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When it all comes crashing down

4/15/2020

This article first appeared in the May 2020 edition of Building Savvy magazine, San Antonio's premier homebuilding industry publication.

While I wish I could be the bearer of good news, reality informs us that the panic over the COVID-19 virus will kill many American businesses. Yours could very easily be one that doesn’t make it. The lasting economic impact may be greater than the 2008 mortgage crisis, which resulted in massive job losses and a global recession. But you don’t need to take my word for it- flip on the TV and it’s 24/7 doom and gloom.

Since the outbreak of the novel coronavirus in Wuhan, China in late December 2019, panic has spread worldwide. Before you knew it, the stock market had lost all of it’s miraculous growth since 2016 and Federal, state and local officials stepped in to take action to protect the vulnerable from the virus, resulting in widespread shutdown of day to day life.

While we cannot totally control the spread of the virus, business owners can take reasonable steps to ride out this storm.

1. Install a succession plan

Many construction firms are small and family-owned. While times are good, no one thinks about replacing key employees (who may be family members). However, as many small businesses know, each employee wears multiple hats. Lose one of them to illness or death, and your business is on its knees. What you can do today is set up contingency plans for succession in case the CEO/owner is incapacitated.

Also, designate key employees so you can furlough non-essential employees to stop the spread of illness. For those key employees, have backups trained so they can fill those shoes if needed. Key employees would be accounting and purchasing people, land acquisition/legal team members, and possibly others. Know who has the keys to everything, and know how to replace them (if need be) in a hurry.

2. Refinance business debt

One the the most striking actions taken in the aftermath of the COVID-19 outbreak was the Federal Reserve dropping interest rates to zero. This was a major signal that the economy is teetering. While you won’t get a zero interest loan from your bank, rates in general will be lower. If you have buildings or equipment that were financed a few years ago, take a look at your terms. Now might be a great time to cut your interest payments, add some funds to cover lost revenue and daily expenses, or reduce your monthly outlays for debt service. It all depends on your business’ situation, but managing your expenses could be crucial in the next 6-18 months.

3. Call your vendors.

You’ve got a ton of materials on order, multiple jobs in progress, and boom- the bottom falls out. Maybe you aren’t closing contracts as fast as you have been. Maybe your buyer interest has evaporated. With an economy as weak as ours right now, everyone is feeling the bite. However, don’t duck your suppliers and vendors. They are most likely to understand your situation, as you are not the only person they do business with.

A simple phone call to check in on the progress of your order can provide a lot of detail in how your vendors are managing their own day to day business. For example, if your lumber vendor is under a quarantine order, you are likely to have to wait for your 2x4s a little bit more than usual. You can’t know how your vendors’ business is being impacted without reaching out. Plus, building bridges during hard times will leave a lasting impression on your vendors. See if you can delay or modify payments. It’s all about person to person connections.

4. Cut your expenses.

We have to accept the possibility that the economy could struggle for a year or more. Builders have been living pretty high on the hog for the past couple of years, with record breaking home prices and contracts closed. If you were around in 2008, you knew that this wasn’t going to last forever.

Now is the time to cut the unlimited data cell phone plans for non-essential personnel. Put off buying that new F250 for your superintendent. Maybe dial back your marketing budgets in the more expensive channels. While it may seem counter-intuitive, your customers are going to be waiting out this crisis too, and your marketing dollars now will likely be spent on passive onlookers who aren’t going to convert to buyers any time soon. If at all possible, avoid layoffs of veteran personnel- a little bit of loyalty now can go a long way when the industry comes back to life. Ask for continuances on large bills- see if you can forgo loan payments for 3 months and tack them onto the end of your loan. Get creative and stay afloat.

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Do you have business saving tips that you learned during the 2008 crash or other economic hard times? Share them on Building Savvy San Antonio’s Facebook page! We’re in this together.

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South Side on the Rise

4/13/2020

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St. Philip’s College Homebuilders Club Named #1 in the Nation

This article first appeared in the April 2020 edition of Building Savvy magazine, San Antonio's premier homebuilding industry publication.

When I first visited St. Philip’s College - Southwest Campus in early 2016, the dilapidation was obvious. This was a rough side of town, an industrial hub surrounded by working class neighborhoods that had long been neglected. I was the freshly hired government affairs and education director for the Greater San Antonio Builders Association (GSABA) charged with bringing a newly crafted student club to life. The pet project of the late affordable housing developer Dan Markson, was a student chapter at this campus aimed to create a pipeline of skilled talent for the homebuilding industry in the San Antonio area. But on that first day that I arrived, it was clear: there was a long way to go to make this an asset for the southside of San Antonio.

Flash forward to January 2020: the St. Philip’s College - Southwest Campus organization was named the National Association of Home Builders’ (NAHB) Outstanding Student Chapter of the Year. The program had emerged from the dirt to national prominence within four years.

Gilbert Noriega, the program coordinator for the homebuilding programs at St. Philip’s, greeted the industry support with open arms when we first met. In 2016, his program served only 30 students with a paltry $4,000 operational budget. The program was sinking fast, and few seemed interested in pumping life into it, despite lip service about supporting skilled trades.

However, I saw the hunger for opportunities in every face I met; I knew that a little attention would go a long way to impact lives here.

Initially we crafted scholarships to be awarded to outstanding students. This is the lowest bar to hurdle in supporting a program that is minority-majority and located in an area of widespread poverty. The next step was to find local service projects that these students, who were eager to put their newly learned skills to the test, could take on. With a lot of need in the nearby neighborhoods, it wasn’t hard to find projects where students would provide labor to rebuild unlivable homes, repair fire damage, or to build accessibility ramps for elderly veterans. I simply served as the nexus between ready-to-work students and large corporations who were willing to donate materials or cash to provide direct aid to the community. Slowly but surely, the money started to flow. These community service projects quickly grabbed the attention of the campus administration, the Alamo Community College District and other local leadership. The St. Philip’s College NAHB student chapter was bridging the corporate world with impoverished neighborhoods. When I presented the student chapter’s work at NAHB’s national conference in 2017, building associations from around the country hounded me to help them create a roadmap to duplicating this collaborative effort in their own communities.

However, in the nonprofit world (such as home building associations), resources are limited and successful new programs such as the student chapters directly compete for dollars with legacy programs, such as fundraisers and social events. That can ruffle feathers, but I was determined to craft a culture of service via the student chapters- it was good for the students, the association, and would build a pipeline of talent for the industry.
My vision for the student chapters at St. Philips and UTSA (which was also recognized as the nation’s best in 2017) was to expand the community service projects into a citywide partnership between business and educational institutions. Certain leadership at the San Antonio builders association, caught up with the day-to-day demands of keeping the lights on and placating demands of powerful members, did not see the vision and I eventually exited the organization in 2018. The student chapter at St. Philip’s College found itself without a champion at GSABA and feared that a return to obscurity was upon them.

However, Gilbert Noriega is not a guy to take a loss without getting back up. He picked up the ball and followed the path that we had created two years earlier by going directly to the community to find gaps the students could fill. The chapter expanded to 70 students and was the buzz of the campus. In 2018, the club’s extensive commitment to serving the community was recognized when NAHB awarded them 3rd place in the Outstanding Student Chapter category, putting the scrappy campus on Quintana Road in the spotlight over well funded 4-year institutions like Michigan State, Purdue, and Brigham Young. This caught the attention of a lot of people, and the chapter’s president Sam Velez was recognized as one of the top student chapter leaders in the nation.

For 2019, the St. Philip’s College-Southwest Campus chapter set one goal: to be #1. Their meteoric rise to national recognition was commanded by a determined Noriega, who found creative ways to fund projects as GSABA leadership lost interest. From retrofitting a pet shelter in Kerrville to revamping inner city community centers and residential properties, the St. Philip’s College student chapter continued to do the tough work where others didn’t think it was worth their time. In January of 2020, the chapter was recognized as the nation’s best in its 4th year of existence. Also, the chapter’s President Sandra Vasquez (yes, the homebuilding program at St. Philip’s is often 20-25% female) was recognized as one of the nation’s best. Something special is brewing on the south side, and all it takes is members of the industry to show up, listen, and partner with these energized students. The end result could be an organic revitalization on that side of town, as well as the creation of the next generation of homebuilders.

Interested in getting involved with local construction management students by donating your expertise, experiences or resources? Awesome, it isn’t too late. The St. Philip’s Chapter plans to compete in the construction management competition at the International Builders Show in Orlando, FL in 2021. Help them reach new heights by reaching out to Gilbert Noriega at gnoriega6@alamo.edu.

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When it all comes crashing down

South Side on the Rise

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