Lee Wetherington Cos.; 100-500 Units; Sarasota, Fla.
Florida builder Lee Wetherington retools his company for greatness.
The first time Lee Wetherington started a building-related business he failed miserably. Despite growing up with a father in the industry, the young man somehow put the wrong numbers together for his new drywall and painting business, and, in his own words, "got in trouble." Attending college on the GI Bill at the time, Wetherington worked nights and weekends to repay his supplier and within two years returned every cent he owed.
Which is when the supplier took another chance on the young ex-Marine, backing him a second time for the same business. This time, Wetherington succeeded. The lesson learned? "I guess you always have to have a failure to become successful," says the 56-year-old Sarasota, Fla., builder.
That was in 1972. Since then, Wetherington has gone on to found a successful, $69 million home building company named one of America's Best Builders in 2004, thanks to its solid financials, appealing home design, community involvement, and innovative business model.
The secret to his success? Persistence. "My girlfriend says persistence is who I am," says the lifelong bachelor. "I am persistent and driven." He's also blessed with a kind of second sight, able to see five and 10 years out and shift direction to take his company not where the market is, but where it's heading.
In 1992, for example, Wetherington foresaw the entrance of the national builders into Sarasota. Once they arrived, he knew their buying and marketing power would create a local builder's greatest nightmare. So he decided not only to grow his company, but to add an element the nationals didn't have: community involvement.
He threw himself into the Sarasota nonprofit arena, carving out a name not only as a big spender (he recently donated $1 million to create the Lee Wetherington Foundation for disadvantaged kids), but as a roll-your-sleeves-up-and-work benefactor.
Under his guidance, the Boys and Girls Clubs of Sarasota County has been transformed from an organization on the brink of bankruptcy to one of the strongest chapters nationally. In 1996, he earmarked $250 from every home he sold for charity. With those funds, he began a scholarship fund for the Boys and Girls Clubs, sending 12 kids to college to date.
But being a great community leader is just one of two goals that drives Wetherington. The other is to be a great--not a good or even an excellent--but a great builder.
Ask him what distinguishes what he calls "regular" home builders from "great" home builders, and he hesitates. It's a certain savoir faire about their homes, a style that distinguishes them from the competition, he says. It's a distinction Wetherington has a hard time articulating, but one he knows exists. "It's like driving a Lexus and then driving a Ford," he explains. "Both are cars but one just feels better. We're the Lexus."
The judges agreed, calling his homes beautiful. But they were just as impressed with Wetherington's business acumen, particularly how he reorganized the company in 2000, using a vertical integration model unusual in builders of his size.
In 2000, the company was prospering but it wasn't excelling. Wetherington brought in a consultant who told him that with a 4 percent net profit, the company lagged far behind other builders his size. To get where he needed to be, Wetherington would have to clean house.
So he did. He fired nearly his entire senior management team and recruited seasoned veterans, including now COO/CFO Bill Hager, a man with more than 25 years' experience in development.
Wetherington also relocated the company into one, 10,000-square-foot corporate headquarters and created Lee Wetherington Cos., an umbrella corporation that includes not only the home division, but six other divisions reflecting various aspects of the business.
They include LeeSure Pools, created when the pool company Wetherington worked with went bankrupt. "We had to take over their jobs and finish them and I learned a lot about pools in a very short time," he says. "I said, 'We can do this.'" Today, the pool company is one of the largest in the area, winning awards locally and regionally for its unique designs.
It was quickly followed by the Wetherington Design Center, a 25,000-square-foot facility where professional designers help home buyers choose everything from light-switch plates to living room couches.
A separate architectural and engineering department, Lee Wetherington Development evaluates and acquires large tracts of land within Sarasota and Manatee counties, while Wetherington Signature Homes focuses exclusively on custom-built homes.
And, instead of following the classic builder model of contracting with a realty company or treating Realtors as independent contractors, Wetherington created a separate realty division that bears his name. The reason is simple, he says: "As independent contractors, Realtors work for themselves. But as employees, they work for me." With the added perks he offers--health insurance, 401(k), bonus plans--he gains a more dedicated salesforce.
In fact, the entire workforce is more dedicated since the reorganization, says Cecilia Davie, vice president of finance and comptroller, in part because the company implemented its first pay-for-performance bonus program. "That instilled in all associates across the board that this is our money, and we care if you waste it by wasting time, or wasting supplies," she says.
Questing for the best
Davie, who has been with the company for 20 years and still lives in the Lee Wetherington home she bought when she started, says the key to her boss is his continual drive for improvement. "He's never satisfied," she says. That's one reason Wetherington personally conducts quarterly classes for his home buyers, walking them through every aspect of the home building process and handing them his card with his direct phone line and e-mail address. He also answers every e-mail he receives, and if a customer has a problem and hasn't tried to contact Wetherington, then "shame on them," the builder says.
It's that kind of drive that led Wetherington to spring into action several years ago when county commissioners were considering a three-year building moratorium. Wetherington flew in a team of consultants from Washington to help the builders' association beat the moratorium, even sending his employees out into the community to distribute flyers opposing the legislation. In the end, the moratorium failed by a thin margin. "If Lee had not done that, [the legislation] would have passed," Davie says.
Wetherington garners praise from Sarasota County commission chairman Shannon Staub, both for his community action and for his commitment to environmentally friendly building. Wetherington was the first builder in the county to use native plants for new-home landscaping. He also helped the country pass a landscaping ordinance with the support of builders and developers. "When we had the hearing, we didn't have one person speak against it because Lee paved the way for it," she recalls.
She also praises one of his newest developments, Willowbend, which backs onto an environmentally sensitive state park. Wetherington designed a buffer between the park and the development, which features energy-efficient and environmentally sustainable homes. He even gives free memberships to the Friends of Oscar Scherer Park to all new homeowners in the development. "He hasn't failed us on that project," Staub says. "It's already gorgeous."
Sales have also been pretty spectacular, with 100 homes sold in the community's first year--about what Lee Wetherington Homes closed overall in 2000.
Raising the bar
Those kinds of sales indicate the success of the turnaround, which has resulted in higher revenue and profits. "In a nutshell," says Hager, "we put professional discipline into the company."
For instance, the company used to focus on gross sales, targeting all other budgets and accounting to that figure. "When sales are the focus, you tend to discount your houses to make the sale and do things that increase revenue but not the bottom line," explains Hager. Today, the company sets a target net margin based on NAHB guidelines, then tailors its business plan correspondingly. The first year after the reorganization, the net jumped from 4 percent to nearly 13 percent.
In 2003, the company planned to construct about 250 homes a year. But it doesn't plan to get much larger. "Growth in our view is to tweak and fine-tune and improve systems and productivity so, as costs go up, we can still maintain our margins and be successful," says Hager.
Those systems include customer care and trade relations. A major priority is ensuring that customer service doesn't get lost in the growing company, says Wetherington. To that end, he's brought in a customer service consultant to train employees and handed every employee in the company the book Raving Fans, by Ken Blanchard and Sheldon Bowles. And the builder does whatever it takes to maintain good relationships with the best the trades have to offer, even formally surveying his contractors about their satisfaction with the company. "I don't treat them like trades, but like partners," he says. "I tell them to beat me up about what I'm doing right or wrong."
Now that Wetherington has attained the prestigious ABB designation, you might think he'd relax just a bit. No way. When he heard he'd won, he told his employees and trades that the bar had just been raised. As he puts it: "You can't be 'America's Best Builder' and not be America's best builder."
Debra Gordon is a freelance writer based in Nazareth, Pa.
Lee Wetherington Cos.
President and founder: Lee Wetherington
COO and CFO: Bill Hager
Focus: Luxury semi-custom and custom homes in Sarasota, Fla.
Web site: www.lwhomes.com
Notable: Wetherington plays a large role in the community's charitable organizations, creating a $1 million foundation in 2003 to help disadvantaged children.
Tips From a Winner: How to Revitalize Your Company
Retooling a company for better performance can boost your top and bottom lines. But accomplishing that requires commitment from you and your employees. Here's what Lee Wetherington recommends:
1. Hire the best managers you can find and pay them performance bonuses. Set the bar high but reachable.
2. Always hire people better than you and give them clear direction.
3. Organize a fun committee and make sure you have fun.
4. Make sure everyone knows how much you appreciate what they do, and be sure to thank your customers for their faith in your company.
5. Be an example for community leadership and allow your associates to participate in community events.
6. Have an open-door policy and empower your associates to speak what's on their minds.
7. Roundtable all important decisions with your key management team.
8. Invest in the equipment necessary for your associates to do their jobs efficiently.
9. Invest in training and education programs.
10. Be the cheerleader and salesperson for your company--no one does it better than you.
Learn more about markets featured in this article: Bradenton, FL.