Business Monday

Small business makeover: Building a makeover for Hollywood construction company

Aaron Stadlen, Ilene Stadlen, Art Stadlen and Joe Stadlen, of Intertech Construction Corp. in Hollywood on Nov. 11. The family business that does luxury and high-end buildouts and interior customization for the retail and restaurant industry.
Aaron Stadlen, Ilene Stadlen, Art Stadlen and Joe Stadlen, of Intertech Construction Corp. in Hollywood on Nov. 11. The family business that does luxury and high-end buildouts and interior customization for the retail and restaurant industry. ctrainor@miamiherald.com

Art Stadlen got into the construction business in 1971. “I started a general contracting business and worked on anything I could get my hands on,” he said. Under the name Alamo Building Corp., Stadlen scooped up commercial and residential work. He specialized in buildouts — interior customization work.

Stadlen slowly grew his network of contacts. In the early 1980s, he landed the contract for the Hair Cuttery in Miami, which led to contracting work for more than 100 locations. In 1987, Stadlen rebranded himself as Intertech Construction Corp.

In 1996, son Joseph Stadlen joined the business after earning a trio of bachelor’s degrees — in marketing, management and economics — from the University of Florida. What started as a low-level job pushing a broom turned into a 20-year career, with Joseph putting systems in place that moved them from legal pads to computers and doubled sales. Joseph now serves as president.

In 2001, son Aaron Stadlen joined the company after earning a bachelor’s of fine arts in design at the University of Florida. An acumen for business led Aaron, as chief financial officer, to handle financials and graphic design.

Intertech, based in Hollywood, carved a niche with a high-end clientele including luxury watchmaker Longines in Aventura, Hermès in the Miami Design District and an upscale food court in the Galleria in Fort Lauderdale. The company handles about 15 to 17 projects during its busy third quarter, with six to eight projects a quarter the remainder of the year. The average job is about $350,000, or about $250 per square foot. About 75 percent of the work is in South Florida.

The company has 27 full-time employees. Art Stadlen, and his wife, Ilene, would like to retire. The Stadlens have a loose idea of how the transition from parents to sons will work, but no firm plan. Joseph Stadlen also would like to increase job efficiency, see more profits and improve work/life balance.

After a steep downturn during the 2008 recession, the company rebounded with a 60 percent increase in sales in 2011 and a 110 percent increase in 2012. The past couple of years’ growth has been stagnant, Joseph Stadlen said.

“We’re taking on high-end jobs, but is it worth it?” he said. “Are we planning far enough in advance? Are we picking the right subcontractors? What are our self-inflicted wounds?”

The Stadlens asked the Miami Herald for a makeover, and the Herald brought in Broward SCORE, a nonprofit with volunteer counselors from the business community who mentor small business owners. The SCORE tune-up team was led by David Harris, director of marketing, Greenway Golf Course Management, whose expertise is in operational management, fiscal controls and marketing. Other team members were Russell Thompson, a Sunrise attorney with expertise in manufacturing operations, marketing and accounting; Emmanuel Okwor, project director at Grelite Corp., whose expertise is real estate development, construction and management consulting; and Angelica Love, a certified life coach and business coach.

Here is the SCORE team’s advice:

Write a business plan: Write a plan with clearly defined goals and objectives, with a timetable for each phase, Thompson said. Be specific, with actionable steps, and name who is responsible for overseeing each one. Establish criteria for measuring success. In your plan, explain how you will achieve your goals, Harris said, and map out a five-year strategy.

Price jobs to increase profitability: Intertech’s profitability has dropped as its revenue rebounded. Joseph Stadlen said to maintain its level of service, they had to invest in more people and technology. “Make sure your bids include all overhead,” Thompson said. “Recalculate the way you price jobs to increase profitability.” If your growth was because your bids were too low, that will affect your profitability, he said. Factor in labor between jobs in estimates, because you can’t absorb all costs, Okwor said. Determine what types of jobs are most profitable. Use the numbers to guide you, rather than the prestige, he said.

Qualify customers: Intertech has had its share of “good” clients who do not pay. Do a little research before you sign a contract, Thompson said. Google company names to look for prior trouble. Okwor suggested using sites like Sunbiz.org to make sure a Florida company is incorporated and myfloridalicense.com to ensure it is licensed. “Increase productivity by weeding out non-compatible clients as early in the process as possible,” he said. Harris suggested asking new hires from competitors to get fresh ideas on the process. “Look at successful companies, what they are doing, and how,” he said.

Have an ironclad job estimating system: Have a good estimating system nailed down, so if a client starts to beat you down on something, you can walk away, Thompson said. Compare costs before and after a job to learn what you can control and change, he said. “Being a good negotiator takes practice,” Harris said. “Walk away from jobs that don’t make sense.”

Know when to draw the line: “You are really nice people who emphasize service,” Thompson said. “You have to be careful that people don’t take advantage of you.” If a client asks you to reduce the price, advise them that it will reduce the scope of work, he said. Okwor said to prequalify subcontractors, give them checklists with exact specifications to price jobs, and hold them accountable for omissions. Draw the line on client punchlists. Once it is accepted, it is a legal document, Okwor said.

Decide whether you want to be big or small: Instead of going for bulk, look for the highest profit jobs, Okwor said. “You are in business to make money, not to have big sales,” Thompson said. “You might make more money going smaller.”

Strengthen the CFO’s position: The CFO’s knowledge of debt ratios and assignment of labor costs can help guide the company to the most profitable work, Okwor said. “The CFO should read up on the industry, know what market is booming and what the trends are,” he said. Come up with a five-year goal, and understand your numbers, Okwor said. If you have a bad debt ratio, you’re not billing on time or waiting too long to collect.

Be firm about receivables: Intertech sometimes has clients who do not pay, resulting in expensive lawsuits and uncollected debt. “Get ahold of receivables. You don’t want to establish a reputation for negotiating,” Thompson said. “You don’t want to be known for that. Don’t allow people to take advantage of you.”

Make a plan for the management transfer: Though the sons are managing the company, Art and Ilene are still on-site nine months a year as advisers and administrators. Make a firm exit strategy and plan for the transfer, Okwor said. “You need to transfer that power and knowledge to someone else,” Thompson said. Get a fresh perspective by forming an impartial advisory board, Harris said. “Broward SCORE has a program called SCOREBoard17 which is an advisory body consisting of three senior executives with comprehensive business experience who will meet with, consult and advise you much like a board of directors,” Harris said.

Aim for more work/life balance: Look at how many hours you are dedicating to work and non-work activities. List the reasons why work hours are dominating the mix. Use this analysis to strategize ways to achieve a better balance, Love said. Have a written plan of how to handle things if a key person is out, she said.

Joseph Stadlen said he found the makeover process valuable. “It kind of had us hold up a mirror, and it made us notice things we probably should have seen on our own,” he said.

The makeover

The client: Intertech Construction Corp., 5100 Hollywood Blvd., Hollywood. The family-owned business handles high-end buildouts for the restaurant and retail industries. It has 27 full-time employees.

The experts: David Harris, director of marketing, Greenway Golf Course Management; Angelica Love, a certified life coach; Emmanuel Okwor, project manager at Grelite Corp.; and Russell Thompson, an attorney.

The challenge: To increase profitability and make a generational transfer of management.

The advice: Make a business plan. Accurately price jobs and qualify new clients. Get a handle on receivables. Identify ways to improve work/life balance.

About SCORE

Based in Washington, D.C., SCORE is a nonprofit with more than 12,000 volunteers working out of about 400 chapters around the country offering free counseling to small businesses. There are seven chapters on Florida’s east coast, including Broward SCORE, which has more than 60 volunteer counselors.

Counselors from Broward SCORE meet with small business owners and offer free one-on-one counseling as well as dozens of low-cost workshops, such as “How to Drive Traffic to Your Website” on Tuesday and “Basic QuickBooks for Small Businesses” on Wednesday. See more under “Local Workshops” at www.broward.score.org. To volunteer or learn more about SCORE, go to www.score.org or www.broward.score.org.

How to apply for a Small Business Makeover

Business Monday’s Small Business Makeovers focus on a particular aspect of a business that needs help. Experts in the community will provide the advice. If you would like a makeover, concentrate on one aspect of your business that needs help — corporate organization, marketing, financing, for example — and tell us what your problems are.

The makeover is open to companies in Broward or Miami-Dade counties in business at least two years. Email your request to rclarke@miamiherald.com and put “Makeover” in the subject line.

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