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REVIEW SUMMARY
Company. Synergy Contractors
Industry. Construction
Key. Low overhead equals winning bids.
By The Numbers.Click here.
Nelson Nieves pulls up a chair at a Starbucks coffee shop one recent morning, a shock of gray hair peeking from under a baseball cap.
Nieves looks older than his 33 years. “I've been trying to get a haircut for three weeks,” he says, apologizing for the disheveled look.
But in the world of construction, the harried look is most definitely a healthy sign. Nelson Nieves and his brother, Verne Nieves, 30, together are responsible for the livelihoods of nearly 90 employees at their firm, Cape Coral-based Synergy Contractors.
That they're busy at all is a wonder, but not surprising because they make a fearsome team. They finish each other's sentences, drive together to job sites all over the state taking turns at the wheel and complement each other's business skills. Nelson is an introspective former banker while his brother is the outgoing persistent type who never takes no for an answer. Nelson Nieves explains the brotherhood this way: “Verne kicks the door down and I seal the deal.”
Through three of the most tumultuous and disastrous years for the construction industry, Nelson and Verne Nieves have grown their firm's revenues annually by double-digit percentage rates. That surprising feat has earned them the Review's Entrepreneur of the Year award for the Lee-Collier region.
Expense control
To outside observers, the Nieves brothers probably couldn't have picked a worse year to start Synergy Contractors: 2006. The real estate and construction markets were peaking and miserable years lay ahead for the industry.
Things started out with a bang, though. The duo built the concrete shells of some 3,000 homes for Hovnanian Enterprises by outbidding the competition. They figured the volume would make up for narrow profit margins by keeping an eagle eye on overhead expenses. They bought equipment at auction for a fraction of what it cost new and kept salaries in check.
But 2006 might have been the best year to start the firm, considering the Nieves brothers' thriftiness would allow them to underbid any project in the years ahead. They learned this trait from a young age; their father came to the U.S. as a merchant seaman from Uruguay with 25 cents in his pocket.
Both brothers were graduates of Florida Gulf Coast University's Lutgert School of Business, where professors drilled conservative business practices into them. “I use them as examples in the class quite a bit,” says Shelton Weeks, director of the business school's Lucas Institute for Real Estate Development and Finance.
While the margins on the Hovnanian homes were thin, the builder paid Synergy on time and that allowed the brothers to reinvest in the business. “A natural temptation is to not reinvest when you start your business and that means failure,” says Weeks. “I always hold them out as examples of people who learned.”
Nelson Nieves had been a commercial banker with Colonial Bank shortly after graduation and had learned first-hand the mistakes business customers were making. Naturally, Nelson Nieves has a good relationship with Fifth Third Bank, the company's banker. In fact, the business got an increase in its line of credit in 2008, the same year Lehman Brothers failed.
“They're definitely one of the best businesses in their industry,” says Brandon Johnson, their lending officer at Fifth Third. “They're really keen on the expense side.”
Publix and Wal-Mart
The Nieves brothers were early to forecast the residential real estate bust, so they quickly shifted to commercial construction in 2007. Because they specialize in building concrete shells, they bid on jobs secured by general contractors.
But few local general contractors would give the Nieves brothers any work because of their young age and their company's short lifespan. What's more, commercial builders frown on residential builders encroaching on their turf.
So the brothers hit the road to other parts of the state, outbidding more established rivals who couldn't compete because they had costly overhead from the boom years that included high salaries, fancy offices, big debts and expensive equipment to maintain. “When we first started, we had to go for the throat,” Nelson Nieves explains.
Many bloated construction firms were slow to react to the downturn in commercial construction, which gave the Nieves brothers a chance to cement relationships with general contractors. They landed high-profile jobs building Publix supermarkets and renovating Wal-Mart stores in places such as Miami and Orlando. “The local guys wouldn't give us a chance before,” says Verne Nieves.
To land jobs, Verne Nieves says he hounds the decision makers, finding out everything about them by using Internet searches. “He's the bulldog and I'm the leash,” his brother jokes. “Sometimes I have to say, dude, relax. He doesn't take 'no' for an answer.”
Verne Nieves doesn't appear fazed by his brother's self-restraint. “I want to be the new guy and to be the new guy you have to push,” he says.
With experience, the Nieves brothers returned to the Fort Myers area, winning commercial contracts they wouldn't have had a chance to land before. For example, they built the high-profile 50,000-square-foot corporate headquarters for 21st Century Oncology in Fort Myers last year. “Now, we're credible,” Verne Nieves says.
Dream of going public
Ultimately, the Nieves brothers dream of taking their company public. The effort will help them raise capital to grow the business and earn the rewards for their efforts. “You always have to have an exit strategy,” Nelson Nieves says. His brother adds: “You've got to think big.”
In the meantime, the brothers get by on as little sleep as possible. Verne is at his best in the morning; Nelson works late at night. They've been fishing once in the past year despite the fact that they own a boat and a house on North Captiva island.
They haven't given up on the homebuilding side of the business either, which they say is necessary for diversification. Synergy builds 30 to 40 homes a month for an undisclosed national builder from Tampa to Naples and another five or 10 homes a month for local builders.
Homebuilders are starting to take advantage of low prices and they're building homes again. “They see the value in the land,” Nelson Nieves says. Synergy's residential and commercial divisions operate separately, the brothers say, because the two disciplines don't generally mix.
The brothers are exploring construction projects in other nearby states such as Georgia. Verne plans to buy a second home near Tallahassee and will live there half the year to be closer to those new markets.
Synergy is also considering doing more government work, though most of those projects require bonding insurance. Until now, Synergy hasn't needed bonding because it's not required in private work. “Why bother?” Nelson wonders. “It's another cost and it's tons of paperwork.”
But one dream the Nieves brothers have is to build a building at FGCU. Last year, they gave $30,000 to the Lucas Institute for student and faculty research. “They were the first graduates of the finance program to give back to our department,” Weeks says.
They don't worry about when a recovery in construction will come, saying there's enough work now building supermarkets, medical offices and high-end homes. The brothers have been able to recruit talented employees too, preferring to pay a little more for a skilled person than less for two people to do the same job.
“If we make money now, I cannot wait for the recovery,” Verne Nieves says.
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