Mis-direction, and knowing when to fold them.
Of all the things self-employed people have in common, I’m sure one that ranks way up there is getting into something that in retrospect either you shouldn’t have, or maybe you should have, but if you knew what you were signing up, you wouldn’t have.
As I look across my small business colleagues, there isn’t literally one of them that didn’t bite from the wrong apple, or took too big of a bite of that apple, or bit the apple too early when unripe, or too late when overripe.
I’ve done it too many times to count, but in at least one regard if you are one that looks for silver linings in things, I haven’t made the fatal mistake that strikes a lot of people in my business, and that is buying the wrong piece of land, or overbuilding a spec house, or getting stuck with a house for a lot longer than you want. Other than that pretty important mistake avoidance, I’ve made all the rest.
What got me thinking about the corners I’ve fought out of, all the tight spots I’ve wriggled out of, all the hairpin turns I’ve navigated on 2 wheels, is this 4 house, single family rental community I built and own down in Phoenixville PA. P-ville is just a fabulous town, and has been growing for 15 years or 20 years and it’s one of those towns you can feel the civic enthusiasm across the cultural, business and neighborhood environments.
My sister lives down there, so around 2014 or so I was riding my bike on the trail that hugs the Schuylkil River (not a word easily spelled) and came across this 5 acres parcel with a distress box for a structure on it. Being such a vibrant area, my thinking juices got pumping, and before you knew it, I owned it.
That began a 8 year journey of false starts, mis-starts, wrong starts, what seemed like good ideas but turned out not to be, etc… Just a never ending process of experimenting, brainstorming, switching gears and changing directions - what made it worse, was it was far from home and I was really busy on the home front, and I had zero for a team down there.
So the original building was a community hall, built in 1935. From outerspace google earth, you can still see the faintest traces of a baseball field. From there, it was a hardcore biker bar (my neighbor has bullet holes in his stucco when he would occasionally complain to the police), an underground lesbian bar, a korean church, a charter school, then sat vacant, then I got suckered into it.
Thing is, it sits in a flood plain, last flooded when everything on the east coast flooded in the early 1970’s Hurricane Agnes, more than a generation ago, so all memory of it was mostly lost, especially for those younger people involved in its nascent gentrification and who didn’t have any relations or contacts down in the area. Christ, it hadn’t flooded in 50 years, until it did, in 2021, when Ida began in New Orleans and somehow came up inland and hovered over Southeast PA, and dumped a lot of rain really quickly. And flood did it flood. Right after I had spent 7 years of my life improving that home that sat in the flood plain, but also building 3 more, just out of the flood plain.
Flood it did. Worse than anyone could remember. The entire canal and river area under 5' water. 130,000 gallons of water in my basement - 8' high, in a 40x60 space. Poured in in a matter of one hour. My tenant had to be rescued in a canoe, and canoe back every day to feed her cat. That was hard, post-pandemic (actually not quite post), and a lot of really taxing events that pushed me to the brink, literally not figuratively. After events like that, compounded by a 2 year pandemic, when I measure myself of what I'm capable of dealing with, sustaining and navigating - I'm almost on a different planet than most people.
Turns out, getting the plot surveyed, as I always do, was a good thing, and one a lot of people don’t do. I’d never buy a piece of land without surveying it - just a simple exercise, and can reveal so much from property line misunderstanding to deed issues. Anyway, what this survey did was reveal to me (and not the other dozens of people interested) that the flood plain stopped 2/3s up the property which gave me a development opportunity.
A lot of people think I’m a skill developer, but I’m really not. I mostly buy parcels that are building permit ready and leave the subdividing to others, in the far past or recent past. Subdividing can just cause so much expense, delay, time and uncertainty and there is no real guarantee that you will succeed, regardless of the expense and money invested. In the end, it’s up to 5-6 people on a planning board, many who have very little expertise. Though on the other hand, it’s fascinating how many boards are made up of a diverse cross section of skilled persons as well.
I’ve purchased, either in bulk or one by one, several subdivisions done by others. Autumn Ridge in Saugerties, 12 lots in Bethel, 200 acres and 20 building lots in North Branch, (2) 4 lot subdivisions in Kerhonkson, a 15 lot project in Kerhonkson, a 3 lot subdivision in Olive, 16 lots in Saugerties and there’s probably more. I’ve built them all out, many of them had been sitting around for years if not decades.
So where was I going with this - basically I guess, just to demonstrate 1 project I bought, had a plan, the plan sucked, had another plan, plan sucked more, and kept coming up with ideas until one didn’t suck and actually stuck. 4 lot subdivision instead of a pre-school, of single family rentals. Nothing about it was easy. Nothing about it was straight-forward, nothing about it went according to plan, but in the end, through perseverance and really no other option, I saw it through, and it’s now generating $10k of rental income a month, plus the depreciation and tax advantages of owning real estate. That’s forever.
But my point is, all of us business people get into these situations - and the hard part is when to know when it’s a lost cause and time to admit defeat and move on, or whether to stick it out and see it through. It’s hard to admit defeat, and defeat comes in many forms - it may be that it’s just sucking up so much time that it is materially taking away from your core business.
It’s impossible to avoid - these mis-judgements and misdirections - it’s just what you do with them that counts. Plenty of folks have made lemonade out of lemons, and probably just as many refused to let go, and drug the whole enterprise down with it, maybe not ‘out of business’, but less mobile, less healthy, less positioned for growth and less positioned to take advantage of the next opportunity that comes your way - miss too many opportunities (most not even close to being well-timed, which helped me coin the idea that 'you don't get to time opportunities, you get to decide to pounce or not.'
The building when I found it.
Strengthening Relationships
This isn’t even a reverse double gainer reverse psychology (maybe the first time I ever spelled that word right the first time) silver lining type of thing, trying to bring to light and the front ‘good things’ that have happened since The Transition. The truth of the matter is that having me out in the field, working directly with the subcontractors not just on big picture scheduling and problem solving but also on the minutiae, the planning, the numerous field decisions.
It’s a big deal, considering this business is about relationships and the attempt to motive and inspire a large team of personalities and talents. Being in the weeds collaborating helps. Also, I’m scarier than Amanda ever was, less tolerant of baloney and phoning it in and a lot more experienced so less passed down the line.
Just in the last 3 weeks, by meeting personally with the mechanical hvac contractor, we re-engineered some ductwork in our a Ranch homes that had a material impact on them. Just yesterday, working with the framer, we engineered then built two dormers in the upstairs of a new home that added views and light to a what was a neat room before but now rocks even harder.
I also get to see who’s trying and who’s not, not secondhand but first hand, which is valuable. People report problems to me, and I can react, with 20 years of experience to guide the fix.
It’s not perfect - we definitely have lost some of the client hand-holding, but interestingly, that whole process had gotten sort of out of hand and we had allowed a degree of custom design creep into our process that we weren’t really getting paid to do. We build personalized homes, not custom.
So it’s been interesting, and there is one sure fire way to keep your business out of any danger zones, and that’s being aware of each and every element of it, which I am - always was, but more so now.
This new Barn home on 10 acres with big views was designed a few years ago, and built a few times after that. Here, we found a way to make it even better with 2 big dormers giving more back of house views. Big big improvement for this site.
Profit Sharing
Just because a professional relationship doesn’t work out long-term doesn’t necessarily mean that long term benefits can’t be derived from most working relationships. I’m thinking of my relationship with a big accounting firm out of Middletown NY who I cycled through in due course and actually left quite frustrated - however, the accountant in charge of my account advised me back in 2012 that it was a no brainer to start a small business 401k program from myself and my employees, and you know, 10 years later - between what I have put away and what my employees have, we have cumulatively put away over $1,200,000 of pre-tax dollars into investments. There are young people in my company that have over $100k, and carpenters who are right behind them.
It’s an interesting program, and I’ve said it bunch but I’ll say it again - it’s a real life example of government program that works. It’s just a good thing, with few unintended negative consequences that I can see.
Our 401k program allows our employees to put away 5% of their salary - pre-tax meaning worth 30% more than after tax - and Catskill Farms matches it, So in essence, if an employee makes $100k, and puts away $5000 (which is actually only $3500 since it’s pre-tax) I match with $5k, meaning the employee puts away $3500 and gets $10,000 worth of benefit.
We also have a profit-sharing program, engineered based on age of employee and length of service to Catskill Farms. That can add another $3000 to $5000 per employee.
And just last year, we added a Defined Pension program which again can spin off $3000-$5000 per employee.
The bottom line is Catskill Farms spun off an additional $273,000 to our employees this past year in terms of sharing the wealth, and that’s quite a bit of money no matter how you spin it. It’s a great benefit, over an above a pretty decent vacation, holiday and bonus program. As an employer, while proud of this, it’s always scary to know you have this obligation now baked into the company’s expenses, in good years and in bad years. I can’t say it keeps me up at nights, but it is a real thing. You can’t just get up one morning and say, ‘Hey, I don’t think I’ll pay this year, things are a little tight”. Once in the program, you are in it.
I often muse, here on this blog, and just when I’m sitting around, at the wealth generation this company has provided across a lot of families and businesses. it’s really just endless- there are direct benefits such as those who work with us to build the homes and get paid well and regularly - these would be our trusted material and subcontractor partners. What I provide them is beyond the cost of individual jobs - it’s a ‘have their back approach’ where I don’t hang them out to dry if something goes wrong, we share the burden, and more times than not, I just pick up the tab as the cost of doing business.
There are the ancillary beneficiaries - the towns and their increased tax bases which then go to higher standard of living for town employees, the restaurant and stores our clients frequent, the realtors who take a large cut, the homeowners who resell their homes for good profits and the realtors who help them, the home inspectors, the banks who have financed tens of millions of mortgages to triple AAA rated homebuyers. We also inspire other people to take chances and start a business, motivate people to set up shop and increase the textured fabric of upstate life. Our marketing has probably exposed more people to the area than the chamber of commerces. Once our clients finish with the homes, they add garages, build pools, hire property managers, do landscaping, donate to non-profits
The bottomline, no matter how you slice it, is the efforts of Catskill Farms, - my personal efforts and that of the teams I have put together - have literally moved the needle of economic sustainability across a broad swath of Catskill life, and idea that that all happened because I had an idea, and worked at it tirelessly, is really the essence of the magic of capitalism. I’m not unique- many people do what I do, which is leave it all on the field nearly everyday - but it’s a club of people who have an outsized role in the quality of life in any given area.
This isn’t really a self-congratulatory self-back-patting, victory lap - though that would be fair enough at this point. It’s just a general reflection of the magic of the free market, where you efforts are measured by your efforts and the tens of thousands of micro decisions you’ve made along the way.
Lake Front Rental outside of Callicoon NY
Brand NEW Catskill Farms one of kind lake front rental on 5+ acres with stream in private community in North Branch NY. This 3 bedroom 3 bath rental has it all - decks, screened porch, lake, ping pong and over 2500 sq ft of space. Air conditioning. Is available seasonal or for an annual lease. Experience all the charm and convenience and style of a Catskill Farms home. Live large in the country. See more pics at CATSKILL FARMS RENTAL.
