After 28 years with Grand Rapids-based construction subcontracting firm Kent Companies Inc., CFO Randy Brink has been through myriad up-and-down cycles.
What’s set the most recent growth spurt apart is not just the slow-and-steady expansion the company has experienced in its home market of West Michigan, but also the breakneck pace at which it is growing in new markets like Texas and the Carolinas, he said.
Add in a significant labor shortage, and it makes for interesting times, according to Brink.
“We’ve never had the labor shortage we’ve had (now),” said Brink, a winner in the 2016 MiBiz CFO of the Year Awards. “It’s probably because of the length of the downturn and so many people left the industry — previous downturns were maybe a year at the most. For our success, we kept people even though in some cases it was kind of costly, but we felt we had to keep that core group here. It’s paid off now.”
As the third-generation-owned cement subcontractor has expanded, it also has worked hard to implement more sophisticated processes, particularly in accounting. That’s where Brink has been instrumental, according to the company.
Over the course of the last year, Brink led the charge to get Kent Companies’ rapidly expanding Dallas, Texas office on the same reporting and accounting software as the rest of the company after about a decade of being on its own.
“It’s always just been kind of a passive investment,” Brink said of the Texas operations. “We wanted to get better control. We feel our accounting system is pretty good. We like it a lot and it does what we want. We weren’t getting that out of the accounting system they had.”
Converting the 450 Texas-based employees to the same system required the hiring of an additional 10 employees plus two controllers — one in Grand Rapids and one in Dallas.
The switch to a common accounting platform has resulted in greater operational efficiencies for the firm, which employs about 800 people overall.
Moreover, the implementation of the accounting software — which went live on Jan. 1 and continues to be implemented — came at an opportune time for Kent Companies as the subcontractor’s Dallas operations became its largest office. The Texas satellite office eclipsed the Grand Rapids headquarters in size about a year ago and only continues to grow, Brink said.
“Grand Rapids has nice, steady growth and there’s plenty of work for us,” Brink said. “Texas and the Carolinas — there’s more work than anybody can handle.”
It’s no accident that the company is growing so rapidly in Texas and other southeast markets. According to a March report from researchers at The Brookings Institution, Houston and Dallas rank as the two U.S. metropolitan areas experiencing the greatest migration gains. The report noted the trends are expected to continue at least through the remainder of the decade.
Despite the gains the company has seen in the south and southeastern markets, its base in West Michigan continues to be advantageous as the construction market isn’t prone to booms and busts the way some markets are, Brink said.
“We don’t have these huge swings,” he added.
With a pattern of slow-and-steady growth in its home market, Kent Companies found that maintaining satellite offices on the same accounting software platform has become mission critical, according to Brink. Each week, the CFO gets a report of all the projects the company is working on at any time, allowing him to go line-by-line and determine how the work is progressing. At the time of this interview, Brink was tracking nearly 50 projects and more than $1 million in ongoing work.
“It’s a very key indicator for our industry,” he said of the weekly report.
That financial due diligence has proven irreplaceable for the subcontractor, particularly given the length of some of the construction projects, according to Brink. But because of the length and complexity of those projects, being a financial manager in the construction industry can be a challenge. He cites the tool and die industry and the computer software development sector as other businesses with similarly complex financial management.
“Monitoring your budgets is critical,” he said. “You have to be conservative because if your budget goes up, your percent of completion goes down and you can take a major hit. If you don’t watch those budgets carefully, you can have some nasty surprises, (and) you may think you’re doing well.”
Sidebar: Randy Brink, Kent Companies Inc.
- Gross revenue for 2015: $160 million
- Total employees: Varies a fair amount with workload and seasonality but about 800
- Important moment: Over the course of three or four years, Brink helped to mentor Kent Companies’ third generation of owners. Looking back on that time, he said it helped him learn that “planning is key.” Brink said he also learned the importance of allowing other members of the company’s executive group to work as a team to create a smooth transition.
- Mission critical: Once a week Brink generates a report showing progress on each of Kent Companies’ projects. The report allows the CFO to go line by line and see where projects are under or over budget. In the event that he finds a problem, Brink immediately engages other members of the construction team to address the issues.
- Community involvement: Brink serves on the board of the Better Business Bureau of West Michigan. Brink is a past president of the West Michigan chapter of the Construction Financial Management Association.
- Academic degrees: Bachelor’s degree in business management and accounting from Calvin College
- Company advisers: Huntington Bank (financial); Hillger & Hammond PLC and Mika Meyers Beckett & Jones PLC (legal); Beene Garter (accounting)