Episode 46: Competing On Value Not Price With Todd And Melissa Lake

In episode 46 of the Professional Builders Secrets podcast, we’re joined by Todd and Melissa Lake from Contegrity Homes. Throughout this episode, the two go over their journey with Contegrity Homes, and how they’re beating their competition with value, not price.

 

Inside episode 46 you'll discover

• How Todd and Melissa got into the building business
• The highs and lows of Contegrity Homes
• How they managed to turn their business around
• The importance of financial awareness
• How they started to compete on value, rather than on price
• And much, much more.

Listen to the full episode to find out exactly how you can up the value you’re giving your clients and stop the uphill battle against price.

 

Todd Lake - Owner of Contegrity Homes

Todd started his carpentry journey in 2004 with minimal experience and grew to love the profession. He then became a project manager for another company in the Southwest, and developed a passion for the process of construction. Everything from additions to new home construction he has aspired to be the best he can be with a high standard of quality workmanship. From there, Contegrity Homes was birthed to set a new standard in the Southwest.

Connect with Todd

 

Melissa Lake - Designer at Contegrity Homes

Whether it be meeting with clients to develop floor plans, finalise cabinetry selections, discover the picture-perfect light fixtures for their space, pore over paint colors, or peruse wallpaper samples, design is where Melissa gets her joy! Design has always been a passion of hers and she has recently branched out to achieve her Interior Design Certificate.

 

Timeline

1:43 About Contegrity Homes

2:45 How they got started in business

6:54 Coping with the isolation of business

8:32 Highs and lows of the business

11:44 How they turned the business around

14:42 Current focus of the business

17:21 Competing on value, rather than price

18:51 How they came across APB

20:03 How financial awareness changed the business

21:47 How the contract approach transformed the business

26:32 Future for Contegrity Homes and for the building industry

31:27 How Melissa and Todd define happiness and success

 

Links, Resources & More

Contegrity Homes

APB Website

APB on Instagram

APB on Facebook
APB on YouTube

Join the Professional Builders Secrets Facebook group for builders & connect with professional builders world-wide.

Todd Lake:

We didn't necessarily see the money that was being lost, but we could feel it.

Todd Lake:

In carpentry school they don't really teach you the ins and outs of running a business. You're learning carpentry, but you're not really learning the business side.

Todd Lake:

It didn't really happen that we went into the red overnight, but it was going there.

Todd Lake:

The rewards and value that we've got from it have been phenomenal.

Melissa Lake:

Success, for us, is having happy clients because happy clients produce more happy clients.

Todd Lake:

If you screw up once, it'll affect you 10 years down the line.

Bosco Anthony:

Hello, and welcome to the Professional Builders Secrets podcast, a podcast by the Association of Professional Builders (APB) for building company owners, general managers, VPs and emerging leaders. Here, we discuss all things running a professional building company, from sales processes to financials, operations and marketing.

Bosco Anthony:

Hello, and welcome. I'm joined today by Todd and Melissa Lake, Founders of Contegrity Homes, located in Saskatchewan, Canada.

Bosco Anthony:

Melissa, lovely to have you here today.

Melissa Lake:

Thank you. Thank you for having us.

Bosco Anthony:

And Todd, welcome and thanks for being here as well.

Todd Lake:

Hi Bosco. It's awesome to be on the show.

Bosco Anthony:

Well, let's start off with a little bit about Contegrity Homes and what you specialise in. Where are you in Canada, for our listeners who don't know where Saskatchewan is?

Todd Lake:

We're in a small town, and it's called Swift Current. There are about 18,000 people, so it's a very rural area. We specialise in design-build homes, and we're probably the only ones in our area that do this. We do major projects as well, but mostly we try to focus on new builds, new homes.

Bosco Anthony:

Is there a running joke that you could see a dog running down the street for four days straight because of the flat lands? Is that true about Saskatchewan?

Todd Lake:

Surprisingly, there's quite a lot of valleys and hills and it's not as flat as people say it is. But yeah, it is still a joke, people still joke about that and make that a thing, so I suppose so.

Melissa Lake:

Easy to draw, hard to spell: Saskatchewan.

Todd Lake:

Yeah.

Bosco Anthony:

Let's go back down memory lane. How did you both get started in the industry? Was this a purpose calling you? How did you land into this particular business idea? What made you choose this path, out of all the other paths?

Todd Lake:

I started in construction in 2003, when a builder actually reached out to me. I was 21 years old, and I didn't really know what I was going to be doing with my life, to be brutally honest. I actually was in college, and I was meant to be a conservation officer. I dropped out of college and quit that. This construction gig was just supposed to be a temporary thing, but it really caught my heart and it really developed into a huge passion in my heart.

Todd Lake:

I continued with it, and I started right at the bottom. I worked with two different builders, for roughly nine years. Then, in 2012, we started Contegrity. We really enjoy the process. Being able to build something and stand back at the end of the day and say, "Wow, we built that," that's super awesome. I felt rewarded by it and developed this huge passion for it.

Bosco Anthony:

And Melissa, did you get in at the start as well, with Todd? Did it take you some time to jump in? What was your story with the whole process?

Melissa Lake:

Originally, I was just doing all the bookkeeping. I also had a full-time job, working at the hospital pharmacy in our town, and I was doing the bookkeeping for our company. But then I started to help clients more and more. As we were getting into bigger projects and clients were needing help choosing finishings, I started to get into that more and more. So, actually, I did just achieve my interior design certificate just this spring.

Bosco Anthony:

Congratulations.

Melissa Lake:

Thank you. It was just to have more credentials behind my name when we're working with our clients.

Bosco Anthony:

So, Todd and Melissa, tell me a little bit about what it was like starting out in 2012. I think, at that point, the recession in North America had just completed. It was a major recession that everyone had gone through in 2008 and people were reinventing themselves at that point. So, what was it like for you, in Saskatchewan? What were some of those experiences, starting out, not knowing what it would evolve to today?

Todd Lake:

I think just starting any business, whenever you start it, is a challenge. It's not just an 8am to 5pm job, and you carry a lot of the load with it. I know, for us, we started it and we just did it and winged it, and we didn't really actually have a clue what we were doing.

Todd Lake:

A lot of the companies in our area have either had a dad who owned the company before and got handed down to them. It always had somebody to go to. For us, we were the pioneers, and we started the company. Both my parents actually were teachers, so they taught at the high school and at the elementary school here in town. So, for us, we just had to learn on the fly, per se.

Todd Lake:

In carpentry school they don't really teach you the ins and outs of running a business. You're learning carpentry, but you're not really learning the business side, so we had to figure it out on our own. We'd learnt by trial and error. We didn't really have any kind of systems in place to run our business effectively, right out of the gate.

Bosco Anthony:

You mentioned that you didn't really have someone to lean on. This business, from talking to a lot of builders out there, could be really isolating as well. Right?

Todd Lake:

Yeah.

Bosco Anthony:

So where do you go for counsel or where do you go for support? Or do the two of you lean on each other when times are tough?

Todd Lake:

I think, even to this day, we do lean on each other. If I'm stressing about something, Melissa calms me down or coaches me through it, or vice versa. It's important to have somebody you can lean on, for sure. We have Clint as our mentorship business coach. Even having him as part of our business is huge for us, because we can go to him. There are times when we have our coaching session where I just vent to him for the whole hour, and we don't even talk about anything else.

Todd Lake:

It's good, it's good to have that. You need that. Like I said, it's not easy and there's a lot of demand for it. But I know it's worth it and I know we're wired for it and able to handle it.

Bosco Anthony:

I’ve had the pleasure of having Clint on the podcast before as well. He's out in BC [British Columbia] and he's had an interesting time as well, with different builders. I think he said the same thing, sometimes the coaching calls are really just there as a listening tool for builders who don't have a lot of opportunities to talk about what's on their mind. Right?

Todd Lake:

Yeah.

Bosco Anthony:

If we look back at the illustrious career that you've both been in now, what were some of the highs and lows? Every builder has memorable mistakes or memorable experiences that they'll look back at and say, "This was a defining moment." Every builder will have some really amazing moments as well, that changed the path and the trajectory of the business. If you two both look back down memory lane, what are some of those things that come to mind?

Todd Lake:

When we started out, like I said, we didn't have a good idea what we were doing. We were even pricing our jobs and we wouldn't even give a markup on our materials. We thought, "Let's just really be that better builder, per se, and say, 'You know what? We're going to give you our materials at cost. And whatever we pay, you get to pay.'"

Todd Lake:

That does not work, I'll say that. It can cause a lot of headaches. So actually, in 2015, and I'm talking about the lows here, we were losing money. We priced a job so low that it wouldn't be covering any of our overhead costs. You can't run a business effectively without having your proper margins in place.

Todd Lake:

We didn't necessarily see the money that was being lost, but we could feel it. We didn't watch our financials and we didn't know anything about WIPAA [Work in Progress Accounting Adjustment] and margins and markup, or anything like that. It didn't really happen that we went into the red overnight, but it was going there. There were times where we would actually be robbing Peter to pay Paul.

Bosco Anthony:

Right.

Todd Lake:

We'd be paying bills on jobs that were completed a few months ago, and we're paying them with the deposits of future upcoming jobs.

Bosco Anthony:

Right.

Todd Lake:

It was bad. It was a bad situation. We actually got taken to court by one of our clients, and that became a serious situation where we lost a lot of money. We had to even get a loan to pay out our vendors in a sub.

Todd Lake:

It was a dark time; that was a really dark time in our company. We realised where we were at, though. At that point we realised, “Okay, what are we doing wrong?” We knew we had to change. I started learning and reading and understanding business. Now we know we're not in that position anymore, that we're not taking Peter's money and paying Paul, and we're actually turning a profit. It's a dangerous game and you need to make sure you know what your financials are and all that too.

Bosco Anthony:

It sounds like you obviously had a lot of transformation. We'll get to that; I want to know a little bit about how you changed and pivoted in the right direction or recalibrated. But before I get into that, did you have moments where you wanted to throw in the towel? Melissa, I'll ask you this question as well. During those dark times, how did you keep the ship still moving? Were there some times where you questioned whether you were both going in the right direction?

Melissa Lake:

Oh, for sure. Yes. I know one of your earlier questions was: 'What was it like starting out?’ For me, it was terrifying, because I was used to having a fixed income. We had a new baby, I was just going back to work from maternity leave, so that was scary. But then this happened, and it was even worse.

Melissa Lake:

So yeah, I think you just keep putting one foot in front of another. You just keep going, you keep moving forward. And you know what? Somehow, we made it through. I think it was credit, honestly, to God. It was a miracle that we made it through. I just kept encouraging Todd. I think we started doing small jobs, easy quick money jobs, keeping cash flow as a priority. Eventually we were able to dig ourselves out of this hole, because, truth be told, we wanted to quit.

Todd Lake:

Yeah. Yeah.

Melissa Lake:

But we didn't. Now we're so glad we didn't because it's really been a testament.

Todd Lake:

A testament to APB.

Melissa Lake:

Yeah.

Todd Lake:

We got accountable with our coach. We got accountable even with our accountant. We just took a deep dive into our business and really figured out what wasn’t working, and whatever wasn’t working then we just changed it so that everything in our business is working.

Bosco Anthony:

It sounds like you were a student to the systems as well. One of our first podcast interviews was around the Work in Progress Accounting Adjustment calculator and understanding your shortfalls and understanding that it's not money you can use. Especially in between tax season, between one tax season and the other, you have to be really careful about the numbers. So, I can totally appreciate your experience with everything, because it's one of those things where, if you don't attend to your numbers, it's a growing debt that just gets bigger and bigger and bigger. It sounds like you and Melissa really got a hold of that. It's impressive that you were able to pull yourself out of that situation as well.

Bosco Anthony:

Let's talk a little bit about what you focus on. Melissa, you said you just did something in design as well, so I'm curious to know how that will impact the future. Interior design was what you talked about a little bit. But tell us what you specialise in right now, where your focus is, and what the future, as far as the specialties, looks like, moving forward?

Melissa Lake:

I guess, right now, I try to help our clients. We started with this design-build company. So, we work with our clients, right from designing blueprints all the way to choosing the final bathroom accessories, so everything goes well and works well together.

Melissa Lake:

I know that the clients have really appreciated that help, because there are so many decisions to be made in a build. I think that it can become overwhelming. When we've done this before, so we have relationships with the vendors and we have preferred suppliers. And just working with those people really helps us and helps them.

Bosco Anthony:

Todd, tell me a little bit about your focus as well, with Melissa, as far as the type of specialty and the work you guys do. Where is the focus right now?

Todd Lake:

I would say our focus is really getting value to our clients. We want to capture our clients, not when they have the finalised plan but when they're just thinking about building, when it's just right, then maybe he and she have had the conversation and they just type in: ‘home builders in Swift Current’ into Google. That's where we want to pop up. That's ultimately what we're trying to capture, to make sure that we can take them, really hold their hand through the whole process of designing their home, building trust with a builder, and being able to get a home built that has incredible value to it.

Todd Lake:

We're not necessarily so stuck on price, we’re more so just stuck on the value. I’m not saying that our price is over the top, but it's a fair price, a price that is competitive but also that we bring great value to that.

Bosco Anthony:

Yeah. I'm curious to know a little bit about the transformation as well because some people compete on price. It sounds like you're competing on the value of what you deliver. How did that transformation happen, and how has it changed the business today? And what does the business look like today?

Todd Lake:

We've taken what APB has shown us and applied it. It's very easy to just run through the coaching calls, sit there for an hour and do the coaching calls. But if you're not actually applying the modules and the work tasks that are involved with APB then you're not going to change, you're not going to grow. I think, for us, it was just really applying ourselves and working at it and taking the time and making the modules a high priority and developing that.

Todd Lake:

That's where it all started and how it all came about. Then it just snowballed from there, with ideas on how we're going to run a design company and then how we're going to take these clients right from the beginning and right through, right to the end. Then after they're even moved in, being involved with them, with our warranty package, and really just showing that we're not cowboys but we're actually professional builders. 

Bosco Anthony:

You mentioned that you've gone through the coaching program. Tell me a little bit about how you came across APB? Was it on social media? Was it an ad? How did you first start off? And how has that membership really impacted and changed your business?

Todd Lake:

It was through a couple of avenues. One was through Facebook. The APB ad kept popping up on Facebook. I would see it and I'd look at it, but I would never commit to it. Then I heard of other builders in Saskatchewan who were doing it, and I heard their testimony for it. I thought, "You know what? We should." I'm a personality where I love growth and I push to grow, and I want to change. I don't always just want to be comfortable; I always want us to be pushing ourselves. At that point, I thought, "You know what? Let's do this. This is going to be healthy for us and a little bit of a commitment." But the rewards and value that we've got from it have been phenomenal.

Bosco Anthony:

It sounds like the coaching has really created some awareness around financial awareness and contracting as well. Melissa alluded to the fact that you guys took some smaller jobs and then you went into some bigger jobs as well. But tell me a little bit about the financial awareness aspect and the contract side of things. How did things change?

Todd Lake:

I think once we understood, with the coaching and with having our KPIs and setting our targets and forecasting our revenue and being able to understand even basics such as what the difference is between markup and margin and following our results and seeing what the WIPAA calculator is showing, we really understood where we were at as a company.

Todd Lake:

We understood, okay, once we got an identity of who we are as a company, and being able to apply that identity to ourselves and knowing who we are, I think it overflowed onto our clients, and being able to know our numbers and knowing that, “Okay, this is how much our overhead expenses are.” Just having a whole awareness of all that produced a tremendous amount of confidence in me and Melissa and being able to sell ourselves properly, because we knew where we were at, and we knew what fair market value was. That was how it all transformed I would say, for sure.

Bosco Anthony:

Take me through the contract stage. You were talking a little bit about how, in the past, you were potentially quoting the value of what your expenditure was when it came to materials. Obviously, things changed with the contracts as well. Take me through how you transformed the business by leveraging the contract side of the approach of the business.

Todd Lake:

I would say, mostly, when we would take clients through the contract, we would present the fixed price. In the past, in 2012 and 2013, there was a fixed price, but it wasn't a true fixed price. There wasn't a heavy, detailed contract saying when the scheduled payments were going to happen and the dates or anything like that.

Todd Lake:

We've really homed in on our contracts and been able to detail that all out and follow that. We know clients have been really impressed with our contracts and our fixed price proposals; we're producing proposals that are 80 pages long. We're detailing everything out so that there are no hidden costs. I think clients, in this day and age, need that. Even in the midst of COVID, or after COVID here, I think it's so important going forward.

Bosco Anthony:

Have the contracts changed and improved the business, as far as revenue coming in? Have you seen a shift in the numbers? It sounds like you've had some big wins with that too.

Todd Lake:

Yes, we have. Like I said before, just taking our clients through that design stage and really working with them and having those fixed price contracts, we've had some huge wins as far as the amount of margin we've had.

Todd Lake:

I think it just all relates to building that trust with the client. I know that a lot of the clients aren't necessarily sold just on price, but they really want somebody who they can trust and really know that whatever kind of house they're building that they can lean on them 100%, lean on the contractor.

Bosco Anthony:

It sounds like you've really informed your clients of the value that they're getting, from what you're saying. And that's probably what's leading to these high margin contracts as well.

Bosco Anthony:

Let's talk a little bit about the market. You mentioned that you live in a very rural community area. How does a building company dominate and be an authority in this area? How did you take yourself to the market? How have you maintained yourself over the years as the trusted builder of choice?

Todd Lake:

It's interesting, because before I ever developed a website, I would look to see if any other builders in our area had websites. If they did, it was a very poor website, but 95% of them did not even have a website. So that was probably one of the number one things we did, developing a website and developing advertising. I know Sky even has said it best, "You don't have a business if you're not advertising." So, we've started advertising, running social media ads and Google ads.

Todd Lake:

Another thing that's really huge for us was Buildertrend and being able to run Buildertrend and have that 24/7 communication with our clients. Nobody in our area had heard of Buildertrend when we started it, so that was a huge thing. Also, warranty wasn't a huge topic in our area either.

Todd Lake:

We developed all these things that were very new to our area. The old-style builder runs most of the area. But as far as we’re concerned, we're coming in and we're doing something totally different. And it's really catching traction here, for sure.

Bosco Anthony:

As you've grown the business, what are you focusing on today and what's the focus for the future for you both as well? What's on the horizon? What can we expect?

Todd Lake:

We just focus on stress-free experiences for our clients. We want our clients to just be over the moon. One of our core values is that we're obsessed with delighting our clients. And that's where our focus is. We know, living in a smaller town like this, reputation is key here. If you screw up once or you do something bad, it'll affect you 10 years down the line. So, we know that if we're making sure that our clients have no regrets hiring us and working with us, then that's just key for us. That produces more happy clients for us. Word of mouth is good; it’s key here for sure.

Bosco Anthony:

Let's shift this conversation to the future and let's talk a little bit about perspective as well. What are some of the struggles builders face today in the industry, both running a business but also the challenges that come with having a family and all the other things as well? What are some of the struggles that people face?

Todd Lake:

Right now, it's the ever-changing economy and what the economy is doing. It's going up and down. Prices are going mainly up. Fuel costs here are ridiculous. Even finding employees and workers, that's a huge struggle right now, especially in our area. It's definitely becoming more and more of a challenge. Hopefully we can ride it out and things will become better, but we'll see how it all goes, I guess.

Bosco Anthony:

What advice would you give a younger version of yourself? What advice would you give new or veteran builders out there as well? Going through this now for a few years, I'm sure you earnt the right to actually offer your perspective. But let's just say you were to meet a younger version of yourself, or new and veteran builders, what advice would you give them?

Todd Lake:

Get your financials figured out right away. Know what a markup is, know what a margin is, know what your gross margin is, your workflow and your fixed expenses. Really home in on all that, because once you understand those KPIs and you start to price your jobs more accurately, it gives tremendous value to you as well as your client. You build confidence within yourself. Ultimately, you don't get so stressed out and you start pricing jobs that turn in a profit. Ultimately, that's, I think, every builder's goal, to be very profitable.

Bosco Anthony:

How do you see the construction industry evolving or what is it evolving to? You've talked about rising costs. You've talked about the fact that times are unpredictable right now. But where do you see the industry moving forward? It sounds like we're always going to need home builders. People are always going to need homes.

Todd Lake:

Yeah. For me, I feel like technology is going to be continually advancing. It's important to be up to date with what is happening. The Facebook ads are always changing. Google's always changing. Even things like Buildertrend, those are things that clients need. They totally need things like that so that they can understand how transparent you are. 

Melissa Lake:

Yeah, we've had clients who have lived several hours away, and we were building for them here in our town. That was their favourite thing, Buildertrend, just being able to check those daily logs, see what was happening on their project without actually being here, just following along with that. I think more and more clients are going to want that type of experience. They're going to want that.

Bosco Anthony:

Handholding?

Melissa Lake:

Yes, having their hands held throughout the whole process and having people to trust.

Bosco Anthony:

What do success and happiness look like to you both? I'd love to get both your perspectives on this. When you look at the business, you look at the hard times and what you've had to sacrifice and change, and you've put a lot of emphasis on changing the value belief system. You've put a lot of emphasis on educating yourself on awareness. What do success and happiness look like to you both today?

Melissa Lake:

Success, for us, is having happy clients because happy clients produce more happy clients. We just love that we have a relationship with these clients after the build is done. It's a year past the build and we're still able to go into their homes and meet with them and just have that relationship with them. That's been so great.

Bosco Anthony:

And Todd, what's your perspective?

Todd Lake:

Yeah, I totally agree with that. I think, for me, it is handing over the keys to a client and a homeowner and being able to see how awesome it is that their dream came to reality. I think, for me, there's so much happiness in that, knowing that we were completely transparent with them, we didn't hold anything back and we communicated with them, to just really honestly have a stress-free experience. I think that's what success would be for us, for sure.

Todd Lake:

That all comes down to preparation. I've heard a quote, "Preparation is the key to opportunity." I think that being prepared and being able to communicate and work with your clients, I think that's so much success just built in that, for sure.

Bosco Anthony:

I could talk to you for ages about the life and struggles and the highs and lows of being a builder, Todd and Melissa. But I have one final question for this episode, which has been great because it's really refreshing to go behind the curtains and actually see what it takes to build a successful building company.

Bosco Anthony:

Melissa, you mentioned you have kids as well. How do you promote balance in your life? How do you both promote balance in your life, being parents, being business owners, being leaders to your staff, being members in your community? Do you have a secret for balance?

Melissa Lake:

It can be a challenge, for sure. There are times when our kids are dragged along to the job sites – and they just love going to the job sites.

Todd Lake:

Especially when it's out of town.

Melissa Lake:

But they understand the importance of it too. We do try to keep that balance in having work time during working hours and having the evenings free to do their activities too. Kids are only kids for such a short time, and we don’t want to lose that relationship with our kids either. So, we do take time with them. We do take vacations with them. I think it's important. A lot of people don't take time away from their businesses. We have employees who we know we can trust to carry on while we're gone. It's important to take time away and rest as well.

Bosco Anthony:

That's very inspiring. I think it's important to take that time off, like you said, because there's no point in going on holiday if you're answering people's emails and phone calls as well. The fact that you can trust your employees to hold the fort while you're away is always refreshing.

Bosco Anthony:

And Todd, how do you do it? Do you have a schedule? Are there sacred days or time blocks? How do you promote that wellness for yourself?

Todd Lake:

Yeah. I have a schedule on my calendar, where I do whatever work needs to be done during work hours. And then usually in the evenings or weekends, we're not extremely diligent at this, but we try to just block out work.

Todd Lake:

I worked with a builder in the past, or when I first was in construction, and he would be on-site all day, working, and then in the evenings he would be in the office. He had kids, but he wasn't able to really be with his kids. He would talk to me about that a lot of time, about how he was wondering, "What am I doing?" because all his time was spent in the office or on-site.

Todd Lake:

For our company, I said, "I'm not going to do that. It's just not fair to my kids. It's not even healthy for me." So, for us, the family's number one and we put that first. So far, it seems to be working out.

Bosco Anthony:

Well, I must commend you on both on building this journey together for yourselves. It sounds like you have a lot to look back on and a lot to be proud of as well. I just wanted to thank you both for your time and your candidness. Also, we'd love to hear from you guys in the future as well. But I just want to say thanks for being on the podcast today.

Todd Lake:

Yeah. Well, thanks Bosco.

Bosco Anthony:

And thank you, Melissa.

Melissa Lake:

Thanks so much for having us.

Bosco Anthony:

Thank you for listening. Remember to subscribe to Professional Builders Secrets on your favourite podcast platform and leave a review. To learn more about how the systems at APB can help you grow your building company, visit associationofprofessionalbuilders.com. See you next time.