Steady, Planned Growth: A Strategy in Progress

Like many remodelers, Gary Marrokal started as an apprentice carpenter, worked his way up through the field at another firm and then started his own remodeling company out of his home. Within seven years, Marrokal Construction hit $1.5 million, an annu...

February 29, 2004

 

Gary Marrokal makes sure service and career growth go hand in hand with revenue gains.

Photo: Tim Tadder

Company: Marrokal Construction

Location: Lakeside, Calif.

Years in business: 23

Type of business: design/build remodeling

Business goals: improve customer service; reduce production time; improve subcontractors' professionalism; grow revenue and profit; provide work/life balance, career growth and profit sharing for employees; develop marketing strategy

Personal goal: reduce work hours

Like many remodelers, Gary Marrokal started as an apprentice carpenter, worked his way up through the field at another firm and then started his own remodeling company out of his home. Within seven years, Marrokal Construction hit $1.5 million, an annual volume at which the firm remained through the mid-1990s. The company employed just its owner, Bruce Howard (now director of production) and an office person.

Joining a peer-review organization in 1990 put Marrokal in touch with other remodelers who introduced him to the design/build concept as well as new business ideas. As Marrokal learned from them, he developed a formal, written business plan. Now his company has grown from $1.5 million to $7.8 million for the fiscal year ending Sept. 30, 2003. Marrokal also has cut his 75-hour weeks in half.

"I like to grow," he says. "Normally we grow about 20% a year. This year it's 25%. We've been growing at this rate for about six or seven years." He also likes that instead of doing everything himself, he now gets to watch his 20 employees develop their talents.

Located in the expensive San Diego area, Marrokal Construction specializes in room additions, complete kitchen remodels and master suite remodels. Average job size ranges from $100,000 to $120,000. With that kind of high-end clientele, Gary Marrokal identified a design center as a high priority. Holding every meeting with clients in their homes was no longer cutting it. The design center needed to be easy to reach, near supplier showrooms, provide a professional-looking meeting area, give the four design/sales consultants room to collaborate with each other and the draftsperson, and include catalogs and samples for selections. Also, Marrokal wanted to hire architect John Davies, who had been working with the team, as full-time director of design.

Davies joined the company Jan. 1, 2003, and quickly began working with Howard and the design/sales consultants to bring the design center to fruition. "None of it was laid out," Davies says. "Gary didn't come out to the design center at all until our opening party."

The 1,900-square-foot center, which cost $100,000 to design and build, opened in mid-2003. Marrokal says it helps differentiate the company from competitors and justify higher prices in consumers' minds. With the addition of the center, he planned for 2004 sales of $9.7 million and produced volume of $9 million (up from $6.8 million). He anticipates meeting both goals. "We all know where we want to be, and we constantly talk about it," Marrokal says. "My sales have averaged $1 million per month for the past four months. We know we'll have one bad month, one OK month."

In his growth planning, Marrokal had to factor in more than just the $100,000 hard costs for the center. He had to account for Davies' salary, space rental, an additional truck, a part-time administrative employee and a finish carpenter. Altogether, the design center cost Marrokal $250,000 the first year.

"It will pay off," he says. "I did all those numbers. I have my bookkeeper constantly feeding them to me."

Customer service already has improved. Davies developed a streamlined design/sales/selections process and package to hand off to production. "We're faster, less likely to have mistakes or confusion," Davies says. "It's reducing our clients' stress and their anxiety level. There's now a physical place where clients can call and get hold of me all the time."

The company continues to "tweak" the design center while addressing other strategic initiatives. Davies is working on creating an overall brand and image for Marrokal Construction and marketing the firm through his professional design connections.

Selling more jobs means improving production capacity, which is why Marrokal promoted Howard to production director two years ago. Management training for Howard and injecting a "sense of urgency" into the company culture have made a difference, Marrokal says, as has careful evaluation of subcontractors. Howard, Marrokal and the five superintendents give every sub a monthly letter grade. Any firm graded below a B won't be rehired. Marrokal also wants to partner with trades to increase their profits and therefore their incentive to deliver high levels of professionalism.

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