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J&J Electrical Contractors, Inc.: Retaining Viability in a Highly Competitive Industry

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John (CEO) and Jean Abernathy (CFO), a husband and wife team, owned and operated J&J Electrical Contractors, Inc. (J&J).1 J&J performed commercial, industrial, residential, and public electrical-contracting work. Electrical work included wiring and installing anything to do with power, lighting, or other electrical equipment, and electrical contractors had to be licensed by the state of California.
Often, electrical contractors were called to a job by a general contractor who had overall responsibility for constructing a building or remodeling it. But they could also bid on projects independently, especially in the public sector.
By May 2006, John and Jean had successfully grown J&J from a company of three electricians to one of fifty-four employees. They took the company to 2005 revenues of
$5.22 million, a 75 percent growth over revenues of $2.98 million in 2001. J&J prided itself on its reputation for good customer service as reflected by John:
Our most important accomplishment has been customer service. We have built our reputation on integrity, responsibility and reliability. Even though we are not always the cheapest, when customers hire J&J Electrical for a project they know what they are going to get; there are not a lot of surprises. When we do have a bad project, we never have to go to court. Instead of letting it go to our bonding company or walking away from the project and going into litigation, we just fix the problem, take the loss, and go on. You don’t want to do that all the time, but sometimes you don’t have a choice. So, we’ve built relationships that way. We have the same clients that we’ve dealt with since 1987, and we have continued to build clientele. So, our plan has been to focus on service and integrity.
Despite their success, however, the Abernathys were at a crossroad. Although J&J had experienced strong revenue

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