One of the credos I live by — thanks to the writings of Berkshire Hathaway billionaires Warren Buffett and Charlie Munger — is living beneath your means. If you saw my car, or my excuse for a car, you would know what I mean. But I sleep better at night knowing my wife and I aren't buried in debt.
That goes for businesses, too.
Take Therrien Waddell, one of those invisible construction companies that you don't recognize or hear about, but you will find the Maryland firm's handiwork all over the Washington area.
Business partners Jerry Therrien, 67, and Donnie Waddell, 74, have built a $50 million-a-year enterprise grinding out friendly storefronts, those anonymous data centers and even swimming pools.
But the secret of their success is living in the real world.
"The smartest move we ever made was buying this company in 2005," Waddell said. "The second smartest thing was to leave cash in the company and not have debt. The company means everything to Jerry and I. We kept the money in so when we hit hard times, which we know was coming, we could survive."
The 2007-2009 financial crisis hit everybody hard, including TW. It lost $2 million in equity and a big chunk of its business. But it survived.
The longtime construction guys are now working on their most important project. It's the work of selling their company, for $4 million, to the next set of owners: three employees who share the values of the owners.
Dan Coffey, a vice president at TW and one of the three future owners, said he joined the company because of the founders' austere approach.
"When Donnie and Jerry asked me to come on board, one of the core values I had before I made the decision was conservative finance," he said. " I don't like debt."
Coffey said the new owners will run under the same philosophy.
"We like being a small business. We have no aspirations to be a billion-dollar company," he said. "You build successful projects, piece by piece, you make a decent margin and you build trust with your clients so they keep coming back. My marketing costs are low because I don't have to keep hunting new business. We spend money where it's needed."
That's what the co-founders wanted to hear when they offered to sell to Coffey and others.
"I love continuity," Therrien said. "We never imagined not transitioning to key employees. They are getting equity in the company instead of bonuses."
"Jerry and I could have made more money selling this to an independent," Waddell said. "But I work with these guys and emotions came into it. The whole thing is family, and we take it personally. It's the reason I am working here at 74."
TW doesn't build the glamour destinations like Nationals Park (Clark Construction) or the Trump International Hotel (Lendlease) or the United Therapeutics headquarters in Silver Spring (Whiting-Turner).
But it has created a good niche. Drive down Rockville Pike and see the sprawling dealership it built for Porsche-Audi. There's the folksy facade on the Warby Parker store in Georgetown. Panera Bread. Trader Joe's. Jared Jewelers. Shopping centers.
TW has 34 employees and an annual profit between $1 million and $3 million a year. Therrien and Waddell don't take huge salaries, in keeping with living beneath their means. But they share in the profits in good times.
Thousands of small businesses are in similar transitions as baby-boomer entrepreneurs seek a home for their creations. Just last week, I wrote about two 50-somethings preparing for a future sale for their successful window-installation business.
Therrien and Waddell met 40 years ago on a construction site.
"I was the college guy to Donnie's farm boy," Therrien said. "I was the laborer, and he was the superintendent."
They've weathered a handful of recessions, real estate collapses, stock market misfires, a banking crisis or two and a friendly breakup with their former business partners.
They built a specialty in shopping-center refurbishment as the region's commercial centers aged. Now they are building data centers, the big, anonymous, energy-hungry buildings that warehouse the brains of the digital economy.
They can be finicky. TW walked away from a $10 million job to replace water pipes in a high rise because Therrien and Waddell felt that it wasn't a fair deal.
When they like somebody, they stick with them. "Once we get our foot in the door, we get repeat work," Waddell said.
Therrien, who graduated from Gettysburg College with a degree in biology, is Mr. Inside, responsible for office administration, contracts, sales, deals, all the above. There is about $2 million in the bank.
Waddell is Mr. Outside and a construction guy to the core. He visits job sites, schmoozes with his construction supervisors and makes the trains run on time.
"Jerry's strength is not my forte, and my forte is not Jerry's," Waddell said. "In the field, you have to be direct. If you don't get a point across and you need to do something, you use a jackhammer. In the office, you have to be diplomatic. In the office, it's an eraser."
TW's average job is about $1 million, but costs can go as high as $14 million on a shopping center renovation. Around two-thirds of that pays for actually building the project: cement, lumber, steel, labor, trucks, cranes and other costs.
That leaves the owners with an operating profit of 10 to 12 percent. TW pays its administrative staff (including owner salaries), lease, insurance, accountants and taxes out of that.
Of $50 million in gross revenue, they end up with a profit in the low millions.
Therrien Waddell has been around since 2005. Before that, the two had been partners in a larger firm called Williamson Group. Williamson was both developer and general contractor.
Developers are like orchestra conductors: They buy land, finance real estate deals, build or have builders build projects.
Today, Therrien Waddell acts more as a construction manager that plans, directs or coordinates, usually through contractors, the building of projects.
Two years after their launch, the partners were rocked by the 2007-2009 financial crisis and the ensuing recession. Revenue dropped from $25 million or $30 million to half that. Profit margins on each job plummeted as cash-strapped developers drove harder bargains.
Therrien and Waddell know the severity of a downturn, so they were prepared for the worst.
In addition to the loss of $2 million and half their equity in the company, they cut staff by 20 percent, including receptionists. They watched every dime. They took salary cuts.
"We looked at each other and said, 'Holy cow! What do we do now?' " Therrien said. "Those are those times when you wake up in the middle of the night and say, 'Who is going to hire me?' "
Jobs dried up, so they had to market themselves instead of relying on referrals. They started attending networking groups. They attended chamber of commerce lunches. They became LEED-certified so they could qualify for more jobs. They started hosting "lunch and learns" to figure out how to chase a wider variety of jobs, including a two-story home they built for the National Institute of Standards and Technology — a laboratory built to enable NIST to study things such as drywall, paint, solar panels and other materials that go into a house.
Both partners said that the smartest move they made was going out on their own. The breakup with Williamson was friendly, but the negotiations were arduous. They vowed that when the time came, the transition to the next ownership of TW would be seamless.
"The only thing I regret about starting our own company was that I wish we had done it 10 years earlier," Waddell said. "If I had done this at 52 instead of 62, it would have been different."
The hardest part is hiring and managing the workforce. But when there is chemistry, the employees stick around. The partners are selling to three veterans who have 45 years of combined experience with TW.
What they are going to do next? I mean, they are 67 and 74.
Well, they aren't just walking away. "We are planning retirement with optimism and some reluctancy," Therrien said. "We don't plan on disappearing."