86. The Building Industry Trap With Jim Schneider

At the end of the day, construction is a cost based business. It is a very simple, this is what the products cost, this is what materials cost, this is what labor costs, and this is what it costs to run my business with a reasonable profit and overhead. It's very simple and there's no smoke and mirrors to it. And if you can't follow that, and if you don't follow that, you're going to fail.

Welcome to Professional Builders Secrets, the podcast for building company owners wanting to grow safely and securely. I'm your host, Will Blunt, and today I'm joined by Jim Schneider from Schneider Construction in Virginia in the United States. So, Jim, welcome to the show.

Thank you very much. Thanks for having me.

Yeah, absolute pleasure having you on the show. So today we're going to go into a bit of a backstory about how you got into the construction industry. And I'd like to go all the way back to the beginning, but just as a starting point, what's your elevator pitch? Who is Jim Schneider and what do you do?

Okay, so Jim Schneider owns Schneider Construction in Norfolk, Virginia. And the elevator pitch really is that we, you know, we're a small design build firm that builds high performance homes while creating a one of a kind customer experience for our clients.

That's a great overview. So what was life like before you were in the building industry?

I don't really know. This is the only industry I've ever been in. So the thing about me is that I grew up the son of a contractor. My dad was a worker bee, one of those guys that worked tons of hours just to put food on the table and make sure that my mom could stay home with myself and my sisters. So as a result, the only time I really ever got to spend with him was when he brought me to work. So as a little guy, he would bring me to work. And when you're in second grade, you are very, very convinced that when your father says he needs to bring you to work because he needs your help, you believe that. So I started working with him when I was about nine and really just going and riding to the job with him and spending time with him. As I got older, that really became a great summer job. Good for weekends and vacations. You know, I kind of grew up never really asking my dad for $50. I was always kind of, dad, can I work Saturday? So it's really all I've ever done. And I spent my entire adolescence making it very clear to my father that I was far too smart to ever become a contractor. I Was going to be an engineer. I was going to use my head. I was going to use my back, not my back. I was just never going to do what he did. And here I am, 38 years later, running this small design build firm, doing exactly what he did and really loving every minute of it. I mean, I'm one of those fortunate people that loves to do what I do.

I love that story, actually. So when did it become your business compared to working with your dad?

Pretty quickly. I was in my late teens. I actually decided I was gonna go to college to be an engineer and actually decided I was more motivated, more interested in actually creating structures rather than proving mathematically that they would work. So I never finished college. I actually stopped and I did start working with him for a short period of time. And he actually was very instrumental in helping me start my own company. And we worked side by side for a lot of years where we had a gentleman's agreement. We stayed out of each other's way. If one of his clients called me or one of my clients called him, we would always make sure that they understood the distinction between the two companies. And we work together. And he really gave me a really, really great start as a young guy. So I was probably 19 when I started this business.

Wow, that's such a young age to start a business. Do you feel like you had the tools and knowledge at that point to know what you were doing?

Nope, Nope. I was the classic technician. There's a huge difference between the skill set of a technician, you know, a tradesman, and. And that of a business owner. They're. They're very, very different skill sets. And. And it was probably one of the hardest transitions that I had to make. Actually taking my tools off and. And becoming administrative was. Was really one of the biggest challenges that I ever transitioned, that I ever. I ever went through, because that was my comfort zone. That is what I was. That is who I am. I know all of the business stuff was something I learned much, much later.

And how did you go about learning all that stuff? Did you just kind of on the run, on the job, or did you go and study elsewhere?

Little bit of. Little bit of everything. A lot of it was, you know, a lot of it was learn as you go. A lot of it was trial and error, making lots of mistakes, having it cost lots of money. Other avenues were seeking professional help, whether it was business coaches. One of the. One of the. For the last 13 years, I've been part of a builder 20 club, which is here in the States. The national association of Home Builders puts together clubs of 20 like builders in non competing markets. And it's been an invaluable resource. We share business plans and financials and best practices and we help each other when we're struggling and we, and we try to learn from each other when we're winning. And that APB is another great resource. I was able to learn a lot working with them. So there's unfortunately a very shallow source of resources in our industry for professional development and education. So you really, really have to work hard to find it.

Well, you must be doing something right, Jim, because you've got a highly successful business now and you've been in business well, essentially for your whole life. So you're doing. You might have touched on it then, but what do you feel is the biggest challenge you've faced running a residential building company?

Well, these days the biggest challenge is skilled labor. I would say it's a pretty universal issue that we run into. I think I kind of get on my soapbox here a little bit when I talk about the fact that as a society here in the States, we've really created a situation where we've funneled all of our young people into two and four year colleges. Everybody thinks that they need a degree. We have marginalized the tradesmen. We have made kids that are maybe going through school feeling as though they are second class if they are going into the trades or going to trade school as opposed to a college. And it's really a shame because intelligence is not education, it's that they're separate. And I think we've made our young people feel that if they don't have a college education, somehow they've fallen short. And as a result, our trade, our tradesmen are real. Our true craftsmen are starting to age out. So trying to find. I tell people all the time that we are. Our industry is full of installers, but not a lot of craftsmen. And there's. They're two totally separate groups of people.

Interesting. Yeah. Do you feel like there's like what, what can society do to try and kind of start mending that?

Well, I think, I think that if we can, you know, if we can again normalize young people going into the trades, that is a huge step. It was interesting. I had an interesting thing happen about a month ago. I was, I was approached through my info email on my website and was a woman that works or works with the parent teacher association of the high school that my kids went to. So she reached out and asked for donation. They said that they Were establishing three scholarships for first generation and underprivileged students to go to college and would I be interested in donating? And at the bottom was a link, you know, you could just click the link and donate. So what I did was I responded to her and said, look, I appreciate your effort to raise money for kids to go into college or get to college, but I would encourage you to widen your, your scope a little bit and include, you know, money to help kids go into the trade school, you know, into trade school. And she thought it was a great idea. Said, I'll run it behind, I'll run it by the board and I'll get back to you. And within a couple of days she got back to me and said, you know, the board thinks it's a great idea, so here's what we've done. And they added some language, basically kind of a piggyback language onto the already established criteria for this scholarship and said it was open to kids that wanted to go into the trades as well. And I thanked her and said, that's great, it's a great start, but we really need to roll up our sleeves and do something more because this is a different group of kids. These are kids that are not going to compete with your high gpa. College bound kids, they're different types of students, they learn differently. I'm frankly less, you know, I am less concerned with their gpa. I'm actually more concerned about their attendance record and how they interact with their teachers and what their emotional intelligence is rather than their gpa. So anyway, you know, much to her credit, I told her, if you were willing to roll up your sleeves and, and get involved with me at this level, I would contribute to both. So she has, she has really been true to her word. And we're working together now with a local technical school to establish some scholarships for young people to go into trade school. And I've actually decided that I would name the scholarship after my father, my James R. Schneider, you know, memorial scholarship because he passed away in the fall. So, so yeah, so that's what I, that's, that's what I'm doing. I, that's, I think we all have to start somewhere.

I'm very sorry to hear that your dad passed away. Must. But I guess it's great that you can leave a legacy there.

Yeah, he left me a lot. I owe him a lot. We, you know, I kid all the time that we spent, probably as much time, maybe more time butting heads than we did holding hands. We were, you know, we were, we were not always on the same page, but at the same time, not a week goes by where I don't reference him because I owe everything I have to him. He, you know, he, by accident, really gave me something invaluable.

The tools you've got to do something you love right now.

That's great. That's correct. Because interestingly is, you know, I've got a friend who writes for a national newsletter, and he actually said once that, you know, I know plenty of MBAs, but not one of them has ever fixed my sink. And, and the point is that we need both. We need, you know, we need MBAs, we need, you know, we need attorneys, we need, you know, we need business people. We need all these college crowd. We all, we need these white collar people, but we need people to do the work as well. And, and what I found as I've gotten older, because I was for a very long time uncomfortable with the fact that I never finished college. And it took me a real, it took me a real long time to realize that it had nothing to do with my level of intelligence. I was in some ways better off because not only could I sit at the board, at the boardroom table and speak about business matters and financial matters and all these things that business people talk about, I could get my kitchen and fix it and put it back together, too. So.

We need people like you, because I can't fix anything in the kitchen. I mean, I think to your point, like, there's not enough information for young people about what the options are out there. So people feel that they need. They're almost pressured to go into university or something when that may not be a good fit for them.

That's true. The classroom doesn't equal success. The classroom doesn't equal intelligence. I think we all have our own way of learning. You know, Europeans very often will track the kids and identify what the best path for those kids will be. You know, we don't do that here in the States. I actually think it would be. It would be taboo to try and do that here in the States. It's a little bit of profiling, and I think we'd have some trouble, you know, we'd have some trouble with that, with that approach, but I think it's a very sound approach.

So just kind of bringing it back to the challenge that you were facing, the biggest challenge you were facing in the, in the construction industry, and yet you kind of touched on shortages of craftsmen and staff in general. But what implications has that had on.

Your business Specifically, it really limits our resources. It has, you know, I mentioned before that design build high performance. We work what we. What we produce, we produce at a very high level. You know, code built home, by definition is a D. Okay. If you build a home that just passes code, we just got done talking about education. That's a D because it just passes. Okay. So our approach really is that I have no problem if you only want to invest in a deep, but I won't build it for you. We build A's. So as a result, we can only. There's only so many people, so many resources available to us, so that the scalability of what we do can only go so far because there are only so many truly skilled trades that we can work with. So what it does is it limits our, you know, limits our ability, our, you know, our. Basically our, you know, our workflow, how many. How many projects we can produce in any given period of time.

Does it. Do you ever find that it can, like, cause delays and things like that if you don't have enough people on board?

It does. It actually does cause delays. And. And what has been really helpful is going through APB Slot Schedule Action Plan has really, really been helpful for me to. To help systemize that, you know, was. It's something that you understand you have to do. I. I kid all the time that I am a. I'm kind of like a. The construction version of an air traffic controller. I have to make sure that the planes are taking off and landing without crashing because there are only so many runways available to us. Kind of to use a. An analogy. And while, you know, that's what the case is, you know, until opportunity to go through the APB Construction Slot Action Plan, it's. It's hard to put it into practice. And it was a really great way to systemize it so that I was able to say, okay, yeah, I understand this is how it happens, but here's how to implement. So it was hugely, you know, hugely helpful for me.

For those out there that don't know what the Construction Slot Planner action plan is, do you want to give an overview of, like, how you kind of discovered that and then the process you went through to kind of use it?

Yeah. So what I did was I invested in the. In the private mentoring program with apb. So I work with Eric Cofield, my coach, and working through the KPI workbook. Just, it's. We're working through all of the different things, and that is one of the tabs. So that along with all of the Action plans that are available to members on the, on the website. I went through the action plan and worked with that along with Eric to. Now we have this, this spreadsheet and all of these, you know, all of these resources to where it's right. It's kind of plug and play. You just look at it, you, you modify the templates to fit your own particular business. The number of, you know, the number of draws or stages that you have. And, and really it was a way to systemize it. Take several different size or types of project projects and create some templates so that I can plug them in and create the slot schedule. So now we have slots and opportunities to be able to start projects and, and put them on the book. So now we can, we can create some urgency. That's the kind of the, you know, the, the other benefit it was not why I started with the slot schedule was really at first to systemize and organize my, my resources. But what we're able to do in the, you know, you know, additionally or side by side was create some urgency where now I've got, I've got slots that I can, you know, I've got this person slotted in for this date and this person slotted in for this date. So when I'm talking to a new client and they say, well, gee, when would we be able to get started? I can, I can very quickly open this up and say, well, I have a slot in September, I've got a slot in November, and then after that we have to wait until next March. What slot would you like? And right away they all want the first one. So what do we have to do to get, what do we have to do to get the September slot? Where do we start? So you, you're able to create some very real urgency without being a salesman. It's just, hey, here are my, here are my, my resources allow me to do this much work, and here's what I've got available. How can we help you?

Yeah, that's great. It's like a, it's an inbuilt sales tool. And I think we mentioned, you mentioned off air, you were talking about how like, you know, sales isn't necessarily your thing. So just having those systems in place is really helpful.

It is correct. I am, you know, I go back to the fact that I am, I'm an operations guy. I'm really good at making the trains run on time. I am not really good at the sales part. And it's hard to ask for the sale. It's hard to move people along. It's easy to play tennis. Okay, so what do you think about this? I don't know. What do you think about this? What do you think about this? It's easy to play that game where you go back and forth and nothing actually moves forward or nothing actually progresses. That's easy. What's hard is to get to the next step is to say, okay, here's where we are. We've gotten to this point. What's the next step? Are you ready, you know, are you ready to move into a pre construction agreement? Are you ready to sign that? Are you ready for the construction agreement? What's the next step?

So is there any other implications of the construction slots other than urgency? Have you been, has that been able to help you kind of increase your prices and things like that too or.

It does, it absolutely does. Because what it's done is, it's having that urgency has given me, it's also given me the ability, okay, to.

Not.

Just the slot schedule action plan, but the pricing for profit action plan has also been instrumental. They very much work hand in hand. And what it's done is, it's given me certainly the urgency gives you the confidence to be able to say, okay, well if you want us, this is what, you know, here's what it's going to cost. And so rather than feeling desperate where you have to maybe drop your margins a little bit to get the work, it's more, you feel more comfortable standing pat with, okay, well here are the margins and this is what it costs. And between the slot schedule action plan and the pricing for profit action plan, those two things working together has really given me the confidence to really to stand pat. Because at the end of the day, construction is a cost based business. It is a very simple, this is what the products cost, this is what materials cost, this is what labor costs and this is what it costs to run my business with a reasonable profit and overhead. It's, it's very simple and it's, there's no smoke and mirrors to it. And if you can't follow that, and if you don't follow that, you're going to fail.

What type of like increase are we talking? Like before you were using this process, what kind of margins were you charging compared to after when you had the urgency and the slots in place?

Well, I mean ultimately we've been able to increase our margins by about 7%.

Wow, that's massive.

Which is very significant. It makes the difference, it makes the difference between having a, you know, a healthy building company and a marginal building company from a financial standpoint.

Yeah, that's really helpful. Really helpful. So a little bit of a reflective point now on what advice would you give to a younger gym if you were starting again, Starting Schneider Construction again?

I think if I was starting again, I would seek coaching earlier. I think I would advise myself to learn more about the business side. If I were talking to my younger self or someone younger looking to get into the construction business, I would, I would encourage them to spend as much time learning about what it means to run a business as much as I would encourage them to learn about their craft.

Yeah, that's really helpful. I think that business aspect is massive. Right. So many people in construction, they're great craftsmen or they're great at doing the work, but it's that business side where they kind of maybe fall behind a little bit and can hit you between the eyes. I think once you get into the heart of the storm.

No doubt, no doubt. And I think that there's. I think that going back to the trade school discussion, I think that. And I don't know anything about it, I've really just broached it because I've been kind of whining about it for years about the fact that we don't support trade schools enough, but I haven't really ever done anything about it. I've just whined about the fact that it's a need. And now I've finally taken the steps to start working to make a difference with this. And one of the things that I've yet to learn, but I will find out is with these trade schools, are there business classes, is there business training? It's one thing again to learn to be a tradesperson, but then if you want to start a business, do you then go to go to a four year college and get a business degree? I don't know. It would be, in my opinion great if that could be part of the curriculum in a trade school where you can kind of work hand in hand so that the business portion of it would be very construction centric and not just business, you know, just not business centric.

Yeah. So you don't think it's like necessary to do like a full business degree, but it needs to be built into the trade school training?

Yeah, I think it would be great to go hand in hand. I really, really do.

Makes sense. Makes sense.

It's amazing to me how many professionals, it's amazing to me how many business people that I work with on a daily basis. Tradespeople that are Running their businesses years and years and years that don't know the difference between net profit and gross profit. Crazy. Or don't. Don't. Or don't know the difference between markup and margin. It's crazy how many people just don't know the difference but get up and drive to work every day with trucks with their names plastered all over it. And I think we need to do better.

Yeah, definitely. Definitely. So one thing that we like to always cover in these interviews is like, obviously building companies wouldn't run without the software that you use. So could you just give me a bit of an overview of like your favorite software that you use, Something that you couldn't live without in your company.

Yeah. Today, accounting software aside, because we all need that. Builder trend is something I've used for a very long time. Time. I always laugh because buildertrend now has become a very, very large resource, a very large company. I remember when I started working with BuilderTrend there were five college buddies working out of a garage. So it was a very, very early on experience. It's funny when I call in and if I need some help and they check my client number, there's always a, oh, you've been around a long time. Because I think they've, I think they've got somewhere around 40,000 clients or something like that now. And my client number is like number 348, you know, so I just don't know what I would do without it. It helps. Again, I'll use the word systemize. APB has done a really great job of helping me systemize my processes and buildertrend is also another tool that helps us systemize from scheduling to all of the project management tasks and activities that we have to, that we have to do. It's, it's great having a cloud based solution that gives our trades and our clients as well as of our, our own team the ability to see things in real time. Other different interfaces, it's the same information and it's just an invaluable resource. I don't know what I would do without.

That's a great. Thanks for sharing that. I will share the link to build a trend in the show notes for anyone that doesn't know about it, but I know it's a very well known software so I'm sure most will. But it's great to hear those stories as well. So that's about it. Jim, it's been absolutely fantastic talking to you today, but do you have any further advice for builders out there or anything else you wanted to share on the show today.

If there's any advice I could give you, I can say that I've been a member of App twice. Okay. The first time I was a member, I just never really took advantage of the resources. I always felt I was too busy to sit down and watch the action plans and too busy to spend the time with any private mentoring. I was just, you know, there was just too much to do. And now after kind of re engaging last year, I've done a much better job taking advantage of all the resources and it has just propelled my business, myself, you know, myself and my business. So if there's any piece of advice I could give you is that I would. I would look hard and take advantage of these resources because there is nothing I said earlier that our industry is so shallow and so short on professional development and resources and there is a plethora of resources here that is just. I mean, just. It's just an incredible amount of information and. And resource for guys like me.

Thanks, Jim. I mean, yeah, thanks for giving us a bit of a prop up there. The apb.

I will tell you, if anybody knows me, knows that you don't get anything from me that you don't earn. And it is that simple.

Well, it's a great. It's an interesting story because you've been in and then you've been out, then you've been back in. And I'm sure a lot of people will have a similar experience, so they just don't feel like they've got the time to dedicate to professional learning. But to your point, you need to create that time.

You don't have the time not to make the time.

Exactly. Well, Jim, thanks once again for coming on. You've provided a ton of value to our listeners. My biggest takeaway was around the construction slots. Obviously that's helped you create urgency and it's also just helped with your general feeling around selling and increasing your margins. So that was my biggest takeaway. So thank you so much for sharing that. Also, a huge thank you to our listeners, wherever you're listening from in the world. If you'd like the show today, please subscribe to Professional Builder Secrets on your platform of choice. And if you're feeling generous, please leave us a review as well. But until next time, have a great day.