- On March 12, 2013
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Playing Prevent Defense – 2007
It is now 2007 and life is changing again. Our first child is now graduating from college with a degree in finance, and the economy is starting to show major cracks.
I remember the day I knew the economy was headed for real trouble and it was going to be painful. Before I tell the story about that day, I want to give you a little background information that had drawn my attention on the economy and potential problems with the economy. One of my closet friends is James “Jim” Young (Jim Young is now deceased), and Jim was a bank President and an old school kind of banker. I had noticed a number of new houses being sold, included in the financing packages, second and third mortgages as part of the financing plan. I was noticing 100% mortgages, and no documentation or no wage verification mortgages. I thought back to buying our first house in 1984 and all of the verification that was required and a down payment and proof of money in the bank for the down payment. Now by 2007, 23 years after buying our first home, mortgages were being given away like free candy. Homebuilders were building houses everywhere and property values were going up, up, and up. I was talking to Jim one day about my observations over the last few years in the mortgage industry. I remember Jim saying this will not hold up, one day soon this will all blow up. Jim confirmed what I was thinking, how could this keep up. Now to the day I knew the economy was in trouble. I didn’t know it would be as bad as it was, but I knew we were headed for a recession of some sort in America. I was out-of-town at a construction seminar in 2007. I called to check in at work and check on the projects. We had a new school project we were completing and we were ready to turn over the school to the client to start teaching the kids. The client had worked out a deal with a national home builder to install the main sanitary sewer for the project because the school and the homebuilder were going to both use the new sanitary line. The home builder had cleared acres of land and was going to eventually build over 1,000 homes if my memory serves me right. Well anyway, the homebuilder just stopped everything and didn’t install the sanitary sewer and didn’t build any houses, just walked away from the project. When the homebuilder abandoned the entire project and this was a national homebuilder, I knew that day; the economy was headed for real trouble. I had no idea how bad it was going to be in the construction industry. In one of my earlier post, I talk about always paying attention to things around you in business and trying to foresee the future . My worst fears had been confirmed when the homebuilder abandoned the project. I then started playing more prevent defense. I actually started playing prevent defense in 2006. Playing prevent defense in business for me, was playing not to lose whatever we accumulated in business, instead of being aggressive and chasing work. Playing prevent defense is not a long-term plan to be in business. Once you lose your nerve to take on risk to keep growing your business, then eventually your business will stall, not grow anymore or possibly die. I was really torn now, I remember not knowing how we would pay our house note in the 1980‘s, and now I have over 50 families counting on me for their living. People often think it is so glamorous to be an entrepreneur. It has many positive benefits and it can also make you old before your time if you aren’t careful. My feelings are you should always be cautious and take calculated financial risk in business. In 2007, I had become even more cautious about risk and starting to plan for a bad recession. In 2007 we had a lot of work and the large international terminal project, but I was frightened of where the economy was headed. I had no idea it would be as bad as the recession actually became for the world.
I had one child finishing college in 2007 and my other child with 2 years to go. Karla and I could see the finish line and had planned for years about paying for college. One thing I recommend to young families is to start saving for college early and get in the practice of saving some money every pay period for the future, even if just $10 per pay period. By 1990, we had kids 4 and 5 years old. We were making just a little money and we decided to start buying zero coupons when we could, started to try to save a few dollars monthly, and investing a little money each month in the stock markets. I would buy $10 worth of stock if that was all we could afford. We also decided our kids would go to public school from kindergarten until they finish high school. I am proud to say they both finished in the top of their class in high school and finished college in four years and made the honor roll. So our plan for staying in public schools was a good decision and they got a great education. They also went to the school in the neighborhood. It was very helpful financially to keep the kids in public schools and start investing very early for college. I hope if any young couples read this post will realize, saving a little money early and for college will be worth the sacrifice later in life.
In 2007, I was learning and understanding everything my dad had taught me about saving and preparing for a rainy day.
We had won two exciting projects in 2007; one was the Ray Charles Performing Arts Center and the other was the Coretta Scott King Women’s Academy Middle and High School. The CS King Women’s Academy was the biggest job we had ever done on our own as a company. It was over $40,000,000 and a complicated project and site. The interesting part of this project was the procurement changes to the project. The original request for proposal had a rectangle building design on a level site. We prepared our price for the proposal on the original RFP. We won the bid and we were excited about the project. Here comes the interesting part of the project. After we were awarded the project, the client tells us, by the way, we have changed the site and we want you to make the project a design build project. The site they gave us was no longer a flat site. It was a deep slope lot with a creek running in the back of it, and a rectangle building would not fit as per the original building layout we priced as per their instructions. They gave us one other important wrinkle to the project, even with the changes we still had to meet our original price and schedule. That is the beauty of entrepreneurship, you have the freedom to walk away from a project or accept the challenge. We accepted the challenge with all of the changes. By the way the architect wasn’t too happy to be assigned to work under us. They were hired originally to work directly for the client and had never really done a design build project. So this was a forced marriage between the architect and the general contractor. There were no time extensions or budget increases to adjust for the dramatic changes to the project. The only disappointing part to this procurement was how one firm and I might say a very large national firm wanted the job badly. After we won the project they had a business development person who was going behind our back saying we couldn’t do it and they should get the job. Of course people love to tell you the negative things people say about you. I usually try to ignore them and don’t give them any time in my mind. But this was different; I knew this person and he acted like he was my friend. I called him up and nicely told him what I had heard he was saying and asked were they so desperate for work that they have to try to bad mouth other people to get work. He apologized for his comments and admitted he was under pressure to win work. In all of my years in business, when I lose a project, I move on and I have never bad mouthed another builder to a client to win a job. I have said earlier in a post, business can be cut throat and nasty at times. I always practice staying above the mess of cut throat business practices. Life is too short, and I believe it will catch up with you when do cut throat tactics in life or business.
Once we got the project started we had a lot of growing pains between us and the architect. The architect had never worked under a general contractor before, and was nervous about us leading them and keeping them in budget during the designing of the building. In the end we built a great project, Silver LEED, award winning project, a great relationship with the architect and a happy client.
Companies were starting to see the shift in the economy in 2007 and pricing for construction projects were dropping to new lows, and would get even worst over the next 5 years. My planning for a raining day and playing prevent defense was going to pay off in our survival. I will talk about our survival in the coming weeks.
The best advice I can give to entrepreneurs from what I had learned from being in business so far from 1988 until 2007 was the following. Always save some money, live beneath your means, do great work, don’t let negative talk by competitors make you lose focus, pray for guidance, stay humble, be honest, because downturns will happen. So prepare and be ready because downturns and storms will come one day in your life.
In 2007 Karla and I decided it was time to start taking one trip per year doing something we always talked about doing. In 2007 we went on an Alaskan cruise. This was the cruise I realized how beautiful and green it was in Alaska. On the ship deck I just would sit and daydream about the beauty and God’s handiwork. I was in awe of the beauty of nature I saw for 7 days.
In 2007 I also started running and training hard for road races again. I was now in my 50’s and wanted to see how good of shape could I get in at this stage of life. I ran my first half marathon and was back to running 10k races. I was still living daily with the fear of panic attacks or people thinking badly of me for being a sexual abuse victim, but I was determined to keep pushing through the fear and live life with a smile daily.
There are some pictures of a rafting trip with my son, his friend from college, my high school friend Steve Copeland. Steve has been a close friend since 1971. I want to tell a quick story about this rafting trip and how God protects us. Steve hated water and was fussing at me the entire walk down to the river. His mother had recently passed and I talked him into coming to Georgia from Michigan for a fun rafting trip. This was during the drought and the water level was probably too low and made some areas of the river harder to navigate and actually a bit unsafe. Anyway, I fell out the raft and that was ok. At our first break, we got out the raft, and were walking to shore. Somehow Steve fell in a hole in between some rocks. Our guide was trying to save him and people on the shore were screaming. I was screaming don’t let go of my friend. All I could think about was how I got Steve here and he is going to drown. Well Steve is kind of on a large fellow and our guide was half his size. Now while Steve was going under water and popping back up, he stayed very calm during this ordeal to my surprise. It was getting scary; finally I moved our guide out the way, laid down in the water, reached my arm in and grabbed Steve. This is one of those God protection moments. I grabbed Steve and he was light as feather and I pulled him up to safety. It was only God’s grace and mercy everything turned out ok. He and I talked about that moment often and how when I grabbed him, he just rose out of the water, and we both knew there is a God that protects and keeps us and can do miracles. Steve is my friend that writes the poems that I have in my post some times.
Karla and I were endowing more scholarships to help others, and donating to organizations to help those less fortunate. We just hoped our gifts can help a person just have one day better than the previous day.
It was great day to see my son graduate from Morehouse College with his degree in finance and with honors. Even though the storms of the economy were brewing, life was good, and Karla and I were just happy to still be in love, and be able to just get up each morning and face the day. We are blessed because we have never worried about how much money we can have in life. We enjoy the simple things of life, such as nature, good health, great friends and a fantastic family, all surrounded by love.
Next week, there will probably not be a new post. My daughter and I will in Honduras on a mission trip with spotty if any internet service. Please pray for the groups safe travels, and that our group will make a positive difference in ourselves and the people we will help next week.
Please enjoy the project pictures, and family pictures from 2007 in the slide show. Keep going for your dreams and know you are stronger than you realize to face life’s challenges. Please enjoy some sunset pictures I have taken from our travels over the last 6 years.