“The 20 Club involvement has kind of forced that too,” says Beck, who has participated in the NAHB peer-advisor program since 1997. Made up of builders who run similar businesses in non-competing markets, Beck’s 20 Club acts as an informal board of directors, meeting periodically to comb through his operation, offer advice, and hold him accountable for acting on his stated intentions. This kind of scrutiny, Beck says, demands that club members standardize their financials and produce hard numbers for quantities that might otherwise exist only as gut feelings: “Working capital ratios, that kind of thing.” Managing projects that run to eight figures imposes another layer of financial discipline. “Surety bonding takes a very critical eye at how you run your company from a financial standpoint,” Beck says.
Customers at this level tend to know their way around a balance sheet, too. “Almost all of our work is negotiated,” Beck says. And when he opens his books for a client, he expects a very close reading, even when the project is a mountain-fantasy ski house. “Just because it’s fun andit looks like a whim, it doesn’t mean they aren’t interested in financial management.”
After a decade of this intensive grooming, Beck Building Co. is truly a thing to behold. “We’re not the only good builder in the Valley,” Payne says, “but when we start talking about process, I absolutely think we’re head and shoulders above any builders in the Valley, if not in the state of Colorado, maybe beyond.” The prestige architects who refer their clients to Beck agree. Put simply, this is a company that knows what it’s doing; not only in the sense of competence, but also in the sense of self-awareness. In preparing for his own departure, Beck has coached his team to an impressive level of organizational fitness.
Mile High Challenge
With decades of experience and success in its Vail, Colo., market, Beck Building Co. approached expanding into Denver, 100 miles to the east, with justifiable confidence. “We thought we’d go down there and kick ass,” says Andy Beck. The Denver market kicked back, though, and Beck and his team got more than they bargained for, in both challenges and lessons learned.
The company’s first project in the Denver area, a high-profile house by San Antonio, Texas, architects Lake|Flato, gave a taste of what was to come. The highest hurdle was finding subcontractors able to deliver the quality required and willing to accept the company’s accountability standards. “We had a lot of subs just send the plans back,” says vice president Kevin O’Donnell, who ended up calling in subs from Vail and Aspen.
For its next two Denver projects, the company made a concerted effort to use only Denver subs. “We put a pretty good team together,” O’Donnell says. “We fired one guy, the heating guy.” Soon after, though, work heated up in the mountains, and the company shifted some of its resources back to Vail, assuming it could sell Denver jobs from a distance. Wrong. “We lost our momentum,” O’Donnell says. “When you’ve got work going on in-market, that’s the time to make the move.”
Rather than fold their tent, though, Beck and his people took their knocks and came back smarter. Beck bought a small office building in the Denver suburb of Golden, Colo., and put O’Donnell in charge of building the company’s presence there. A couple of key hires added valuable local connections, a hot-shot marketer provided cocktail-circuit access to the right clientele, and some demographic research helped narrow the target market.
“Even though Denver is a much bigger place,” O’Donnell says, “for what we are doing it’s a much smaller market. If you look at the demographic map, the dollar signs start to show up on the south end, and the next cluster is around Boulder.”
Finding its kind of clients in the new market, the company also found its bearings. There have been more lessons along the way, but the Denver office is doing well enough that O’Donnell is down to two days a week there. And the effort is fulfilling its goal of adding to the bottom line. “Our original vision was that we might do one or two projects down here, and that’s grown a bit,” Beck says. “We’re doing four,” one of which is a 16,000-square-foot residence.
The company got some dirt thrown in its face along the way, but that can be a good thing, Beck says. It gave his younger managers a taste of what it is like to struggle, and it reminded everyone involved that there is always something more to learn. “In a way it reinvigorated us as a company.”
Looked at another way, though, the process has been like fattening a handsome Thanksgiving turkey: The ultimate point of the exercise is to remove its head. “Deciding to exit, that’s the toughest thing,” Beck says. Starting and running a business can be an all-consuming proposition. Free time is always just over the horizon, and the horizon never gets any closer.
“Your family suffers, and your marriage suffers too,” Beck says. But even with the prospect of a comfortable retirement within reach, the tug of responsibility, the excitement of risk-taking, the thrill of accomplishment, the feeling of being indispensable all bind the entrepreneur to his role. “That’s a hard elixir to rid yourself of,” he says, and time does not make quitting any easier. “So you just decide, ‘This is what I’m going to do.’ And that’s a deep breath.”
When Beck finally took that deep breath, five years ago, he felt a surprising sense of liberation. “Once you’ve got to the decision that you’re going to leave, then you can just go and work really hard at it,” he says. Beck’s two grown children work in other fields, and selling outright seemed precipitous, so he set the wheels in motion for an eventual sale to his top managers. “We went through a strategic development process, trying to figure out what we’re going to be post Andy’s involvement,” Beck says. “So when we push away from the dock, everything is shipshape.” There sulting strategic plan gave the company a new vision statement, defined its guiding principles, identified its core competencies, clarified its primary processes, combed out some kinks in the organizational chart, and sharpened its job descriptions.
To adjust to their own changing roles, the management team began work on “personal development plans,” which address the relationship of each manager to his position. “Where are you now?” Beck explains. “Where do you want to go? What are your skills now, and what are you going to need?” Ultimately, the company will develop such a plan for every employee.
With the imperative to support a new generation of leadership while, in effect, pensioning off the founder, Beck says, “We realized we would have to have a certain number of dollars to carry the freight.” But, he adds, “We’ve always been in a kind of controlled growth mode.” The company plans on taking a larger share of the Vail Valley market and continuing its expansion into new markets via its satellite offices in Steamboat and Denver (see “Mile High Challenge” in sidebar).
The financial aspect of the transition is relatively straight forward. Beck has made a specified amount of company stock available for sale to his top managers via a process that is linked with the company’s compensation plan. The latter has three components: a straight profit-sharing plan for rank-and-file employees, an incentive bonus based on project profit for superintendents and project managers, and a bonus based on company-wide profit for top managers. Members of the management group can use their bonuses and/or other funds to buy stock in the company. Beck has also financed part of the sale, so some of the managers will be using their bonuses to pay off a note.
For the foreseeable future, Beck will remain the majority stockholder, a position that will provide retirement income, in the form of dividends, and give him the last word on any difference of opinion with the new management. In time, however, he expects to cede direct control, “so that my role becomes more of a CEO, and later more of a board position.” Toward that end, and in characteristically methodical fashion, Beck has already transferred most of his day-to-day responsibilities to Payne. “Frank and I had an organized sequence of how we would hand off the work,” he says. They made a chart of duties-sales, finance, management of hard assets, even calculating bonuses-each of which would be turned over in the course of a year. “Sometimes we would do more than one a year.” Planning ahead and proceeding by stages in this way, Beck says, “kind of lets everything mature.”
That includes the founder’s attitude toward his impending retirement. It is axiomatic that entrepreneurs identify, often to an unhealthy degree, with the companies they create. As a result, many hang onto their command until it is too late to effect a controlled transition to new leadership. Working until you can’t work any more, then turning out the lights may suit some. But Beck’s model of entrepreneurial success has a different goal: a business that requires of him no more than he cares to give, while he is still young enough to have other ways of spending his time. He is almost there. “Eventually,” he says, “you get to the point where you say, ‘You’re good to go,’ and you step out.” When he does, Beck will hand his successors not only a healthy company, but also an example of how, in stepping back from leadership, an owner can make his company better than it was. “Maybe,” he says, “the best thing you do for your business is the last.”
