Homebuilder in Paradise

When Jim Butler’s cabinet company tanked in the recession, he countered with the riskiest business move of his life.

He totally changed directions. He invested more than $1 million in a glossy new showroom, a display center for a remodeling and custom homebuilding business he also ran. Considering the cabinet firm, Venice-based Country Cupboards, went from nearly $10 million in revenues in 2005 to next to no sales by 2008, the decision was certainly gutsy.

Several other factors upped the gamble. For one, the funds behind the investment were made up mostly of Butler’s life savings. Butler also opened the showroom and sales center in a high-traffic, albeit high-rent area on Osprey Avenue, a few miles south of downtown Sarasota.
More ominous: Butler decided to expand in early fall 2008, the height of the global banking and credit crisis.

“It was a pretty fearful time. Most people, family members and friends, said I was crazy for spending all this money,” says Butler. “But I believed in what I’m doing. We had to reinvent ourselves.”

Butler’s faith has been rewarded.

The company, Extreme Remodelers of Sarasota, a parent entity over several units, including Butler’s Paradise Homes, is on a gigantic growth spurt in revenues, hires and homes. Annual revenues in 2010 for example, were up 100% from 2009, from $3 million to $6 million. Butler projects revenues will be up significantly more by the end of 2011, to at least $30 million.

Paradise Homes filed 21 building permits in 2010, and another 33 so far in 2011, figures that outpace nearly every local homebuilder. Finally, the consolidated companies under Extreme Remodelers, which includes the cabinet business and a tile and granite plant, have 65 employees, up from about 40 last year and 10 in 2006.

Says Butler: “We’ve kind of exploded.”

It’s easy to see why Butler says the seven-figure investment in the Sarasota showroom, despite the timing and the risk, “was the best thing I ever did.”

The second-best thing, says Butler, was when he secured the ability to build homes in Lakewood Ranch, the east Manatee County master-planned community. Lakewood Ranch has been one of the lone growth spots for new-home construction in the Sarasota-Manatee market. The rebound has been so sharp, actually, developers raised prices of home lots this summer for the first time since 2006.

Homebuilding in Lakewood Ranch facilitated the recent success spurt, Butler says, but the firm builds in a variety of communities, and in a variety of sizes.

In addition to Lakewood Ranch, Paradise Homes has projects on Casey Key, Longboat Key and Siesta Key. The average size of a Paradise Homes home is 3,400 square feet, though current projects include an 18,000-square-foot home in the Lake Club in Lakewood Ranch.

‘Simplified pricing’
An explosion in work, however, didn’t only come from Butler’s big investment. A big key is the Paradise Homes business model, which counters the traditional homebuilder approach.

In the standard model, homebuilders use subcontractors to perform the bulk of the work, from plumbing and electrical to windows and cabinets. It’s the way many homebuilders grew during the boom. It’s also how Butler grew his cabinet business when he was a subcontractor.

At Paradise Homes, though, work is done in-house. Butler’s employees include interior designers and architects and professional engineers and cabinet installers. In sum, Butler sidesteps the middleman who eats into many homebuilders’ margins. “Our strength is that we are the builders,” says Butler. “We are able to put out a product that’s still high-end, but also competitive.”

Another reason behind the growth, Butler says, is the company’s simplified and transparent pricing model. He says that allows it to separate itself from homebuilders that push upgrades on buyers. Paradise Homes has six models and three levels of interior upgrades. Some standard models are priced between $297,000 and $497,000

A final step in the Paradise Homes model is its connection to several high-end product brands that fill a home’s kitchen and bathrooms. The list includes Wood-Mode cabinets and Viking kitchen appliances.

Viking, in fact, represents Butler’s second million-dollar gamble in his company, and, to a certain extent, the resiliency of the Sarasota-Bradenton new-homes market. Butler’s bet: He opened a Viking Culinary Center on Main Street in Lakewood Ranch Sept. 14.

The 4,000-square-foot center, one of 19 nationwide and the second in Florida, offers an array of cooking classes, small kitchen products and large appliances. It also helps Butler get in front of potential homebuyers. (Sidebar below)

When all those steps are put together, Butler believes he can exert near total control over a homebuilder’s three most common worries: the quality of the home; the cost of the products to build the home; and the construction schedule.

“My competitors,” says Butler, “can’t be sure of those things.”

New challenges
Butler developed the idea to flip the homebuilder business model while revenues and profits fell at his Venice-based cabinet business during the downturn. “I was being squeezed,” says Butler, over negotiations with homebuilders over prices for cabinetwork from 2006-2008. “I couldn’t make any money that way.”

Like any good entrepreneur, Butler also has undying confidence in his vision. “As I supported the builders with cabinets,” says Butler, “I always thought I could do it better.”

Butler founded Paradise Homes in 2003. Along with Extreme Remodelers of Sarasota, it was a way for Butler to diversify. The cabinet business is still operational, but the bulk of Butler’s time, money and resources are now in homebuilding.

The cabinet business, too, was a proving ground for Butler’s spend-money-to-make-money mindset. Indeed, Butler invested at least $6 million in Country Cupboards soon after he bought the business in 2001. His expenditures included $250,000 for a computerized saw and $4 million on a new factory.

The investment paid off. The firm grew from $1 million in annual revenues when he bought it to more than $10 million by 2005. (See Business Review, Nov. 17, 2006.)

Similar to the Paradise Homes showroom and the Viking Culinary Center, the money for Country Cupboards’ expansion came from a combination of profits and Butler’s personal savings.

“I believe the only way to do better,” says Butler, “is to reinvest in the company.”

A mechanical engineer by trade, Butler was born and raised in Rhode Island. He started his first business, metal stamping, in his garage when he was 25 years old. He built the company into a 30-employee, $7 million enterprise over a decade. Then he moved to Florida.

The metal stamping business and the rise and fall of Country Cupboards leaves Butler — he hopes — prepared to handle the next big challenge: managing rapid growth.

Butler says he will continue to use a business axiom to manage the fast growth by hiring people smarter than he is. And while he’s doing that, Butler will keep a close watch on the competition, which includes homebuilders for whom he used to do cabinetwork. He worries his success might invite copycats.

“I think they thought I was just going to fail. They thought I was going to fade away,” Butler says. “Now I think they are trying to change their business plan to be more like me.”

Build the Brand
In an effort to find a unique marketing approach for his homebuilding firm, Jim Butler ended up in cooking school. 

Now Butler, founder of Extreme Remodelers of Sarasota and Paradise Homes, runs a new business, the Viking Culinary School in Lakewood Ranch. It opened Sept. 14 and is one of two schools in Florida under the flag of Greenwood, Miss.-based Viking, a luxury kitchen appliance firm.

Butler sought to open a Viking facility in the Sarasota-Bradenton area for four years. But the timing was off until this past year, he says. The school offers classes in everything from pickling to foods of Provence. It also sells Viking products, from pots and pans to appliances.

The 4,000-square-foot facility, says Butler, is also a way to showcase the type of kitchens his firm can build and the appliances it can use to fill them. “It’s a nice marketing tool for the homebuilding side,” says Butler.

The school cost Butler more than $1 million in build-out and preparation. After the school is open a few months, Butler expects to have 30 employees. Says Butler: “It’s a big investment.”