Full-Service, Diversified

Diversification is often seen as a growth strategy: When times are great and you’re looking for a way to exponentially increase your volume, offering more services and adding employees is a natural choice. But it seems that remodeling companies who are already diverse in their offerings are poised to better weather the current downturn.

“Remodeling activity has been strong in our area for those companies who already are or are becoming more diverse,” says Allan Terhune Sr., president and owner of ATCO ENT Inc. in Beechwood, N.J., No. 474 on this year’s list. “It’s definitely been better than new construction in our area.”

Terhune says that with the drop-off in new home sales and construction throughout the Northeast, customers are looking to stay in their homes longer and are often undertaking larger, more complex jobs such as room additions and even whole-house remodels. “The specialty firms in our area have to compete on price only. Companies that offer soup-to-nuts service are poised for a stronger presence.”

Terhune says the strongest segment of his business has been with the higher end clients. “They usually want more than just their siding redone. They usually add a few other things to the job as well.”

In markets suffering through slower sales and lowered prices, many remodelers say they still have plenty of potential jobs out there, but those jobs may be harder to get. “People are looking more carefully at remodeling jobs, and price is not the only factor like it may have been a couple years ago. Value is the big word now — both in terms of what the job will bring to the home and what kind of experience you can provide to the customer,” says Terhune.

Josh Baker, president of Bowa Builders (No. 22) in McLean, Va., agrees. “The jobs are still there, but clients are always becoming better educated and more value-focused. Clients are just more careful with their money in times like this.”
Baker also sees an opportunity in the current downturn in that it has flooded the market with many potential employees from other firms who have had to lay off or have gone under. “It’s always a challenge to find and keep the right people, but now’s the time to be aligning teams of the best suppliers, trades, engineers, designers and whoever else you can to deliver an enjoyable experience for the client and add value to a home. It’s what times like these are all about.”

The slowdown has also begun to affect the normally robust California construction market. Dennis Allen, LEED AP and president of Allen Associates (No. 66) of Santa Barbara, says things have slowed down a bit in his region. “It held strong until the beginning of this year. We won’t hit our projected numbers, but we should still hold to what we did last year — which was our best year ever,” he says.

Better Marketing Strategies

Allen says what has helped his company remain strong when others are faltering are his green offerings. As a LEED accredited professional, Allen incorporates a lot of ecological and energy saving features into his remodels and has occupied the green niche in his market for 30 years. “Green has helped us weather the storm better than some other companies,” says Allen. “It really helps in our marketing efforts as we get called upon to help with public presentations about green building, as sources for magazine articles and as members of some pretty high-profile projects. It gives us tremendous credibility with the community and is far less expensive than traditional marketing.”

That differs a bit from the marketing approaches of Terhune and Baker, who state their marketing efforts are mostly geared toward past clients in search of referrals and repeat business. They keep in touch with their past clientele via e-mail, direct mail, newsletters and postcards, and it’s interesting to note that a smaller company such as ATCO ENT is even looking at expanding its marketing efforts.

“You have to do a lot of things, but you have to know what’s effective and what isn’t,” says Terhune. “Radio has actually been phenomenal for us. We target certain stations for key demographics and air them at certain times of the year, but they leave lasting impressions. People think we’re on all the time.”

Terhune also agrees that green is an increasingly important aspect of remodeling, and contractors can capitalize on public demand for earth-friendly and money saving building products and strategies. “There’s definitely an opportunity in offering energy-saving upgrades like low-E windows and upgraded insulation. Even if the client isn’t necessarily looking at their remodel from an ecological perspective, almost everyone loves the economical benefits of lower energy bills,” says Terhune.

Looking Forward to New Opportunities

Despite the slowed activity of the past several months and the gloomy forecast for the rest of the year, many remodelers remain optimistic. Baker says that before this current downturn, his company was already making sure they had the best employees they could find and forging good relationships with banks – both for his own credit line and to help clients secure solid financing. “One good thing to come out of the current construction climate is that there are a lot of good people available from companies who have had to lay people off,” says Baker.

Allen sees further opportunities in growing the green component of his business. Even now, as many companies are cutting back on marketing budgets or outside training for their employees, Allen is investing in overhauling his entire sales program. “We’re working with outside consultants and investing a lot of time and resources in setting up a more proactive sales program,” he says. “We’re learning new skills, training new people and trying to set up a more streamlined, systematic approach in order to incorporate green into our sales processes.”

Allen is also among the first group of remodelers to become active in the new LEED (Leadership in Energy and Environmental Design) for Homes program, which provides a roadmap for incorporating green features into building renovations. He says it not only helps his company plan and implement cost effective green strategies into his projects, but garners his firm a lot of attention and public goodwill. “I’d encourage every remodeler to move as rapidly and responsibly toward green as they can. It’s just a great opportunity today,” says Terhune.

Terhune sees the challenges of the past several months as really just another set of opportunities. While he says that every good remodeler is always striving to keep overhead and materials costs under control, and finding and retaining good employees is always difficult, times like these have forced his company to truly focus on these aspects.

“We’ve been working hard to forge good relationships with vendors, suppliers, financers and our trades, and we’ve expanded our benefits packages to attract and keep the best of the available workforce,” says Terhune. “More than just shoring our business up for hard times, it’s those things that will really help us grow and remain even stronger when things turn around.”