The last couple of years of a very challenging economy have made many in our industry question not only what we’re doing, but how we’re doing it.
Old ways of doing things just don’t seem to work anymore, and that’s meant we all need to figure out new approaches to finding and selling projects – and then getting the work actually built.
As a result, it may be time to review what you do in a hard, cold business light to see what works and what doesn’t.
If you’re involved solely in designing jobs – no building, installation services or product sales included – it’s more difficult than ever to make enough money. That’s true for several reasons.
First, there simply are not as many remodeling or new construction projects out there as there were a few years ago, so you’re competing with more people and with more companies to land the work. Get used to that, and think about what else you can offer a potential client. If it’s not specific building or installation services, perhaps its more guidance through the construction process. Maybe it’s offering other products, such as cabinets, fixtures, stone or tile, as well as drawings and specifications?
Second, there are many design/build firms that are heavily discounting design fees and services just to get the client in the door and sign them up. How can you compete with a company or chain store that offers to design a kitchen plan for $500 or less.
These outfits may be offering this ‘low-cost service’ as a teaser, but it sounds very attractive to the budget-conscious homeowner who’s concerned about not over-spending on a remodel.
Then there’s the low-priced builder who’s seen a dramatic downturn in his business. “Just sign up with us and we’ll get your new kitchen built in no time” – so goes his line, all too often. He’s desperate to land the work, and he tells potential clients they don’t really need design services.
Maybe one way to compete with all of this is to offer more than just design services. While focusing exclusively on design has its benefits, offering one-stop-shopping gives potential customers more reason to come to you – and stay with you.
The Money Thing
One obvious reason for getting involved in building and installing your projects is the money. Simply put, there’s more to be made if you participate in the entire process, rather than just relegating yourself to the design end of things.
It’s not without risk, of course, but if you understand and embrace that, it may be a road you want to take. The design part usually costs between 5% and 15% of the total of any remodeling or building work. On an average $50,000 kitchen job (depending on the quality of fixtures, cabinets and finishes), that’s not a lot of money. If things go smoothly in the construction phase, it’s not uncommon to make the same percentage of profit.
Add to this the fact that you may find it easier to bill additionally for continuing design services while the project is being built, and it simply makes a lot of sense to keep the project under your control and contract while it’s in construction. And, you can often charge more when you handle the whole project yourself, and increase your profit margins there as well.
When you offer one-stop design and build services, you have a captive client: The homeowner is probably not going out to solicit a low-bid contractor to build or install the work. It’s a natural transition from design to build – the same people, designers and builders – that the homeowner is comfortable with from the start.
Many people in the design profession are loathe to let the client go once they’ve started working with them – especially with all of those contractors out there claiming that they really don’t need too much design in order to build the work. Those ongoing charges for design are very justifiable in some circumstances – for example, helping the client choose stone, tile or paint colors.
Pros and Cons
One big advantage of the one-stop shopping approach, from a homeowner’s perspective at least, is that ‘finger pointing’ is minimized with design and building services coming from one entity. It may pose more risk for you – you have no one to blame if the light fixture you specified looks out of place, or if the refrigerator doesn’t fit in the opening – but at least you’ll have less of those jobsite moments where the builder is screaming blue murder at the designer. The other side of that, of course, is if that refrigerator does indeed not fit, you and your crew have to take care of the problem – at no charge to the customer.
There’s a boatload more liability here, as well as in the overall risk of building, of having things go wrong or fail. In some states, you have to warranty your building work for as long as 10 years, so you’d better make sure you and your crew know what you’re doing. You’ll need the proper licensing and bonding, too.
Building the job is really a different industry you’re getting into, even though it’s closely connected – and clients look at you very differently after they’ve been submitted to eight weeks of dust, noise, inconvenience and big checks to write.
If you want to offer design/build services but aren’t quite up to building your own projects, you should consider partnering with a builder. There is no need to merge your businesses, either; you can work as separate entities but as one team – and sell it that way to potential clients.
The builder you choose to collaborate with has to understand that you’re in it together; if there are problems, you need to support and back up each other. If you’ve ordered the wrong sink faucet, you take care of the problem – just like he needs to take responsibility if he builds a wall out of plumb. You’re both connected at the hip!
And, if you don’t sell product, remember, to get started, you don’t need to invest in a showroom and sell everything from soup to nuts. Perhaps, instead, you can supply plumbing and lighting fixtures; just mark them up and make a little extra money there.
Of course, there is the old stand-by of providing cabinets for your projects. Again, you may find that you don’t need to have a showroom in order to do this. Some cabinet manufacturers are anxious to move more product, and may will work with you to sell and order their cabinets.
This can be both lucrative and risky. If you’ve been doing design only for a long time and have not been involved in ordering product, you will quickly realize that ordering cabinets correctly involves skill, attention and experience.
Order things wrong and there goes the extra money you stand to make.
If you’re thinking of embarking on the design/build path, try to educate yourself. There are a few excellent consulting groups out there that can help you avoid many of the potential pitfalls.