Delegate to Grow

Delegate to Grow

Jose Morales credits employees with his company's fast

growth and profitability. In three years, the 5-year-old firm's annual revenue has grown from $250,000 to $15 million.

ENTREPRENEURS by Janet Leiser | Senior Editor

For 10 years, Jose Sosa urged his friend Jose Morales to start a company. But Morales, an environmental health and safety consultant, worried about losing a regular paycheck. He had a family to support and a mortgage to pay.

Finally, it clicked for Morales. In November 2001, he quit his job as a minority partner in a firm and started J2 Engineering Inc., with Jose Sosa as a minority partner. J2 is for the two Joses.

Morales felt confident in his ability to survive, he says, because he had two big clients to start with, Tampa Electric Co. and J.J. Sosa and Associates (his partner's company).

Plus, he initially worked out of his home to keep down costs. And he realized he could always find work as a civil engineer if the company didn't make it.

All hasn't gone as expected for Morales, 48, a 1985 University of Florida graduate who grew up in Miami. In many ways, things have gone better then he expected.

The firm now specializes in environmental cleanup and serves as a general contractor overseeing construction projects, farming out most engineering work because of bonding requirements. And the growth of the company has surpassed Morales' initial expectations.

What's more, the firm was 42nd on Entrepreneur Magazine's 2006 list of 100 hot companies. J2's revenue was $15.5 million in 2005 and is expected to hit as much as $25 million this year. The company's profit target is 10%.

Employee growth

The company is constructing a new 10,000-square-foot building in west Tampa, a block or so north of Hillsborough Avenue. It hopes to move into it by December. It's also building a new office in Gainesville and has bought a building in Pensacola. Morales and his partners formed limited liability corporations to buy the buildings, a way for Morales to give them equity without giving up his majority ownership, which he needs in order to participate in the U.S. Small Business Administration's 8(a) program that gives minorities and other disadvantaged business owners preferential treatment in the awarding of government contracts.

Who gets credit for the company's success? Morales points to his six partners and the other 60 or so employees that work in one of J2's offices in Tampa, Pensacola, Gainesville, Atlanta and Little Rock, Ark.

"The key to my success is the people in this company," he says. "My job is to continue to find new people for the company who share our philosophy and our goal.

"And once we find them, we reward them."

Morales isn't exaggerating: Even though J2 has only been in business five years, it matches up to 25% of every dollar invested by an employee in the 401K, it provides health insurance coverage at no cost to the employee and gives bonuses of as much as $1,000 throughout the year, as well as larger bonuses at year's end.

For instance, Morales says a couple of employees were sent to New Orleans after Hurricane Katrina to clean up a post office that was in awful shape from tainted sewer water. The employees received a bonus in their next check.

Morales says he believes in sharing the wealth, and the company's generous benefits package helps J2 recruit employees in a tight labor market.

"The last six months have been good," he says. "I see the flourishing of the employees. They're taking more and more of an active role in the company because they understand the way I make decisions, the way I work. People have taken more accountability. They're doing great things. That's truly what the goal is. It's not for Jose Morales to be involved in every decision in this company."

Morales says it'd be impossible for him to know all that goes on within the company as it grows. He has to delegate to succeed. His co-founder, Sosa, isn't actively involved with the company.

Military buildup

Most of the company's work, about 85%, is for the government, from the city of Tampa, to the Hillsborough Aviation Authority, to the military. After J2 qualified for the 8(a) program, it competes only against other disadvantaged companies for government work. It's allowed to stay in the program nine years before it must graduate. Or it must graduate sooner if its average annual revenue exceeds $31 million over a three-year period.

Morales says he plans on taking advantage of the full nine years to grow the company and make it sound.

J2 has done construction on most of Florida military bases. One of the firm's biggest projects was the $8 million construction of roads at the U.S. Naval base on Andros Island in the Bahamas. The company has also done a lot of repair work on hurricane-damaged Naval Air Station Whiting Field in Pensacola.

The company's growth strategy ties in to how the military is moving the forces, Morales says, adding, "Bases in the Southeast are getting more and more people. To be in the construction mode in this part of the country is great. There is definitely not a slowdown in military construction. I don't know how the government is going to come up with the money it wants to spend."

Still, he says, even with all the dedicated employees and his partners, there are times when running a company seems overwhelming.

"As the owner, you always think about work," he says. "It just consumes you. But when it's your business and your company, there's a great deal of satisfaction. There are good days and there are bad days.

"At the 9-year or 10-year point of this company, if we're worth $40 million, then guess what? I've done pretty good."

At A Glance

J2 Engineering

Year Revenue % Chg. Employees

2001 $10,000 n/a 2

2002 $250,000 2,400% 6

2003 $2.6 mil 940% 24

2004 $5 mil 92% 46

2005 $15.5 mil 210% 53

2006 $25 mil* 61% 70

*Projected