50 states project | Aug 28, 2021 |
How this North Dakota design-build firm is navigating sky-high construction costs

The 50 States Project is a yearlong series of candid conversations with interior designers across the country about how they’ve built their businesses. This week, West Fargo, North Dakota–based Kirsten Waverek of Studio West Homes tells us how she uses visualization software to help clients be more decisive, what she chose to delegate as the firm grew, and how she set boundaries with clients who were texting after-hours.

Did you always have an interest in design as a career?
I grew up in a small town in Minnesota with very can-do parents. They taught me how to use my hands, and they allowed me to work on projects for them and for their friends—I would literally redo rooms for my parents, and even my mom’s co-workers. I look back at it and it just seems so random to me that you would let this 14-year-old come paint your house, but I grew up where I wasn’t really told, “No, that’s not appropriate for you to do.” They were just like, “Yeah, that’s cool. You should go for it.” But coming from a small town, design did not seem like a feasible path—I don’t think that they saw a lot of people who were successful at it, and I never thought that I would make it a career. I got my four-year degree in business and marketing, then worked at the local hospital in marketing.

When did design enter your professional world?
After working at the hospital, I transferred to an architecture firm and did marketing there. At that point, it was a weird series of events: The firm [did] architecture for commercial projects, and then they had a residential home building side. I started doing some design work for them on the residential side. Then, when the owner of that sector of the business left the company, I was told to learn how to design houses or go find a different job. So I figured it out.

Where did you turn for that information?
YouTube—seriously. I also don’t want to discredit my previous employer at all—they’re an amazing architect, so creative, and I learned a lot from them, too. I learned the principles of design from them, the general rules of proportion, mixing materials, and sourcing. It was just baptism by fire. At first, they would design things and I would draw them. Then, it came to the point that I just had to do the drawings and they would edit them, no different than they would [with] a drafter.

What made you want to go out on your own?
I was at the firm for about five years, and then my project manager, Elliot Steinbrink, and I started Studio West Homes in 2017, when I was 26. We were at a crossroads: either purchase the firm or start our own. Our boss at the time was planning for retirement, but we were trying to keep food on the table. I have four kids, and my business partner has four kids—we’re just in a different stage of life.

Wait, so your business partner Elliot was your project manager?
He was my project manager for all my houses there, and then we both left. It’s been a really good thing, because I didn’t go to school for drafting, architecture or interior design. But he studied construction management and framed homes, so he understands the nuts and bolts of what works and what doesn’t.

How this North Dakota design-build firm is navigating sky-high construction costs
A textured treatment around the fireplace adds drama and visual interest to a room designed by Studio West Homes.Courtesy of Studio West Homes

What surprised you about running your own firm?
We had gotten to the point at the previous firm where we were doing all of the accounting work—pretty much running the whole business top to bottom—which is one of the things that led to our confidence starting out on our own. We felt like, “We’ve got this.” But more of the stress is on you when it has your name attached. You really feel it. When your client’s happy, you feel it and you get to rejoice a little bit more, but you also feel the pain a little bit more, too, because your butt’s on the line.

Because you have that marketing degree, I’m curious about your strategy when you launched the firm. How did you attract new business?
We put a business plan together. When we set our goals. We still thought we would do semi-custom—we were going to do a set of 10 houses. But since then, our clientele has evolved, and we just made the most of what was being thrown at us. We were doing semi-custom builds at our last place, and now we’re full custom, which is even more creative and fun. When we started, our average house was $500,000 to $700,000, and right now, our average house is not much under a million. But that clientele, they’re looking for something more.

How do you change what you offer to give them more? What did that require?
More work. We have somebody who has been a mentor for us, and he told us, “You can’t control the market. When you have work, you’ve got to run as hard as you can, as fast as you can, as long as you can. When it’s slow, you rest and you take vacation.” That’s when you truly rest. And so we’ve used a little bit of that mentality. You can only plan so far in advance, so it’s always hard to turn down work, because you don’t know what’s coming next.

Where we’re struggling a little bit—prices in the market right now are insane for materials, and then there are labor shortages, which also drives up prices. We’ve seen the construction costs on all of our homes increase 20 to 30 percent—and on a $1 million house, that’s a lot of money.

How do clients react to that kind of spike?
We’re seeing clients push pause—and it’s like, “OK, but how long are you pushing pause?”

Do they know?
Nobody knows. That’s the kicker. And yes, lumber prices went down—cool. But now windows and garage doors have gone up three times this year, and we’re telling clients, “Make a decision, because prices are going up again in September.” It’s a wait-and-see game. And our fear is that interest rates have to rise for some of those prices to fall. But then our clients look at it and they say, “Well, if my interest rate goes up and I’ve got a $1 million loan, is it worth it?”

How this North Dakota design-build firm is navigating sky-high construction costs
A pair of hammered brass pendants are the stars in a kitchen that pairs warm woods and painted black cabinetry.Courtesy of Studio West Homes

What does your team look like?
We have four people. It’s Elliott and myself, and then we each have an assistant. I have a design assistant and he has a project management assistant. It’s a really good dynamic, as we are just naturally hard workers, and we found people who are also very hard workers and support that. We are very customer-centric. We get a ton of business from social media, and then we get the majority of our business from client referrals. If our clients aren’t happy at the end of the day, we’re not going to be getting their referral. So we would prefer a small group and keep the quality up on all of those touch-bases with our clients.

How did you know you were ready to make that hire?
I went to a women’s leadership conference and I asked that question to a group of women who have businesses much larger than mine. They all said, “If you’ve asked the question, you know the answer.” They were like, “If you feel like you’re being overworked to the point that you’re asking a group of people if it’s time to hire someone, then it’s time.” In what capacity, and at what pay rate? Those are all details you obviously have to figure out. And what does that role need to be? But if you’re asking if you need help, you need help.

That’s good advice. Did you go home and post a job listing immediately?
Yes, exactly.

How did you know what you wanted to delegate?
I made a list that literally said, “Shit somebody else can do.” Because I knew that if I was going to stay in this job and loving it, I had to offload some of the things that I didn’t love.

What were those things?
Social media. And then from the dollars-and-cents side, I can bill out my time at X dollars per hour, so I had to ask myself, “Is it worth my time?” Is it worth me sacrificing potential projects to be running samples, color matching, ordering, assembling, organizing? Even just weekly emails. Every Friday, Elliot and I run job sites and we touch base on everything that was done in the last week, everything that’s going on next week, and things we need to do internally for that project.

Do the clients come to that touch-base, or is that just the two of you?
Typically, it’s just the two of us. Otherwise, we’d be there all day long!

We have clients who are like, “Let me know when it’s done!” Then we have clients who want to talk to you three days a week. I think that’s one thing that I have a hard time balancing—me thinking, “These are the 10 things that I have to get done today,” and then me sitting around chit-chatting with clients is eating into that time. But you also realize the benefit that has.

How many projects are you typically working on at one time?
I would like to be working on four to six. And I think currently we probably have about a dozen.

That’s a lot of site visits every Friday.
We try to stagger our projects, so right now, we have two that are approaching their finishing stage; two in the framing stage; two that just started; and then we’ll have another two starting this fall. So we have eight site visits, and then I’ve got one or two commercial projects that I’ll check in on every other day, or every other week or so. I also rely heavily upon Elliot to communicate. He’ll say, “OK, nothing got done at that project this week; there’s no need to go.” Because he’s there every day. He’s at every job site every day.

How this North Dakota design-build firm is navigating sky-high construction costs
Waverek clad a paneled office in black, including the ceiling. The room is proof, she wrote on Instagram, that 'there is, in fact, a tasteful way to let your husband hang his mounts inside the house.'Courtesy of Studio West Homes

How do you ultimately decide what projects you’re saying yes to?
My assistants do an initial intake to verify budget, location, timeline—just black-and-white, does it fit the priorities that we have for clients? Because we don’t want to waste anybody else’s time. And then I would sit down and meet with them.

Fargo is a pretty small town, fortunately and unfortunately. I think after a meeting, you have a pretty good idea of whether or not you are going to get along. Is this somebody that you feel you can communicate with, and who is going to be understanding? Because things go wrong during a 12- to 18-month build. We’re very honest, and we will be upfront with our clients, but it’s also important that we are working with people who are able to pivot.

We’ll make a list when the project closes of what went really well, what didn’t go so well, and why it didn’t go well. Was it a communication issue? Was it just the market? Right now, we’re just suffering from COVID everything, it seems. It helps to have that regroup at the end of the project and ask ourselves, What did we learn from this project, and how are we moving forward to make it better for future clients?

What are things that you’ve changed as a result of that touch-base at the end?
Implementing project management software, for one. Contractor communication is another big one, because we make a lot of assumptions internally—“Oh, Elliot’s dealing with that,” or “Oh, Kirsten’s dealing with that.” We’d like to say that we stick to our own lanes, because when it was just the two of us, it was easy to say, “This is you, and everything else is me.” Now that we have more people on our team, it’s like, “OK, so what is your role?” As much as we value fluidity with that, we also need to know who’s responsible for what.

Left: A pretty bathroom vignette is a study in contrasts. Courtesy of Studio West Homes | Right: An airy living space. Courtesy of Studio West Homes

You’re starting from nothing and staying with a client until the finishing touches are complete. How does that relationship evolve over time?
Not everybody that builds has us do the design. It is definitely the higher-end where [we do design work]. We have two homes now where the clients asked the initial question right when we first met, like: “So if you help with the finishing stage also ... ” and we can say, “We’ll get you all of our information on that portion of it.” And then we have some people who don’t think they want that, and then all of a sudden they’re in their house and it’s an “Oh, shit” moment where they realize they don’t actually know how to set it up. That’s especially hard right now, because when it takes 26 weeks to get a sofa, you’re like, “Well, you probably should’ve thought of this a while ago.” And then some people want it budgeted right away.

Where they’re like, “This is my total budget and I want you to build it and buy all of the furniture”?
Yes. It’s: “This is my total budget. I’m allocating X to landscape, I’m allocating X to furnishings, I’m allocating X to window treatments. The rest is for the house build.”

Is that the most successful project?
As long as you have a decisive client. I’m personally pretty indecisive, but for other people, I can be very decisive. I love when clients have a style and they own it, and I’m just helping them coordinate the best of what they want.

How much is there an aesthetic to what your firm does, and how much of it is taking on what the client is looking for?
It’s equal parts. I think people come to us because we pay a lot of attention to detail, and I love when spaces have their own unique style. But I also really love when it still feels like it fits in that home. One of my biggest pet peeves is that people build a beautiful house and it’s like: That’s a beautiful bathroom, and it looks like it’s a totally different house, and this living room and kitchen don’t actually look good together.

How do you guide clients to the right decision?
I have one client in particular right now—I will give them a suggestion, they will ask for every alternate, [only] to come back to the original suggestion. You have to decide what hill you’re going to die on. There’s times where I really dig my heels in, and I will have a blunt, awkward conversation where I’m like, “I just don’t think this is right for this project, or for you, or for what you’ve shown me.” We use 3D software so we can show people, but sometimes it’s just—they want what they want and you have to move on.

Is the 3D modeling an extra service or a mandatory part of your process?
We actually don’t charge more for the 3D, just because I personally use it a lot as a decision-making tool. It makes my life a lot easier to be like, “Do you want a blue island or do you want a white oak island?”

You can say, “I can show you both.”
Right. Like, “Give me two minutes, I will show you both. Which one do you want?” That way, you have so much less back-and-forth.

Has that always been standard in your process?
It has. We’re very visual. We’ve even started incorporating a lot more of it into our drawing sets for our contractors, because it helps portray the look that we’re trying to get, and then we get a lot less questions. For one of our bigger projects, most recently, we did a detailed set and I think it was almost 30 pages of all the millwork profiles. It went room by room—it had the light that was in there, the box that was in there, and all of these schedules, and I think it helped to keep people organized on site. And they’re like, “I appreciate that I can see what we’re shooting for and what we’re trying to do here.”

How this North Dakota design-build firm is navigating sky-high construction costs
A living room is clad in a medley of crisp, cool whites.Courtesy of Studio West Homes

Have you changed your approach to billing, in the climate that you’re in right now, in terms of high demand?
We’ve stayed the course for the most part. We almost always do fixed contracts. There are allowance items that are obviously going to go up and down, and then we change order through that, but our clients have the confidence of knowing, “At least I’m locked in at this.” With some of the market changes, we’ve had to add clauses regarding lumber pricing and things like that, which are just out of our control. We’ve had a lot of things out of our control in the past, but not like these extensive swings.

Do you bill for the design differently, or is that also a fixed rate, just a separate one?
We have started increasing our rates on that as the homes get bigger. We used to have a flat rate—but now that we’re designing houses that are two, three times the size, we take it on a case-by-case basis.

Where do you see the most opportunities to grow?
Seeing how relationships develop. One unique part about working in Fargo is that we have “The Lake.” It’s about an hour into Minnesota, an hour from Fargo, and there is a ton of lake property. And as they get older, people tend to spend more of their money at the lake than they will in town. I don’t know if it’s because the lake is for hosting and you’re showing off, or if it’s because it is more private. Fargo itself is kind of a big-little town, so everybody knows whose house is whose, who did what, and who spent what—it’s a little nosy like that. But when you go to the lake, nobody really knows, and you’re a lot more spread out.

A lot of clients who are at that point where they’re looking for their second home, or mom and dad have a cabin and they want to redo it—I’m looking forward to getting into the referral line there. We’re just starting a lake project that will probably be a five-year project.

Wow. What are you doing that it will take five years?
It’s probably a $6 million project. There’s a main house, a guesthouse, sand volleyball, pickleball, a clubhouse—it’s this whole compound, and they want to piecemeal it. They want to build the guesthouse first, and stay there while they’re building the main house, so it’s just a very long project. We hired David Charles Design out of the Twin Cities for the architecture, and then we’ll do all the interiors and finishes on that one.

What is the biggest thing you know now that you wish you would’ve known when you started the firm?
How to say no—to stand your ground, know what’s worth your time, know what’s not worth your time. Because I am a people-pleaser, and we love to have happy clients, but there’s a point where you realize, “Oh, I’m getting mowed over now.”

It seems like that’s the stuff you just have to learn the hard way, right?
You do, unfortunately. I think you need the experience to give you the confidence to say, “Nope. Been down that road, and it’s not worth it.”

How this North Dakota design-build firm is navigating sky-high construction costs
For a girl’s room, delicate pink accents punctuate an all-white interior.Courtesy of Studio West Homes

I wanted to ask you a bit about North Dakota—but you do a lot of business in Minnesota, too, because you’re right on the state line. What’s the design scene like?
We have to be licensed in both states just because of where we’re located. But with our clientele being on the higher end—Minnesota has much lower property tax and higher income tax, whereas North Dakota has lower income tax and higher property tax. So a lot of the professionals—we’re building for a lot of doctors and lawyers, single- and dual-income working professional couples—they’re more concerned about their income tax than about their property tax, so we build the majority of our homes in Fargo, North Dakota. And then at the lake, that’s a second home, so you’re not paying income tax there. It is a really weird dynamic that way. We have built a handful of homes in Moorhead, Minnesota, but not many, because when you have an income high enough to build that kind of house, it just doesn’t pay to live three miles away. It’s the same prairie in Moorhead as it is in Fargo.

Besides being licensed in both places, how does that impact your business?
Not so much. I mean, Minnesota actually has a lot more rigid construction policies. Depending on size, your average build is at least $15,000-plus more in Minnesota, and you have more requirements—and they tend to change more often. For about two years, Minnesota had a policy that for every house over 4,000 square feet, including porches and decks, you had to have a sprinkler system like you would find in a hotel. So then people were capping their houses at a certain size, because it’s super expensive, and it’s just kind of ugly to have these sprinklers throughout your house. And then they were like, “Oh, that was a dumb policy. We’re not going to do that anymore.” For a while, they also required foam insulation around the entirety of your exterior, on top of the insulation on the inside. Then they were like, “Nope, never mind. Don’t do that anymore.”

That’s got to be frustrating to navigate.
You have a lot of things that you have to pay attention to. And then at the lake, there are two different counties: One county is super laid back, where you can pretty much do whatever you want, and another that is very strict. So it’s like, What line are you on when you go out there? Politics also play into it, in terms of who knows who, who knows what and what you can get by with.

Is that something you’re contending with, or is that something your clients are thinking about when they purchase a lot?
I think it’s a little bit of both. Our clients are either very informed or very uninformed. They’re either like, “I’ve thought about this, asked 100 questions to the powers that be, and I think I’ve got it figured out,” or they’re like, “Wait, we have to get a permit?” There’s not much in between.

How do you navigate budget conversations with clients? How did you get comfortable talking about money?
It used to be something that I was afraid to ask, and now, quite frankly, we have an upfront conversation when we sit down and state: “The more honest you are with us regarding your budget, the closer we can get you [to your dream home].” If you overshoot, we have to revise, revise, revise to get things down. If you undershoot, then you’re not happy with the products that we’ve delivered to you. If you go into design saying the budget is $1 million, we design a house accordingly, and then you’re like, “Add a couple of hundred thousand dollars” because you want it to be more high-end, well, then we’re just redoing work. Not that we’re afraid of more work, but—

They’re paying for the work again, aren’t they, at that point?
Yeah. It’s like, Let’s be honest about this. We are going to do our best at the budget you give us. It’s been really hard this year, because every house we’ve priced out has come in way high. You want to have a poker face, but how do you have a poker face when clients are like, “Why is this so expensive?” Sometimes I don’t even know why it’s so expensive! And then I’m supposed to go tell a client that? But I think some clients appreciate the honesty of us being a little taken aback by the price, too. It sucks that we’re all in this position, but here we are, and how do we move forward?

What does success look like to you?
A really good work-life balance where I feel satisfied with the work I’m doing. Busy but not too busy.

What does work-life balance look like for you?
I can shut off at night. One thing we’ve had to backtrack a little bit is client communication. Texting is really great, just because we can be on group texts and get a quick answer to a quick question. But then people are texting you until 10 or 11 o’clock at night. We had to set boundaries: “It’s family time 5 p.m. to 8 p.m. and I’ve got four kids awake. I need to give them the attention that I give my work during the day.”

Are clients receptive?
For the most part. I think it’s harder for me to be blunt and say, “I don’t want to wake up at 4:30 in the morning because you texted me your random thought. Put that in an email.”

What are you most proud of?
I am proud that we have exceeded the goals that we set for ourselves. I think we set pretty aggressive five-year goals for ourselves, and we hit them this spring, a whole year early. I mean, we’re in a market right now that I would have only dreamed of being in.

Builders tend to come and go quite frequently in this area. When we started, we asked a lot of the successful builders who’ve been around for 30 years: “What did you do?” A different dynamic is that there’s two of us. A lot of these builders are older men who deal with the construction side, and Elliot will be the first to say, “Anybody can build a house, but they don’t have Kirsten in the office directing the design.”

Neither of you has to learn the dynamic of a new collaborator for each and every project. That’s a huge advantage.
It’s all taken care of in-house. The communication is streamlined. We know what to expect from each other, and we’ve been able to balance that relationship for 10 years. We really value the respect there. I screw up on things and he screws up on things and it’s like, OK, that’s the cost of doing business. How are we moving on from this?

We both are pretty laid back, but we want it done and we want it done right and we want everybody to have fun. We tell all of our clients when we start: “We are here to make the build path as enjoyable and as fun as it possibly can be. It will not be perfect. But we want it to be fun.”

To learn more about Kirsten Waverek and Studio West Homes, visit their website or find them on Instagram.

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