St. Louis Home Builder Shares Lessons Learned on Resilience

Filed in Business Management, Home Building by on October 20, 2015 1 Comment
Brett Hardesty, president of Hardesty Homes in St. Louis, Mo.

Brett Hardesty is president of Hardesty Homes in St. Louis.

Brett Hardesty says when he founded Hardesty Homes of St. Louis in 1982, the most difficult thing his company did was build homes. These days, he says building homes is the easiest thing it does.

The industry has changed a lot during the last 33 years, and like many builders across the country, Hardesty has learned some difficult lessons – especially after riding the recession roller-coaster.

What began as a four-man start-up company in 1982 grew to be a 41-person corporation by 2006. But when the industry went into a tailspin, the future looked bleak for Hardesty Homes.

“I had all three of my largest real estate developments at one bank, and about six months into the recession, the bank president told me that all of my loans would be coming up for renewal within the next 90 to 120 days,” Hardesty recalled. “He told me the bank had a commercial real estate portfolio problem and it was not going to be in a position to renew the loans.

“That was the biggest dagger to the heart I’ve ever experienced,” Hardesty said.

Lesson 1: Diversify

Hardesty reminded the bank president that he was never late with any payments and that his balance sheet showed he had enough cash on hand to carry the loans. But the circumstances were beyond his control.

In that moment, he realized the severity of his mistake in putting all his eggs in one basket. He was immediately forced to let go of 38 employees, which he says was the hardest thing he’s ever done in his life.

But being a third-generation builder, Hardesty was determined to keep his business afloat.  He never knew another profession, nor did he want to.

“I wasn’t about to set up a frozen custard stand and start asking people, ‘You want sprinkles with that?'” Hardesty said. “Our backs were against the wall and we had to find a way to keep going.”

Lesson 2: Have a Plan B

With just three remaining employees, Hardesty was obliged to relocate to a smaller office space. Luckily, he owned the 3,500 square-foot space they occupied, which he leveraged to buy some time for his faltering company.

As a means to slowly climb out of debt, Hardesty negotiated deeds in lieu of foreclosure for his current projects, and he was able to sell his display homes and other lots.

He then took notice of the empty lots all over town, and started asking the banks what they planned to do with them. Though the national and regional banks were more prone to sell their lots as quickly as possible, the smaller community banks were looking for ways to recoup at least some of the lost value of their properties.

Hardesty proposed a plan to resurrect several projects financed through the community banks by reviving their operating programs using closely monitored accounts funded by each bank. Nearly all of the local banks he met with decided to establish joint venture agreements with Hardesty, arranging profit splits on the finished projects.

During a five-year span, Hardesty collaborated with local banks on eight different projects. With his guidance, those banks were able to regain an additional 50-60% increased return above their original estimates.

Lesson 3: Show Adaptability

Hardesty Homes was able to survive, but nowadays it looks quite different than it did just nine years ago. With six employees and a new business model, Hardesty Homes now focuses primarily on building custom homes on the owners’ lots and subcontracting nearly all of the work.

For Hardesty, his business and the industry as a whole has forever changed. He says the old ways no longer work, just as he’s no longer merely a company president. He has to wear many hats throughout the day, including quality control engineer, marketing and social media manager, and chief economist.

“The biggest change in home building over the last 10-plus years is the tremendous amount of foresight it requires,” Hardesty said. “It’s drastically different with all of the new regulations, technology and strategy needed to develop a finished product. But you have to show adaptability if you want to keep the business going.”

Hardesty says he’s often reminded of something his grandfather used to say: You can’t run very fast when you have your pants around your ankles.

After running through the gauntlet and coming out on the other side a little wiser, Hardesty is proud to say his company is regaining its stride.

Comments (1)

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  1. Congratulations!
    Now, it is time to back to your three generation of buyers and remind them who you are and how you can help them, their families, friends and associates!
    ONwards and UPwards!

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