When JJ Pace tells us that he was hired in 2002 to build and eventually lead a finance team that would create and implement monthly budgets for a four-location building materials company, the sense of accomplishment that he exudes never falters even when he eventually confides: “In the end, I was the last employee there.”
It turns out that Pace’s 5-year stint as a controller (2002–2007) for Build It With Brick of Charlotte, North Carolina was transformational not necessarily for the company but certainly for Pace, who first joined the company as an operations-minded executive but soon found himself knee deep in Excel spreadsheets and month-end reporting tasks.
Read More“My job was to basically build the finance team from scratch for what was at the time an expanding business,” explains Pace, who grew into a finance leader as he contributed to the management insight that made Build It With Brick a successful company—until it wasn’t.
“Unfortunately, there was nothing that we could do. We were undercapitalized to ride out the downturn, and the decision was made to close the company,” comments Pace, who despite the bitter outcome refused to exit Charlotte’s building materials and construction corridor and over the next few years found work as a controller for several small to midsize Charlotte firms.
Along the way, Pace would also return to school locally and receive an MBA with a concentration in finance from Queens University of Charlotte.
It was with an MBA in hand and nearly a decade of controllership experience behind him that in 2013 Pace accepted a CFO role with Service Pros Installation Group, a flooring installation company that today has 68 locations across the 16 states.
“It’s been a fun ride: Over the past 9 years, our compound annual growth rate has been 52.9 percent,” remarks Pace, whose finance team today serves Service Pros as well as two other operating companies—each with its own controller and a combined workforce of more than 500 employees. –Jack Sweeney
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CFOTL: Tell us about Service pros … what does this company do, and what are its offerings today?
Pace: Well, we have a flooring installation company that has an exclusive to Lowe’s. So the Service Pros business is built around the Lowe’s customer. Lowe’s is our sales and marketing arm, essentially, and we are their installation arm. So, we service the same customers that Lowe’s services. A customer walks into Lowe’s, buys their product from Lowe’s, and pays Lowe’s. Lowe’s then contracts with us to perform the installation. We perform the installation, and Lowe’s pays us.
Read More… At Service Pros, one of the strategic moments for finance occurred when the decision was made to upgrade our accounting software from QuickBooks Enterprise to Oracle NetSuite. The transition had to be made prior to our growth, so we had to read the tea leaves and not do it too soon. We needed to have it timed exactly so that we were into our growth cycle and could scale the business and not have to add additional finance staff—yet still make sure that we would be able to accommodate the additional volume that would be coming through.
We do a lot of jobs every week—most of our jobs take a day or two. The transition to NetSuite has allowed us to efficiently process payables and receivables for the approximately 5,000 jobs a week that we perform. So, things have been really interesting for us. Since we are in the construction business—specifically, talking about Service Pros installation Group—the arrival of COVID led to our best year ever from a revenue standpoint. People were stuck at home. They were doing projects around the house, and one of the most impactful projects of all is updating your flooring. We had nearly a 20 percent increase in our number of installations during COVID, so we’re coming off a peak.
What’s been particularly interesting for Service Pros has been to come down off that peak. What we saw during COVID was a lot of margin compression because the demand was so high for our subcontractors that they were able to dictate essentially whatever price they wanted for their services. What we’re seeing now, as the economy slows down, is that these same installers and subcontractors aren’t able to demand that pricing due to more competition. So, they’re back to us for more consistent work and operating under what we would call a more standard pricing model. Over the next 12 months, we are expecting a tremendous growth cycle in a couple of our businesses. Right now, I’m working on building the team that will allow us to execute that.
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“Our visibility into the business continues to improve. … We have now put in place what we call levers. And there are a number of levers within the business, five or six, depending on where an operations manager sits, giving them a greater span of control. And our operators now know how to move the levers up or down in order to either accelerate or slow down the business and adjust the profit margins to operate the business more efficiently and effectively.”
—JJ Pace, CFO, Service Pros Installation Group
Service Pros Installation Group | www.serviceprosig.com | Charlotte, VA