Controlled Growth Puts AFD Second
"As successful contractors know, cash is always king," said the president of Air Flow Designs Inc. (AFD), Casselberry, Fla. "Even in the best of times, we keep watch over expenses, capital investments, and head count."
You could say Burd watches his company's cash flow like a hawk, but there's no denying that such business vision has been instrumental in AFD growing at a phenomenal pace. According to the man in charge, AFD has grown at an average of 15 percent per year over the past five years. Last year, AFD took in $37 million, of which 90 percent can be traced to residential new construction income. This equates to an income of $33.3 million.
"It requires the ability to adjust to the ups and downs consistent with the housing market," explained AFD's leader, relaying what it takes, in his opinion, to be among the best in new construction market. "New companies spring up when the market booms and are successful for short periods. We see new names, new trucks, new buildings, and higher wages offered to our employees.
"But, when the cash flow begins to slow and suppliers, banks, mortgage companies, and employees - the ones that got the 50 cents-an-hour increase - are looking to be paid, the big problem sneaks up on these new companies. Many are bankrupt far before they ever recognize it."
REASONS FOR GROWTHBurd believes AFD is experiencing, as he put it, a calculated "controlled growth."
"This growth was the result of anticipating growth areas and building new or expanding warehouses to serve builders in those areas," he explained. "We also implemented new procedures, both field and office, to take advantage of a booming new construction market.
"We had the opportunity to grow at a much higher percentage, but chose to keep the growth at a controlled level. We believe overexpansion in a hot housing market can lead to big problems when it cools off. All of our growth was financed internally."
AFD's leader is happy to report that the residential market in Florida is expected to continue to grow and prosper. He said his company should be right there in the thick of things. "Yes, there will be some bumps and down turns, but we believe the number of new people coming into Florida is something like a hundred thousand a year. With the Baby Boomers retiring and dreaming of breaking 90 on the course, Florida, I believe, will continue to grow. It is expected to be the fourth most populated state in the near future."
In addition to having cash on hand, Burd believes in striving to be a nonentity to his builder customers. "A nonentity is not having your name come up in a builder's superintendents' meeting," he explained. "You try hard to never be the reason the house is behind schedule. It means your supervisors schedule a rough-in for the house before the builder calls you. It means being on the job on time and completing the house on schedule.
"But, conversely, this also means being the only entity a residential customer thinks of when they need service or a replacement unit."
LOOKING BACK AND AHEADO.R. Cousineau and his wife founded AFD in 1958. They grew the business until Cousineau died of a brain tumor at the age of 53. Prior to her husband's death, Mrs. Cousineau made an agreement with Burd, allowing him to buy the company. During the past 20 years, he has grown the business through acquisitions and controlled growth.
According to Burd, AFD gravitates primarily to new and small custom builders. It operates in central (Orlando and Tampa) and northeast (Jacksonville) Florida. It serves these markets from six warehouse locations.
The fastest-growing parts of the company are the replacement/add-on, service, and service contract segments. Burd said AFD is a service warranty association, meaning the State of Florida has approved the company to market its own service contracts.
Burd realizes it takes a lot to keep 300-350 employees happy and employed year around. So, AFD provides medical, dental, and life insurance, paid vacations, a 401k program (with the company paying 50 cents per each employee's dollar contribution), and a California plan program, which allows employees to pay for insurance with pretax dollars.
Burd is keeping his fingers crossed, but he believes the company's future continues to look bright. "People will always want to own a home or own a bigger home," said Burd. "Air Flow Designs will continue to pursue the builder market and we will continue to expand our replacement market and our service and service contract segments."
Publication date: 09/11/2006