Leaving Nothing to Chance

by bkrigbaum@solagroup.com

Nothing is left to chance at Payne & Payne Builders. Growth is controlled, profit is prescribed and survival is expected. A calculated approach works for this residential design/build firm in Chardon, Ohio, and helps maintain harmony among the two sets of Payne brothers managing it.

The last months of 2009 were busy at Payne & Payne, and the first quarter of 2010 has been jammed with starts backing into the second quarter. Mike Payne Jr., vice president of operations, says the strongest indicator of activity is clients being more decisive. “In the past, business would fall off as one year ends and another begins. But now we’re seeing great leads, qualified leads, so good starts and leads are coming in and the pipeline looks pretty good. It’s a mixed bag for many of our peers, but for our market, what we’ve lined up, it’s outside of what the market is doing,” he says.

In recognition of its success, Payne & Payne Builders was recognized as the 2009 Custom Home Builder of the Year by the NAHB’s Custom Builder Committee. The honor roused a sense of pride among all Payne employees, and humbled one of the firm’s founders, Michael Payne. “I know of so many other great custom builders, and I think any one of a dozen others would deserve it, but this is a great honor that means a lot,” Payne says.

Awards and careful business management, however, can’t shield even the most successful business owners from the housing downturn and economic recession. Payne & Payne Builders has experienced struggles as well, but to a lesser degree, one could argue.

The edge of the cliff came in September 2008 which was the builder’s biggest year ever, says Eric Payne, vice president, administration and product development. “We were cooking along fine and had a good book of prospects even then. The bottom dropped out as one at a time our prospect base eroded over a few weeks. It was a little spooky,” he recalls.

Still, Payne & Payne Builders is doing well, and David C. Payne knows why. “The amount of effort put into what we do is significant. We’re good at problem solving. It takes a lot for us to feel we hit a road block. We’re creative and can find solutions most times.”

Solving problems translates to success and growth, but Payne & Payne Builders’ growth has been customer-driven, not part of a business strategy, Michael says. This doesn’t mean there’s no strategy involved in the builder’s success.

In fact, says Mike Jr., strategic planning has always been part of the plan.

“We can look into the future and our capabilities and decide how to handle the work coming up. We’re not just reacting to market conditions; that’s poor business. We’re making strategic decisions for how to manage the workload coming up. When facing trying times, there’s nothing that supports you more than the culture built during good times. That starts with good people, and we have a team of incredible people that treat this company like it’s their business. At the end of the day, it’s that group of hard-working people that I believe made us stand out,” Mike Jr. says.

Brothers in Business

Six Payne men are responsible for keeping the builder operating efficiently: Michael and his brother David S. who founded the business, and Mike Jr., Eric, David C. and Brian who are Michael’s sons. Their roles are as follows: Michael is co-founder and retired president; David S. is co-founder and production supervisor; Mike Jr. is vice president of operations; Eric is vice president, administration and product development; David C. is vice president of sales, and Brian is project manager.

The roles the brothers play were not assigned or chosen. Each brother grew into their current responsibilities. Strengths and weaknesses helped determine where each would do the most good. “We all respect each other’s opinions.

In the worst case, two people might have a disagreement, but there’s always conversation going back and forth, and things get worked out. And once a course of action is decided, we’re all on board,” David C. says.

Division of duties is a critical aspect of the Payne family’s working relationship, co-founder Michael says. “We’re responsible for our own aspects of the business and no one steps on anyone else’s toes. There’s a mutual level of respect, which is key. We also rely on the strength of the board of directors platform we formed,” he adds.

Michael retired a few years ago but remains involved on a limited basis. “I didn’t think I ever could retire because I loved my business so much. Then I realized the boys were working hard and that all the accolades were directed at me; they weren’t getting their fair share of recognition for their efforts. It came time to get out of the way and let them cast their own shadows. So I weaned myself and found out there’s life on the other side,” he says.

At the time he and brother David S. founded the business, Michael worked for one of the 400 largest builders in the country. The vision of the new business was a lean, mean builder which stood out from the dozens of competitors in the local market. These dozens quickly grew to hundreds during the 1980s while the number of permits remained the same.

“I wanted immediate distinction; better-designed, better-looking homes where the minute you walk in the front door people say ‘wow’ and are surprised at the level of detail,” Michael says. “Very quickly we were outpacing the competition, and we treated every customer like family. It was only a few years later we started seeing competitors copying our designs.”

The young business was focused on profit not growth, and designing semi-custom homes. Ultimately, the brothers were designing custom homes for almost every buyer so the business evolved as a custom builder.

David S. became involved as a partner a few weeks after his brother Michael founded the company, reuniting brothers who worked together in high school. “Back then, we talked about one day going out on our own; it was just a matter of when would be the best time,” David S. remembers. The brothers have worked together almost 30 years.

Market Approach

Payne & Payne Builders’ approach to custom home building is that everything begins with good architecture. “That’s the foundation,” Michael says. “As sketches and plans are put together, everyone on staff looks for ways to distinguish the design, and for ways to make it better, to make it a home they’d be proud to live in.”

Eric Payne believes no one designer suits everybody’s needs, so clients are matched to one of a group of outside design partners. “We have a group of designers for our clients to meet. We don’t mess around with clients who bring plans to us that are so far out of budget,” he says. Payne & Payne Builders works with designers to balance design with budget to assure everyone’s happiness. Drafting is handled with an outside partner, Eric says.

The ability to design on the fly gets the builder through challenges in the field, David S. explains. “All the employees, family or not, have input, and the boys in the office trust my production team and our ideas out in the field. If something’s not working, we figure out what it will take to make it work. We’ll make that decision and inform the office and the client how we resolved it.”

Payne & Payne Builders

Residential projects: 95%
Single-family projects: 100%
Residential new construction: 85%
Residential remodeling: 15
Percent design/build: 80%
Homes designed/built annually: 25
Average annual revenue: $15 million

Preferred Vendors

Corsillo Plumbing
You can’t help but smile any time Mike Corsillo arrives on a jobsite. His easy-going, fun-natured personality is hard to miss. Beneath the camaraderie is a company that provides a unique level of commitment to our business and service to our clients. Another business spawned from a previous generation, it is common for Corsillo to not only respond but to complete service the same day he is notified. He is consistently one of our clients’ favorites and another great example of the type of teammate that understands his role in everyone’s success.

Progressive Building Supply
After working with other local suppliers, Mark Polari saw an opportunity to use his experience and entrepreneurial spirit to start a supply company that stands out. In a short time, his creative abilities and diverse services made him a go-to partner. If he does not have it, he will find a cost-effective way of getting it for you. Located in the heart of Amish country, PBS has established many relationships giving him the resources he needs to deliver great service and product to our business and clients. Besides the ability to fabricate and/or acquire unique custom products and details, they have the design savvy and technical know-how that makes them an invaluable contributing member to our design process.

River Run Drywall
Brian Chumita took over this drywalling company after another Payne & Payne partner and friend of more than 20 years passed. Chumita settled in as an ideal benchmark for our trade partners. Although the quality and pride he puts into his work is evident, perhaps the most significant benefit Brian brings is the prompt and friendly warranty service he provides our clients, and his consistent follow-up to let us know they are satisfied. In an industry that often discounts the value of great service, River Run Drywall stands out.
Western Reserve Farm Coop
Great supplier partners will consistently provide value and service. WRFC, providing our lumber and shingles does this and more. By understanding the supply chain philosophy and how it affects our business, they constantly support our purchasing systems by providing ideas and support that come from downstream. Always a pleasure to work with, they also solidify their partnership by providing service that exceeds their responsibilities and our expectations. They often will come up with ideas to save cost, and will surprise us by passing on additional discounts on costs already agreed upon.

Yoder Brothers Construction
Part of the team for more than two decades, this framing company represents our family values and team approach. Although supporting a company is easy when times are good, their commitment to our business was even stronger in this challenging market. A two-generation family business as well, Yoder Brothers takes enormous pride and personal commitment to being a key teammate. They are gifted with the ability to interpret and then efficiently transform complex design details into reality.

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