On the banks of the Hudson River in Beacon NY 2013

Before I Get Started…

I think that I should clarify and explain that while you are reading this on the JerraldHayes.com website I am the guy behind The Small Business Systems Co. where I provide consulting and coaching services to small businesses in general (The Technology, Tools, & Methods You Need To Run Your Small Business…Better) and the guy behind Paradigm Projects Ltd. where more specifically I provide those same kinds of services, consulting and coaching to home & garden, building & remodeling businesses (Business Process Improvement Projects For Architects, Builders, Remodeling Contractors And Other Members Of The Home & Garden Industry). And I also write mobile and destop software solutions using the Claris FileMaker Pro platform at 360 Difference. (A Robust, Powerful, And Scalable Set Of Estimating, Job Costing, Project & Business Management Tools For Macintosh, Ios, And Windows) Three distinct channels, all the same guy.

Please forgive me if at times I lose the linear track of the story and jump forward or back in time…

Okay Here Goes, a Little History…

While I was born in Baltimore MD my earliest memories are of Chappaqua NY since I moved there when I was just 1 year old. That is where  I grew up and went to school K-12. In fact the building where I went to Kindergarten was the last one room school house in Chappaqua NY.

After graduating as a proud member of The Horace Greeley Class of ’74 I then went off to college as a drama major at The State University of NY at Geneseo and then transferred to what we used to call SUNY Purchase (they now like to call it SUNY Purchase College) where I was a Theatre Design & Technology major.

After my official college years I began to work in the professional stage, dance theatre, and rock n’ roll in NYC and the New York metropolitan area as a scene painter, stage carpenter, lighting technician and sometime set and lighting designer too (Some of My Theatrical Set & Lighting Designs). And all that while I continued to study art in various continuing educations programs (Some Of My Artwork) but also started working in the building and remodeling trades as a stone manson and carpenter working on houses mostly in the Greenwich CT and Westchester County NY area although I did work on a few residential and commercial store and art gallery projects in Manhattan too.

This model of my life, going back and forth between theatre/dance work and the building and remodeling trades, stayed in place until I was around 29 years old when I first seriously decided to go into business for myself. My first go-around in business for myself I started out as Apple Building Corporation…

Apple Building Corporation Chappaqua NY 1984-September 1988

My first go around in business for mysef was as Apple Building Corporation. My friend Mike P. and I were working for a small fledgling timber frame company I’ll call S.M.W. and S.M.W. was making a mess management-wise of the timber frame addition project were were working on. The homeowner actually approached Mike P. and me as asked us if she fired S.M.W, would we stay on and finish the job? We took our time spending a day and a half discussing the idea. Mike was amenable to the idea under one set of conditions. I would have to run the business and he would be exclusivly labor but I would also have to show him I was really taking steps to learn the buisnss of contracting.

As far as gaining this education on the fly he pointed me two trade magazines New England Builder (which would later become The Journal of Light Construction) and Remodeling Magazine (which today is exclusivly online with no print edition). He also pointed me to two books that he thought were essential reading and at the time I would have to agree. Those two books were Professional Remodeling Management: Proven Methods For Success In The Remodeling, Renovation And Rehabilitation Industry and Professional Cost Estimating for Residental Remodeling, Renovation, Rehabilitation, and Repair by the legendary industry guru the late Walt Stoeppelwerth and I have written about this before in a blog post titled: My Evolution in Construction Estimating & Technology Back In The Mid 1980s & 1990s.

The Great Comeuppance; July 31st, 1987

That first go-around in business for myself as Apple Building Corporation started out great but ended in miserable failure. 

Using the pricing methodology described in Walt Stoeppelwerth’s Estimating and Management books (which is also the methodology described in Michael Stones book Markup & Profit) without doing the actual math to actually really figure out what I should use as a Markup (the number you multiply your Direct Job Costs with to generate a Gross Profit that is intended to cover the Overhead costs of running the business). I had read in his book where he wrote as a bare minimum a contractor has to use a markup of 1.5 (multiply Direct Job Costs by 1.5) to generate a 33% Gross Profit. But most successful contractors used a markup of 1.67 to obtain a 40% Gross Profit Margin.

And like I said, instead of doing the math to actually calculate to correct markup for my company I took a short cut and arbitrarily chose to average 1.5 and 1.67 and used a markup of 1.58 for 37% Gross Profit Margin for A.B.C. projects.

We were doing alright,..4 guys doing decks, additions, and a couple kitchen remodels here and there. Then one day I was approached by an architect/general contractor who asked me if we would be interested in working providing the finish carpentry labor on a number of homes in a development he and his team had designed and were now acting as GCs to build. I thought “Wow that sounds great! 20± homes! I wont have the hassle of getting materials or lining up subcontractors! Sure we’re interested!”.

BUT there was a problem, I made a big huge mistake in thinking I understood the concept of “Markup”.

Things were going okay (I thought) until I took a one day seminar in a hotel conference room in Danbury CT called ‘How To Survive & Prosper In The Contracting Market’ taught by the late Irv Chasen of PROOF Management Consultants. During the morning session I listened but for the most what I heard was flying right over my head. Then sitting outside during the lunch break all of a sudden the math clicked and made sense to me and I thought: “%$@#!,  I have been working the last year for free”.

In brief the problem was in using the markup rate I had used successfully before it was now only being applied to Labor and NOT to Materials and SubContacting. Without thinking about it I had cut my Gross Profit Margin by approximately 2/3 . 

I have detailed in many pages and blog posts in my Paradigm Projects website like this one: ‘One of the Potential Problems in Using a Traditional Volume Based Markup’. In fact in 2004 I developed a simple Excel spreadsheet called The Capacity Based Markup Workbook which a countless number of contractors have downloaded to help them figure out the right price for their company’s labor and I now offer a online training program for the methodology too (Capacity/Activity Based Markup & Pricing Seminar).

In fact the author of the book “Running a Successful Construction Company” (often cited as an industry bible) David Gerstel has written in a recent article in The Journal of Light Construction “A Smarter Way of Charging for Overhead and Profit“:

…But as Jerrald Hayes puts it, “The idea is to be mostly correct rather than absolutely wrong.” And if you are mostly correct, over time, across many bids, the law of averages is on your side. — David Gerstel

(That’s actually a quote I took from the economist and philosopher John Maynard Keynes) and David also wrote…

Jerrald Hayes raises another interesting case: using CDM [David’s acronym for what I call Activity Based Markup or ABM] for a company that has multiple divisions—design, general contracting, cabinetwork, and home repairs. Hayes, whose take on CDM is closely parallel to but not identical to my own, offers a solution at his thought-provoking website, paradigmprojects.com. My own inclination would be to separately account for overhead for the various divisions—and where overhead costs spread across several divisions, apportion it among them as accurately as practicable. Then the appropriate variation of CDM could be selected for each division. For the general contracting division, overhead could be recaptured and profit assigned on the basis of capacity and of the duration of each project. For design, and for the handyman division as well, it might be best to include overhead and profit in a charge for each hour billed. And so on. — David Gerstel

But I digress,… I would slowly shut down Apple Building Corporation going from 16 field employees and a bookkeeper to just me and one other guy over the next 14 months.

The Reset Oct 1987 – 1990

After the failure of Apple Building Corporation I took a job as a lead carpenter with a quirky fellow named Tom Hughes and performed kitchen and bath installations for Kitchens By Deane (Stamford, CT), Kitchen Design Studio (New Caanan CT), and St. Charles of New York (NYC) and then after he furloughed me in a slow winter month I took a job as a Lead Carpenter with Arnold Wile & Associates (Pleasantville, NY).

During this reset I worked at paying down some of the personal debts I incureed futilly trying to rescue Apple Building Corporation all the while reading books and trade magazine articles to better my undertanding of the building & remodeling BUSINESS. I knew I was a very talented skilled carpenter but I also knew I still had a lot to learn about the business of the business.

While working on the installation of a new “master*” bath room additon for a a client who happened to be the President & CEO of a Fortune 500 company each day as I worked there I would move between my van in the driveway and the bathroom we were working on by entering the house through a door near the garage and going up one floor to the kitchen and then up another flight of stairs to the top floor and as I would turn left to head down the hallway I would pass Mr K’s home library reading room and in it I could see what he was reading by looking at what was on the small table next to his reading light and chair. Two books that I saw there were: The Goal: A Process of Ongoing Improvement by by Eliyahu M. Goldratt and  Agile Competitors and Virtual Organizations: Strategies for Enriching the Customer by Steven L. Goldman, Roger N. Nagel, et al.

I knew about The Goal: A Process of Ongoing Improvement and the business author and guru Tom Peters who books I had read a lot said: “The book has been highly effective”. So after seeing it next to my client’s reading chair on my way home from the job that night I swung by a Borders Books in Turn Of River CTand bought a copy. It was seminal moment for me. One of the big takeaways from The Goal for me was to Optimize systematically, not departmentally or individually. There is more nuance to that but it essentially boils down to the fact that a company (as an overall system), is only as strong as the weakest link in the process.

Agile Competitors and Virtual Organizations: Strategies for Enriching the Customer I picked up on the concept of busines agility (which is related to the concept of Agile Project Managememt but they are NOT at all the same thing). It emphasized the need for organizations to be agile and flexible, innovative, and customer-centric. The book delves into strategies for creating virtual organizations, which are adaptable networks of resources and expertise that can quickly respond to market shifts and customer demands. It discusses how these approaches can enhance the customer experience and drive business success in a dynamic and competitive environment and provided insights and practical guidance for businesses looking to navigate the challenges of modern markets through agility and virtual organizational structures.

Moving to Katonah, NY

In September of 1986 I moved 9 miles north from Chappaqua to Katonah, NY and lived there for the next 30 years and my front yard there would become the “Dog Park” for all the dogs living on top of the hill in the Old Deer Park neighborhood.

Old Deer Park Road Katonah NY circa the 1990s

In Katonah in addition to becoming Paradigm Building & Remodeling in another go around in business for myself I would sit at my desk near the house’s front door and explore and learn technology while I watched all my dog friends and fans gather outside waiting for me to come out with my Hyper Pet K9 Tennis Ball Cannon or my tennis tennis racquet.

Paradigm Building & Remodeling (Paradigm Projects) 1991

In September of 1991 I started up in business for myself again far better equipped business-wise than before as Apple Building Corporation.  I named the business Eastlake Associates at first inspired by an article I had read about Charles Locke Eastlake a British architect and furniture designer whose father who went by the same name was a painter and first Director of the National Gallery. The thinking was this 30-year-old “kid” would have a “real” business name to present to prospects and work under.

Having worked for other small contracting businesses and in the technical theatre up until then I started out just putting together project-specific teams for different projects as they came up and for the most part while I would eventually build up a core of key employees and that was a methodology I never abandoned.

In 1988 I changed the company name and incorporated in 1988 as Paradigm Associates, Ltd. The word “paradigm” helf some signifigance to me in that it meant: a typical example or pattern of something; a model and I liked that.

It was sometime in 1992 I bought David Gerstel’s Running A Successful Construction Company and  there it was…David introduces a methodolgy he calls Capacity Based Markup which was the same as the PROOF Type Markup I learned from Irv Chasen and what I would discovver in time was also the samething as  J.R Huston’s OPPH or Overhead Profit Per Hour and what other people like Ellen Rohr, and Frank Blau were teaching too.

I think Gerstel’s Running A Successful Construction Company (get a revised edition!) is arguably the best guide or overview of the contracting business there is for a neophyte contractor running a new remodeling or construction contaracting business. And his book Building Freedom: A Construction Pro’s Path to Financial Independence is a worthwhile investment too along with his other books and it was my guide for years back when I was younger and I still use all his books as reference books today.

Paradigm Associates working as Paradigm Building & Remodeling did a diverse array of projects from “Theatrical Spaces & Environments” which called on my back ground and traing in theatre design and technology. We essentialy built scenery for restuarant and nightclubs like The Great American Cafe in Glastonbury CT  designed by Frederick Brush Interors in which different rooms and sections represented different regions of the United States which was also very obviously the theme of the restuarants menu.

And there were also some very unique projects for ecentric homeowners like this Interior Koi Pond we did for client in Hewlet Harbor NY in the spring of 1996. After discussions with the designer regarding what he wanted to achieve we decided to build on site an epoxy fiberglass reinforced tub for the pond and after framing out our basic structure we would fabricate the rocky environment surrounding the pond using techniques I had used as a kid to build the mountains on my HO train set only on a larger scale and using QUIKWALL® Surface Bonding Cement (SBC), and/or USG Structo-Lite® basecoat plaster over expanded metal lathe instead of USG Hydrocal® plaster over window screen although we would still use those materials for the out of the way and high up sections that we wanted to keep thin and ultra light weight.

It was right after we completed that Hewlett Koi Pond project that we hooked up with one of the premiere custom builder in New York’s Westchester County doing interior work, stairs and railings for his new home in Scarsdale NY. and then for other projects after that.

—Screenshots from my 1999 Paradigm Building & Remodeling website—

By May of 2006 we were getting so many calls for stair railings since we could fabricate custom curved wreath turn sections and turning railing easements I launched StairScapes.com as a new channel for Paradigm Building and Remodeling and we started to get calls from homeowners looking to fix and/or repair the stairs or even more often the stair railing in their homes in addition to the builders we worked for in the past.

While I still worked on fabricating stair railing parts during the next 9 years I began to work more under the cloak of Paradigm Projects further developing my 360Difference software as well as rebuilding/remodeling a FileMaker based Enterprise Resource Planning tool for an Independent Insurance Adjustments office and then got called back a year or so later by them to setup and program them an array of dashboards. The application would display custom dashboards for the individuals in the office based on what they did or were handling which I again did in FileMaker Pro. (the Independent Insurance Adjustments ERP Dashboard)

It pulled information and data from their own ERP (that was the easy part) while it also read and pulled data from a collection cloud based apps they used too (that was the hard part) like Slack and a few industry specific apps I no longer recall the names of provided those apps had an API (Application Programming Interface) I could then program my dashboard app to exchange data with.

Then just about 2021 I think it was Claris the company that owns and develops FileMaker Pro released a new product called Claris Connect which is a cloud-based integration service that allows you to bring your everyday apps together to create powerful automated workflows greatly simplifying what I had done a few years before that. Instead of having to build my own connections it provides you with prebuilt connectors between popular business apps. Kind of like Zapier does.

Meanwhile my building and remodeling troops were making it along fine without my interference or meddling and I would only come in when it was vaction time and I needed to put on my toolbelt again or when there was a tricky helical stair railing component like a hand railing wreath turn I needed to fabricate or when there was an estimate that I felt I really needed to help out on.

Paradigm Projects (and Paradigm-360) Dec. 2002

I was discovring that I really enjoyed working with other SMBs (small and midsize business) who needed help organizing and building business methods and systems so in December of 2002 I made an official split off my consulting and computer programing activities into it’s own operation with a website named Paradigm-360.com.

My thinking at the time was “Growth” was not just about size, market share, and sales volume but perhaps more importantly growth should mean growth in business agility, systems maturity, and emotional intelligence. A book and other books by the same author that I had read in the mid-90s became a big inspiration and influence to me. That book was The Fifth Discipline: The Art and Practice of the Learning Organization by Peter Senge. I would come to think over the next few years and a learned about Lean Thinking the concept of building a “Learning Organization” is a key component for a company in adopting Lean Thinking.

“The idea of a “Learning organization,” as promoted by Peter Senge in his book Fifth Discipline, is not something different from lean management. Rather, it is embedded within lean management. A learning organization is an organization in which individuals and teams watch and learn, make changes, experiment, and then learn from those experiments.
— ZeeshaN.SyeD A Lean Organisation is a ‘Learning Organisation.”

Business Systems to me was not just about having a program like Primavera or Microsoft Project but was having a functioning method and workflow in place that the computer proograms would help you with. Computer progams aren’t panaceas. e.g a project management computer program isn’t going to do you much good if you don’t know the fundementals of Project Managent. I think just as valuable as my development of computer programing skill was my building a solid understanding of systems thinking and the concept of flow.

360Difference

One night in January of 2005 I was driving home to Katonah after visiting a friend in Kingston NY and the conversations with her that evening and a lecture we had attended really had my mind all worked up and I’m not sure exactly what train of thought it came from but in regard to the estimating of building and remodeling projects I thought “Always use the Standard Unit Cost in your Costbook and then estimate what makes that line item different for that particular project” and then thought the name 360Difference would be a good one to use for my software. The “360” part comes from a tidbit I picked up from my friend Bob Kovacs (now VP of Preconstruction of Preconstruction at Evans General Contractors in Alpharetta, GA)

Consider not only the cubic foot, cubic yard, lineal foot, square foot, pound or ton but all of the complicating conditions encountered in putting the materials in place. —from Richardson Engineering Services General Construction Estimating Standards.

I then launced the website for my software I would call 360Difference. Back in the late 1990s while I was developing a software tool I called The Simple Estimate Worksheet.

The other big plus we got out of our subs using The Simple Estimate Worksheet it brought them into the Unit Cost Estimating world. Most, a super majority of our subs were in the EyeBall Guesstimate camp and a few were still doing “Stick” estimates (attaching a cost to every last single piece of lumber in an estimate rather than grouping them in repeatable assemblies or unit costs). I thought if you brought a sub into a job through a door on the north side of the house he would give you one estimate and if you brought him in a day later through a door on the south side of the house he would give you another quote for the same project but it would be $5,000 different. Getting them to use the software put them on the road to consistent pricing we could count on.

Development of 360Difference didn’t stop with The Simple Estimate Worksheet and 360Difference evolved into a customizable ERP (Enterprise Resource Planning) tool. One of the first customization projects came in 2006 with a NGO called JumpStart International that at the time was working with local communities in distressed areas such as Afganistan Iraq Haiti and Gaza co-ordinationg their efforts to rebuild destoyed homes school and infrastructure.

Seth Godin, Permission Marketing & more…

We were working on a home in Irivington NY while also working on a trade source exhibit for a company named Tangram International Exhibitions that at the time was localected in an old industrial building down by the river and on my forawys into town for lunch, coffee, or visiting the hardware store I would from time to time see this disctictinve looking guy, okay he was bald, that looked so very familiar to me. I would discover it turns out I didn’t know him personally but he was familar to me from reading about him in magazines and hearing him speak on marketing via YouTube and what he saif and wrote about struck a cord with me. It was Seth Godin (Seth’s Blog)

And then he published a book in 1999 or maybe 2000 entitled: Permission Marketing: Turning Strangers into Friends and Friends into Customers and fascinated with what he had to say I found myself completly hooked. My journey down the road of inbound marketing took off.

Alongside Seth’s books on the shelves in my local Borders Bookstore I noticed a book written by Don Peppers and Martha Rogers: “The One to One Future: Building Relationships One Customer at a Time.” Peppers & Rogers predicted a future where brands would use one to one marketing to personalize customer communications and interactions at scale.

The future Peppers & Rogers foresaw in those early days of the internet was one where the rise of the web would give customers access to more data and information about brands that ever before and marketers would have to learn to deliver personalized marketing, individual marketing, or “marketing to a segment of one” and I think the Peppers & Rogers One-To-One Marketing vision is embodied in what many today are calling Account-Based Marketing or ABM.

Using what were now able to learn about our customers preferences we would need to deliver personalized interactions and messages, content, recommendations and proposals.