How I Started A $500K/Month Custom Home Building Company
Hello! Who are you and what business did you start?
My name is Michael Parnell, and I am the founder of MPC Builders. We provide general contracting services for custom home construction along the Jersey Shore, as well as commercial projects throughout NJ and the Philadelphia metro area.
We’re known for our open-book style of construction management, we educate our clients on all aspects of their project, from cost and budgeting to constructability and schedule. Most builders keep that information close to their chest, almost guarding the details as a way to protect themselves from conflict. We believe that an educated client is a happy client and one that will become a raving fan of our company.
We also understand that our clients have busy lives, and cannot afford to have the construction of their projects impact their lives. So we handle everything for them and keep them informed at all times on the progress of work on-site, the current cost tracking against their budget, and the overall schedule of completion.
We’re busier than ever because of this open book-building process, it’s unlike any of our competitors and our clients take notice, and become raving fans… and in turn, refer to their friends, and so forth…
What's your backstory and how did you come up with the idea?
I started my career in a large scale, the commercial construction industry in the NJ and NYC markets. I was a project manager on $50-100+ million dollar projects, for clients such as the NY Red Bulls, Goldman Sachs, Princeton University, GlaxoSmithKline… large, multi-year projects.
After the downturn in 2010, I was just finishing up the Red Bull Arena soccer stadium project, and my employer decided to all but shut down our NJ business unit, laid off a ton of employees and pulled the ones they kept into our NYC office. I was commuting from Monmouth County, NJ to lower Manhattan, and after a year and a half, I had enough. My son was just born, and I was leaving for work at 5:30 am and getting home at 7:30 pm, and never home when he was awake other than on weekends. I knew that wasn’t the life I had envisioned having, and I needed to make a change.
So at first, I tried getting another job, in northern NJ for a small general contracting firm. I was hired as the Operations Manager and had a deal to work my way into an ownership position after a few years. But shortly after starting with the company, I knew it wasn’t going to be a long term position. It was very unorganized, with a culture in place that was not interested in making any changes to the way things were run. They also didn’t have solid business relationships, and after coming in 2nd place in nearly all of our bids (without the relationships to bring in those opportunities), I saw the writing on the wall. I was the second-highest salary, in a sinking ship, and I was laid off after only 5 months in the position.
About a week before the layoff, I started to consider my options, knowing that the layoff was inevitable. I spoke to a few former clients about potential opportunities for work at their facilities and started to consider opening my own business. The groundwork was in place, in my mind, when the layoff conversation happened, so I decided to give it a shot. I had an $8,000 severance check and took out a $15,000 crowdfunded personal loan with a website called Prosper, and I rolled the dice. The startup money I had on hand would give me a few months of household bills to be paid before it ran out, and I was prepared to liquidate a small retirement account if need be to give this hopefully 6 months to a year to work out.
Two weeks after my layoff, and making the decision to give it a go starting my own company, I was introduced to my first client. His name was John Liedersdorff, and he was building a music-themed building renovation in Asbury Park, NJ, called the Lakehouse Building. To be included in the project were recording studios designed by the world-famous Walters Storyk Design Group (who designed Jimi Hendrix’ Electric Ladyland Studio, as well as studios for Beyonce, Jayzee, among others). Beyond the studios, the project had rehearsal rooms, lesson rooms, music retail shops, and office space. I was hired to project manage the building after our first meeting, and MPC Builders was off and running!
Describe the process of launching the business.
Startup costs were lean and mean, as I was a solopreneur for the first 9+ months. I just had to cover my monthly living expenses, and that was the goal month in and month out. I didn’t have targets for the years ahead, I was just taking it one month at a time in sort of a “proof of concept” stage of the company. Initially, I was trying to be a “consultant”, in the form of an Owner’s Rep on projects.
I’d manage the project, for a fee, and the subcontracts for each trade would be directly between the client and the subcontractors… but within 6 months of starting the company, every client I met was looking for a General Contractor to give them a lump sum price to build their project, they weren’t interested in taking on the risk of overruns or contracting directly with subs.
So, based on the demand of the market, I shifted my position and turned the company into a General Contracting firm. I registered as a GC, got all of the necessary insurance policies in place, and started taking on at-risk general contracting work from that point forward. We’ve been general contractors ever since…
What I’ve learned throughout this process is that the plans you have in your head aren’t necessarily how they’ll work out. You can plan all you’d like, but if the market wants a different product then you need to pivot. You also have to have a mind of your own and not get caught up in what other people think you should be doing.
Since launch, what has worked to attract and retain customers?
For the first 6 and a half years, I got wrapped up in the pressures of “growing”, as that’s all you hear in the world of entrepreneurship these days, you’ve got to “scale”, “grow”..! At one point, I was up to 9 salaried employees, and over $400,000 in annual payroll. But with that kind of employee growth, comes a ton of pressure to land new projects constantly, to “feed the machine”.
If I’ve got 25 employees and 10 trucks on the road, someone may think “wow, he’s got a huge company” but if I’m struggling to make payroll and miserable in my home life, does that really mean I’m successful?
It created constant stress, and daily pressure to make sure I could make payroll. Every bid we submitted to win new projects became critical. That became my life, and personally I wasn’t making any more money than I did when it was just me and one other employee. So what was I doing this all for? If you’re not enjoying yourself, and you’re just stressing out and working like a dog to make sure other people went home with their paychecks, then you’ll never feel fulfilled or enjoy what you’ve created when starting your own company.
So I hit a breaking point where I knew we couldn’t go on like that any further, and we decided to restructure the company. We scaled back our employees to four of us, and the last year and a half have been amazing. We no longer have the pressure to win every bid we submit, yet we’re winning more work than ever before, and we’re ENJOYING what we’re doing again!
Now we’ve got the bandwidth as well as capital to invest in the company again, which we’re doing by revamping our website, hiring a firm to develop our SEO strategy and streamline our social media messaging. We recently shot a video highlighting one of our finest custom homes and speaking about our home building process and open-book management philosophy, and we’re about to release that in a paid Facebook and Instagram ad campaign, to scale our home building business which I’m very passionate about. These are exciting times ahead!
Our philosophy in both our residential and commercial building markets is to educate our clients, not hide information from them like our competitors. That’s our unfair advantage, we’re so confident in our estimating process that we share our entire estimate with our clients in an open book manner, informing them on where they’re spending their money in their projects. This process allows them to understand their budget, and give them the opportunity to relocate those funds into areas that they value the most. Our competitors keep their budgets close to their vest and keep their clients in the dark. We believe an informed client is a happy client, and the repeat business and steady stream of client referrals is a testament to our process, and that it works and people enjoy working with us!
How are you doing today and what does the future look like?
We’re just getting started with our SEO, and organized social media and advertising campaigns, so I can’t speak to our numbers at this time.. but we’re confident in the team we’ve hired to manage these processes and we’re excited about where that targeted advertising will take us! My goal is to further build the custom home building division, as I see our management style being a real disruptor to that market place and an unfair advantage over our competitors.
We’re currently tracking around 50% custom home building, and 50% commercial projects.. which is right where we like to be. This breakdown will allow us to weather any potential changes in market conditions if there’s a housing adjustment or a shift in the economy… a large percentage of our commercial work consists of higher education projects primarily at Temple University, in Philadelphia, PA, and that’s by design as well. In times of recession, higher education work actually increases as states pump money into their education systems, so this type of allocation prepares you for downturns in the economy.
Through starting the business, have you learned anything particularly helpful or advantageous?
We’ve made plenty of mistakes along the way, building MPC. I would say the biggest mistake was scaling the staff the way we did, but I’m not sure I would have known it was a mistake without actually going through the process for myself. When you hear “scale, scale, scale,” you think that’s what you’re supposed to do! I got wrapped up in defining success based on how I thought other people may look at me, what their metrics may be for determining if I was successful or not. How many employees did we have, how many trucks with our logo did we have on the road… But those stats don’t mean anything if we’re not profitable.
If I’ve got 25 employees and 10 trucks on the road, someone may think “wow, he’s got a huge company” but if I’m struggling to make payroll and miserable in my home life, does that really mean I’m successful? Not in my book. I stopped viewing other people’s success in the same way, and now just focus on keeping my house in order. The grass may not always be greener on my side of the fence, but I’m not worried about other people’s grass, I’m gonna water my own lawn.
Another lesson I learned is to tie my business success to my philanthropic goals. When your driving force is something superficial or materialistic, it doesn’t mean that much when you lose it. But if your driving force is something that’s larger than you, a higher calling, then you’ll be dealing with a different monster when adversity and opposition hit. And there is always adversity and opposition in entrepreneurship.
So in 2020, I’ve decided to pledge 10% of the profit from each project we are awarded, to an organization called the Cure JM Foundation. They fund research into safer treatments for children impacted by a rare autoimmune disease called Juvenile Myositis, which my daughter was diagnosed with a week before she turned three years old.
I’m now on the National Leadership Council for Cure JM, and with this pledge of support, when a client chooses to work with MPC to build their construction project, 10% of the profit from our contract award will be donated to Cure JM in honor of the client who awarded MPC their project. Now, our mission is not only to deliver a superior product in the world of construction, but we’re also working to improve the lives of children across the country impacted by this rare, and life-threatening autoimmune disease. And that’s a cause we can get up for each and every day we go to work.
What have been the most influential books, podcasts, or other resources?
I’m a podcast junkie, over the last three years I’ve probably listened to thousands of hours of episodes. The most influential ones for me have been Lewis Howe's School of Greatness, Rob Murgatroyd’s Work Hard Play Hard, and The Ed Mylett Show. So many great insights into the challenges we face as entrepreneurs, both mentally and in business, and they’ve provided tools and advice on how to get through them.
Jesse Itzler, a frequent guest on several podcasts I’ve heard, as well as a keynote speaker at Lewis’s “Summit of Greatness” event, is another major influence on my life. I joined Jesse’s “Build Your Life Resume” online course last Summer, and that greatly changed the way I view my time and priorities. I’ve learned to separate my life into four buckets: Family, Health, Business and Contribution/Charity. These are the four buckets I value the most, and where I get the most energy from, and if something comes up that doesn’t fill me up in one of these buckets, I pass on it. I also try and divide my time equally between them, providing the feeling of “balance” in my life. Jesse also taught me to make sure I’m taking the time to have experiences that I wouldn’t have had if I wasn’t making that a focus of my life. By building your life resume, just as much if not more so than your work resume, you become more well rounded and have more to offer people, and inherently you will experience growth in your business by doing so.
Advice for other entrepreneurs who want to get started or are just starting out?
Only start a business that you are super passionate about, because once you start you’re in it, no one is going to come and bail you out, or take over for you. Not all times are fun and you’ve got to have the drive to get through the downs just as much as you have to enjoy and celebrate the ups!
Sometimes a good idea doesn't convert to a good business. But you’ve got to be willing to give it a go if you’re passionate about it! If you fail, then you learn from the failure and apply those lessons onto the next thing you attempt in life. You never truly fail, if you learn from the failure!
What will inspire people isn’t the achievement, it’s the courage to try, to make the effort!
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
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