46. Competing On Value Not Price With Todd & Melissa Lake

We didn't necessarily see the money that was being lost, but we could feel it in carpentry school. They don't even really teach you the ins and outs of running a business. So you're learning carpentry, but you're not really learning the business side. It didn't really happen that we went into the red overnight, but it was going there. The rewards and value that we've gotten from it has been phenomenal.

Success for us is having happy clients because happy clients produce more happy clients.

If you screw up once, it'll affect you 10 years down the line.

This is Professional Builder Secrets, the number one podcast to help you grow your building company safely and securely, brought to you by the association of Professional Builders. Join us every week as we talk to industry experts and your fellow professional builders on everything you need to know to generate more leads, more sales, and higher margins while improving the building experience for your clients. Hello and welcome to the Professional Builder Secrets podcast, a podcast by the association of Professional Builders for building company owners, general managers, VPs, and emerging leaders. Here we discuss all things running a professional building company from sales, processes, financials, operations, and marketing. Hello and welcome. I'm joined today by Todd and Melissa Lake, founders from Contegrity Homes, located in Saskatchewan, Canada. Melissa, lovely to have here today.

Thank you. Thank you for having us.

And Todd, welcome. And thanks for being here as well.

Yeah. Hi, Bosco. It's awesome to be on the show.

Well, let's start off with a little bit about category homes and what you specialize in and where are you in Canada for our listeners that don't know where Saskatchewan is?

Well, we're in a small town and it's called Swift current. It's about 18,000 people, so it's a very rural area we specialize in. And we're probably the only ones in our area that do this but design, build homes. We do major projects as well, but mostly we try to focus on new builds and new homes.

And is there a running joke that you could see a dog running down the street for four days straight because of the flatlands? Is that true about Saskatchewan?

Well, actually, surprisingly, there's quite a lot of valleys and hills and it's not as flat as people say it is, but yeah, it is still a joke. People still joke about that and make that a thing, I suppose.

And the easy to draw, hard to spell.

All right, well, listen, let's go back down memory lane. How did you both get started in the industry? Was this a purpose calling you? Did you land into this Particular business idea. What made you choose this path out of all the other paths?

I started in Construction in 2003. A builder actually reached out to me. I was 21 years old and I didn't really know what I was going to be doing with my life, to be brutally honest. I actually was in college and I was meant to be or taking to be a conservation officer and I dropped out of that and quit that. And this construction gig was just supposed to be a temporary thing. And it really caught my heart, you know, and it really developed a huge passion in my heart and I continued with it and I started right at the bottom and I worked with two different builders roughly for about nine years. And then in 2012 we started Contegrity. So we just, we really enjoy the process and being able to build something and stand back at the end of the day and say, wow, we built that. That's super awesome. And I felt rewarded about it and developed this huge passion for it.

And Melissa, did you get in at the start as well with Todd? Did it take you some time to jump in? What was your story with the whole process?

Well, originally I just was doing all the bookkeeping. So I also have a full time job working at the hospital pharmacy in our town and was doing the bookkeeping for the company. But then I started to help clients more and more as we were getting to get into bigger projects and clients were needing help choosing finishings, I started to kind of get into that more and more and more. And so actually I did just achieve my interior design certificate just this spring just to kind of have. Yeah, thank you. Just to have more of more credentials, I guess, behind my name when we're working with our clients.

So Todd and Melissa, tell me a little bit about what was it like starting out in 2012. You know, I think at that point the recession in North America had just completed. You know, it was a major recession that everyone had gone through in 2008 and people were sort of reinventing themselves at that point. So what was it like for you in Saskatchewan and what was some of those experiences starting out, not knowing what it would evolve to today?

I think just starting any business whenever you started, it's a challenge. It's not just an 8 to 5 job and you carry a lot of the load with it. And I know for us, we started it and we just kind of did it and winged it per se and didn't really actually have a clue what we were doing. A lot of the companies in our area, they have, they've either had, like, a dad or, you know, who owned the company before and got handed down to them, or however, you know, it was, always had somebody to go to. For us, we were the pioneers, and we started the company. We didn't. My dad was both. My parents actually were teachers, so they taught at the high school and at elementary school here in town. And so for us, we just had to kind of learn on the fly, per se. You know, like in carpentry school, they don't even really teach you the ins and outs of running a business. Right. So you're learning carpentry, but you're not really learning the business side. So we had to figure it out on our own. And, yeah, it was. We'd learned by trial and error, and we didn't really have any kind of systems in place to run our business effectively right out of the gate.

So you mentioned that you didn't really have someone to lean on. And this business, from talking to a lot of builders out there, can be really isolating as well. Right. So where do you go for counsel or where do you go for support or the two of you lean on each other when times are tough?

Yeah, I think even to this day, we do lean on each other and kind of, if I'm stressing about something, Melissa calms me down or coaches me through it or vice versa. And it's important to have somebody you can lean on.

For sure.

We have Clint as our mentorship business coach, and even having him a part of our business is huge for us because we can go to him, and there's. There's times when we have our coaching session, I just vent to him for the whole, whole hour, and we don't even talk anything about anything else. So it's. It's good. It's. It's good to have that. You need that. I think there's. Like I said, it's not. It's not easy, and there's a lot of demand for it, and. But it's. I know it's worth it, and I know we're. We're wired for it and able to handle it, so.

Had the pleasure of having Clint on the podcast before as well. And he's out in B.C. and he's had an interesting time as well with different builders, and I think he said the same thing. Sometimes the coaching calls are really just there as a listening tool for builders who don't have a lot of opportunities to talk about what's on their mind. Right. If we look back at the illustrious career that you've both been in. Now, what were some of the highs and lows? Every builder has memorable mistakes or memorable experiences that they'll look back at and say, this was a defining moment. And every builder will have some really amazing moments as well that changed the path and the trajectory of the business. If you look, if you two both look back at Memory Lane, what are some of those things that come to mind?

When we started out, like I said, we weren't really didn't have a good idea what we were doing. We were even pricing our jobs and we, you know, we wouldn't even give a markup on our materials. We thought, let's just, you know, really be. Be that better builder per se and say, you know what, we're going to give you our material materials at the cost. Right. And whatever we pay, you get the pay. That does not work. I'll say that it is definitely. It can cause a lot of headaches. And so actually, in 2015, we, and I'm talking about the lows here, like we were losing money and we priced a job so low that it wouldn't be covering any of our overhead costs. Right. You can't run a business without effectively without having your proper margins in place. So we didn't necessarily see the money that was being lost, but we could feel it. And we didn't watch our financials and we didn't know anything about WIPA and margins and markup or anything like that. And it didn't really happen that we went into the red overnight, but it was going there. And there's times where we would actually be per se, robbing Peter to pay Paul, if you know what I mean. So we'd be paying bills on jobs that were completed a few months ago, and we're paying them with the deposits of future upcoming jobs.

Right.

And it was bad. It was a bad situation. And we actually got taken to court by one of our clients and that became a serious situation where we lost a lot of money. We had to even get a loan to actually pay out our vendors and our subs. So it was a dark time. That was a real, really dark time in our company. And we realized where we were at, though. At that point, we realized, okay, what we were doing wrong. We knew we had to change. And we started. I started learning and reading and understanding business and that now we know we're not in that position anymore, that we're not taking Peter's money and paying Paul per se and we're actually turning a profit. Right? So it's a dangerous game. And you need to make sure you know what your financials are and all that, too.

Yeah. And it sounds like you obviously had a lot of transformation, and we'll get to that. And I want to know a little bit about how you changed and pivoted in the right direction or recalibrated. But before I get into that, did you have moments where you wanted to throw in the towel? And, Melissa, I'll ask you this question as well. During those dark times, how did you stay? How do you keep the ship still moving? And were there some times where you question whether you were both in the right direction?

Oh, for sure, yes. I know one of your earlier questions was, what was it like starting out? And for me, it was terrifying because you're used to having a fixed income and. And we had a new baby, and I was just, you know, going back to work from a mat leave. And so that was scary. But then this happened and it was even worse, you know, so, yeah, I think you just keep one foot in front of another. You just keep going. You keep moving forward. And you know what? Somehow we made it through. Like, it was credit to. I don't know if I can say this, and I don't know, maybe we'll have to ask this question again, but, you know, I. Yeah, I think credit, honestly to God, it was. It was a miracle that we made it through. And we just. I just kept encouraging Todd, and I think we. We started doing small jobs, easy, like, quick money jobs, like keeping, you know, cash flow as a priority. And then eventually, you know, we were able to dig ourselves out of this hole as we. Just. Because, truth be told, we wanted to quit, but we didn't. And now we're so glad we didn't because it's really been, I don't know, a testament to, I don't know.

Well, to apb.

Yeah.

And just, you know, we were. We got accountable with our coach, we got accountable even with our accountant. We really took just a deep dive into our business and really figured out what's not working and whatever's not working, then let's change it so that everything in our business is working.

It sounds like you're a student to the systems as well. One of our first earlier podcast interviews was around the work in progress account adjustment calculator and understanding your shortfalls and understanding that it's not money you can use. And especially in between tax season as well. Between one tax season and the other, you have to be really careful about the numbers. Right. So I can totally appreciate and I really appreciate your candid experience with everything because it's one of those things where if you don't attend to your numbers, it's a growing debt that just gets only bigger and bigger and bigger. So it sounds like you and Melissa really got a hold of that, and it's impressive that you were able to pull yourself out of that situation as well. Let's talk a little bit about what you focus in. And Melissa, you said you just did something in design as well, so I'm curious to know how will that impact the future as well. You know, interior design was what you talked about a little bit as well. But tell us what you specialize in right now, where your focus is, and what the future as far as the specialities look like moving forward.

I guess right now I try to help our clients. We started with this design build company, so we work with our clients, right from designing blueprints all the way to choosing the final bathroom accessories. So everything goes well and works well together. And I know that the clients have really appreciated that help because there's so many decisions to be made in a build, and I think that it can become overwhelming. And when we've done this before, we have relationships with the vendors. We. We have preferred suppliers. And just working with those people really helps us and helps them.

Todd, tell me a little bit about your focus as well with Melissa. As far as the type of specialty and the work you guys do, where's the focus?

Right now, I would say our focus is really getting value to our clients. We want to capture our clients not when they have the finalized plan, but when they're just thinking about building, like when it's just kind of right. Then maybe him and her have had the conversation and they just kind of type in home builders, in swiftcurrent, in Google. That's where we want to pop up. And that's ultimately what we're trying to capture to make sure that we can take them really hold their hand through the whole process of designing their home. Building trust with a builder and being able to get. Get a home built. That's. That has incredible value to it. More, we're not necessarily so stuck on price, but more so just stuck on the value. Not saying that our price is over the top, but it's a fair price, a price that is competitive, but also that we bring great value to that.

Yeah, I'm curious to know a little bit about the transformation as well, because some people compete on price. It sounds like you're competing on the value of what you Deliver. How did that transformation happen today, and how has it changed the business today? And what does the business look like today?

We've taken what APB has shown us and applied it. It's very easy to just run through the coaching calls, you know, sit there for an hour and do the coaching calls. But if you're not actually applying the modules and the work tasks that are involved with apb, then you're not going to change, you're not going to grow. And I think for us, it was just, you know, really applying ourselves and working at it and taking the time and making, you know, the modules a priority, a high priority and developing that. And that's kind of where. Kind of where it all started and how it all kind of came. Came about. And then it just. Just kind of snowball from there with ideas on how we're going to, you know, run a design company and then how we're going to take these clients right from. Right from the beginning, right through, right to the end, and then after they're even moved in, being involved with them, you know, with our warranty package. Right. And. And really just show that we're not a cowboy, but we're actually professional builders. Right.

So, yeah, and you mentioned that, you know, you've gone through the coaching program. Tell me a little bit about how you came across the association of Professional Builders. Was it, you know, on social media? Was it an ad? How do you first start off, and how has that membership really impacted and changed your business?

It was through a couple avenues. One was through Facebook, the APB ad popping up on Facebook. And I. And I would see it and I'd look at it, but I would never commit to it. And then I heard of other builders in Saskatchewan that were doing it, and I heard their testimony with it, and I thought, you know what? We should. And I think at that point I was like, for me, I'm a personality where I love growth and I push to grow and I want to change. And, you know, I don't always just want to kind of be comfortable. I always want to be pushing ourselves. And. And I thought, you know what, let's do this. And this is going to be healthy for us and a little bit of a commitment, but we. The rewards and value that we've gotten from it has been phenomenal.

So how. How is the coaching? It sounds like the coaching has really created some awareness as well around, you know, financial awareness and contracting as well. Tell me a little bit about. Melissa alluded to the fact that you guys took some smaller Jobs and then you went into some bigger jobs as well. But tell me a little bit about the financial awareness aspect and the contract side of things. How did things change?

I think once we understood like with, with the coaching and with having our KPIs and you know, setting our targets and forecasting our revenue and being able to understand even, even as basic as what the difference is between markup and margin and following our, our results and seeing what the WIPA calculator is showing, we really understood where we were at as a company. And we understood, okay, once we got per se, an identity of who we are as a company and being able to apply that identity into ourselves and knowing who we are, I think it overflowed into our clients and being able to know our numbers and knowing that, okay, this is how much our overhead expenses are, you know, just, just having a whole awareness of all that produce tremendous amount of confidence in, in me and, and Melissa and being able to sell, being able to sell ourselves properly because, because we knew where we were at and we knew what fair market value was. Right. And yeah, that was kind of how it all kind of transformed, I would say for sure.

Take me through the contract stage. You were talking a little bit about how in the past you were potentially quoting the value of what your expenditure was when it came to materials. Obviously things changed with the contracts as well. Take me through how you transform the business by leveraging the contract side of the approach of the business.

Yeah, I would say mostly with when we would take clients through the contract, you know, we, we would present the fixed price. Right. And in the past, like when 2012, 2013, you know, where wasn't there was per se a fixed price, but it wasn't a true fixed price. There wasn't a heavy detailed out contract saying, you know, when the schedule payments are going to happen and the dates or anything like that. And we've, we've really honed in on our contracts and been able to detail that all out and follow, follow that. And I think clients, while we, we know clients have been really impressed with, you know, our contracts and our fixed price proposals. And you know, we're producing, our proposals are 80 pages long. We're detailing everything out so that there is no hidden cost. And I think clients in this day and age need that even in the midst of COVID or after Covid here. I think it's so important going forward.

And has the contracts changed and improved the business as far as revenue coming in? Have you seen a shift in the numbers? It sounds like You've had some, some big wins with that too.

Yes. Yeah, we, we have like, like I said before, like just taking our clients through that design stage and, and really working with them and having those fixed price contracts. We, we've had some huge wins as far as, you know, the amount of margin we've had. And, and I think it just all relates to building that trust with the client. And I really feel like a lot of the clients, and I know this, a lot of the clients aren't necessarily sold just on price, but they really want somebody who they can trust and really know that whatever kind of house they're building that they can lean on them 100% lean on the contractor.

It sounds like you've really informed your clients on the value that they're getting from what you're saying and that's probably what's leading to these high margin contracts as well. Let's talk a little bit about the market. You mentioned that you live in a very rural community area. How does a building company dominate and be an authority in this area? How did you take yourself to the market and how have you maintained yourself over the years as the trusted builder of choice?

Yeah, it's interesting because before I ever developed the website I would look and see any other builders in our area who would have websites and if they did, it was a very poor website. But 95% of them did not have a website. So that was probably one of the number one things that we had in as far as developing a website, developing advertising. I know sky even has said it best. You know, you don't have a business if you're not advertising. Right. So we've started advertising, you know, running social media ads and Google Ads. And then another thing that's really huge for us was Buildertrend and being able to run Buildertrend and communicate, have that 247 communication with our client. Nobody in our area heard of Builder trend when we started it and so that was, that was a huge thing. And as well warranty, like, warranty wasn't a huge topic in our area either. So we, we kind of developed all these things that is very new to our area and it's, you know, it's kind of old, the old style builder is, you know, runs, runs most of the area. But as far as us, we're coming in and we're doing something totally different and it's really catching, really catching traction here for sure.

So as you've grown the business, what are you focusing on today and what's the focus for the future for you both as well. You know, what's on the horizon, what can we expect?

You know, we, we just focus on stress free experiences for our clients. We want our clients to just be over the moon. We, you know, one of our core values is we're obsessed with delighting our clients and that's kind of where our focus focus is. And that's because we know living in a smaller town like this, you know, reputation is so key here. And if, if you screw up once or you make you do something bad, it'll affect you 10 years down the, down the line. So we know that if we're making sure that our clients are, have no regrets, hiring us and working with us, then that's so key for us and that produces more happy clients for us. Right. So word of mouth is good key here for sure.

Let's shift this conversation to the future and you know, let's talk a little bit about perspective as well. What are some of the struggles builders face today in the industry, both as running a business, but also, you know, the challenges that come with also having a family and all the other things as well. What are some of the struggles that.

People face right now? It's the ever changing economy and what the economy is doing, it's going up and down. Prices are going mainly up. Fuel costs here are ridiculous. Even finding employees and workers, that's a huge struggle right now, especially in our area. And it's definitely becoming more and more of a challenge and hopefully we can ride it out and things will become better, but see how it all goes, I guess.

And what advice would you give a younger version of yourself? What advice would you give new or veteran builders out there as well? You know, going through this now for a few years, you know, I'm sure you, you're on the right to actually, you know, offer your perspective. But let's just say you were to, to meet a younger version of yourself or new and veteran builders, what advice would you give them?

Get your financials figured out right away. Know what a markup is, know what a margin is, know, you know, what your gross margin is, your workflow, your, you know, your fixed expenses. Really hone in on, on all that because once you understand those KPIs and you start to price your jobs more accurately, accurately and it gives tremendous value to you as well as, as your client, you build confidence with yourself and, and ultimately you don't get so stressed out, right, and you start pricing jobs that, that are, you know, turn in a profit and that ultimately that's I think every builder's goal is to be very profitable. Right.

How do you see the construction industry evolving or what is it evolving to? You talked about rising costs. You talked about the fact that times are unpredictable right now. But where do you see the industry moving forward? It sounds like we're always going to need home builders. People are always going to need homes as well.

Yeah, I feel like, for me, I feel like technology is going to be continually advancing and it's important to be up to date with what is happening. Like, you know, it's just like always, you know, the Facebook ads are always changing. Google's always changing. You know, even things like build a trend, you know, those are. Those are things that clients need. They totally need things like that so that they can understand, you know, how transparent you are.

Yeah.

We've had clients who have lived, you know, several hours away and we were building for them here in our town. And that was their favorite thing was, was buildertrend just being able to check those daily logs every day, see what was happening on their project without actually being here and just following along with that. And I think more and more clients are going to want that type of experience. They're going to want that, have their hands, hands held throughout the whole process and having people to trust.

What does success and happiness look like to you both? I'd love to get both your perspectives on this. When you look at the business, you look at the hard times and what you've had to do to sacrifice and change things as well. And you've put a lot of emphasis in changing the value belief system. You've put a lot of emphasis on educating yourself on awareness. What does success and happiness look like to you both today?

Success for us is having happy clients because happy clients produce more happy clients. And we just love that we have a relationship with these clients after the build is done. It's a year past the build and we're still able to go into their homes and meet with them and just have that relationship with them. And so that's been so great.

And Todd, what's your perspective?

Yeah, I totally agree with that. I think for me is handing over the keys to a client and a homeowner and being able to see how awesome their dream came to reality. And I think that's, for me, there's so much happiness in that, being able to know that we were completely transparent with them and we didn't hold anything back and we communicated with them and being able to not for them not to have any kind of to just really honestly have a stress free experience. I think that's what success would be for us for sure. And that all comes down to preparation. I've heard a quote, preparation is the key to opportunity. And I think that being able to be prepared and communicate and work with your clients, I think that's so much success and just built in that for sure.

I could talk to you for ages about the lifes and struggles and the highs and lows for being a builder. Todd and Melissa. But I' save it for one final question for this episode which has been great because it's really refreshing to go behind the curtains and actually see what it takes to build a successful building company. Melissa, you mentioned you have kids as well. How do you promote balance in your life? How do you both promote balance in your life? Being parents, being business owners, being leaders to your staff, being members in your community. Do you have a secret for balance?

It can be a challenge for sure. There are times when our kids are dragged along to the job sites and they just love going to the job.

Site, especially when it's out of town.

But they understand the importance of it too. And we do try to keep that balance in having work time during working hours and having the evenings free to do their activities too. Kids are only kids for such a short time and we don't want to lose that relationship with our kids either. We do take time with them. We do take vacations with them. I think it's important a lot of people don't take time away from their business. And we have employees that we know we can trust to carry on while we're gone. It's important to take time away and rest as well.

That's very inspiring. And I think it's important to take that time off like you said, because there's no point in going on holiday if you're answering people's emails and phone calls as well. So the fact that you can trust your employees to hold the fort while you're away is always refreshing as well. And Todd, how do you do it? Do you have a schedule? Are they sacred days or time blocks? How do you promote that wellness freeze?

Yeah, like I, I have a, I have a schedule in my calendar where, you know, it's just whatever's work, it's work for that time. And then, you know, usually, usually in the evenings or weekends we try, we're not extremely diligent at this, but we, we try to just block out work. I know like I worked with a builder in the past or when I first was in construction. And he, he would, he would be on site all day working, and then in the evenings he would be in the office and he had, he had kids and he wasn't able to really, you know, be with, be with his kids. And he would talk to me about that a lot of times about how he's wondering, like, what am I, what am I doing? Because I, you know, all his time is spent in the office or on site. And for our company, I said, I'm not going to do that. It's just not fair to my kids. And it's not even. Just not even healthy for me. So for us, the family is number one. And we put that first. And so far, it seems to work out well.

I must commend you both on building this journey together for yourselves. It sounds like you have a lot to look back on and a lot to be proud for as well. And I just wanted to thank you both for your time and your candidacy. And also we'd love to obviously hear from you guys in the future as well. But just want to say thanks for being on the podcast today.

Yeah, well, thanks, Bosco.

Yeah, thank you, Melissa.

Thank you so much for having us. Yes.

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