This interview was conducted in December of 2022.
Logan Cockerham: Welcome to another edition of the Business Owner Spotlight Series. I’m here today with April Barrett from Flame Lily Construction. April, tell me a little bit about your business.
April Barrett: We’re a woman-owned business. I have a partner named Mary. We do building from the ground up and remodeling as well, and then we also help some investors with flips. Also anybody that’s wanting to rent their property, we will help them get that up and going for them to be able to rent out.
Logan Cockerham: How did you get started?
April Barrett: It’s kind of random. I was a DJ for a little while after college. My mom passed away and she had a family business that was doing apartment rentals and buying smaller units, doing small renovations and making affordable housing.
Dad had another job, so I stepped in and did it for a little while and then I decided that I was learning what I needed to learn there and was thinking about going a little bit bigger with it. So I put my application out there and got hired by a master builder.
He built million-dollar projects, expensive remodels, additions, big, big stuff. I worked under him for six years and my business partner worked there as well with me. He started getting a little older and not wanting to do the big million dollar, $2 million builds.
It’s a different kind of building than a hundred thousand or $200,000 price point. Not better or worse, just bigger. Different engineering involved. So it was kind of, do we stay with them or see if we can fly on our own? So we decided to just jump and see what we could do. We’re in our sixth year now on our own.
Logan Cockerham: So who’s your ideal customer? You do remodeling, but you also do new construction?
April Barrett: Yes, we do both. Both are ideal. I mean, they’re different. Obviously with a remodel, you’re working with the existing structure and making the space new and nice, but not wanting to make it look like you just added it onto the home or that it’s out of place. So with remodeling, you’re looking at matching the trims and styles, keeping to that true design of what the home originally was, so the remodel doesn’t look out of place with the entire space.
With new construction, you start with a clean slate. You’ve got your plans and you can change them on paper. The sky is the limit, depending your budget, obviously. It’s a different type of thinking, I suppose.
Logan Cockerham: Have you seen a slowdown in the new construction at all?
April Barrett: I have. As far as new builds going up, I have seen a slowdown in that. That being said, we never caught up with the demand. Building slowed, but there’s going to be a need for it again very soon. And I think people are going to realize that.
I went to a very interesting lunch and learn the other day that was about interest rates. I am not a financial advisor or a loan officer, but this is just what I learned in class and what I’ve seen.
As far as interest rates being up, think about 2020 and 2021 being kind of like the clearance sale of interest rates, right? They don’t normally go that low. And people are so focused on the interest rates, I think they forget what happened with the contracts on homes that were being put in.
You know, you had 20 offers on a home going $20,000 to $30,000 over asking and being sold within an hour. That’s not good. So we’re seeing an increase in interest rates, but at the same time, it needed to stabilize. We shouldn’t be having 20 contracts on a home. That’s too many. So I think we’re going to get contracts on homes, but they’re not going to be flying off the shelves with this huge markup.
I asked the gentleman that was running the class how the math worked. You had people paying $30,000 over asking, in some cases more, some less obviously. Then what does that math look like for a higher interest rate? Because you’re overpaying for the house, but then now you’re not paying as high of a price with the house being at a higher interest rate. And he said, most of the time the math worked out to about $50 in difference in payment every month.
Now that’s not going to be true for every loan or every circumstance or every situation, obviously, but I thought that was interesting to look at it from both ways.
You also have that now driving up the rental market. A lot of people that have decided not to buy a home because of the interest rates are paying more for their rented living than they would if they would’ve committed to buying a home.
So there’s a lot of different facets around it, and it could all change too. All of this is based around the market that is ever changing and fluid and alive. But that’s what I took away from the class.
I agree with it from what I’ve seen as a builder and a real estate agent. I think that we have a little bit of a slowdown. But there’s always business no matter what. Life happens. We’re in an industry where we’re dealing with people’s homes. People have babies. They need that extra room. The economy doesn’t stop life. People may have different needs in their home. A lot of people shifted to at-home work, and I’m seeing a lot of remodels that are including home offices or new builds that are very concentrated on a home office.
Even if they’re doing 50-50 remote, they’re still wanting that office space and that option to be able to work in their home and function at a high capacity. I think that it’s key with the home office to get it really organized and separated from the rest of the house so that you get in that work mind frame.
Logan Cockerham: What have been your biggest learnings in your business so far?
April Barrett: I don’t feel like I ever stop learning. If you think you know it all, that’s when you’ve stopped growing. Education is extremely important. Listening to other people’s advice and opinions is important. You don’t have to take everyone’s advice. But I listen a lot. And then at the end of the day, I think about what makes sense for me and my business.
When you listen, you think about the other person’s perspective and how their opinion affects what they’re saying. And you’re going to get a lot of good advice. It may not be right for your current situation, but it doesn’t mean you can’t use it in the future.
We take a lot of classes through the Small Business Administration, and I recommend seeking out those education classes, not only about business, but also about your profession specifically. I am in a licensed field, so we’re required to have continued education classes for building regulations, code changes, law changes, rule changes, and I think that’s probably true for most businesses that are regulated.
It also helps you to meet other people when you take classes. Maybe you get to meet somebody that’s doing the same thing you’re doing, and you get to talk about how you run your business and they talk about how they run theirs, and you can pick up pointers from each other.
I think competition’s a good thing. I think competition drives us to be better and I also think that it gives you a colleague and somebody to share experiences with. You just have to ask them.
Logan Cockerham: What are your biggest learnings? What are the biggest obstacles you’ve had to overcome as a business owner?
April Barrett: You know, as a business owner, you are making your own money. If you don’t book business, a lot of times you don’t have money coming in. Sometimes you need to be creative. My business partner and I, when we first started, we didn’t quite realize how much insurance payments were going to be. We knew we needed insurance, but we didn’t realize that it was thousands of dollars and you don’t just get to pay one month, you need to pay a couple months.
So we got creative and made hula hoops from hand and sold them at music festivals, parks and record stores. And after a couple hundred hoops, we had the money. So, I would say, if you hit an obstacle, don’t let it stop you. Just try and think outside the box and get creative with a way to be able to push forward.
It may not be immediate. It took us a while to sell some hula hoops. But at the end of the day, we made a fun product, we had a little bit of fun doing it, and we achieved the goal of being able to raise the funds to get the insurance to start our companies.
Logan Cockerham: That’s an interesting story. A lot of people are unwilling to make sacrifices like that. What does the future look like for Flame Lilly Construction?
April Barrett: I would love to expand and build more houses. We do custom builds, meaning we have a client that we build a house for and it’s their vision and their dream. And then we do spec builds, which means we build for a speculative buyer and that we buy the lot. We get the loan and we sell the house with our real estate license too. That takes a lot of money to do. It takes a lot of savings. But I do love doing the spec builds because it’s our design from start to finish and it’s what we want it to be. And I love creating something beautiful for people to enjoy and live in.
I do enjoy doing that for a client as well, but there is just something about being able to build it when you’ve truly created it all on your own, start to finish, the whole vision. And not only that, but we put our blood, sweat and tears into it. A lot of people think a general contractor just sits back and hires people to do the work, but a good one digs in and helps with work.
If I can get materials to a job site and not have to bug my boys to do it, then I’m going to do that. If landscaping needs to be done, I’m going to pick up some mulch and start landscaping. I moved lumber the other day. The tasks are endless. It’s about being part of the team, not just directing the team.
Logan Cockerham: So are any particular obstacles that you think are going to occur in the coming year that you have to overcome?
April Barrett: There is what I was talking about earlier, a little bit of a hesitation in the market for buyers, sellers, builders, and remodelers.
You can be doing a remodel based on something that went wrong in the home, like general maintenance. And so therefore you might be doing something because you have to take care of something else. And then people that are in a home, they just need things to change sometimes, based on life, like an aging-in-place type of situation. For new builds, I think we might see a little bit of cooling like we are in at the moment.
I would like to think that the interest rates will come back down just a little bit and people will realize it’s not as scary as they think it is, and that we get to create more building. It’s only going to help the current market, because we’re still in a shortage of homes. The more homes there are, the more it brings the prices down.
It could also go wrong and things could get tighter. As a small business owner, you have to keep an eye on the economy and see what’s going on. You have to decide when you’re going to expand. If you were thinking about expanding your business and the economy changes, maybe this is where you decide to keep the cash and pull back a little and wait and see what happens. Then there are times where you just push forward and hope for the best.
Being a small business owner is not for the faint of heart.
Logan Cockerham: Do you think that there’s a possibility of pent up demand for building a new home? Are there customers sitting on sizable down payments waiting for interest rates to go down?
April Barrett: I’ve talked to a lot of people to get the feel of the industry. You could be right, you could be wrong, but it does seem like there are people waiting, and those people will eventually get sick of waiting, and they will start moving. As long as things don’t go into catastrophe mode, people will start adjusting to a new norm, if that makes sense.
There is always going to be business, good economy or bad economy. Life happens. Sometimes you might have to get a little bit more creative with the way you find your business. And you know, part of that is networking. Part of that is you don’t have to blast Facebook with it every day, maybe just put up a video of what you did related to your business that day, or a picture. Just as a friendly reminder. In sales, you don’t have to be in somebody’s face all the time. You need to be present, but I don’t think you have to be banging their door down either. I think there is an elegant way of being able to market and remind people gently at the same time.
Logan Cockerham: You want to build relationships, not transactions.
April Barrett: Exactly.
Logan Cockerham: Is there anything else you wanted to add?
April Barrett: I really enjoy what I do even though it’s not for the faint of heart. I think that if you find something that you really enjoy and are passionate about, and you’re willing to try and make those creative moves to make it happen, then keep doing it.
Logan Cockerham: Well, April, I definitely appreciate you coming on today and I wish you all the best in 2023. And again, thank you for taking the time.