Fayetteville-based Baumann & Crosno Construction is celebrating 10 years in business in 2023. It is not the region’s largest homebuilder but may be among the most meticulous.
Mike Baumann and Michael Crosno started the business in May 2013 and started framing their first home two months later in Gassville, near Mountain Home. A decade later, their business has built hundreds of single-family homes throughout Northwest Arkansas, generating more than $230 million in revenue. The company should eclipse 1,000 closings sometime this fall.
“While we have established a brand and reputation that we are proud of, we will continue to operate as if we have something to prove every day and strive to be one of the best builders in Northwest Arkansas,” Crosno said.
CONNECTING IN NWA
Baumann, 47, and Crosno, 38, share a family connection — and may have even gone on family vacations together when they were younger — but they weren’t close growing up, geographically or otherwise.
“Our dads went to SEMO [Southeast Missouri State University] together and later worked together,” Baumann said.
Born in Seattle, Baumann grew up mostly in Pittsburgh, and his construction career began after he graduated from Virginia Military Institute in 1998. That career took him to leadership positions for homebuilders in Charlotte, N.C., and St. Louis before relocating to Northwest Arkansas in 2009 to work for Rausch Coleman Homes as a division president.
Crosno was raised mainly in Cincinnati but “moved all over” growing up. His family settled in Hot Springs in 2000, and after graduating from Lakeside High School, Crosno headed to Fayetteville. At the University of Arkansas, he earned an administrative management degree with a minor in real estate finance in 2006.
Crosno stayed in Northwest Arkansas, but with construction jobs scarce, he started his career working for Fortune 500 member Cintas Corp. When Baumann relocated from St. Louis, the two men reconnected and eventually worked together at Rausch Coleman beginning in 2010.
Three years later, they formulated plans to start their own brand, accompanied by all the usual feelings of nervousness, stress and anxiety. They bootstrapped the company and went for several months initially without paychecks.
Their first general contracting job was a couple of lots for a mutual friend in west Fayetteville’s Rupple Row subdivision.
“Then, we spoke to Randy Werner and Ted Belden, who had about 40 lots in Rupple,” Baumann recalled. “I told Randy what we had built and [asked] if we could talk. They let us build our first production housing.”
“In the beginning, we had Rupple Row to get our cash flow going, but then our reputation for doing what we said we would do and operating with integrity helped us,” Baumann said. “Michael insists on really high quality.”
“We were able to meet some people and get a couple of decent spec lot positions where we could build our plans instead of what others wanted us to build,” Crosno said.
Baumann and Crosno, which has 14 full-time workers, builds mainly spec houses in subdivisions throughout Northwest Arkansas. It has projects going in Prairie Lea in Pea Ridge (starting at $370,000), Aurora in Cave Springs (starting at $450,000) and Towne West in Fayetteville (starting at $380,000). The company recently acquired dozens of buildable lots in Blackberry Ridge, a nature-inspired conservation neighborhood. It’s less than 1 mile outside the Fayetteville city limits on the northwest side, north of West Weir Road.
Lane Crosno, Michael’s wife, designs the company’s house plans and chooses all the exterior and interior materials for spec homes. She also works as a draftsperson and design consultant for clients building custom homes with other builders under her own company, Lane Crosno Designs Inc.
Both business partners said her expertise in drafting and design is critical to the company’s success.
“When you go into one of our houses, it’s going to be different from the house next door or next door to that,” Michael Crosno said. “Going into a [neighborhood], we make sure we aren’t building the same five houses over and over and the same interior color packages over and over. They will be similar in style, but you’d have to really try to find a similar home.”
RECIPE FOR SUCCESS
Baumann and Crosno also point to a dedicated team of long-term employees, trade partners and vendors who’ve been vital to the firm’s progress over the past decade.
They said the company’s success is tied to implementing effective processes and procedures, particularly in estimating, material ordering and accounting.
Their partnership has also flourished because of complementary strengths. Salesmanship and networking are where Baumann excels. Crosno’s detailed operational strengths and level-headedness in a chaotic industry stand out.
“He is the single-best operator I’ve ever met,” Baumann said. “And he’s got good stress tolerance and can grind. You can say, ‘figure it out,’ and he figures it out.”
Nearing the midway point of 2023, Crosno is candid in his assessment of the year, owing to prevailing economic headwinds. The prospect of building homes has become less appealing to developers due to bloated interest rates. Because new homes aren’t selling like they used to, committing to new ones is not feasible.
That will likely lead to a flat year, at best, but it’s a prospect the company didn’t prepare for.
“Our revenue is probably going to be down, and you’re going to have some of those [years], but we’re in a good spot for it,” Crosno said. “Last August, we consciously slowed down when the rates started going up. We set a limit on how many we were comfortable with and made sure not to exceed that number. We played it conservatively.”
“We aren’t on [last year’s] pace, but we just started a large general construction job that will increase our current pace.”
Baumann concedes it will take longer to sell houses in 2023, but the company isn’t overly leveraged.
“I think right now we have two completed specs we’re sitting on,” he said. “I hope interest rates stay around 6% or 6.5%, and the market gets used to it. Northwest Arkansas is a remarkable area, and there are enough people [moving here] where there’s an organic demand for housing. As long as we pick good locations, deliver a quality product and follow our recipe.”