Silicon Valley Bootstrapper Success Stories - Pacific Ridge Builders
Commercial building projects can be very lucrative, but at the same time, have very high stake. A gap in between projects or a mistake in executive can put huge pressure on the company’s cashflow. In today’s interview, I have the honor to talk to Thomas Newman, the founder and CEO of Pacific Ridge Builders, a fast growing silicon valley based commercial builder. Let’s hear what Thomas believes are the important factors when building a successful company.
When did you start this company?
I started the company in early of 2016. So, we're coming up to our 4-year anniversary pretty soon.
Why did you start this business?
There are a few different reasons. I worked for a family business which I love for 18 years, but a while you realized that the business is there for the family. I then switch to a larger corporation and it was acquired two different times in one year. I realize working for large corporation is not always the best. Tired of working for other people and tired of working at places that didn't have solid cultures, I saw the potential of starting my own business. I was able to really handpick and cherry pick what I wanted to include in our business and our culture.
You mentioned culture a lot. What do you see is the culture of your company?
it's hardworking, young by nature and innovative. We don't count hours here. It's about getting work done and be successful. We are very selective in who we bring in because we don't want to change that chemistry here. A lot of people bring in people that fill a role. We've learned times and again that when you just fill the role, it's not the right hire. You got to find the right person. You could almost find the right person, teach them anything and they'll be a great fit. It’s always people first. Get the right people and if they lack the technical skills, you can train them. But the other way around, you're basically getting them a job and they stay in that job.
What did you do well to get to this point?
I relate well with people - with my customers, with employees, with our design partners. This is a people business and it's about relationships. Three things we preach here is people, partnerships, and passion. If you can't treat people well, you are going to have a hard time in what we do.
There is a life cycle of business - the initial startup phase, the growth phase, then maturity. Where do you think you are on this growth curve?
I think we are in growth phase. The first year we did about 23 million in revenue, the second year about 24 million and this past year, our third year, we did 41 million and our goal for this year is over 60 million in revenue. We established some processes and procedures, this year we have to change some people around, add a few more processes and procedures and really develop the team.
What was your biggest challenge in the start-up phase?
The biggest challenge throughout about was money. I think that's a challenge for a lot of people starting a business. Besides with the type of business we are, we burn through cash fast. I remember when we started, we took family money into the business. I started the business was the month that our second boy was born. I remember watching the bank account dwindled down to like the last $20,000 in the bank and I knew I had maybe a week left. I remember going to bed that night on a Thursday night and not being able to sleep and just in tears. That’s how afraid I was. At that time, besides construction, I was doing a lot of construction management projects which didn't take a team. The following Monday, checks are coming in from all the construction management projects, it was the right timing. So the number one challenge was money, it was cashflow.
We got better afterward. We learn the financial language for your business very quickly. I have a partner, my business partner who actually first started with me as a outsourced CFO. He helped me work through it and really understand where we need to be financially. We had enough work going. The next hurdle we had was about a year later, because we have gone through a big growth where we grabbed a couple of big projects. We were able to hire some people, but we weren't mature enough yet as a company to have enough project in the pipeline to keep everyone busy. For the next 6 months, we didn't have a lot of work and we were paying out of pocket again. At one point, we had to borrow a little bit of money for about a period of two and a half months just to make sure we got through that hurdle.
In the growth phase, besides cash flow, what is your biggest challenge?
Right now there are a lot of work. We have a lot of good relationships and the team is established. We are at a point that we could keep growing and not worry about having gaps. I think right now at growth stage, The biggest challenge is just juggling the many priorities I have as a CEO. It's constantly looking out, interviewing and hiring the right people with experience. Hiring people who fit our awesome culture as we talked about, and spending a lot of time, money and energy on developing leaders from within. We are also making sure the client is still receiving consistent quality product. Then while we are doing all this, the office is expanding. I think just the multi-tasking and making sure you dot your eyes, cross you teeth at all aspects.
What are something that you're doing in terms of developing leaders to ensure that they would still adhere to the culture and the mission and vision of the company?
Number one is that you hire the right people. There is a great book called Traction, I recommend reading that. In there, there is the people analyzer. I mean you want people to grow with the right attitude. Then we utilize a lot of the different business coaches and leadership development tools. I myself have business coach, work with Vistage. We also have a few other potential leaders here and hooked them up with business coaches. They are meeting once a month and really developing their skills. On top of that, we are doing the one-on-ones, so everyone gets a one-on-one report. Once a week, you check in with your direct report and you talk about what is working and what is not working. That helps a lot of people really focus on what's important. That takes 15 to 30 minutes a week and that is to keep people happy. I do one-on-one to about five people, and they do one-on-one with their group.
Have you thought about the eventual exit plan?
A little, not much. I'm here because I love doing what I do. Number one, I love the people I work with. I really want to see this company stick around for another 200 years. Well beyond my life span so setting up this legacy company is huge. That being said, I also know that a lot of people hold on to the company for too long. It suffocates the company. I think we have to be smart as leaders and know the company and when it is time to let other people to take over. I think for me, between age of 55-60, I would love to be at a spot where I can still have my hand in the business a little bit. But I really want to switch over to do a more like personal projects and development projects and bring up a new generation of leadership so that this company can go for another 200 years or even longer.
If you have one advice that you could give us, what would that be?
I got several things:
1. I think if you're just starting off your business, just reminder, be all-in. Don't have one foot out. Don't give yourself and out because times get hard. If you have one foot out, it's really easy to say, "Well, I want to quit. I want to go back to my old job or do something else." You got to be all in and you got to fight through the hard times because tomorrow is usually a lot easier than the hard day you're going through right now.
2. You have to have faith. Whatever sort of faith you have, you got to understand that tomorrow is going to be better. Otherwise, you're going to go to bed, frustrated, you're going to go to bed in tears. We are all human. It's okay to feel that way. But believe that there's a plan for you and that you're not in full control always.
3. Find the people who could help you. There are people who have done this all over the world and all round you that you don't even know about. If you don't know how to start a business; if you don't know how to write a business plan; if you don't know how to get from point A to point B, don't waste time energy and money. Find a coach. Find the personal support around you that could you get you there quicker. I know a lot of us like to go on these adventures and travel the world, but most of us don't have the resources to take two years to figure out how to get from point A to point B which should take a month or two. There are great coaches. It's worth hiring the right person and spending the money to do it right. You will spend less money if you hire the coach now. Without my coaches, I probably would be at least two years behind where I'm at today.
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