Stanley Martin's COO talks about the downturn and the company's challenges after merging with Piedmont Realty & Construction
Stanley Martin was among the small group of private builders that grew during the recession. It did so by building smaller, more affordable houses to differentiate from the competition’s larger mansions and by recognizing that Washington, D.C. metro buyers were gravitating toward move-in ready and under-construction houses when many builders broke ground only after they had an order. In 2013, the 47-year-old company merged with Piedmont Realty & Construction, in Charlottesville, Va., to begin its southern expansion.
- Cash is king. Work hard to generate cash and cease all new financial commitments earlier than you want to.
- Be honest and early with communication to your financial stakeholders, industry relationships, employees, and vendors. Most importantly, be honest with your assessment of the business and your sales prices.
- Eliminate waste quickly in the construction process. This is always a goal, but particularly in material selection. Build what people will pay for.
- Take the long view. Be prepared to reinvest when the time is right, and build a war chest of cash. There is a time to reap and a time to sow.
- Get creative with your business model to help unnatural holders of assets. Use your experience to create more value for your company.
- Consider the cyclical nature of the industry when times are good. We always desire growth and being invested is a natural instinct, but you can create less risk on your balance sheet when times are healthy.
- Work hard to protect your “A Team,” by right sizing your business operations early. Some members of the team are value creators. A dollar saved is a dollar earned. Work hard to keep them part of the team.