's 2020. So we've got that nail,

Unknown Speaker 28:30
the name of the podcast, right?

Wes 28:34
Yeah, it's not too late to rename. We're only on episode one. So

Brooks 28:40
I would I would, my thought would be treating your business like a business is a key thing. And having had no exposure to a business having started out that's probably my one of my bigger takeaways is you can sell bill do anything but Still business? And then what are those key factors? And I think going back to building job descriptions, building profiles, or what's the best personality profile for this description, and using that as a guide to help you try to hire someone very close to that personality profile for that description is, is very helpful. So you don't end up with the wrong just the absolutely wrong person in because sometimes you're just trying to plug a hole, which is I need somebody in this spot because I'm dying. But it's a little extra effort, you can actually hire that right.

Wes 29:37
I think that's true. And I think another part of it would be setting, setting goals for the business. first think of it as a business. It is a business. So it's a means to an end. In some ways. Sometimes the process itself can be the end for some people because they enjoy the process. But what ultimately do you want that business to be? Come, what is it trying to fulfill as a business? And because you might have radically different opinions about that. So in the case of Rex and Todd and myself, we never actually sat down and talked about a what's the ultimate goal of the business? I think we all said, Oh, well, we want to make enough money to retire someday. And you know, those types of things. But we didn't. We didn't really sit down and talk about any of those things. We just talked about how to build this many houses next year. That that was the that was the sum total. So I think, you know, what's the goal of the business? How do we want to be structured? What are the job descriptions? What do I need? You know, was that org chart look like? What are the types of people that would go in the org chart, as Brooks was talking about, and what are the best disc profiles for the people in that, but I think the people within the business especially It's a family business, is you really need to everyone has a different dynamic growing up. So either they got along as kids or they didn't get along, you know, maybe they fought like cats and dogs or they didn't. And you have to be able to separate yourself from those types of things. You know, for me, I looked at the family business a great way to spend time with my brothers. So, you know, that is probably maybe my viewpoint is a little bit different than bricks and tides, but like, Oh, this is fine, because I'm working with my brothers. And I think they probably felt the same way. But we didn't take it a step further. Okay. Well, is that the total goal? Do we have any other goals that we want to try to accomplish?

Brooks 31:38
Yeah, I don't think especially you there was,

you know, a lot of introspection, you know, in the first 10 years, it's like, you know, what, we're trying to make a living. We're trying to grow this business, and you've got growing families, and you've got financial needs. So there's a lot of things in the mix and probably introspection and deep thinking at that moment, we're not there wasn't a lot of that happening. So yeah, that's one of those things like, I always suggest that hey, you know, sit down Think about it. Because that's something that I could have definitely done a better job of is, you know, thought more deeply about the business.

Wes 32:18
And I would bet there's a lot of remodelers and builders out there, you get in fairly young and in immediately you know, you, you're married. You have kids, you've got other responsibilities that are new to you. And so all of those things kind of crashing down at the same time can make it very difficult to be very introspective, or take a step outside of what's going on for even a half a beat over a weekend or something and think about that, that'd be super valuable to do it.

Brooks 32:49
And you're busy making payroll you're you're got kids, you're running kids, the baseball and basketball and you're maybe you're coaching and you're running your business. And getting that time away. Even if it's a few weekends a year to try to get your head together and and think about the business and if you're involved with it with your family or your spouse, or you're just doing it by yourself, it's it's that time to think about it is important.

Spencer 33:18
Yeah, no, no, that's one thing that I've picked up from you guys, too, is just, you know, if you if you do take a little bit of time to just think about where you're going or what you want it to be, you know, 10 years just goes like that, you know, and if you're just kind of caught up in the whirlwind, as they say, of the business, and you're just going, going going and then you look up and you're going, Okay, they have spent a decade or spend you know, this amount of time and so, I think that's good advice, you know, for for any stage of the business that you're at, but especially, you know, when you're early on and trying to set yourself up for the future because all of a sudden becomes the future. builder funnel Academy is a high powered digital marketing training for

Unknown Speaker 34:03
remodelers

Spencer 34:04
ever since helping grow my family's remodeling division of their building business from about 2 million to over 5 million coming out of the Great Recession, we've been helping builders remodelers and contractors build sustainable repeatable marketing systems. We know marketing isn't always at the top of your list, but it's what drives your business for marketing that leads to sales. sales leads to production, which leads to happy customers, which leads to referrals. So without marketing, nothing gets solved. Without marketing you stall out for revenue growth. Right now the doors are closed to builder funnel Academy but I encourage you to get on the waitlist by heading over to builder funnel academy.com slash VIP. Let's Let's jump back quickly to a little bit of the history and just continuing forward to current so I think when we left off like the three brothers are in the business You guys are building homes. You got this, you know, 36 homes a year is the perfect, you know, formula. What happened after that? And kind of did you guys just continue working together forever? Or you know, how did that go?

Wes 35:16
Oh, secondly, the bricks.

Spencer 35:19
Yeah. dramatic pause for effect. Nailed it. Yeah, that was I look at my script. And yes, you had it. Yeah.

Wes 35:26
Well, no, obviously it didn't continue on forever in that because nothing continues forever. So probably in about 90 on the mid 90s. Probably. We hit a, we hit a downturn out of bricks. When was that downturn 94 or something?

Brooks 35:44
It was 94 to 96. And we've been going and we've been charging pretty hard for 10 years we've been we've been through one one mini slowdown and then got a little bit better and then, you know, then if we took a big downturn in 9495, then lasted about five years.

Wes 36:02
Yeah, so I think at that point in 96, I received an offer from my father in law Colorado to come by his business, which was totally different and I think probably early midlife crisis or something and going okay, you know kids are small and new opportunities something different for me to challenge myself with and I think I was also pretty worn down with a poor market and you know, we were stretched and and we can talk about leverage some other day. No, let's talk about leverage. That's a subject for an entire podcast right? So I took I took him up on that opportunity in good the family to Colorado to buy that business which ultimately morphed into builder Club, which is is Spencer's business at this point. So so that's how I actually did the business but then bricks you can probably talk about

Brooks 37:00
What does that mean? Western exit obviously created an opportunity for me to run the single family division. And we're also doing development to build another senior community. So at that point, I got the opportunity to finish the development on that build activity while we're building. Single Family and then my moving in that space of doing both of those things, gave room for Todd to you know, take on more responsibility in the single family side and also create an opportunity for our sister who came into the business and ran all the marketing for one of the senior communities and then set up all the operations for one the new senior community that we built, and you know, from 97 to 2001, and then continued on till 2000 to 2003. And then Todd and I, at that point, we're ready to move out on our own in the construction business. So we bought the construction company from our parents. Our sister continued on we, at that point have set up a property management company to manage the properties that we built over the last 20 years. And she ran that for a couple more years. And then she eventually exit the business and to start her own business, and, and then at that point, you know, we're all combined with some common ownerships of properties that don't actually work in the same business anymore. Todd, nice state state partners, and still our partners now in the, in the construction industry, in the construction business. And so that's how it evolved to today. Now.

Spencer 38:41
Gotcha. So basically, at that time, that was kind of the the split off where you had there's a property management company that was managing some apartment buildings in the retirement communities and then you guys took the construction business and ran with that.

Brooks 38:57
Yeah, so our sister stayed on with the property. management business that our, our father owns. And then she, after a few years left to to pursue her own business. And so we all live in the same town. Same small town, outside Seattle. So the Powell name was pretty well known, been around for over 10 years. So it says we're involved in construction, party management, senior management, just in our in our small market.

Spencer 39:31
Yeah. And so just to round us out to current so Wes, you came, you bought the direct mail business, and then kind of, you know, take us from there and we'll get caught up to 20 to 2020. Yeah,

Wes 39:46
yeah. So in 86, came out to Colorado, bought this Direct Mail Processing business, which is totally different than building and once again, though, it was a family business. So I guess I'm an expert or non expert in family businesses. That's all I've ever had experience with, honestly. So bought that business, and then operated that until the downturn in direct mail, which really happened in during the Great Recession, as we call it. And really, media changed quite a bit. So at that point, Spence and, you know, you could probably tell this part of the story yourself, but I mean, essentially, you came out of college, you were starting your own social media company. And at that point, we said, hey, let's partner up on this. Let's give this new company some support. So it can continue to grow and figure out what it is because really, internet marketing was pretty new at that period of time, explosive growth around that industry. And so you really nurtured that business along and then we finally sold off the direct mail portion of the business. And now you've changed and rebranded the the ending inbound marketing services that we offered him to build our funnel radio, really because we discovered that we are totally focusing on builders and remodelers and helping them with their marketing, because that was the space that we're very, very familiar with. Both from a family business dynamic and from a marketing standpoint. So that kind of brings up the current current state, I think.

Spencer 41:23
Yeah, I think so. It was interesting when you were talking about when you got out of school, you kind of said, hey, I've been, you know, scrapping lots and doing all this stuff. I don't want to be involved in that business. So you went another route, but then that route pulled you back in, you know, through it kind of a different project, right. It was doing the market study for the retirement community. And as you were saying, I'm going that's exactly what happened to me. So I'm like, I stuffed a lot of envelopes growing up, and I don't really care about direct mail. I don't think I want to be involved with this business, and then got into social media and then it was like, hey, I've got it. transformed this business with a new, you know, kind of we call it a disruptive business within the legacy business. And and that's where that took off. So interesting to see that parallel, we might be related or something but and then Brooks obviously you, you didn't scrap enough law so you're like, yep, give me more of that. Like I'm

Wes 42:20
to the point, though I mean, and I'd love to, you know, we should probably talk about transformation in businesses at some point because Brooks and Todd certainly transformed their business through the Great Recession from a spec business and he, you know, to to something different, but still within the construction space, so, which I thought was fascinating to watch them do that transformation and do it so well. So I, I think that's a that's an interesting topic in and of itself.

Spencer 42:49
Yeah, and maybe Brooks, you can, you know, continue and get get your side of the story up to current and that and maybe touch on that transformation. We'll definitely dig into that in some some later episodes.

Brooks 42:59
Here's what we after, Tom, I bought the construction business, you know, to we were rolling along, you know, economy was super hot. And we were we could do no wrong. I can still distinctly remember it was September 2008, I was out looking at a couple Finnish spec houses. And I got a call on my phone that said, Oh, the stock market has just unwound over subprime. And I had no idea what subprime loans. And little did I know that my business would be so heavily affected by what Wall Street was doing, and something I had even no idea what was going on. And so, we our business quickly went from building, you know, 3040 houses a year to building we went from 3040 houses a year in 2008 to three houses In 2011, wow, the business just, you know, was gone, and every builder in in the specular building space, but that's what happened. So there was 10s of thousands of us that went through that. So we had to reinvent our business. And so that's where we added custom homes. We added remodeling, you know, so we blasted into the remodeling space as quick as we could and learn how to become remodelers. And that's where we you took the idea of businesses and your how do you set up a business like, Well, we know how to build. So how, how are we going to learn how to be great remodelers and so that was our next task but the next 10 years till last year, and so that's where we ended up. We ended up as speculative home builders, custom home builders fathers. Yeah, we ended ended the business.

Spencer 44:56
Yeah, and I think it's it's interesting both Those journeys that you guys were on, you know, when the tough times hit. You acted fast, you know, and I can't speak as much to how fast you moved into remodeling Brooks, who I know was I remember distinctly, you said, I just went to this conference, they said direct mails going off a cliff. Like we got to get into some new things and you like within 20 days or 30 days that already rebranded the company, we're pushing into those new things, like, didn't really know what you're doing, but I think you know, fast. Yeah. Well, I but I think, you know, you watched a lot of guys go out of business, you know, in that industry, and whereas you did not and so, and I'm sure the same for you Brooks, you know, and so, to me, my takeaway was, you know, when those things happen, like quickly, kind of pop your head up, look around and say, okay, where can I just start taking new action because the same action isn't working. But I don't know. I'd be interested to hear if you guys like, went through that thought process that was Kind of my view looking back at it, but, you know, what was kind of what was the mindset as you guys got hit with that great recession?

Brooks 46:10
I think for a construction business, I mean, we tried, you know, different things the whole time. So we went from, you know, building 30 houses a year to three over the course of three years in the every, every month, you're trying to figure out, Okay, what am I doing? Because it is because now it's like, oh, the great recession in 2008. Well, it went on and on and on, you know, month after month, and just getting worse and worse and worse. So you're, you notice this kind of, is this triage, you're like, Okay, I've got to fix. And then three months later, oh, I don't have it fixed. And the whole time you're going along, you're like, well, I'm trying to keep my business going. I'm still buying lots. You're like, Okay, well, this is the right kind of product, you know, and then as the market continues to fall, you're like, Oh, it's not the the right kind of product, and then you still have to unload it. And there's no consumers because there's no financing. So it's one of those situations where people think, Oh, well, there always be, you know, plentiful mortgages. And there was no mortgages for 24 months. So it's it kind of goes back to the 30s. When something Why are you worried about banks failing? You're like, Well, you know, banks haven't failed for 50 years. And but someone who went through that the 30s, it's like, well, they do fail. And so it's the similar thing, guess where that perspective is helpful as you're trying to move through your business journey is hearing about other things that can't happen. So we were reacted, React reacted. And we're constantly trying to come up with a plan. And it just, it wasn't working. I mean, it wouldn't work. You try this, it wouldn't work. You try this, we wouldn't work. And luckily, we had plenty of reserves built up that we were able to We had some room, but it was, it was a scramble all the way until it really kind of bottomed out, and 11 and then start to come back out. So really the economy recovering allowed us to recover wasn't anything that we were, we were still in business. So it allowed us to, to take advantage of that. But, you know, the whole economy in the whole country had to recover. And then we came along with it.

Wes 48:26
I think that with, but I heard you say though, bricks, I think it's an important point is, and it ties into what Spencer just said, which is, you know, taking action. So even though it was difficult, I think just being iterative, in what you're trying. So you're experimenting, you're trying things, things don't work, you're going to try something else and you're trying to experiment as fast as you can to get to a new model. And I think that's a good that's a good mind exercise to play you know, with your business which is okay, well If this happened, how would I iterate? What would I change to? And, you know, for us in our business, really, whereas building came back, the direct mail industry, the way we had known, it certainly went through structural destruction and transformation. And so most small, smaller shops never came back. printers didn't come back in the same way. And so the whole industry changed. And so you had to iterate pretty quickly to figure out what your new thing is going to be. How can you provide a valuable service that people want to want to buy? And so that's what we we tried to do, but that's what you were doing as well, I think and it was just probably. So if you're in a business that has hard, tangible assets that you have to deal with, so if you're in the building business, you got lots and you've got a finished product, and so it's purchasing and if that finished product is right I still have to sell it, you know, so I can go out and experiment again with something else. So that makes it makes it harder. So I think that's something that business owners have to look at, which is how much capital Do I have invested in, in assets that are illiquid? And how quickly can I experiment to get to a new business model? So, you know, in our case, we had lots of equipment sitting around on the shop, you know, have big inserting machines and folders and all those types of things. Whereas today, a lot of internet businesses don't have much in terms of hard assets that they have to worry about. So they can probably iterate a little bit faster. So their hard assets are really around personnel and, and thought leadership and their employees and what those employees can bring to the table. And so I don't know if it's easier, because things are moving even faster. It's not I doubt it's easier, but certainly something to think about if you're you're remodeling business. change dramatically. What would you do hiring situated? Do you have a strong balance sheet?

Unknown Speaker 51:05
Yeah, I think

Spencer 51:06
I think those are good takeaways and kind of now that we're here in 2020, we've been kind of we're into a deep, you know, run, what would be maybe some final takeaways from you guys, before we wrap for today, as you know, I know you mentioned, you know, Brooks that you guys had some reserves and you had put some things in place. So you were able to basically work your way through some difficulties, you know, what would be the top, you know, one, two, you know, three things for people to put in place now and over the next you know, 12 months, 24 months, however long we have left or

Brooks 51:43
before something will change, you know, is the was interesting. I was going through some files the other day as I was cleaning out some things and the biggest thing that one of the things I said, Oh, we had in reserves, we went into the recession, we had 24 months of operating reserves, and we just worked really diligently, we'd ask lots of questions of older people, you know, we've pulled our CPA or other finance people, hey, how much should we have in reserves, and the standard number is three to six months of real operating reserves, so you can run your company. And we're like, you know, we're in a highly speculative business. So we had built up, you know, two years of reserves. And it we went, you know, even though as we downsize and things like that, we went through all of that, and more so, my biggest takeaway is, you know, build a balance sheet, build your cash reserves, give yourself time, because that's in so that's the key thing. So if you've got cash, you can survive anything and that's the hardest thing to do when you're in building business or in the remodeling business. Cash is always in short supply. So manage your balance sheet means your accounts receivable collect, do not do free work. Getting paid for everything you do have the right mark up your right margin.

And if you do those things, you'll you'll survive and

Wes 53:09
yeah, that's really good advice for it. So I think, as you were saying that I was thinking about how long it took us to transform from direct mail, inbound marketing, you know, work through that transition, and it was easily 3648 months probably, you know, from start to finish. And even if you do make adjustments, you know, in your business as you go on to do that, you do have to have a strong balance sheet. Yeah, that's certainly one thing that our our father is always preached is have a super strong balance sheet. You know, he has a friend who's a banker said have a fortress, fortress balance sheet, right? Because you have to sometimes you have to crawl inside that fortress and and protect yourself. And if you've been through enough cycles, you know that cycle And, you know, the low point ends. And so you have to be there to take advantage of the upswing if you're not there. Cuz you didn't make it. You can't do anything. So yeah,

Spencer 54:13
yeah, I like that. Yeah, build the fortress. And I know that was something that you know, Wes you and and my mom Karen, you know you guys instilled you know, budgeting, you know into and saving you know from a young age and so I think you guys made a save half of everything we earned or half of our allowance so we had like a whole $2 left over to go spend ourselves you know, but that was good because then you know that that set set us up? Well, you know, when we got into college and wanted to start you know, doing some things and you know, you start spending money in it starts going out, you know, then you've you've built that mentality and so I think for a lot of people listening to you know, as I've entered the business world, I've really looked at that on you know, try to look at it on both fronts, you know, like build, build the fortress personally. And within the business and then you've kind of got both of those things working for you. And yeah, I think to you to your guys's benefit, you know, because you built that, you know, you probably watched a lot of people that weren't able to weather that storm, because they didn't have enough in reserves and had to either go out and start again fresher. That was just kind of the finish line. So I think it's very timely advice for everyone listening now, like nobody has a crystal ball. But you know, we're all kind of sitting here wondering I think, like, what the timeline looks like. So we're going to wrap here and and next episode, I know we're gonna dig into a little more specifics around the like family dynamics and relationships and working with siblings or parents and that sort of thing. But yeah, I appreciate you guys joining me today. Hopefully everyone listening got had some fun with the history and we'll try to pull out some fun stories for everyone but you guys got anything before. We we were

Brooks 56:01
Yeah, appreciate the time.

Wes 56:02
Yeah, I really do. It's a lot of fun.

Spencer 56:04
Yeah. Cool. All right. Well, thanks again for listening, everybody. We'll see you next week for Episode Two. And thanks again for tuning into builder funnel radio. Hey, guys, thanks so much for listening to the first ever episode of building a family business with Wes and Brooks. Again, I like to do takeaways, I think it's helpful to summarize and give you guys some action items. So I'm going to continue to do that for each of these episodes. So from this one, we talked about a lot. There was a lot of history. We wanted to basically introduce you guys to to some of the family and how the dynamics work. But I think a few things really stood out to me and one was really that concept of building your fortress and your cash reserves. You know, we don't know if and when a recession will hit. But we do know we're really deep into a strong economy. And so having that fortress built building up Your cash reserves, you know, taking that operating expenses number that you have on a monthly basis and multiplying that out three 612 months, or even more, I think is is huge and just puts you in a very stable position moving forward. Then another takeaway was really thinking through why you're hiring for a specific spot in the business. And so not necessarily just bringing in bodies to fill those slots, but really being intentional about that and having a good process for it and thinking, what are the skills that this position requires? Can I find somebody that has those skills and being an intentional and especially when it comes to family thinking about Okay, sure, maybe I'm just pulling them in and I need to put them in a spot but thinking okay, this may be a spot that they're in for a while, and then they're going to rotate through the business so they can learn. But I think a lot of times just the real takeaway is being intentional about filling these spots and having some reasons for doing them. Even if It's not the perfect scenario. But it's better than just throwing people into different spots. And then the last takeaway was really something that was brought up there in the middle, which was learning from others, whether that's mentors or peers in the business. But, you know, we've all made tons of mistakes. And so if you can learn from other people's mistakes, and shortcut kind of your success, I think that that is super impactful. And, you know, obviously, we're all going to continue to make our own mistakes. But if we can avoid a few here and there, I think that's a good thing. So those are my three big takeaways from Episode One. Again, you guys we're super excited for this show. definitely give us feedback. If there are topics you want to hear about. We'd love to to have those sent in. So go ahead and send those in. And go ahead and send them to radio at builder funnel COMM And again, put family in all caps in the subject line that helps us flag down those words. questions and we'll be able to bring up those topics in some future episodes. So thanks again guys and we will see you next time on Builder Funnel Radio.

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