Building a Company for Profitability
When John Caldwell, Jack Heckles and Peter Egan decided to form a construction company over 30 years ago, they started with little to no working capital and no business training. Their best assets were their personal town homes and years of trade knowledge learned on the job. Early deals were worked out in barter: new countertops and chimney liners procured early stage legal documents and financial forms.
Over time, Caldwell, Heckles & Egan, Inc. (CH&E) developed a portfolio of fine craftsmanship, detailed renovations, and custom millwork along with completing impressive construction contracts. Yet throughout the decades of impressive growth, CH&E could rely on their accounting firm to continue to meet all of their accounting and finance needs.
From Humble Beginnings
At the start of the company, needs were basic. Peter Egan, one of the original founders and now President of CH&E, related they not only needed basic commodities, like help putting together a bid model, but also an understanding of the relationship between overhead and sales, labor and revenue. “In the very beginning,” said Peter, “we were completely dependent [on the Walz Group]. I did not have an awareness of it all. It’s not where I came from. I couldn’t read a financial statement, and I didn’t understand taxes.”
Peter connected with Steve Geisenberger as his primary point of contact, and he utilized the Walz Group’s collective expertise to fill in the gaps in his business know-how. The team worked closely with CH&E to explore the relationship between how they employed their labor and revenue in ways that, Peter said, “no other firm did.” Steve helped the new company become incorporated, and used several tax saving strategies that saved them money at a crucial time in the business’ history. “It was a capital saving move, moving on his advice,” said Peter. “It helped when we were short on working capital in the beginning.”
On Becoming Established
Very early on, the three owners took on a 15-person crew and began establishing themselves in the community. Soon they needed to borrow money for equipment and a future building purchase to maintain their growth. The Walz Group was able to use their credibility with banks to help establish the reliability of the small company. With the Walz Group providing quality financial statements, the banks could trust the numbers CH&E reported were thorough and correct.
On Maintaining Profitability and Credibility
As Caldwell, Heckles and Egan grew, the Walz Group’s experience proved invaluable, particularly when the varied cycles of the economy affected the company. Peter says, “We’re paying our bills, and I couldn’t have done that without Steve.”
Both companies value being accountable to their clients, and supplying numbers backed by credible data. As Peter explained, in his industry, “You’re giving someone a number and guaranteeing it. And you’re only as good as your last job.” In the same way, the Walz Group was accountable to making sure Peter had the numbers he needed to accurately bid new jobs, taking into account crucial variables such as overhead, labor, warranty costs, and all the details that make building flexibility into a bid critical.
“We always try to have the best number possible,” said Peter, “and that meant we had to know number costs. I’d call Steve up for the ratios and how ask, ‘how much do we need to make?’ … With Steve bouncing off the ideas, I could actually see the opportunities in jobs and make a conscious decision whether we wanted the job.”
On Winning Jobs Otherwise Lost
Even with established businesses, winning some jobs means proving you have the means to complete it, no matter what. CH&E was a growing construction firm with a growing reputation for craftsmanship and quality; but, in an economic time unfriendly to the construction industry, they still needed to sell their ability to complete the work when plans go awry.
The Walz Group was able to step in and lend additional support to CH&E’s project bids. As Peter explained, “If some customer is taking on five million dollars in debt, that’s a lot of money, and they end up getting five or six construction prices, they want to know how much it will cost in the end. Who does it actually cost less with at the end? If someone questions if you have the wherewithal to get over the hill, you say, ‘talk to the accountant.’ Getting that point across to customers is a lot easier to do with an accountant than with a sales guy. They give confidence that the numbers we’re providing are correct and credible and consistent. It’s not a roller coaster ride.”
Would You Do It Again?
When asked if he would recommend the Walz Group to another construction company, Peter gave an animated yes. Peter went on to provide advice for other construction firms based on his experience with Walz: “I would look at them to let the firm in to being a part of the company. And include the project managers with the accounting firm.” The project managers from CH&E and the team at the Walz Group worked so effectively that Peter considered the Walz Group as a part of the CH&E firm.