Staying Strong

By definition those remodelers listed in Qualified Remodeler’s Top 500 are not typical remodelers; they’re at the top of their profession. And, yet, even these high performers have felt the impact of the recent economic downturn.

Most have experienced decreases in revenue. There are fewer jobs and those are taking longer to sell. Many remodelers have been forced to make difficult cuts to control costs, particularly in personnel. They’ve survived by knowing their numbers and keeping a tight rein on them.

Most of them have heard enough talk about difficult economic times and are more than ready to think about what’s next. They’re guardedly optimistic about the future, but few expect an abrupt turnaround without challenges.

For many remodelers, most of whom have weathered previous economic slowdowns, the current state of affairs is perceived as more severe than previous downturns. Iris Harrell of Harrell Remodeling Inc. in Mountain View, Calif., (No. 80 on the list) predicts a 35 percent drop in volume in 2009 revenues compared to 2008 figures and says she knows of firms who likely will experience drops as high as 50 percent. “We’ve had downturns before, and we’ve gone down 15 percent, maybe 18 percent,” she says, “but we haven’t had that kind of drop in volume [35 percent] ever.”

Geno Benvenuti, owner of Benvenuti and Stein in Evanston, Ill., (No. 61 on the list) reports a similar downturn. “Our client base is mostly affluent, but they too suffered from the uncertainty and fear that controlled everyone’s thinking,” he says. “It’s difficult when your net worth is halved in a couple of months to consider investing money in your home, an asset that may turn into a financial black hole if you get transferred or lose your job. Indulgence spending was replaced by necessity spending, except for the very well off, which we have been fortunate to have as a major part of our client base.”

“Our problem is diminished opportunities,” says David Amundson, owner and president of TreHus Architects+Interior Designers+Builders in Minneapolis (No. 203 on the list). “We have some work going on, and it’s good work. We’re still able to charge what we need to charge, but everything is harder this year. It’s a much tighter market,” he relates.

Downturn is relative for some

For some remodelers the downturn is relative. Joseph Kupstas, co-owner and co-founder of GoodFellas Construction Management, LLC, in Worcester, Mass. (No. 416 on the list), has been in business just over five years and in some ways hasn’t seen the flush times experienced by those who have been in the business longer. “We didn’t own a business during a boom. I think we’re going to be very strong because we experienced a down market; it’s really all we know. Other companies might be trying to change and adapt to what’s happening right now; we don’t know any different,” he says.

Kupstas says his company is looking forward to its best fall ever, with multiple projects, many of them self-funded by homeowners. Indeed, bank financing is often a sticking point. “I think there may be one project out of 20 or 30 that might have a bank involved,” he says.

“I can definitely see that there’s a major downturn in our area,” Kupstas acknowledges. “There are companies we competed against when we started and which had been in business 20 years, and they’re gone. But we have more work than we can handle. We’re doing something different. We’re making the phone ring and not waiting for it to ring. A lot of people just seem to be sitting and waiting,” he says.

Perception, in addition to economic reality, has a lot to do with homeowner decisions to remodel or not to remodel, according to several remodelers who spoke with Qualified Remodeler. Neal Hendy of Neal’s Design-Remodel in Cincinnati (No. 229 on the list) points out that among his professional and entrepreneurial clients who might otherwise have the means to undertake a project, there is a reluctance to do so because of the out-of-touch impression it might leave. “They’ve had to lay people off and they don’t want to be seen as poor leaders,” he explains.