James Pratt and his son, James "Win" Pratt III, appear to fit the grizzled pro and fresh-faced newcomer stereotype. However, after surviving the near-collapse of their development company and its subsequent resurgence, the partners are both hardened graduates from the real estate school of hard knocks.
Business at Pratt Homebuilders is booming now, they say, but in late 2007 things weren't quite so rosy.
"In August 2007 it was like the spigot turned off," James Pratt said. "We were slow to react because it took us a while to figure out it was for real."
But the phenomenon known as the "Great Recession" was for real, and 40 percent of Pratt Homebuilders' sales disappeared within a few months. The company went from 30 employees to four, and Pratt Homebuilders, formerly known as Pratt & Associates, was on the ropes.
Overextended and forced to liquidate projects in markets outside Chattanooga, they decided that Win Pratt would take over day-to-day operations while James Pratt focused behind the scenes on maintaining bank relationships and winding down money-losing developments.
"We wanted to get out of the out-of-town markets, basically undoing what we had done," Win Pratt said of the company's projects in Memphis, Knoxville, Nashville and Savannah, Ga. "Over the last 18 months, [James Pratt] spent a lot of time doing that so I could focus here in Chattanooga."
Father and son originally founded the company in the late 90s with profits from the sale of James Pratt's propane distribution business. They "thought it would be interesting" to try their hand in real estate, the younger Pratt said, and in their first year completed roughly three houses.
The next year it was five, then 15, and soon they were building and selling hundreds of homes per year, Win Pratt said.
"We learned the business together," he said.
A decade later the golden age of real estate sputtered to a halt, and the Pratts recognized that the business model of building profitable homes had shifted under their feet.
In the midst of the crisis, the elder Pratt underwent heart bypass surgery, and Win Pratt took over the company.
His first step was to change everything.
"At the end of the day for us to survive, we needed to cast a bigger net, and make changes in our construction process, marketing process and thought process," James Pratt said of his son's strategy. "A house is put together with 10,000 pieces, and every one of those has a cost and a value."
They spread the plans on a table and began simplifying their designs. They counted every two-by-four, brick and nail, the elder Pratt said, and even revamped their procurement process.
"The typical mentality among homebuilders is that they have a set of plans, they give them to the lumber yard and the people selling the lumber are the ones deciding how much to use," said James Pratt. "We use a framing system where they come from the supplier already engineered and ready to put up on the walls like a puzzle."
With the exact supplies needed for each home assembled on-site like a kit, all the builder has to do is follow the instructions in a process that has reduced build time down to five months, company officials say.
"We figure out where every piece of material goes before construction even starts," said Win Pratt.
Since revamping their operation, revenue is on track to pick up 30 percent against the 40 percent they lost in the downturn, and they're back up to 26 employees, nearly matching the 30 workers employed at the height of the boom.
"The whole company is radically different now," Win Pratt said.
The entire industry is radically different as well, said Teresa Groves, executive director for the Home Builders Association of Southern Tennessee, and smaller, too.
"At least a third of the homebuilders who were involved in building new homes are no longer building new homes," she said.
The scope of development has changed as well.
"What everybody is doing is finishing up what they started, there aren't a lot of new developments," Groves said.
Aware of the market realities, Win and James Pratt are thankful to be among those who survived, but far from complacent, they said.
From switching to pre-painted trim and siding to standardizing window sizes, they said their "penny saved is a penny earned" philosophy will keep them in a solid financial position.
"A dollar is a dollar, and every dollar is important," James Pratt said.