Contractor Profile - Russ Becker, Beck-Reit & Sons Ltd.

“Mamas don’t let your babies grow up to start construction companies,” could be the first line of a country song about new small business failure rates. Five years after starting, the share of mining companies remaining alive is nearly 15 percentage points higher than the fraction of construction businesses still in operation (52.3 percent versus 36.4 percent). This is based on the Census Bureau’s Business Dynamics Statistics which comes from a longitudinal database of businesses that government economists created by linking together annual administrative records, for example unemployment filings.

Enter Russ Becker, owner of Beck-Reit & Sons Ltd, a successful construction company that is in its 15^th year of steady growth. Having discovered a passion for dirt bikes at the age of 8 and picking up running and mountain biking in the last few years, you get the sense that Russ is a guy who is comfortable with taking on challenges. In an industry that is experiencing increasing competition and has a high rate of failure he has developed a business model and approach that work. Below are some excerpts from my interview with Russ:

Tell me a little bit about how you got started?

My partner and mentor, Norman Reitmeyer was a plumber by trade, who became a very successful federal government contractor.  Norman invested his construction profits in development projects in the San Antonio area; I worked for Norman for 6 years before we started Beck-Reit and Sons, Ltd. in 1999.  We focused on infrastructure work for state and local agencies as well as the construction of our development projects.

Norman was a wealth of knowledge in banking, bonding, contracts and understanding the risks of the construction business.  Norman and I parted ways in 2004, I am very thankful for his impact on my business.

 

What have been some of the unique projects you have worked on?

One of the first federal projects that I worked on, was a US Army military contract in Tooele, Utah.  We were building storage facilities for the government’s chemical weapons incinerator. They were destroying stockpiles of VX nerve gas. I remember getting issued with an antidote syringe antidote that had an 8-inch needle you were meant to inject in-between your sternum in the event of a spill.  That will get your attention. 

Recently we developed and built, the Solutions Oriented Living (SOL) subdivision in Austin, Texas.  SOL is a 40-lot subdivision 3 miles from the Capital in East Austin.  The houses built in SOL, are Net Zero capable, being able to produce as much energy as they consume, through solar power, passive design features, and new building technologies.  The biggest lesson we learned at SOL, was timing; we broke ground on the project just as the real estate market crashed in 2008.  Having a $1M plus development loan, and trying to sell houses in a market with a mortgage industry in collapse, will also get your attention.  Fortunately, we had a very unique product in the market, and that pulled us through the crash.

Why did your company succeed where a lot of others have failed?

Without a doubt it has come from finding and developing good employees. I have spent a lot of energy and effort working with my employees.  It is important to have people in your company who are well educated in the business, understand your clients and look and act professionally. It is important to me to take care of my people and make sure that they can build a career at my company.

I think that in the construction industry your people differentiate you.  If you don’t invest in your people you can’t keep good employees and end up becoming a revolving door with no stability in your business.

For example, Henry Fitzgerald Sr. (Big Henry) and his son Clay, have over 50 years combined experience in bridge construction. The Fitzgerald's, have taught me a lot about how to work with the Texas Department of Transportation who has become our biggest client.  The Fitzgeralds have become leaders in our company, with a can do spirit and a will to win.  Their potential would never be realized without giving them opportunity to succeed or fail.

How have you found great employees?

I have been lucky to hire people who have hardworking family and friends. Most of the people working for me are kin to one another. Basically, I bring someone on and give them a lot of autonomy – it is a ‘sink or swim’ approach with a close eye on results. The folks that have a ‘can do attitude’ end up making it work and doing very well with our company.

Finally, what do you think are the biggest challenges you face and where do you see the industry going?

One of the biggest challenges has been the big jump in costs over the last ten years. For example when we first started I could buy a Cat Backhoe for around $40,000 new. Now that same piece of equipment today is going to run me over a $100,000. Costs have gone up for just about everything from equipment, materials and overhead so it is really important to get your costing right when you bid jobs.

You also have to be really good at logistics – moving people and equipment to and from efficiently. In the last 15 years we have only done two to three jobs in Austin where we are based. The rest of the jobs have been across the state. 

As far as the industry goes it is becoming more competitive every day. You are seeing more unfamiliar names bidding each job. This makes having strong customer relationships and a reputation for doing good work at a competitive price essential.  We are thankful for opportunities that have come our way and most important we know that we are only as good as our last project.

IIC New Rewards Program

“I like their quoting system and their customer service is great but their underwriting is tighter than other carriers.”

A few weeks ago IIC surveyed our clients to see where we could improve – some the feedback as illustrated above has led IIC to make the following changes and improvements:

c   Credit requirements and the amount of information required for Motor Vehicle Dealer & most other bonds have been decreased.

c   Direct bill is now easier to use.

c   Underwriting questions and requirements have been significantly reduced for Certificate of Title bonds.

c   All License & Permit/City bonds, Sales Tax bonds and Probate bonds have few questions.

The net result is that you can now use IIC’s streamlined online bond submission process to submit Commercial bonds in less than five minutes with competitive underwriting standards. Thanks to all of our agents whose feedback helped drive these improvements.

The video links below demonstrate the bond submission process so you can see how user friendly the system is:

How To Submit A Commercial Bond In Under 5 Minutes

How To Submit A Contract Bond in Under 5 Minutes

Now to the rewards!

To thank our best customers IIC encourages you to try the new streamlined version of the online bond submission website you by enrolling via the link below:

Enroll Me To Earn Rewards

To be eligible for rewards beginning in the 1^st Quarter of 2014 you will need to enroll by January 30^th.

Congratulations to the Hotchkiss Agency on earning their first reward! Some of the other agencies who have already enrolled and are earning rewards are IBC, Pearson & Finley, Bailey and Miller & Miller to name just a few.

Once enrolled you can earn the following rewards for one calendar year (Jan – Dec) as you use IIC online bond submission website:

Reward Level	Qualification	Reward Amount
Green (Qualify for Program)	3 Bond Issues	$25 and $25 for every 10 Issues until you reach Silver
Silver	20 Bond Issues	$50 for every 10 Issues thereafter
Gold	50 Bond Issues	$75 for every 10 Issues thereafter
Platinum	100 Bond Issues	$100 for every 10 Issues thereafter

To explain, once the agency has 3 bonds issued you have qualified for the Rewards Program and will begin at the Green level and earn a $25 reward for getting started! Thereafter, you will earn $25 after 10 Bonds have been issued. Once you have 20 bonds issued you qualify you for the Silver level. Thereafter, you will earn $50 for every 10 bonds issued until you reach Gold level. For each 10 bonds issued you now earn $75. Finally, once you have issued 100 bonds you are Platinum rewards member and will receive $100 for every 10 bonds issued thereafter for the remainder of the calendar year.

The faster you qualify and the more you use the system the greater your rewards will be as you progress the through reward levels.

For illustration purposes let’s say you issue 120 bonds over the course of one year using IIC’s online submission website. You would earn the following rewards:

Earned Rewards	Amount	Number of Cumulative Bond Issues
Green (Qualify for Rewards)	$25	3
Green Rewards	$25	10
Green Rewards	$25	10
Silver (Qualify for this level)	$50	20
Silver Reward	$50	30
Silver Reward	$50	40
Gold (Qualify for this level)	$75	50
Gold Reward	$75	60
Gold Reward	$75	70
Gold Reward	$75	80
Gold Reward	$75	90
Platinum (Qualify for this level	$100	100
Platinum Reward	$100	110
Platinum Reward	$100	120
Total Rewards	$900

By reaching the Platinum Rewards level you can rapidly accelerate your rewards.

In the illustration above your cumulative rewards would be $900. All rewards will be paid using a Visa gift card so you can spend them any way you want! Either an individual or the Agency may enroll and qualify for the rewards program.

Remember to click the link below and enroll before the 30^th:

Enroll Me to Earn Rewards

Trends in Construction

 According to the most recent report from the Texas Comptroller's office between August 2012 and August 2013 Texas added 274,700 jobs and has now remained at or below the national average unemployment rate for 80 consecutive months. This is a strong indication of the economic recovery being driven by a boom in oil & gas within the state.

Although single-family residential construction remains depressed, the total value of the contracts for the most recent year available for nonresidential building construction of offices, fabrication facilities, and warehouses increased 10.6% over the previous year.

In 2011 there was a 4.8% jump in construction jobs with most of the new jobs being added in heavy and civil construction, as well as utility construction work by specialty trade contractors. The trend clearly shows strong growth potential in apartment, hotel, warehouse and oil/gas related construction while there has been a steady decline in highway, street & bridge construction and building finishing contractors.

Oil and gas clusters are still major drivers of construction in Texas and this trend is likely to gather momentum as production increases. In November the U.S. reached a major energy production milestone - it produced 137,000 more barrels a day than it imported. This is the first time in nearly 20 years the U.S. is producing more crude oil than it imports.

Oil and gas production will continue to drive the Texas economy and in-turn the construction industry. However, there will be regional exceptions to this like Central Texas which will see strong growth in highway, street and bridge construction as well as building finishing contracts. You can see this illustrated below in the Texas Workforce Commission's construction employment projections through 2020:

Being aware of the local construction growth trend in your market will allow your agency to focus resources on developing business relationships with the contractors who have market dynamics working in their favor.

Feel welcome to contact sgoodman@insurors.com for a one-page analyst brief detailing the local construction trends in your market which IIC will be happy to email you.

Dealing With That Unhappy Customer

Things aren’t going well:

“I am willing to pay for your services – I just didn’t get what I paid for.”

“If I was advised of the charges upfront, I wouldn’t have agreed to them.”

“This is not the way I understood it. I am frustrated with your company.”

What do you do when you are dealing with an unhappy customer? How do you get past their unreasonable demands?

Let’s assume that once you’ve reviewed the situation you realize you haven’t made a mistake, rather the customer is mistaken. Unfortunately, in their eyes you will never be right – you will never win, so where do you go from here?

Step #1 – Focus on the problem

You have to set aside any feelings that you have about the situation not being your fault or that the criticism is unfair. Rather you want to step into your role as a problem-solver.

If you hear their complaint as a personal attack and become emotionally involved then you will react to their outburst and this will only serve to inflame the situation and steer you away from a solution.

Step #2 – Listen Actively

Put yourself in the customer’s position and consider his/her basis for being upset. Start the dialogue with a neutral statement, for example, “Let’s see if we can figure out what’s happened,” or “Tell me more about why you are upset.” This puts the two of you on the same side of the table focusing on how best to solve the problem. You are no longer involved in an adversarial tug-of-war, but rather are working together toward a mutual solution.

It is important to resist the temptation to solve the problem right away or jump to a conclusion about what happened. Rather let your customer tell their story and confirm you are hearing what they are saying by repeating back key points, for example, “You are upset because the bill was higher than what you had originally planned for, is that correct?”

Step #3 – Be Empathic and Apologize

Demonstrate you understand the customer’s concerns by showing you understand why they are upset. For example you could say, “I understand why you are upset. I would be too if I was planning on paying one amount and then discovered the bill was actually higher.”

Step #4 – Present a Solution

Suggest a solution and if the customer accepts it then make sure the customer has your contact details – this gives them a feeling of control because they can reach you again if they need to. Note down to follow-up with the customer in three to four days to ensure they are happy with the solution.

If they resist the solution you propose then you can give them the power to resolve things. For example you could say, “If my solution doesn’t work for you, I’d be happy to hear what would make you happy. If it is in my power I’ll get it done, and if it’s not possible then we can work on another solution together.”

Remember to follow-up after the problem has been resolved. Often an unhappy customer presents an opportunity to demonstrate exceptional customer service when it is needed the most. 

5 Habits of the Most Productive People

What does it mean to be productive? Let’s start here – quickly write down the five most important results you are meant to ‘produce’ throughout your work day. For example, resolve customer issues by 4pm or make 15 calls to prospective customers.

In order to be productive, you first have to have a clear grasp on the exact results you want to achieve from your efforts. With that firmly in mind the following habits exhibited by the most productive people will guide you.

Habit #1 – Start with the end in mind.

It’s not the time you spend; it’s the results you get. Rather than organizing your work by time organize by the results you are committed to getting. For example instead of planning to spend an hour on submitting client applications rather plan on the specific number of submissions you want to complete.

Habit #2 – Cycle between difficult and easy tasks.

Behavioral research has shown that our willpower operates more like a muscle. It gets stronger the more we exercise it, but it also needs a rest. In one experiment researchers found that if a person was given an easy task (sample a chocolate chip cookie) before a harder task (complete an unsolvable maze puzzle) they would stick with the harder task longer. Conversely, when researchers gave the participant a hard task first and then had that person try to solve the puzzle they stuck with it 70% less time than if it was preceded by an easier task!

Productive people organize their work so that their activities cycle between things that require different degrees of willpower. They build up their reserves for the activities that will need it.

Habit #3 – Write a list, check it twice.

Review your schedule and write down a few things you want to accomplish next to each item. Writing down the tasks along with a brief description of what you want to accomplish helps focus your brain on the end result you are aiming for.

Develop the habit of spending 5-10 minutes each evening before you go to bed writing out your schedule for the next day with a brief description as outlined above next to each item.

According to Virginia Berninger, a professor of educational psychology at the University of Washington, handwriting differs from typing because it requires executing sequential strokes to form a letter, whereas keyboarding involves selecting a whole letter by touching a key.

She says pictures of the brain have illustrated that sequential finger movements activated massive regions involved in thinking, language and working memory—the system for temporarily storing and managing information. By writing out your schedule you are engaging your memory and actively engaging your brain for the upcoming tasks.

Tracking and noting your progress throughout the day will keep you focused, providing momentum to see your tasks through.

Habit #4 – Taking control of technology

Between email, your phone and the Internet you have a lot of different things vying for your attention. Being constantly distracted throughout your day not only breaks your concentration but dramatically increases the amount of time you have to spend completing tasks.

Several recent studies show that it takes the average person’s brain 15 minutes to refocus on a task after being interrupted. The concept of the effective ‘multi-tasker’ is false. For example if you were working on a report that would normally take you an hour but you had three interruptions (email alert, text and phone call) that same report would take you over an hour to complete.

You can see the evidence of this when you are working long hours to ‘catch-up’ or feel like you have been busy all day but haven’t got any of your work done.

Most effective people have developed the habit of switching off so they can focus on key activities. For example, they will put their phone on silent, turn off their web browser and email alerts so they can have an hour without interruptions to tackle tasks that require focused concentration.

Habit #5 The mind-body connection.

Energy is the fuel that allows you to work at a high level of productivity. Stress, insufficient exercise and lack of sleep all deplete your reserves of energy and prevent you from having the capacity to work productively. Ironically, the more productive you are, the more time you have to exercise, get enough sleep and socialize with your family and friends.

On a physiological level stress caused by lack of sleep or other environmental factors elevates a hormone called cortisol. This hormone is responsible for regulating your fight or flight response. At elevated levels it interferes with short-term memory, increases blood pressure and can cause serious health problems over time.

Your first line of defense is exercise. When you exercise regularly (more than three times a week for 45 minutes) your body produces endorphins which boost your sense of well-being, help your muscles to relax and lowers your blood pressure. The combined effect is to inhibit the production of cortisol and aside from making you feel better it also positively affects your memory and brain function.

Next by ensuring you get enough sleep (7-8 hours a night) you ensure your brain is able to get the REM sleep it needs to consolidate memory and allow you to feel well rested.

Finally, eating a diet that is balanced and suited to your activity level you can ensure you have the fuel you need.