When status quo just won't do - DCC Constructors Inc. management - Column

Nation's Business, Oct, 1993 by Joe A. Alvarez, Jr.

There is nothing funnier than hearing people describe how they have done business the last 30 years and how they plan to make money the same way the next 30 years. Provided they don't work for me. I have found that going forward without change is impossible. Call it a built-in dissatisfaction with the status quo.

At DCC Constructors Inc., we constantly review what we do and how we do it with an eye toward capitalizing on the next opportunity. Making change something of a constant has enabled our company to cope with the troubles many construction firms have experienced during the recession.

Charging a business with constantly moving into new areas requires an entrepreneur to learn as much as possible about new segments of the market, whether the business is building apartments or selling doughnuts. Most entrepreneurs shy away from lines of business they don't understand, labeling them as too risky. Instead, we learn about a new line of business, decide how well we understand the risks, and, if possible, proceed.

We started as a commercial builder, constructing office buildings, shopping plazas, parking garages, and churches, but in the mid-'80s, we predicted a tremendous demand for rental apartments in central Florida. Most commercial builders, who were used to working with steel and concrete, were reluctant to master stick-frame construction of apartments. Sensing opportunity, however, we talked our way into a few multifamily projects.

We thought we were ready, and so did our client, the developer. It turned out that we didn't have the proper supervisory personnel. Our first apartment projects were difficult to administer and complete, but the money we lost was the price we paid to learn how to do the job right. We eventually went out of state and hired people who were experienced in supervising construction of apartments, and in one year we went from losing money to making a profit.

Since then, DCC has built more than 17,000 apartment and condominium units. Multifamily residential construction now provides about 40 percent of our revenue.

This year, the company will have more than $60 million in revenue, compared with $15 million in 1982.

DCC has expanded beyond commercial construction in other ways as well. We have hired people from a variety of fields to bring a broader outlook to our company. A former Big Six accountant, for example, enables us to provide services in business development and real estate planning. Among other things, he helps developers draw up formal business plans for submission to banks.

Diversifying has helped us thrive. Typically, when a general contractor calls a potential client, he or she is likely to hear, "I'm not ready to talk to a contractor yet; I'll call you back six months from now." The phone call ends there.

Our broadened outlook helps us hold on to a prospect. A customer who is months away from hiring a contractor probably needs someone who can help get financing. Our work in real estate planning, in turn, often leads to future contracting work, which we can perform.

In providing the level of service that we strive for and differentiating ourselves from the competition, we are not necessarily the lowest-priced company in the market. We find, however, that a lot of customers are willing to pay for someone who is more sophisticated and aware.

Being successful doesn't require beating all of the competition, just 80 percent of it. My guess is that about 20 percent of our competitors are like us, trying to predict what will happen next and to determine which opportunities best suit them. If an entrepreneur can be in that group of forward thinkers, he or she should be able to outperform the remaining 80 percent.

That approach will ensure that the company will still be doing business the next 30 years.

Joe A. Alvarez Jr. is president and managing owner of DCC Constructors Inc., a construction management firm in Longwood, Fla. He prepared this account with Nation's Business Contributing Editor Charles A. Jaffe.

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