In recent days I have conducted interviews with two business owners of distinct profile. One started his company over 30 years ago as a hands-on trim carpenter, and then honed his business skills to develop a significant remodeling and millwork operation that sustains 30 families and has survived the Great Recession. The other businessman started his company during the depths of that recession, buying and rehabilitating distressed homes. A young guy, with a college degree and technologically savvy, his company has also grown, gaining recognition in the marketplace and offering stable employment. Both of these men and their enterprises provide valuable insights into unique business strategies that worked for them, and may work for you. This week, I’ll start by telling you what I learned from Steve Nicholls, co- founder of Mueller Nicholls, now celebrating their 33rd anniversary.
Diversity Means Business
Steve Nicholls founded Mueller Nicholls in 1981 as a merger between his finish-carpentry business and a good friend’s cabinet shop. They offered their customers convenience by combining millwork fabrication and expert installation for high-end kitchen-remodeling projects. Eventually the company began to expand into larger remodeling jobs, additions, and custom building. Working in affluent San Francisco, where the company is based, many of their large remodeling projects resemble custom-home building in size and scope. The business has a beautiful website featuring marquee projects. You should visit http://www.mnbuild.com for inspiration.
I asked Steve how he managed to skate through the recession with such a big enterprise, and he quickly corrected me, “It was very tough,” he told me, the remodeling business dwindled to almost nothing, and cabinet orders lagged. But because the cabinet shop had established excellent relations with Bay Area contractors, Mueller Nicholls was able to cast a much wider net than some of their competitors, relying not only on consumers, but designers and architects for work. The company focuses on high-end residential projects, but the millwork division also supplies commercial clients with lines of custom and factory cabinets, which helped the company to maintain a steady stream of work through a diverse customer base. Altogether, this was sufficient to squeeze past, if not skate through, the recession. Lately, things have been much better, with all company divisions working at full capacity, Steve told me. Today, Mueller Nicholls provides design-build services, general construction, and two cabinet lines. Annual billings approach $15,000,000.
People Mean Business
Diversification is not the only thing that sustains Mueller Nicholls. In fact, Steve is adamant that no one thing will secure the success of any business, “It’s always a combination of elements,” says Steve, and it requires a careful balancing act to measure and maintain this equilibrium.
For example, Steve explained that in a service industry, such as remodeling, the skills and commitment of the personnel providing the company’s services remains as important as the quality of the materials installed. Especially now that the economy has rebounded, and skilled labor is in short supply. “Keeping your best guys is challenging, but it’s necessary to keep these skilled employees that provide the level of craft and customer service that built our reputation,” says Steve.
This means not only paying his workers competitive wages, but providing a suite of benefits competitors have trouble matching. “It’s worth investing in your best people,” says Steve, contrasting his investment in his employees with competitors that focus on buying expensive equipment, high-end software, offices, and a fleet of trucks. Mueller Nicholls certainly has good equipment and systems, and maintains a professional appearance, but Steve emphasizes the financial investment in his people, because it’s people that provide his business stability, reliability, and self-management. “Nobody can find a better job, so they are very careful not to lose this one,” Steve tells me.
Of the many employee benefits that Mueller Nichols provides, which include bonuses, profit sharing, and a generous 401(k) plan, the company healthcare policy stands out. The company healthcare plan incorporates a low-cost, high-deductible medical-insurance plan, similar to what many companies offer, except that at Mueller Nicholls, it’s the company that pays every employee’s deductible and out-of-pocket expenses.
“Essentially, we provide free healthcare on the European model,” explains Steve. This means the company has become an especially attractive place to work for young families and older workers, for whom healthcare is an important consideration. I asked Steve if this represented a large, unknown risk. He said no, that while the company did pay out health costs, the sums were manageable and within acceptable limits. The gratitude of employees, on the other hand, was unlimited. “I have several employees now with me thirty years, and others so glad to work for us when they had babies, or when they needed costly medical treatments,” says Steve. This loyalty and employee stability has allowed the company to build a robust and growing corporate culture that thrives on each employee’s effort and accomplishment.
If you visit the Mueller Nicholls website, you will see not only the magnificent work they construct for their high-end clients, but a gallery of smiles, individual portraits of every employee in the firm. “Treating our people right costs a little more, which means we must charge more and we don’t get every job, but it also means we have the personnel to do excellent work. Our highly satisfied customers generate enough business for us to survive difficult times and thrive when the economy is strong.”
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Steve Nicholls is a successful, self taught businessman, co-founder of Mueller Nicholls and of the original Splinter Group, a construction owner peer group that has met for nearly 30 years to provide camaraderie and business education to members and guests. You can read Steve's column at Kitchen and Bath Design News.
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From Mueller Nichols website: In this Oakland Hills home, a small addition and a full house remodel yield a flexibly modern home for a family where both parents work at home. The owners prioritized sustainable features, resulting in stylish living that treads lightly on the planet. Designed by: Malcolm Davis Architects
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Muller Nicholls Builders started out in business as a cabinet shop back in 1981, and still continues to provide quality millwork for clients all over the West Coast. "We were one of the first shops to use computer controlled machinery, one of the first shops to be FSC certified, and, for another first in the cabinet world, we switched our electrical system at our facility to solar power in 2008." From Meuller Nicholls website.
