Greg: Welcome to the Tim Faller Show, where production is paramount and we discuss the tools, time and people associated with getting jobs done and making a profit.

Greg: “On today’s episode of The Tim Faller Show, we will be talking about going from being an employee to being a company owner with the help of special guest Ray Hornsby of Hopkins and Porter Construction in Potomac, Maryland, alongside Tim Faller. I’m your co-host, Greg Woleck. Here is the Tim Faller show.”

Tim: Hey, everyone, I’m Tim Faller and welcome to another. What I think is going to be a fun episode of the Tim Faller Show, as I’ve been saying for about five years now. If you have some ideas for me that you want to have on the show, please let me know. And I got to thinking about this this morning.

Tim: And I thought, you know, I think there’s some folks that sent me stuff and then I lost it somewhere. So if you’re one of those folks that hasn’t seen your idea on the show, just send it to me again, because sometimes I get those things lost. So back in August of 2018, we had Ray Hornsby on. It’s episode 21 and we asked him about moving from the lead Carpenter role to the production manager role.

Tim: And if you’ve listened to that episode or you go back and listen to it, Ray and I worked together. We were lead carpenters together. I became the production manager. He was a lead carpenter. And then when I last to get into consulting, then he became the production manager and he’s one of the few now. It’s not impossible. He’s one of the few people that I’ve seen through my consulting that’s actually been able to make that shift effectively within a company.

Tim: And he did a great job with that. And so Ray has kind of moved along the growth track, if you will, and is currently the sole owner of Hopkins and Porter Construction in Potomac, Maryland. The company that he’s been with for a number of years now, the transition from employee to owner or even production manager to owner has to be a big challenge for anybody.

Tim: And that’s what we’re going to be talking about. And I’ve just got all these questions that will mentioned, but like how do all the other employees react? All of a sudden the person they worked shoulder to shoulder with is now the boss, not just the supervisor there, but the boss. And then since there’s almost always a transition that goes on, like what happens if the owner at that time previous current, how are you looking at it just keeps trying to hold on to how you want to do things.

Tim: You know, what is what’s it like when when that’s going on? Or maybe you got the skills to run the production department, but maybe not the skills to be an effective company owner. And so we’re going to kind of hit all of those different things as we go along. So this podcast may be for those who think this would be a good goal in their future, you work for somebody you think you’d like to be the owner of that company, buy them out, that sort of thing.

Tim: It may be also for business owners that are looking at some of their employees that are that they think would be good for a buyout or, you know what? You might just be interested to hear about a company that successfully transitioned from a very successful business owner to and I’m just going to say it here, another very successful business owner.

Tim: And so, Greg, let’s go ahead and get into it.

Greg: All right. Thank you, Tim. Siri Hornsby started working in construction in the late 1970s in West Virginia and North Carolina. In 1986, Ray joined Hopkins and Porter Construction in Potomac, Maryland. As a carpenter. He then spent time as a lead carpenter, a project manager, production manager and eventually the general manager. In 2015, he made the leap to owner purchasing the company.

Greg: What do you say, Tim?

Tim: All right, let’s get going. So give us a little bit of a kind of a look at Hopkins and Border as it stands right now. How do you run your production and maybe the volume that you’re doing this year?

Ray: Well, we’ve changed from a lead carpenter to a project manager role, so we have a lot less employees than we would, you know, ten years ago or more, which kind of helps because we have a lot of good sub that we can count on, which, you know, we can have one of our employees managing, you know, two or three different jobs at the same time, which allows us to do more jobs without all the overhead of the employees.

Ray: And it’s been up and down. I mean, we you know, we survive COVID. Yeah, anybody can say that. Done, done good. I think it was it was hairy for a while. And basically we I think we just had one of our best quarters in production volume that we had ever. I haven’t got all the final numbers yet, but it’s looking really good for this year.

Ray: So.

Tim: So are you guys in the 3 million, 4 million range like for a year at this point.

Ray: We were we’re in between two and 3 million. Okay. We’ve had we’ve had a couple years that’s under two and we’ve had a few. That’s a little over three since I’ve owned the company.

Tim: All right. So we already got in your in your bio. We already got some information about how long you’ve worked there. I was just I thought you had come about a year before me, but I think you were there like three or four years before I joined the company. And then we worked together a lot. But when did this idea of owning Hopkins and Porter get into your head?

Tim: I don’t think we’ve ever talked about that. I know a little bit about some of the conversations that were going on between the two previous owners and things like that. But when when did you start thinking, I want to own this company?

Ray: The day guy came up to me and says by the company, I’m shutting it down. Actually, what happened?

Tim: Is that right?

Ray: Yes, we talked about it. Mike and Guy had was wanting the employees to start buying shares.

Tim: Right.

Ray: There were four employees and I didn’t want to be in business with three other people. I just I just thought that would be a you know, a not a good scenario to be in. So I basically told him I wasn’t really interested in it at that time. And then, you know, later on when Mike died, then basically I became general manager guy Mike was put in, he and Mike was the managing partner, right?

Ray: My general manager and Guy wanted out and he basically said, you know, he was he was going to shut it down or I could buy the company. So told him I was interested as long as I could do it by myself. Yeah.

Tim: So I had heard I had heard through the grapevine that they had originally thought about two or three or four. And you’re telling us four different people owning different parts of the company or whatever. And Greg and I were chatting a little bit before we got on air about like that would drive me bonkers if I had to be, you know, owners with three other people and maybe even just one other person.

Tim: So I can I can really, really respect respect that. So how long did it take from that point in time till you actually took full control as the owner? How long did that all take in terms of transition?

Ray: Two years. We basically set up a day, October one, and I’m pretty sure it was 2015. I’m not 100% sure that it was going to last. Yeah, yeah. But yeah, it’s been eight years. And so we set up kind of a plan. Okay, two years and guys like you, you know, training, they made me the general managers. So I started basically running everything and I could always go to guy at that.

Ray: And then on October one, we met at lawyer’s office, signed all the papers and I, I was officially owner of that, that day.

Tim: Okay. Wow. So how did the other employees respond? This was one of the questions I kind of mentioned in the intro, because to me, you know, I talked to a lot of production managers that came up out of the field, so to speak. And one of their big challenges is I used to work side by side with these guys and now I’m their boss and it’s really uncomfortable.

Tim: And they they don’t respect me as their boss or something like that. So how did the other employees react to you now owning the company or even the idea that they that you were going to own the company?

Ray: That was no problem. Most of the employees that were here at the time, I did at least part of hiring them. Okay. So it wasn’t like it was it was more of a challenge going from Lee Carpenter to production manager with that happening. Cause it was like you said, I’d work with everyone in the field, side by side.

Tim: And you’d been there probably longer than most of the ones that were still there.

Ray: Yes, Well, I had I’d been there longer than we were meant to even at that time, but I just didn’t had a converse at that point. I just went had a conversation with each person. Right. Just get it all out in the open. When I went from to owning the company, there was none of that. You know, I didn’t really have to do that because, like I said, I was either it hired the people or was part of hire and the the people that the workforce at that time.

Tim: So so if we go back a little bit, we’d just say, I think the answer would be that if you’re you’re taking over a company where you’ve been there for a while working with other people and the idea is just deal with it head on and say, hey, let’s have a conversation, because if we don’t, we might run into some trouble.

Ray: Yeah, I agree. I mean, that’s, you know, might as well get it out in the open. You know, if you need problems, get them taken care of. And, and then actually even then after I did that, there was absolutely no problems because everybody had, you know, the opportunity to say what they deal with. Yeah. And, you know, everybody was fine with it, but.

Tim: Probably none, probably none of them wanted to be production manager anyway. And I’m guessing, but I don’t.

Ray: I don’t think so.

Tim: Yeah. Yeah. So what do you think? So you went through this. What do you think made it really work so well? What what? Maybe one or two things do you feel like would be keys to like the we did this. This is what made it work.

Ray: Wayne One of the good things there was there was some bad things that hopefully we can throw out there too. But then the good things is I did have a short period of time of being general manager. So, you know, not just in the field taking care of all the jobs and stuff, but actually working more with the office people that help the law.

Ray: I think that was probably the best thing of getting getting that opportunity to say, okay, I am and basically saying, you know, okay, I’m going to do you know, I’m taking this job over, I’m going to do it the way I think it needs to happen. And if I’m wrong, I’m wrong, then we’ll do something else. Yeah, the and yeah, I was really supportive to that too, because I had, you know, I thought like one thing I went to every office employee and told them to write down their job, right.

Ray: What you do every day. So if you’re not here, I can do your job, right? Like we have a lot of people. I could not do their job. The kind of ideal, so we could, you know, have someone else that that would do it. That’s probably one of the best things that that I did as being general manager general and knowing that I was going to own the company in a short period of time.

Tim: She So I think in conversations before we went on the air, you mentioned something about you really didn’t go public until it been like a year that you actually owned the company. Is that is that right?

Ray: Yes. Yes. Guy wanted to put out a letter and I didn’t want people to say and I know you have these reporters got new, new people in or now they’re not the same company I wanted. I told him I wanted to wait at least a year and let the people that we work with see that we were as good or better than we did before.

Ray: So they couldn’t you know, we wouldn’t panic and say, well, I’m going to find someone else to do my work for us.

Tim: So yeah, I really when we talked earlier, I really liked that. I thought that was such a cool idea, rather than just like the day after you signed the papers. There’s a big announcement in the, you know, and, and then like you said, people start to worry with that sort of transition. And so I thought that was a really good thing as well.

Ray: Yeah.

Greg: Ray, you had mentioned earlier, you know, we asked the question was about what are the good things? So what were some of the struggles as you started to take over? Because I’m someone that learns from mistakes, so I’d love to hear some of the maybe some of the challenges that you faced when you first started as the owner.

Ray: The worst part is I wasn’t trained well enough in business. I mean, the construction part, I’ve done every job. I know that’s easy. It’s not easy. But, you know, compared to taxes, insurance, banks, you know, I had to get all that straightened out. Of course, everything being in Mike’s name, I had to get all of my own credit, like to bang.

Ray: You know, we had a line of credit. The bank dropped it as soon as I took over. And a lot of the the vendors and I had to reapply for credit to carry that. now that took a while. We didn’t have any problem. But it like the line of credit took a year.

Tim: To get to.

Ray: The bank would actually came to me says how long you you know X amount of dollars on loan after that out there to buy the company but I’m like but I only need a line of credit. I want to borrow it from you to buy the company. I got that all worked out. There was willingness, but the line of credit, it took it took a while and then taxes was a big thing, I tell her.

Ray: But no, you know, I, I it cost me a lot of money. The first year that I ran into a taxes because I didn’t understand accounting lingo. Like, right. If I for instance, the accountant tells me we pay taxes on cash cash means to me money in the bank that I can’t get out today. Well, don’t mean that to accountants.

Ray: And I ended up paying over $100,000 in taxes.

Tim: my goodness.

Ray: Which really kind of set us back. But yeah, yeah. So that’s something the owner should, you know, teach training the ever who’s buying her company and and you know, that person should try to learn as much as that as they can. My problem was which can be a lot of it is you don’t know what you don’t know.

Ray: I don’t I didn’t know what to ask. Right. So I just kind of fell into it one day, you know?

Tim: And so this reminds me a little bit of what I think companies do with a lot of employees. They they bring them into a role and then they kind of like want them to learn like as they go. But they as they go.

Ray: It.

Tim: Doesn’t cover everything. In other words, if you spent two years with the owner of the company with Guy, I’m sure he was telling you lots of different things, but they’re what they’re and tell me if I’m wrong, but it sounds like there was not a like, okay, Ray, you need to know about this. This like a checklist of all the things to be a successful business owner that you need to have.

Tim: And so is like if it came up, Ray learned it, but if it didn’t come up, it didn’t didn’t get to Ray. Is that kind of is that fair?

Ray: Yes, I think so. We were mostly when I took out it was it was a very slow time for us. So basically I was selling and I was running the jobs. Yeah. And so we didn’t get to the the business, you know, part of it which like it always done anyway. So a lot of it just kind of sales fell through or guy wasn’t so used to doing.

Ray: And I think that’s probably why he didn’t bring that up is he wasn’t the one that did it you know, previously. So neither one of us just thought about it you know, that you probably know this.

Tim: Well, yeah, I like I said, I think sometimes we assume training just happens as we go. And what I’ve seen with a lot of companies and even myself, I’ve shared this story a number of times when I worked, went to work for Rhode Island Kitchen and Bath. If I had questions, I would I could ask you know, how do you do this?

Tim: But they didn’t sit me down and say, this is how we do bathrooms at Rhode Island, Kitchen and Bath. And so there were little things that I don’t think compromised the success of the job but didn’t get done because I didn’t know to ask, you know. And so I think it in your case, it’s a lot more challenging because of the magnitude that it has in terms of the company.

Tim: So.

Ray: Yeah, in the first year we had a really good year. So you know that just kind of that the taxes was the biggest thing. Luckily for me, I had a really good office manager.

Tim: Yeah.

Ray: That, you know, whether she knew and saw or not, she could count enough people to figure out what we need to do. And we worked together very well on that and then eventually figured it all out.

Tim: Yeah. So that’s another good thing that you had was some good people around you to help you with this. It wasn’t Ray on his own trying to make the business run.

Ray: Now, if there had been Ray is on his own, we probably wouldn’t be talking right now.

Tim: There’s some honesty for you folks, so what would you. So we’re telling the business owners that might be thinking about this transition, make sure you train whoever this new person is in every aspect of the business. What would you tell employees that might be thinking about making this transition? What would be important coming, whether you’re coming from the field or coming from sales, it doesn’t really matter what might be some things that they need to be thinking about.

Ray: Well, first, I think they need to understand it’s not the same. It’s business at this point. It’s, you know, once you own a year, you’re responsible for the business part of it. And I don’t know how anyone knows that this I’ve never done it. I mean, not to say I did, I did not. I knew how to run a construction company.

Ray: I didn’t know how to run the business part of a construction company. Right. Right. So that would be and then, you know, I would just tell them to make sure that’s what they want to do. Because if you want, you know, once you commit, then, you know, you either make it or you don’t. Nobody wants to see someone fail after a short period of time.

Tim: Yeah. So I’m just sitting here thinking about, you know, employees are always looking at the boss going like they live in a nice house, they drive a nice truck, they must make a lot of money. Why wouldn’t I want to own a company? So what might be the reality check for an employee of a company to say no?

Tim: That’s not really what I want. Have you got need them? And I know this is kind of off the cuff question, but have you got any thoughts on how an employee might go? Like, yeah, I think I want that. But when I look at this and what is that this that tells me, no, you’re not really suited for it?

Ray: Well, if I would say number one, if you’re only doing it for the money, it’s the wrong reason. I don’t make a lot more money today than I did when I was production manager. I mean, I make more. I’ve had, you know, at that point, when you’re when you’re an employee, you make basically the same every year. You get a bonus at the end of the year.

Ray: If companies do that, I’ve had some really good years and I’ve had some really bad years where I actually put my own money into the car. Right? Right. Only got it back. But so I’d say that’s the only reason. Then, you know, you should really think about it and, and talk to the business owner, maybe even other business owners about what is really involved.

Tim: Yeah, that’s a great idea.

Ray: Yeah. One of the first things that I done just can’t do it out there. When I. When I know what I was taking over, I put a couch in my office and told my wife I maybe sleep in there a lot and I had a place I could take a shower that’s close by. And I was like, I may be spending a lot of nights at the office.

Ray: And so we’re all the same.

Tim: Well, yeah, but you had that crazy commute from Potomac to almost Richmond. That would also drive me to a couch. So. Yeah. Yeah. To Stafford. Yeah. So. that, that was. That’s really good. So maybe talk with another business owner and find out what some of those those real challenges are for, for running a company. One of the things that just popped into my head and we talked about this when we talked about you moving from lead carpenter to production manager, and it’s one always been one of my challenges.

Tim: It just strikes me that many particularly feel people tend to be not as assertive and not as we’re going to solve this problem as you really need to be to be a business owner. And I think that’s another aspect of this that’s made you successful is you’re not going to give up. And you know, the compared between the two of us, you were much more willing to deal with the conflict and the challenges that came up as a production manager than I could because of my personality.

Tim: So I think that’s another one of those things that people might think about. Can I deal with not only the challenges that come to the business, but can I deal with the challenges of dealing with people? Because that can that can, you know, subvert a company very, very quickly?

Ray: Yeah, Well, you have to do. And that’s something that you can learn. I mean, I wasn’t always great at, you know, staying and letting a client yell at me. And also you basically learn that you just saw you know, it’s just like anything you, you know, it’s something you need to learn if you want to. Then you you just you do it.

Ray: Yeah. Yeah. You know, you take classes. You know, I’ve read a lot of books about what to do. You know, the biggest thing is keep your mouth shut, evolve, and, you know, yeah, it’s a deal that you once you say, okay, I’m messed up, I’ll sit here.

Tim: Yeah, you can diffuse the situation dramatically that way. So, I mean, maybe not now, but when you first made the transition, Ray is now the owner. How did you deal with the is guy there? You know, I want to talk to Guy, you know, because that’s who I’ve been used to dealing with for because I know Hopkins, Warner has long term clients that, you know, knew my new guy and now it’s Ray.

Tim: How do you deal with that or is that a problem?

Ray: Well, I again, since I’ve worked here for so long, I know most of those clients and I had either worked for him as a lead carpenter or in and as a, you know, production manager. Right. You know, and we still have those same long term clients, you know, that that we had again, I didn’t tell them I bought the company once they knew, then, you know, they knew once Neal ran the same and was going to take care take care of them when he when they had a problem.

Ray: But with Guy, one of our agreements was that he stayed here for a year and worked as a salesperson.

Tim: Okay?

Ray: And so he was here since since I was like, since he owns the building, he had an office across the hall that was set up for him for for selling and, and, you know, running the shopping center and stuff like that from here. So, yeah, he was always around anytime I’d call him, he, he would answer and get back with me.

Ray: That was a problem as far as just in our agreements of what he could say and could not say. We we hashed all that out before.

Tim: Right? Yeah. Well, that’s really good. All right. We’re going to we’re going to wrap up here, but I want to I want you to you may have already said some of these things in the course of the discussion, but I’d like to wrap it up with basically two questions. What advice one or two things would you give to someone that’s making this transition?

Tim: The first thing would be to the business owner. That’s thinking about transitioning to an employee or even a family member, because that happens a lot nowadays in the remodelers advantage world. And then if you’re the employee, what little bits of advice would you give.

Ray: Or as a as a business to the business owner? I would say, you know, really take the time and train them to stuff that they don’t know that they need to know.

Tim: Yeah.

Ray: And to the employee that’s looking to it, I’d say, you know, think about it and, and talk to other people. Not I did that also I did talk to some other business owners. Okay asking was I crazy for buying a company in my time? Right. And that helped a lot. Talking to other other, you know, around other from remodelers advantage.

Ray: I’d be a few different people, but I’d say, you know, talk to them, make sure it’s what you want. I, I would do it again. Yeah. I mean, it hasn’t all been easy. It’s always been challenging, which we all need to be challenged from time to time to be happy, you know? Yeah, Yeah. I think that’s the two big thing is just, you know, believe that you can do it.

Ray: If you don’t believe that you can do it, you can’t do it. And just take the time to talk to everyone you need to talk to before you do it to find out what you need to learn.

Tim: Well, this has been fantastic. Again, I love chatting with you. I love visiting when I’m down in that area. But thank you so much for your insights here. I think this will help a lot of folks.

Ray: Okay. Well, thanks for having me on.

Tim: All right. Take care.

Greg: Tim. You know, one thing I wish I had asked, Ray was, you know, what is it like to succeed Tim Faller as he took over for you as production manager? But it didn’t matter. What a great story.

Tim: It didn’t faze him a bit. He knew.

Greg: Him.

Tim: He knew what he wanted to do when he got the job and he went ahead and did it. And Tim was out the door and gone.

Ray: So well.

Greg: Really an interesting story. You know, an established company, you know, still doing really well, has a good I liked, you know, his insight about no know how to run a business. You know, it’s a really good one And I liked the keep them keep your mouth shut. I thought that was a great insight as well.

Tim: Yeah. I mean, I think one of the things that really made it work that he made a big point of was that he was allowed as the general manager to run the business for a couple of years before he actually became the owner. And, you know, again, maybe a little bit more in there about the taxes and loans and all that kind of stuff.

Tim: But having the opportunity to do that with the current owner looking over his shoulders, just giving him advice, being available, but not interfering, if you will. And I’ll do air quotes without interfering. But giving him that opportunity because it helped him with the employees of the company, it helped him with the vendors, it helped him with everybody else that he had to deal with.

Tim: And I really, really like that. I made a point of bringing bringing up the idea that we’re not going to announce this for a year. I really like that in the sense that, you know, it gives everybody some comfort. Hey, Ray is the new owner and he’s been the new owner for a year. Has anything changed? And everybody could go like, well, I guess we’re or okay with this.

Tim: And so I really I really like that. And, you know, it wasn’t on my agenda to ask him about the bad things because I, I love Guy and I loved Mike when he was alive and well. This is just I really enjoyed my time there as well as I didn’t want to make it, you know, But I, I appreciate the fact that he was willing to share.

Tim: Hey, I just didn’t get that business knowledge that he really had to have. And that’s what fit. So why so many companies fail is that they make decisions that are not good business decisions. And so I appreciate the fact that he was willing to, you know, bring that up and share that with us, but then also being willing to say, hey, but you got to put some energy and to figure in that stuff out, don’t don’t assume it’s just going to happen.

Greg: It actually, I totally agree with that. All right. Well, once again, we’d like to thank Ray Hornsby, owner of Hopkins and Porter Construction, for joining us. And thank you for listening to another episode of The Tim Faller Show.

Tim: And remember, at the Tim Faller Show, we’re working hard to eliminate it is what it is from your vocabulary.

Greg: This has been another episode of the Tim Faller Show. Would you like to hire Tim or myself to help fast track your growth? Please send me an email. Greg after mailers advantage dot com. For more information about our production manager and design manager roundtables to get more information about consulting for your team or ideas for the podcast, please subscribe to the show Comment on iTunes, Spotify, wherever you listen to podcasts.

Greg: Thank you so much for listening.