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The Self Taught MBA: David Gerstel on Running a Successful Construction Company
comments (5) February 16th, 2012 in Blogs
Fernando Pages Ruiz, contributor
Long-time builder, master carpenter, and author David Gerstel offers insight into building and running a construction business that can roll with economic ups and downs
Browsing Amazon's list of 100 best-selling books in the "Home Building and Construction" category, I found just two devoted to the business of building. One leans heavily toward commercial construction, the other, just a few titles below an illustrated tract on chicken coop design, is David Gerstel's "Running a Successful Construction Company" (The Taunton Press, 2002). It hasn't been updated in a decade, but don't worry, in this interview I asked Gerstel to tell us what he'd add if he were to write his book today.
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How early in your career did you unbuckle the tool belt and focus on the business side?
It took a while. When I came out of college with a BA in history, I had no idea I was headed for a career as a builder. I just knew I wanted a work life that combined physical movement with my other passion, writing. I got lucky and stumbled into construction, One of my first tasks was digging a ditch, 12-in. wide, 18-in. deep, straight across a rolling hillside in Northern California. I loved the all out effort – and to my eye that cleanly cut trench was a thing of beauty. I apprenticed to a couple of top notch carpenters and was captivated by their work and by their athleticism. Soon I became fascinated by the building process itself, by the co-ordination of all the different trades. And then I got laid off.
Articles by David Gerstel
Running the Company
Although 15 years old, these ideas on organization and management for builders outlined in this article are still sound
Organizing the Project
How one builder creates order at the job site
People think it's hard nowadays, It is. It was hard then, too. Between 1972 and 1982, we experienced three recessions. The construction industry got hammered. At my union hall the unemployment rate hit 95%. I was struggling to get work of any kind, even going door to door, when my wife suggested, "Why don't you get your general's license?"
So you wrote a business plan, devised a marketing strategy and opened an office, right?
No. I didn't know what a business plan was, or a spread sheet, or overhead, or much of anything about business. But somehow I passed the test and began to contract for small jobs. I did them as well as I possibly could, and lo and behold, the small jobs led to larger ones.
I didn't recognize it then, but I had already developed skills that are essential for the self-employed: Attracting work, recruiting and organizing a workforce, and crunching numbers. Early in my career, I found help with the nuts and bolts of running a company – especially at the meetings of some very smart builders who called themselves the Splinter Group and were pushing one another to become more skilled at the business side of building.
So how long were you a contractor before you wrote your book?
I'd been a contractor about eight years, and no, I was not ready to write the book when I started it. That's why it took me years to complete the first edition. Researching and writing the book was, essentially my MBA program. I got into it more or less by accident. One morning down at my neighborhood coffee shop, I met a guy named Chuck Miller. He went on to a storied career as a FineHomebuilding editor, but then Chuck had just started his job with the magazine. He invited me to submit articles including the one you referenced in your first blog. They were about basic stuff but got such a strong response that I got the big head and decided I was the very guy to write the book about how to run a construction company. I had not even completed a table of contents, however, before I realized I did not know nearly enough to write the book. So I started researching: reading, interviewing other builders, especially the Spllinter Group guys.
The effort paid off. The book is now in its second edition with some 100,000 copies in print. As I tested out the ideas for the book in my own company and continued studying – especially Ben Graham, Warren Buffett's mentor – I developed a philosophy of business that emphasized frugality, careful use of all resources, and sustainability. Not everyone agreed with my frugal approach in the boom years. Many contractors preferred the NARI (National Association of the Remodeling Industry) model. They emphasized projecting a professional image, so builders bought beautiful new trucks, and built impressive offices and shops. I drove an aging GMC pickup, and I ran my company out of 50 square feet of office space.
posted in: Blogs, business, green building, remodeling, self-taught mba
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Comments (5)
His emphasis on the value of experience at someone else's risk is also extremely wise. My own career proves both the benefits and downside to self education. While self education makes me very reflective and careful to really know what I am doing, I don't always know what I don't know and could easily take on work I will regret for that reason.
Posted: 10:32 pm on May 22nd
Posted: 9:07 pm on February 20th
Posted: 11:37 pm on February 19th
I have given out at least a dozen copied over the years.
Posted: 3:58 pm on February 17th
Posted: 8:51 am on February 17th
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