Hard times bring hard choices, and David Baud has faced his share lately. In 1986, when he took over the custom building company his grandfather founded in 1949, he inherited a prosperous clientele, a strong reputation, and a skilled crew. It was only after hiring some cracker-jack new carpenter/project managers that he noticed some of the old timers had become a bit … comfortable. “When things are going great that’s OK,” he notes. But the current downturn presented a thorny dilemma: “Am I going to lay off the A team or the B team?” Baud chose survival over seniority. “The B team had been around the longest,” he explains, “but I couldn’t afford to keep them on.” Over the past two years, Baud reports, “My volume has probably dropped 40 percent.” Competition is fierce, and clients have the upper hand in price negotiations. “I’ve been forced to sharpen my pencil and look at everything from the ground up,” he says, “including trade contractors and margins. I’ve expanded my trade contractor base. I was pretty friendly with some of my subs, so there were some hard feelings there, too. But you know what, guys? It’s coming out of my pocket.”
Early in 2010, a new market landscape began to come into focus. Compared with a year before, Baud says, “There are more opportunities. I feel that we’ve hit bottom and things are starting to climb.” But if this is the new normal, it’s a long way from the old one. “We might have three or four projects going at one time. But the $2 million projects are now $1 million to $1.5 million. The renovations that were from $500,000 to $1 million are now $300,000 to $700,000. Everything has dropped as far as the size and scope of the projects.”
Like everyone at his company, Baud is working harder than he used to, and he’s resigned to working longer than he had planned. But the belt tightening—along with some well-timed marketing efforts initiated when demand was strong—seems to have worked. “I’m in a better position now in terms of overhead and expenses,” he says. “I’ve trimmed everything I can, so I don’t need to do the volume I did before to stay in business. I’ve got a good team, and I’ve got a good group of trade contractors. We can be competitive with anybody.”
Baud Builders, Wakefield, R.I.
www.baudbuilders.com
Type of business: Custom builder
Years in business: 24
Employees: 5
2009 volume: $1.6 million
2009 starts: 3
