The last time I saw Bill Asdal–the storied and civic-minded builder who helped launch Professional Remodeling magazine, the author of The Paper Trail: Systems and Forms for a Well-Run Remodeling Company, and more recently Defensive Estimating: Protecting Your Profits (both published by BuilderBooks.com)–it was 2005, during the height of building boom. Bill had recently finished the nation’s first zero-energy remodel and I was writing a book about remodeling. This is why I went to New Jersey to see Bill, one of the premier practitioners of the art of ecological restoration.
We toured several of Bill’s projects in central New Jersey, met some of his clients, and most notably, visited his impressive restoration of a haunted, and truly dilapidated Victorian mansion into the eco-themed bed and breakfast that he now runs as The Raritan Inn.
The least notable part of that tour, from my perspective, was Bill’s home office. A small, bat-cave affair in the basement of his Chester home, crammed with computers and only space for two, Bill and a bookkeeper. Although not photo worthy, this office was Bill’s proudest achievement. He loved the size of it: tiny. He showed me a suite of software programs I’d never heard of and crowed about technology with a passion that presaged the way we now brag about our latest iPhone apps. He boasted about his management and accounting systems and how streamlined, efficient, and economical they were. His overhead: nearly zero.
I’d been thinking about Bill’s little bat cave recently, and began to wonder how this whirlwind of a businessman had made out through the hard times that came not long after my visit. What could Bill possibly be doing today? I called him recently, and asked him, “What you up to?”
“We’re helping a British soccer-coaching company expand,” he told me.
The Evolution of a Builder
Bill is a no-nonsense businessman. His basic business plan can be summed up in five words, make money and keep it. Achieving this in the remodeling industry is not so simple, because it eludes most of us. Bill joked about this during our conversation, asking if I’d heard the one about the remodeler that won the lottery? “When asked about how he would spend his millions, the guy answered: ‘I’ll invest it into my construction company just to see how long it takes me to lose it.” I got the point.
Bill does not believe in investing in your construction company, which is why his office remains unremarkable and small. Bill uses his company to invest in himself. He’s been so good at figuring out strategies to avoid losing money at building, protecting his profits, and then investing them in more lucrative ventures that Bill was in the position of riding out the recession looking for deals.
But although he has built enough passive income to stop working if he wants to, he likes to work. Bill figured his most valuable asset was his methodical, mathematical approach to running a business. So he began to focus almost fulltime in helping other business develop their management and operational systems, and to organize themselves toward profitability and sustainable growth.
“You know my office is small. But when you think about human potential, you are not just looking at the 40 hours per week that a couple of people put in, you can now leverage that with automation to do a lot more. We help all kinds of companies get focused on their core business processes and marketing. No matter what occupation you’re in, you have the same elements: the cost of goods, expenses, short and long term goals, and you have to figure out how daily tasks fit into your long-range objectives.”
Bill works with people who have modest business skills, although highly skilled in other areas–such as master tradesmen. “We took our business skills and helped a bunch of small companies, roofers, remodelers, tradesfolk of all kinds, and even a British soccer-coaching company to become more effective managers.”
The soccer organization had municipal clients, and they were running programs for 1000s of players at multiple ages and venues, but they were stretched thin and they could not expand. “We put their skills at soccer coaching into a business structure, and helped them to develop written policies and contracts for employees, players and for each municipality. Since many of the coaches were from England, they got training on how to get along in the U.S.– like driving on the right side of the road. We looked at every aspect of their business, creating systems and structures. Once they got organized, they were able to serve more towns and form more soccer leagues with more players and hence more profit for the organization.”
Bill has developed the business end of his remodeling company into what he describes as one of the most hard-hitting business instruction providers for National Association of Homebuilder’s. He leveraged his bed and breakfast, the Raritan Inn, into full scale teaching facility (with nice rooms, great breakfast and a productive trout stream for fly fishing).
Leveraging what You Know
Bill’s typical clients include remodelers using construction skills to create real estate portfolios that can provide passive income. “I live off passive income,” Bill tells me. “But most remodelers live and die off their active income.” So he put together a curriculum on income property investment. Unlike get-rich-quick schemes, Bill’s approach takes time and discipline. As a trained educator (Bill began his life as a vocational teacher) Bill put together a curriculum on how to develop passive real estate income through small rental properties, “Until that passive income supplants active income entirely, and this takes all the pressure off your financial life,” Bill explained.
Steve Jensen has been working with Bill for about ten years. He owns a remodeling company and builds new homes on spec. Steve defines himself as a man with “sawdust in his veins.” In the early 1990s, Steve joined the builder’s association where he met Bill, and got to know him as, “…extremely intelligent, principled, and centered human being, looking to help individuals whenever possible.”
Steve joined Bill’s real classes about ten years ago, when he attended a four-week seminar. Since then, Steve has developed what he calls a “nice rental portfolio.”
“Some of Bills ideas work for you, others don’t. But the basic principles include continual acquisition of profitable real estate. I was already interested in rental property, and we were acquiring it, but with Bill I got more focused with and it helped me to realize that the question is, ‘when the saws aren’t buzzing, where’s your income?'”
Diversifying into profitable rental property is a natural for remodelers, Steve tells me. Following Bill’s business model, Steve began to formalize the structure of his business. Instead of putting everything into one basket, Steve placed each of his rental properties into separate legal entities, with segregated financials to more easily view each property on its own merit, “…looking coolly at the profitability of each venture,” Steve explained.
Meanwhile, on the remodeling side, Steve has also improved his business practices. “I’m constantly fine tuning our business practices, better reporting, got more into cash flow analysis, annual planning. It filtered over from the rental business. Our building company is a separate LLC from remodeling, and it does the spec building. The remodeling does only remodeling. We even hire our own companies to work on our properties and pay them. Now I see each operation as separate. Each must stand on its own. Before I took Bill’s classes, we were accumulating real estate and running all business in my name, and this was not a good way of organizing it. So we changed things over and it worked. I’ve been to every one of Bill’s management boot camps and it never gets old for me. Always new information, new circumstances to review, and some really encouraging conversations.”
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The National Association of Homebuilders has honored Bill Asdal as a quality instructor who promotes and contributes to the professionalism of the building industry. Since 2007, Bill has taught over 100 courses and was selected for the award by the NAHB Board of Governors based on student reviews and recommendations of his peers.
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Bill Asdal teaching a class at his bed and breakfast, the Raritan Inn, in Raritan, New Jersey.
View Comments
Fernando,
Thanks for this terrific post. I love Bill's motto: Make Money and Keep It.
There may be other ways to prosper as a builder. But I am pretty sure that Bill Asdal's approach -- reduce overhead (or what I call out-of-pocket overhead, since your largest overhead cost is your use of your own time)to as close to zero as you can get it, make money, keep it, invest it in cash flow producing vehicles and not in your own company -- is the surest way.
My own strategy is similar, though I never thought of such a great five word mission statement as Bill's, and it worked really well. Yes, make money, invest it in good investments. Not in construction companies, yours or anybody else's, because the construction business is the worst business investment on the planet except maybe for airlines.
One thing I like about Bill's approach is that it suggests you must build with integrity -- because if you don't practice integrity, nail-by-nail in the work of building and in your relationships with your clients -- you may make the money but keeping it will be a lot harder. It will get sucked right back out of your accounts by callbacks, litigious customers, hits to your reputation, etc.
I was not surprised to see that Bill's student Steve praised him for integrity.
Fernando, I think you mentioned Bill to me once before. But now I really understand why the guy is worth paying attention to. I think you have probably done a lot of your readers a favor by letting them know about Bill's program and books. I am looking forward to reading them.
best, David Gerstel