President and founder of C.A.P. Government, Inc. (Coral Gables, FL), a privately held, minority-owned consulting firm.
By Liisa Andreassen
Penin’s professional history includes more than 30 years of direct project experience and managerial functions. Throughout his career, he’s played an integral role in the South Florida consulting industry community.
“I started the firm 30 years ago. In that time, I’ve seen many ups and downs,” Penin says. “We try to run the organization as if we’re always in lean years so we can take advantage of growth times. We run a tight organization and there are no layers and layers of management. We keep costs down and let revenue fluctuate as it will. We outsource certain services as needed.”
A conversation with Carlos Penin.
The Zweig Letter: What are the three to four key business performance indicators that you watch most carefully? Do you share that information with your staff?
Carlos Penin: These are the KPIs we watch most carefully:
- Total operating expenses
- Employee utilization
- Miscellaneous expenses such as vehicle and insurance
Growth percentage information is shared with staff, but not in specific monetary amounts.
TZL: How far into the future are you able to reliably predict your workload and cashflow?
CP: We can predict workload about six months out. As for cashflow, we have no problems with that. We have strong cashflow at all times.
TZL: Artificial intelligence and machine learning are potential disruptors across all industries. Is your firm exploring how to incorporate these technologies into providing improved services for clients?
CP: We believe that technology has to be incorporated in all services or we will fall behind on being competitive, locally and nationally. Technology makes our services more predictable, accurate, efficient, and transparent. We work with government contracts and technology makes it easier for our clients to explain results and limits any issues with reporting data. For example, inspectors have tablets with plans set up to share with clients and they can also enter reviews with photos while on the site. Often, they can have the information entered and completed before they get back to their vehicle. This helps to make the process more efficient and accurate. By incorporating newer technologies, we’re also appealing to the younger generation which helps with recruitment, which in turn helps to build a company that provides valuable services.
TZL: Does your firm work closely with any higher education institutions to gain access to the latest technology, experience, and innovation and/or recruiting to find qualified resources?
CP: The industry, overall, has placed requirements on what’s considered an acceptable number of years in the way of experience needed for engineers. We’re working to overcome that through our internship program and by working with local universities. We bring students in as apprentices and teach them how to do electronic plan reviews and inspections. Since we have several higher educational institutions that are clients, we’ve reached out to their administration and have asked them to send us qualified STEM students who are interested in learning how to do plan reviews and inspections. They can do summer internships and then after graduation, they’re qualified to begin working as an engineer or technician. We also attend university career fairs, professional organization meetings where there are student chapters, such as the Association of Cuban Engineers, and have developed a solid reputation, so word-of-mouth is key too.
TZL: How often do you valuate your firm and what key metrics do you use in the process? Do you valuate using in-house staff or is it outsourced?
CP: We have not performed a formal valuation for about five years. However, we do quarterly reviews that combine in-house and external accounting resources. For 35-40 years, I’ve had a CPA friend who provides quarterly reports, with the assistance of in-house accounting staff, to generate information that compares our numbers to last quarter this year and last quarter the same time last year. These reports are in-depth and we always know where we stand.
TZL: What, if anything, are you doing to protect your firm from a potential economic slowdown in the future?
CP: I started the firm 30 years ago. In that time, I’ve seen many ups and downs. We try to run the organization as if we’re always in lean years so we can take advantage of growth times. We run a tight organization and there are no layers and layers of management. We keep costs down and let revenue fluctuate as it will. We outsource certain services as needed. For example, we outsource HR and some marketing services – so they have less of an impact on our core services. We have accounting in-house, but if more staff was needed, we’d outsource that addition.
TZL: What unique or innovative pricing strategies have you developed, or are you developing, to combat the commoditization of engineering services?
CP: Our primary focus is on the municipal government. We work with more than 60 municipalities in Florida. The most innovative pricing strategy we’ve developed – that municipalities love – is one where we are compensated on a percentage of the revenue they collect. So for instance, say a building department collects $100,000 for the month of August in building permits and other miscellaneous items. We’d collect 80 percent of that. Now, when September comes around, they only collect $75,000. We still collect 80 percent. Our percentage does not change, and they always get to keep some of their revenue. It’s our responsibility to scale up or down to meet their needs. They will never pay more than what comes in.
TZL: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?
CP: We went through a merger about 20 years ago. As a result, the company became process oriented. We quickly learned that the processes choked the delivery of service. From this we learned that the clients and employees have to come first – not processes. You also need to adjust processes to get different results. In order to correct the problem, I had to transition out of this merger and do it successfully. It was vital that I had strong relationships in the community with legal, accounting, and financial institutions.
TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO?
CP: To develop a culture that provides opportunities to staff, develops efficient services for clients, and keeps the company strategically growing and profitable.
TZL: Diversity and inclusion is lacking. What steps are you taking to address the issue?
CP: We have to be aware that we’re living in a multi-cultural world now. We cannot let skin color, accents, or gender influence our thoughts one way or the other. Our company is headquartered in south Florida which is a virtual melting pot and our company reflects that community.
TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?
CP: You have to value and respect the individual – it breeds value for the company. I believe our staff is convinced that I care for each and every one of them. I preach respect of their identity and expect them to do the same for the people we serve. Respect goes a long way.