In 2007, Bob Tilghman (Big50 2005) realized that his overhead outweighed his revenue. “We were not able to produce the amount of revenue we needed to earn the gross profit from projects to support an estimator, production manager, office manager, and my wife’s and my own salary for sales,” he says. In addition, he was paying rent for an office in Churchville, Pa.
So he restructured Tilghman Builders, starting with an office move in which he gave up a 1,100-square-foot rental space for a 12-foot-by-14-foot bedroom in his home. “My crews all go straight to their jobs,” Tilghman says. He misses being able to use the separate office as a sales tool. All client meetings are held at the client’s home.
Tilghman eliminated the estimator position, taking over that job himself — in addition to doing his usual sales work with his wife. He also cut the production manager position, opting to give each of his four lead carpenters more management duties. “I explained that we were making this change because we had to and that they had to take on more responsibility ... to represent the company and run the jobs from soup to nuts,” Tilghman says.
Without a production manager, clients began communicating directly with Tilghman. The change revealed communication and workmanship issues in the field. One lead’s project was being poorly managed, so Tilghman let that carpenter go.
The company has recovered from the initial shock of all the changes. Volume decreased from $2.2 million in 2006 to an estimated $1.5 million in 2009.
Tilghman says that the lower volume is expected and is acceptable because the company now has a stronger bottom line. “I thought I could fix everything with more volume,” he says, noting that consultants he had worked with over the years had tried to point out to him the flaws of this approach.
“We went back to doing some of what we had done in earlier days. I thought it would be devastating, but it turned out to be good,” Tilghman says. “In hindsight, I wish I had done it sooner.” He would still like a separate office, but instead of renting space, he plans to renovate a barn on his property.
—Nina Patel, senior editor, REMODELING.