Some business owners are content with the size and sales volume of their companies. Others know they want to grow but don't know how or aren't willing to dedicate the required assets for an expansion. Then there's another group of business owners who set a course for growth and aren't afraid to utilize the necessary resources to do so. San Diego-based concrete contractor T.B. Penick & Sons fits into the latter category. Over the last few years the company has experienced a nearly doubling of business from $70 million in 2004 to more than $122 million expected in 2007.
The pace of growth T.B. Penick is currently seeing has exceeded the brothers and owners Marc and Tim Penick's expectations. Although the Penicks have been working aggressively to expand the company, they set annual growth goals closer to 15 percent.
"Our growth is organic," explains Marc Penick, CEO of T.B. Penick & Sons, "meaning that work is being generated from satisfied clients and our ability to perform the work. We're not forcing top-line growth for its own sake. We've had a lot of success, and some fortuitous events for us to double our growth."
Part of that new revenue has come from an expansion into offering design/build and design/assist services for their expanding client base. The result of the expansion was a new company started last year, Convergent Inc., which utilizes in-house design, engineering and construction to reduce costs and speed the project timeline.
"Accepting the risk and expense of design in the design/build model has been an exciting growth avenue for us and an invaluable service for our clients", notes Tim Penick, company president. "Once we take on the design element, we put in place internal controls that help mitigate our own cost while producing efficiencies in constructability, allowing for a faster schedule and reductions in the cost of work and general conditions for our client."
One recent win for T.B. Penick in this category was a $93 million design/assist project with San Diego's Turner Construction for a 14-story student housing project for the University of California, San Diego. This project, along with others in the pipeline, will add $50 million to the bottom line this year.
Branching into divisions
Marc and Tim have brought the company a long way since their great-grandfather established the business more than 100 years ago, hauling construction materials with horse and trailer. Over the years as the business passed through the generations, its focus changed according to market expectations and customer needs. By the mid-1980s both Marc and Tim were working fulltime at the family business, implementing business management planning techniques they believed would put the company in a profitable growth position. By the late 1990s, when the brothers took full ownership of T.B. Penick, the company was moving upward on a revenue trend.
Today T.B. Penick has about 400 employees, and they perform a mix of general contracting and subcontracting work. T.B. Penick performs jobs all over the country, with about 60 percent of its work in the San Diego area. As quickly as the company has grown, the Penicks used foresight to avoid some of the pitfalls companies encounter during times of rapid growth.
"One of the keys to maintaining profitable growth is diversification within a market so you can reduce market segment risks. If one of your markets takes a nosedive, your company won't because you're engaged in other construction markets," explains Tim. "At the same time, you have to be a specialist in each area you're pursuing - you can't be successful if you're too much of a generalist. That's why we've set up different divisions within our company."
T.B. Penick currently has three divisions - Structural Concrete, General Construction and Innovative Concrete Systems. The Structural Concrete division, headed by Greg Lee, performs structural concrete, as well as prime trade contracting, civil engineering and design/build of mid- and high-rise Type I buildings. This division includes Convergent, Inc.