Patrick Finn is an Irish immigrant who came to America to build a better life in the land of opportunity like so many millions of immigrants before him. When he first arrived in the United States, he found a job doing construction. But Finn had more than just the ordinary skills of a construction worker; he had the ambition of an entrepreneur to build a business. So, Finn decided to go into business for himself by forming Patrick A. Finn, Ltd. His company builds custom homes and does home remodeling.
It’s an industry notorious for its ups and downs and for crushing the dreams of many business owners. When the Great Recession began with the burst of the housing bubble in 2008, Finn was not spared. His custom home building business literally came to a halt—with no new homes being built for four years. And, his home remodeling business dropped like a rock in a pond.
But while many custom home and remodeling companies have gone out of business since the beginning of the Great Recession, Finn took a different path to keep his business successful. He sought the help of seasoned business experts to help him build a better foundation by first analyzing his company. Then, he implemented the changes needed to give him the procedures and controls necessary to manage his company.
Finn said that what he learned from the business analysis was that, due to poor management, a lot of money was slipping through the cracks. The “light bulb” moment for Finn was when a senior business analyst (SBA) showed him the wide fluctuations in his numbers. Finn said he always thought: “If I concentrated on the top line of my business [sales revenue], the bottom line would take care of itself.”
What the SBA taught Finn was the concept of “profit engineering.” He learned that he could pre-plan his profit and, with proper management, achieve his profit goals to ensure long-term success for both his family and his customers.
Finn said one of the biggest changes was the installation of a cash management system, which allowed him to benchmark his business. With this new system, he was able to compare his numbers on a week-to-week, month-to-month and quarter-to-quarter basis so that he could maintain control over his company.
Finn’s consultants told him that, at the end of the consulting project, he would only have two jobs: managing his managers and managing his money. Though he was skeptical at first, he found this to be true after they established a new foundation for his company.
Finn’s consultants developed an incentive system and gain-sharing plan for his employees. Finn said the incentives were based on improving levels of productivity on each job, in addition to finishing the job on time with no customer complaints.
The gain-sharing plan was dependent on the company meeting pre-set levels of profitability. These two plans motivated Finn’s employees to work smarter, not harder, to achieve the results. Finn said it was a win-win for his customers, his business and his employees.
Finn also said the cost controls were very effective, allowing him to measure his business each week. Now he knows where he is each week, whether he is on track, and, if not, what he has to do to get back on track. “I have more free time, more time with my family, and I know exactly where I am each night—I don’t have to worry about it,” Finn said.
As a result of the new systems the consultants put in place, Finn is able to bid his jobs tighter because: “We know our breakeven and know what we can charge. Nothing is left to chance,” he said. He continued by adding, “We know where we are at and we can show our customers on paper where the bid is at—we can show how someone else’s bid is a wild number to help them see it.” He has won several bids as a result of having these numbers available for potential customers to see.
An unexpected benefit, Finn discovered, was that due to his reputation in the field, subcontractors and workers began calling him asking if they could work for him. While controlling his costs and managing his cash flow has been a top priority for Finn during the past recession, he has not been one to just hunker down and wait for the storm to pass. Rather, Finn utilized the expertise of his consultants to install new metrics in his business to track and improve worker productivity, while, at the same time, instituting a productivity-based excess profit incentive system to drive profits.
Finn said the productivity-based incentives have driven his employees to work smarter while maintaining a high level of quality in the work they produce. “The employees like it better because I don’t have to micromanage them anymore,” he said. The employees now hold themselves accountable because they see how they will benefit with an increase in their pay.
Finn’s success during the economic downturn—when so many other contractors were failing—wasn’t from simple good fortune or good luck. Rather, Finn was successful because he recognized that “he didn’t know what he didn’t know,” and he had the good judgment to bring in a team of business experts to build a better business. Today, Patrick A. Finn, Ltd. is projecting revenues of more than $2.75 million for 2012.
Moreover, Finn’s personal commitment to business excellence and quality home building/remodeling has paid off with a clean sweep in winning awards for excellence. Patrick A. Finn, Ltd. entered its work in seven categories sponsored by the Home Builders Association of Greater Chicago and won either the Gold or Silver award for each of the seven categories. Seven entries, seven awards—you can’t do much better than that!
As Finn looks out on the horizon of 2012, he sees the custom home building and remodeling industry still struggling to dig out of the depths of the Great Recession. But he is hopeful for himself and the industry. His revenues have increased 247 percent since 2008 and his custom home building is finally emerging from an industry deep freeze. Finn built two new custom homes last year and has started 2012 with a new one being built today. What’s more, the Leading Indicator of Remodeling Activity report from the Harvard Joint Center for Housing Studies predicts the home building and remodeling industry will see business pick up in the latter part of 2012.
Finn beat the odds, both as an Irish immigrant coming to America to become a successful business owner and as a survivor of the greatest collapse in the construction industry since the Great Depression. But he has done more than just survive. Finn came out of the Great Recession at the top of his industry—and has the awards to prove it!
Filed Under: Business Management
About the Author: Tom Ryan is the director of sales development. Tom has both a law and marketing degree from St. Louis University.