Luis has always worked with his hands. First carpentry, then formwork – molds – for concrete pouring.
In 1978, just shy of his 40th birthday, he decided to go out on his own, getting his own license and eventually incorporating his own construction company in 1980.
For the first twenty years, he kept it small; just county projects, manageable stuff. Then he hired a talented CFO in 2000, and since then, they’ve built Luis’s construction company to tackle huge projects – all commercial; most of them big, ambitious, multi-year challenges. Museums. Sporting arenas. A movie studio’s giant parking garage.
There are some advantages when you tackle construction projects that stretch over years; one of them is the ability to have a bit of a recession cushion. The economy might be in the dumps, but people still need roads to drive on. In the 80s, they were busier than everyone else. In 2008 and 2009, they had some of their best years. But downturns in their local economy can disproportionately affect their business, especially their available capital.
“Sometimes our size kills us, but sometimes it helps,” Luis says.
That’s the pros. The cons are just as large: to survive in their business, you don’t just need financing – you can’t survive without it.
Financing: critical in the concrete business
For projects at this scale, contractors like Luis’s company need to have financing before the contract is even signed. Work won’t start without it.
It’s not just that. You need to be able to pay your workers – while your company may not get paid for a year, at best.
“Labor is everything – the biggest percentage of our cost. We are DOA in the water without it.,” Fred, the CFO, says. “You can’t survive without financing.”
Many banks are risk-averse; they might take on a company like Luis’s, but god forbid they have a bad year. One little blip, and that bank is dropping you.
It’s not just the risk factor. A traditional line of credit loan isn’t a great idea for a construction project; you might be able to get the project with that backing, but it’s not based on your actual billing, revenue, and operating cost needs.
“You don’t want to take more money out than you need. With a static line of credit, you might take out more money than you need – but every day you get money in and it goes against the line,” Fred says, with some frustration.
Finally, when they’d exhausted their line of credit, their bank recommended Far West Capital, citing their construction experience and the type of financing they offered.
That’s when things really changed.
Expectations, and exceeding them
Within a few days of that initial recommendation, we’d flown across the country to meet him. He quickly saw the potential, and within days, the paperwork was in order, the red tape was blown through, and Luis’s construction company had the financing it needed.
But what they didn’t know they needed was the relationship they got with Far West Capital.
“I would’ve never believed how responsible and meticulous these folks are,” Luis says. “They’re very cordial, very personable. And they’re responsive – you can get ahold of them very easily.
“Even better, they’re always solving problems. If there’s a little hiccup somewhere, they’re on it. The people they have involved are incredible.”
For Fred, it’s made his job easier and given him peace of mind.
“We know the money is available, but not overextended; I know we’re managing it better.”
Far West Capital is in the business of funding the goals of high-growth entrepreneurs. Know a great company in need of capital to unleash their potential? Send them here and we’ll give them a call.