MLM Incorporated – Louisiana, USA

August 29, 2024

MLM Incorporated

Looking Toward Growth and Sustainability

Expanding its reach, adapting to sustainability trends, and prioritizing team development amidst economic challenges.

MLM Incorporated operates with a unique dual-approach structure, separating its commercial and residential divisions to cater to various client needs. “We have two different wings to our company,” General Manager Machi Medrzycki explains.

“One is a commercial division, and one is residential. Residential accounts for about 75% of our annual revenue, while commercial accounts for 25%.” This division of labor allows MLM to provide specialized services across different sectors, ensuring focus and expertise in each domain.

The residential side of MLM Incorporated is particularly robust, handling custom additions, renovations, and new construction projects. “On the residential side, we handle mostly custom additions, renovations, and custom homes,” Medrzycki elaborates. In contrast, the commercial projects span a broader spectrum, including public works like schools and libraries and private sector endeavors such as retail build-outs, restaurants, medical spas, and office renovations.

Meticulous and Inclusive Processes

One area where MLM truly excels is in its pre-construction services. Medrzycki explains, “Our pre-construction services take things to another level. We can walk any client through the process as a one-stop shop.” MLM offers comprehensive services from initial concept to turnkey completion, including design, construction drawings, and material selection. Clients often start with vague ideas or inspiration boards from Pinterest or magazines. MLM’s team helps them refine their vision, select materials, and create a spec book detailing every project aspect.

The process begins with the basics, followed by collaboration with the client to ensure alignment with their vision. “We start with single-line sketches, mapping out what their floorplan will look like, then move to draft accurate construction drawings,” Medrzycki explains. This thorough, client-centric approach ensures that every project is tailored to the specific desires and needs of the homeowner.

By the end of this process, two critical outcomes are achieved. First, a strong trust bond is formed between the client and MLM. “The client already knows what they’re getting,” Medrzycki states confidently. “They don’t have to worry about construction because everything has been pre-determined and agreed upon.” Secondly, the pre-construction phase results in detailed planning where every aspect of the project is mapped out. “They know that this is the tile that goes into this bathroom. This is the design. This is the trim. This is the faucet,” Medrzycki explains.

MLM’s process is designed to keep the client’s experience as stress-free as possible. “We try to take all of it out of the way on a pre-construction element,” Medrzycki emphasizes. This proactive approach means that once construction is underway, it proceeds smoothly. “We make it happen in a very organized, repetitive, mechanical, and non-glamorous fashion that, in return, makes the project come together very well.”

Showcasing Recent Projects

To illustrate the breadth and scope of MLM Incorporated’s work, Medrzycki shares examples of both commercial and residential projects, highlighting the company’s capability to deliver on diverse client needs.

“The most recent commercial project we finished was The Now, a day spa,” he reports. This project completed a few months ago, involved transforming a 3,600 square-foot first floor of a high-rise building into a tranquil, upscale spa. “The price point was around half a million dollars,” Medrzycki details. Working with the franchisor and franchisee, MLM prioritized meeting tight deadlines, a critical aspect of franchise projects.

On the residential front, Medrzycki recounts a notable project in Metairie. “It’s a new construction, about 3,400 square feet, two-story plus the garage,” he describes. From concept through design and construction, this turnkey project resulted in a four-bedroom, three-and-a-half-bathroom home with a price tag of just under $1.1 million. MLM handled every detail, from initial sketches to final finishes, showcasing their comprehensive service model.

Determining Project Fit

When it comes to selecting projects, MLM Incorporated prioritizes relationships over transactions. “It’s got to be a relationship,” Medrzycki states firmly. Given the long duration of their projects, a good fit between client and contractor is crucial. “If it’s a bad fit on either level, it’s not going to work,” he asserts, highlighting the potential for frustration and wasted resources.

Medrzycki explains that MLM employs a thorough pre-screening process to ensure compatibility. “We charge for our pre-construction services, non-refundable deposits that get reapplied into the construction contract,” he explains. This not only helps to filter out unsuitable clients but also ensures a commitment from both parties. Medrzycki emphasizes the importance of team input in these decisions. “I always ask my team members, what do you think about this client? How do you feel about the communication details?”

The pre-construction phase serves as a crucial litmus test for the future relationship. Medrzycki describes a scenario where the team might collectively decide against moving forward with a client due to poor communication or responsiveness. “Pre-construction is the most fun part of construction,” he says. If a client is demanding during this phase, it’s a red flag for potential issues down the line.

In situations where market conditions necessitate taking on a challenging client, MLM has strategies in place to manage the additional demands. “We charge for it,” Medrzycki admits, ensuring they can allocate a full-time project manager to the job. This dedicated approach ensures the rest of the team remains focused and unaffected. “We’re throwing one person under the bus,” he jokes, but the strategy is clear—dedicate the necessary resources to manage high-maintenance clients without compromising overall team morale.

Navigating Economic Realities

MLM Incorporated has had to adapt to significant challenges in today’s economic climate. Rising material costs, labor shortages, and high inflation have all impacted the construction industry, but Medrzycki remains pragmatic about the situation.

“I work more for less than I ever did,” he admits, addressing the increased construction costs. Over a short period, project costs have surged, leading some customers to push back. “People on a customer level feel like we are price gouging them,” he says. Despite such feedback, he emphasizes that market prices dictate these costs, not the company’s desire to increase profits. “You can’t change market prices,” Medrzycki points out.

To stay competitive, MLM has seen its profit margins compress. “Something that cost $200,000 two years ago now costs $300,000,” he notes. However, instead of enjoying higher profits, the company’s profit margins have shrunk from around 10-15% to about 5-6%. This means more work for less return, a harsh reality for the business. “We are making less money with more work,” Medrzycki explains. He foresees this situation continuing until the market adjusts to the new realities of pricing and inflation.

Even so, Medrzycki’s focus remains on sustainable systems and processes to weather this period of low margins. “If we can sustain our team as it is right now, and we can keep honing our systems and processes,” he believes MLM can navigate these challenging times. The goal of adding projects, even with small profit margins, is to build infrastructure and be prepared for when economic conditions improve. “When the good times come, I think that’s when we’re going to be able to recoup our investment and hopefully show a larger profit,” he asserts.

Expanding Capabilities and Managing Relationships

As MLM Incorporated continues to grow, Medrzycki explains that the company is making strategic moves to expand its geographical reach and technical capabilities.

“Most recently, last week, I passed the Mississippi State license for building construction,” he announces proudly. This new license covers commercial and residential construction, marking MLM’s expansion into Mississippi. Alongside this achievement, the company is also pursuing an electrical permit in Louisiana. “We’re trying to get more technical and high-skilled trades in-house such as HVAC and electrical,” he explains, aiming to control costs and potentially establish self-standing divisions within the company. This strategic move could allow MLM to handle maintenance and work orders internally, offering more competitive bids on larger projects.

Consequently, maintaining solid subcontractor relationships has become increasingly crucial for MLM Incorporated, especially in today’s competitive market for skilled trades. Medrzycki reflects on how his approach to these relationships has evolved over time. “When I was younger, I didn’t put that much value into it,” he admits. However, the shortage of skilled craftsmen has changed the landscape. “There’s not a skilled craftsman around the corner that will want to do a good job. Those days are over.”

Skilled craftsmen have become more selective, and Medrzycki emphasizes the importance of treating them with care. “We have to tiptoe around some of them a lot,” he notes. MLM makes concessions in payment schedules and ensures all necessary materials are pre-purchased and inventoried, sometimes even delivering them to the job site. “We try to make it easy for them,” Medrzycki says, highlighting the lengths MLM goes to maintain good working relationships.

Sustainability Challenges and Strategic Adaptation

Sustainability is becoming increasingly important, and MLM Incorporated faces new challenges in maintaining affordability while adhering to green regulations. “With the go-green movement, I feel the timing is off slightly,” Medrzycki remarks. He supports the shift towards more sustainable practices but notes the financial strain it adds to already inflated construction costs. “Our state is changing codes to meet more restrictive federal government green regulations,” he explains, which impacts everything from electrical breakers to insulation.

He provides a clear example of how these changes drive up costs. “Two years ago, breakers were between $5 and $20; now they’re between $25 and $55,” he notes. This significant increase stems from production costs and the requirement for more advanced, sensitive breakers. Similarly, new window treatment requirements and insulation regulations escalate construction expenses, further complicating client expectations.

“The consumer base already has a tough time understanding the costs right now,” Medrzycki states. Even industry professionals like architects and interior designers struggle to keep up with the rapid price changes. “They cannot understand the cost of construction,” he says, highlighting the disconnect between design budgets and actual construction costs. This often makes clients shocked when their $300,000 budget needs $600,000.

Despite these challenges, Medrzycki remains hopeful. “People will get accustomed to it, and they will understand that things cost what they cost at some point,” he believes. The roadmap for MLM over the next 12 to 18 months focuses on enhancing efficiency and minimizing errors in construction processes. “We’re just going to keep moving and hoping to keep increasing the efficiency and effectiveness of our systems,” he asserts.

Medrzycki also discusses his approach to leadership during these challenging times. “I’m not even interested that much in the profit margins for myself,” he admits. He focuses on reinvesting in the team and the company, even if it means living on a modest salary for now. He is confident that these investments will pay off when economic conditions improve. By prioritizing team development and strategic expansion, MLM Incorporated aims to emerge stronger and be ready to seize opportunities as the market stabilizes.