With more than three decades of experience under his belt, custom builder and remodeler Ted Peterson has come to see recessions as an inevitable part of the business. So he’s managed to maintain relative equanimity during the current downturn, even as his customers have gone a little wobbly. “It was the first time that I’ve seen the clients realize that they’re not bulletproof,” he says. Losing seven figures of net worth in a single day, as he reports at least one did, can have that effect, and it doesn’t wear off quickly. “It’s only been in the last year that I’ve seen some confidence return,” he says. But Peterson and partner George Collins have calmly followed a program developed and tested in recessions past, preserving their staff and pursuing projects that build their company’s reputation—even if it means treading water on profits until business picks up.
From the founding of their company in 1977, Peterson and Collins have focused on architect-designed projects. “We felt that if you hire an architect, you are committed to the project,” Peterson says, “to paying for it and doing it right.” They have grown their staff by hiring talented people and creating positions for them, rather than vice-versa, and offer benefits such as extended vacations that permit employees from Latin America to visit family back home. “That flexibility is what makes Peterson and Collins a good company to work for,” Peterson says. More important, he adds, “We haven’t laid anybody off in this recession, and we haven’t cut anybody’s pay.” Profit-sharing checks are slimmer than they were a few years ago, but the company hasn’t suspended the program, and when gas prices spiked, it began providing a $100 monthly gas allowance. “Employees stay with us when times are good,” Peterson explains, “because they know we’re going to protect them when times are hard.”
An infrequent bidder in better times, Peterson lately has bid aggressively, especially on “signature” projects that will keep his crews busy and also improve the company’s long-term position. “You have to realize that you can’t necessarily make money,” he says. “Sometimes it’s better to keep the team assembled and take advantage of your financial strength. When there are no projects you can make money on, the best projects are the ones you really want that you can’t make any money on.”
To get the same flexibility from trade contractors, Peterson draws on a years-deep store of good will. “If you build relationships based on mutual respect during the good times, you can use these relationships as chits in the bank when times are hard,” he says. “If when times were good, you just beat them to make more money, they wouldn’t come through.” Recessions are great clarifiers, he notes. “Did you treat your people well? Did you treat your subs well? Or is it payback time?”
And just as recessions are inevitable, Peterson observes, so are recoveries. Keeping your team intact means being ready when the upturn arrives. “You need to understand when the market changes,” he advises. “You need to pay attention to the industry, the news, and your clientele. If you miss the curve, you miss the opportunity to be included in the market change.” In the meantime, he notes, “Sometimes it’s good for a builder with a great reputation to get humbled, to say, ‘Yes, I’ll be happy to build your deck.’ You don’t always hit a home run. Sometimes the single keeps the rally going. It’s good sometimes to just get on base.”
Learn more about markets featured in this article: Washington, DC.