Top Challenges and Opportunities

Last month, Anthony Wilder Design/Build of Cabin John, Md. was named one of 15 small businesses with winning workplaces by the Wall Street Journal. The business newspaper teamed up with the workplace consultancy, Winning Workplaces in Evanston, Ill. to determine which small businesses were creating the best overall work environment.

So, what made a design/build remodeling firm stand apart from the thousands of other small business considered for this honor? According to the Wall Street Journal, it had to do with the proactive way the company dealt with last fall’s financial crisis and an anticipated major reduction in revenue. The firm, which had long since opened its books to its employees, was quickly able to show its team that cutbacks were needed. This went a long way to getting everyone onboard with temporary pay cuts, which reduced the company’s overhead enough to give it the breathing room to keep the team together for the time when business improved.

In the spring of 2009, when business and profitability returned, the company did right by their employees, restored their full pay, and repaid half of their lost back pay during the cutback period. The firm is aiming to repay the rest by the end of this year.

With this innovative response to a challenge, one that most remodeling firms faced during the past 12 months, we thought it useful to share the top challenges and opportunities cited by some of the companies who were listed in the 2009 QR Top 500 Remodelers list. We used only full-service, design-build, and kitchen and bath specialist firms for this article. Insurance restoration and exterior firms experienced similar challenges and opportunities, but those will be the basis of an article in a future edition of the magazine.

Rank

Company Name

2008 Remodeling
Gross Sales

Firm Description

Business Top Challenge

Business Top Opportunity

4

Bath Fitter, Lewisberry, PA

 $58,126,804

Kitchens/Baths

Acquiring adequate customer financing during this difficult economic climate

Revisit existing customers

9

Case Design/Remodeling, Inc., Bethesda, MD

 $45,972,392

Full-service

We’ve seen builders in the D.C. market become remodelers and even many remodelers offer handyman services. Concurrently we’ve seen a decline in response rates from traditional marketing and advertising media (print, direct mail, radio, etc.).

Our top priority in 2008 was maintaining our long-term vision of achieving excellence at every level. This focus of excellence includes high standards of excellence in design, craftsmanship, communication and overall client experience.

10

Alure Home Improvements, East Meadow, NY

 $44,974,616

Full-service

Lead generation during tough economic period

New product offering — new territories

13

De Mattei Construction Inc., San Jose, CA

 $40,493,381

Full-service

The economy and the lack of financing for construction loans

A couple of very large whole-house jobs for senior executives of public companies

17

Gardner/Fox Assoc., Inc., Bryn Mawr, PA

 $29,939,386

Design/Build

Finding new opportunities; driving new business from clients ready to get work done

Two larger residential whole-house renovations

19

Kitchen Magic, Inc., Phillipsburg, NJ

 $27,882,427

Kitchens/Baths

Adjusting to severe market decline

Improving business process system

20

BOWA Builders,
McLean, VA

 $26,477,000

Full-service

Clients and potential clients are taking longer to commit to projects due to the turbulent economy.

Marketing our expertise/leadership position in green construction; people taking advantage of real estate market and remodeling their newly purchased homes

23

Neil Kelly Co., Inc., Portland, OR

 $25,644,155

Design/Build

The economic conditions and generating leads

Build market share and brand loyalty in a tough economy

28

Normandy Builders, Hinsdale, IL

 $23,000,029

Design/Build

Right-sizing the company to remain fiscally strong;  reacting to the market to be sure that we had the right overhead for the level of work we were selling

As a result of right-sizing, we were fortunate to keep the best of our people busy. Therefore the staff we have in place now is the best we've ever assembled.

40

Marrokal Design & Remodeling, San Diego, CA

 $17,712,596

Design/Build

The economy shift in the fall of 2008 was our biggest challenge. Clients still wanted to remodel but it was no longer so simple to get financing for their projects.

Our trade contractors really had to step up as the market cooled. It forced them to improve performance and sharpen their pencils.

45

Crawford Renovation Group, Inc., Houston, TX

 $16,557,365

Design/Build

Opening our new 10,000-sq.-ft. Experience Center

Using our new Experience Center as the emotional tipping point to lure the prospect into engaging our company

57

New Face Kitchen Systems, Inc., Bellevue, WA

 $13,105,192

Kitchens/Baths

Economic slowdown and related challenges

Enhanced quality control and systems development

60

Reborn Cabinets Inc., Anaheim, CA

 $12,524,392

Kitchens/Baths

Sharp decline in incoming leads/sales, and as a result, we were forced to act quickly to turn the business around and right size it for the new market. This was very difficult as we run our business like a family.

We were able to be consistent in our marketing despite the decrease in sales. This has made us be more stable in the consumers eyes despite the fact that many of the small competitors are closing.

64

Lars Construction Co., La Mesa, CA

 $11,589,296

Design/Build

Falling home values, economic slowdown and changes in bank lending practices

The reputation that we built over the years helped us stay busy much longer than many of our competitors.

68

Allen Associates, Santa Barbara, CA

 $11,200,000

Full-service

Responding to the national financial crisis and the downturn in the construction industry was definitely a challenge – one that continues into 2009.

Hiring someone to oversee all aspects of our production process 

70

Platinum Remodeling, Long Beach, CA

 $11,158,902

Full-service

Adjusting to the distressed economy

Due to the distressed economy, there were slow points where we were able to look at how to improve our services and research new and improved products.

74

Mosby Building Arts, Kirkwood, MO

 $10,551,015

Full-service

Improving internal communications during a period of 43% sales growth

Shared reporting systems to support and connect multiple decision makers

84

Moroso Construction, San Francisco, CA

 $9,621,925

Full-service

Moving into our new offices in SF; keeping up with the flood of work and hiring new employees

Hiring new salespeople with extensive contacts within the architect community

90

Repairs Unlimited, Inc., Kansas City, KS

 $9,268,885

Full-service

Dwindling economy keeping average homeowners out of the remodeling market

Replacing lost revenue

96

FBN Construction, Co., Boston, MA

 $8,946,486

Full-service

Our biggest challenge was to stay focused on the continuous improvement process that we had all committed to in 2007 and maintaining revenue growth at the margin standards we established.

Recognizing our marketplace and our customers through networking with the design associations and trade partners

97

Galaxie Construction, Lincolnwood, IL

 $8,895,762

Full-service

Financing. It was difficult to find customers that could get the financing needed to commit.

One very large remodeling project

99

Ulrich Inc.,
Ridgewood, NJ

 $8,741,650

Kitchens/Baths

Maintaining a profitable sales level and controlling costs

Expanding our Design/Build initiative

101

Westhill Inc. Design/Build, Woodinville, WA

 $8,504,989

Design/Build

Closing sales with a downturn in the economy the last quarter

Promoting our small jobs/handyman division

103

Landis Construction Corp., Washington, D.C.

 $8,488,000

Design/Build

Dealing with the economy

Perfecting our company best practices

104

Bennett Contracting, Inc., Albany, NY

 $8,465,791

Full-service

Out-of-control government spending

Adding electrical contracting to our services

106

Chermak Construction, Inc., Edmonds, WA

 $8,300,260

Full-service

Finding qualified customers

Using new marketing strategy

107

Howell Construction Group, Inc., Sarasota, FL

 $8,290,000

Full-service

Contracting new work; more competition for less jobs

Expanding our reach; making new contacts that may turn into work when the economy gets better

111

Sun Design Remodeling Specialists, Inc., Burke, VA

 $8,110,562

Design/Build

Generating leads to meet projections and sales goals

New lead generating activities — home tours

114

VanDam & Krusinga Building, Kalamazoo, MI

 $7,980,949

Full-service

Maintaining volume of work/jobs/referrals

Maintaining volume of work/jobs/referrals

115

American Design And Build, Ltd., Bel Air, MD

 $7,959,276

Full-service

Adjusting to volatile economy

Having our previous customers for projects and referrals

117

Sea Pointe Construction, Irvine, CA

 $7,890,100

Full-service

The economy and the housing bubble burst fallout

Edit staff to keep only the cream of the crop

120

Woodbridge Builders, Kenilworth, NJ

 $7,800,000

Full-service

Economic uncertainty

Diversifying by introducing a Handyman Division

122

Karp Associates, New Canaan, CT

 $7,640,000

Full-service

New projects, continued work

Green building

124

Callen Construction, Inc., Muskego, WI

 $7,555,000

Full-service

Consistent lead generation throughout the entire year

Expansion of window business

130

Great Lakes Window & Siding, Apple Valley, MN

 $7,372,344

Full-service

Rising costs of everything: marketing, health care, materials, gas, etc.

Rethinking the marketing strategy to get back into more window and siding business and expanding the marketing and our territory for those products

133

Tri-State Renovations, Columbus, OH

 $7,056,129

Full-service

Planning for 2009 as the recession took hold in late 2008, including cutting back on overhead expenses

Getting into state government work in addition to public housing work

142

Magee Construction Co., Cedar Falls, IA

 $6,757,304

Design/Build

Floods and a tornado caused major damage in the area; influx of that much work at once caused organization challenges

Opportunity to showcase diversity and depth of our organization during last year’s natural disasters

145

Monmouth Custom Builders, Deal, NJ

 $6,662,810

Full-service

Our biggest challenge last year was dealing with the slowdown in sales. We knew we needed to reduce payroll but did not want the customer to lose the relationship they started with the managers.

Find better talent. The unemployment pool is very large and we plan to hire the best.

148

Sunrooms & More, Lexington, KY

 $6,600,032

Full-service

It was definitely the change in financing last year. We lost several financing companies that we had done business with for several years.

We expanded our SFI program with more large retail stores and increased our lead flow.

150

Tom Trout, Inc., Jacksonville, FL

 $6,507,000

Design/Build

Creating new business to carry us into 2009

Diversify into custom home construction, light commercial work and insurance opportunities.

154

Your Home Improvement, St. Cloud, MN

 $6,360,558

Full-service

Staffing — finding hard-working, reliable, competent help.

The company’s ability to carry an exclusive window and siding product line

155

Southwestern Remodeling, Wichita, KS

 $6,337,815

Full-service

Managing budget and material costs in a rapidly fluctuating materials market. It seemed as if every material, including gasoline, rose significantly in price.

A good remodeling market in our area. New housing seemed to flatten and remodeling as a whole increased in the area.

164

Home Town Restyling Inc., Hiawatha, IA

 $6,162,370

Full-service

Providing leads and suppliers going out of business. Our main window manufacturer went out of business.

We are a strong company and made adjustments to weather the downturn. 

165

CG&S Design-Build, Austin, TX

 $6,150,708

Design/Build

Staffing up just enough to serve clients in a growth period, then keeping everyone late in the year

Achieving record sales and number of jobs with high client satisfaction

166

Francis Harvey & Sons, Inc., Worcester, MA

 $6,136,507

Design/Build

Recruiting and hiring sales professionals

Capitalizing on sales opportunities

169

Kaz Brothers Construction, West Seneca, NY

 $6,086,536

Full-service

Developing the new members of the sales team and company wide communication

No opportunities in 2008 other than we kept proactive in a difficult market. We are fortunate to have produced the amount of work. Margins declined.

178

BACK Construction, Lexington, KY

 $5,892,152

Full-service

Increasing cost of goods

Product innovation through window and door distributorship

180

JRC Construction, Inc., Arlington Heights, IL

 $5,800,000

Design/Build

Selling profitable jobs

Breaking into the commercial field with some small commercial projects

188

North Star Bath Remodeling, Southlake, TX

 $5,600,000

Kitchens/Baths

Keeping afloat with the downturn in the economy; kept a close eye on the profit margin

The competition fell back and we were able to gain market share.

189

Platt Builders, Inc., Groton, MA

 $5,523,982

Full-service

Marketing in a down economy

Aging in place; green construction

193

Deblasio Capo Design Builders, Saint James, NY

 $5,410,866

Design/Build

Our most challenging element for our business this year was changing our structure to meet our workload. 

Our top opportunity of 2008 was expanding to include commercial construction work.

199

Hubert Whitlock Builders, Inc., Charlotte, NC

 $5,353,380

Full-service

Gaining market share in an unstable economy;
focusing and marketing to existing client base

To gain market share as some competitors have struggled

200

American Home Improvements, LLC, Knoxville, TN

 $5,348,427

Full-service

Credit rejection for customers/credit conversion from gross to net (credit rejects)

Being a survivor when things are down gives us less competition.

201

Weidmann & Assoc., Inc., Roswell, GA

 $5,334,918

Design/Build

The Great Recession and resulting drop in both leads and average job size

Weaker competitors starting to fall off the map

203

TreHus Architects + Interior Designers + Builders, Minneapolis, MN

 $5,323,416

Design/Build

Handling the increased growth

Developing a Leadership Team through the use of an outside consultant has improved communication within the office and in the field.

204

Critchfield Construction, Inc., Campbell, CA

 $5,300,000

Design/Build

Our reputation as an industry has suffered locally as a result of a few scandalous contractors being convicted of some outrageous crimes against their customers.

Having all of our employees trained and certified in building sciences has had an enormous impact on the conversations between us and our potential clients.

205

Anthony Home Improv. DBA Housecrafters, Elkins Park, PA

 $5,279,994

Kitchens/Baths

Trying to survive the economy’s downside

Looking for different services and businesses to supplement our downsizing

206

Creative Design Construction, Northvale, NJ

 $5,268,000

Design/Build

Bringing in quality leads

Purchasing properties

208

Remodel Works Bath & Kitchen, Poway, CA

 $5,265,289

Kitchens/Baths

The reduction of staff and overhead while still maintaining morale

Developing new marketing and advertising programs that we never had or needed in the past

209

Classic Remodeling & Construction, Inc., Johns Island, SC

 $5,245,747

Design/Build

Finding the right opportunities

To restructure our company to be more effective

214

NVS Kitchen & Bath, Inc., Manassas, VA

 $5,176,317

Full-service

Trying to get our piece of the remodeling pie which keeps shrinking throughout the year

Hiring several new kitchen & bath designers from companies who either cut back or didn’t make it due to the downturn in the economy

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