When construction work dried up during the recent real estate bust, many Southwest Florida builders hit the road.
While expanding to other parts of the state or Southeast may have worked for some builders, Russell Budd says the numbers didn't work for his firm, Professional Building Systems. Instead, he and business partners Bart Zino and Mario Valle worked the Naples market even harder.
And now it's paying off. Naples-based PBS, which specializes in building and renovating luxury homes, reported $5 million in revenues in 2011, up 43% from the prior year. Budd says the company is on track to boost revenues another 40% this year.
“Our market niche demands intense customer relations and we can't do that being on the road,” says Budd.
Focusing more intensely on the Naples market was somewhat of a contrarian move, particularly during the economic downturn when second-home markets such as Naples and Fort Myers were hit especially hard.
Budd and his colleagues considered expanding outside the Naples-Fort Myers area. “We couldn't make it work,” they concluded.
Besides the travel time, competing against local firms in other areas in the midst of a downturn didn't make sense. Besides, Budd says, “The time to open a market is five years before a downturn.”
Budd speaks from experience. A sister company he founded called Wall Systems tried to land business further than Southwest Florida's borders, but that didn't work. Wall Systems provided metal framing and drywall for commercial construction, but that business is now “almost nonexistent,” Budd says.
Instead, PBS focused on the market it knew best: upscale residential construction. “We found a market in Naples we really like,” Budd says.
For one thing, it's true that Naples was more insulated from the economic downturn than other areas. That's because it's got one of the highest concentrations of retired Fortune 500 CEOs and successful entrepreneurs. “The ultra-rich never ran out of money,” says Zino.
Wealthy individuals bought “bargain” homes for $3 million and hired PBS to make major renovations. “Our average job is $250,000,” says Budd. No client in the last two years has required financing. “We haven't seen a bank inspector in years,” he smiles.
So instead of expanding to Miami or Orlando, PBS' message to customers is: “We're not going anywhere, and we give back.”
Meanwhile, real estate business picked up as the economy and the stock market recovered. “The buying surge is on now,” says Budd, who estimates that about 75% of his business comes from referrals by other professionals, such as Realtors and architects.
The key to being successful in Naples isn't competing on price. “If you're not prepared to do business in a concierge manger, you're not going to make it,” says Budd, whose employees will walk your dog or pick you up at the airport.
People in Naples are used to being waited on and are willing to pay for it. It's no surprise that Naples has two Ritz-Carlton hotels despite the fact that Collier County only has 322,000 residents. “They're not working with their last dollar,” says Zino.
Another thing you need to know about Naples is that county government doesn't pay for any social services. That's a job for the legions of nonprofits that draw wealthy retirees to countless charitable boards, and it's a good way to get connected. Budd and his colleagues are well known for their civic activities.
That kind of networking means they land business by word-of-mouth. “We don't advertise,” Budd says. “We're always working for that next referral.”