Trip to the brink sparked success for Appleseed Workshop

Five years ago, Mike Gibson and his business partner Ben Strout had grown Appleseed Workshop to 20 employees and into one of the most sought after design-build firms in the Birmingham metro.

Appleseed was working on high-profile downtown commercial projects like the one that brought El Barrio restaurant to Second Avenue North when Gibson said one major business decision came back to haunt him and took the architecture and construction firm to the brink of bankruptcy.

“One of the things they say about doctors, architects and lawyers is that they know how to do their thing, but they don’t know anything about money,” Gibson said. “I was trying to run this business from my head … We were breaths away from bankruptcy.”

A major tornado outbreak had hit the state, causing Alabama Power to go into emergency mode, Gibson said, which meant the company was not hooking up any new service.

“All of a sudden our project, and several other projects, screeched to a halt, and I have all of this overhead, and I really don’t understand what this bump is going to cost me,” Gibson said.

The Tuesday following Memorial Day, Gibson said he met with a group of advisers, who suggested he shut down the firm and declare bankruptcy.

Instead, Gibson took a leap of faith, and made a bold business decision.

“I went to every supplier and every subcontractor right then and said, ‘Hey, in three months, we’re going to be done with these projects, and I’m not going to be able to pay you,’” Gibson said. “If I’m going to survive, I’m going to need you to finish with this knowledge and let me pay you back over 12 months.”

Each client, subcontractor and supplier knew it was a massive risk, but it was one they were willing to take.

“We manned up and cut the company down to like six people, including owners, and performed all the work ourselves,” Gibson said. “100 percent of the suppliers and 100 percent of the subcontractors stuck with us.”

Since then, Gibson has cautiously grown Appleseed Workshop back to around 15 employees, including the company’s new director of architecture, Kyle D’Agostino, who is the architect of record for Children’s of Alabama’s new Southside hospital. We talked to Gibson recently about his experience and a few notable downtown projects.

What’s the biggest lesson you’ve learned from clients? It was probably Bob Loftin with Elyton Advisors (Appleseed was doing a design-build for Loftin during the company’s financial crisis)…The first thing I had to do was go talk to Bob Loftin, because I was designing his house, which was on Second Avenue … I said, “We can finish up the design and somebody else can build it,” and he said, “I don’t want anybody else to build it. I want you guys to build it.” He said, “I’m not going to give you a dollar unless I believe you’re doing the right thing with it. I’m going to control all of the money and this is how we’re going to do it.” Him showing confidence in who we were and also saying, “here’s how the money’s going to flow on the project,” that helped us learn how to protect ourselves from ourselves … He’s probably had the most impact as a client. I built his project with my own hands. Me and my business partner, Ben, built El Barrio with our own hands. Every piece of wood in that place, the benches and all that, I literally cut every piece of those boards myself, which is how we were able to pay those people back.

What’s the biggest lesson you’ve learned from employees? You have to let people fail, not in a mean way, but you have to provide people the opportunity to have successes and failures, and be there to work through the failures. I think that’s the only reason we’re here today. The only reason we’re here is that we failed so much.

What’s the biggest lesson you’ve learned in business? The mistake was thinking I could do it by myself. The biggest lesson I learned from that is having the right team and the right people around you is critical and realizing you can’t do everything. We also learned being honest does pay off. It’s scary sometimes, but we endeavor to be honest, even if it costs us money. Business is tough.

Posted on August 24, 2015 .