Consumer Finance as a Growth Tool

Like hammer on nail, Larry Judson is very direct when he speaks about his business. He has spent a lifetime in the remodeling industry and has formed opinions that are as solid as a slab foundation. You get the sense that his knowledge is backed up by experience and results.

When asked about the importance of consumer financing in his remodeling business, his answer was crystal clear.

“Consumer financing is of paramount importance and its importance is indisputable,” said Judson, president and CEO of K-Designers, a company he founded almost 30 years ago with his brother, Lee Judson. “If you want to excel in this business you have to do consumer financing well.”

Judson has used a strong financing program to build one of the nation’s top remodeling companies. K-Designers has offices in 11 Western and Mid-w estern cities and operates in 18 states. The company recently topped $65 million in annual installed revenue.

“Larry is a very incisive person,” said Bruce Christensen, vice president and general manager of GE Money — Sales Finance, K-Designers’ financing partner for many years. “He understands what consumers want and how they think, and he has translated that understanding into nearly 30 years of business growth and success.”

Judson is no Johnny-come-lately to the financing game. He was a proponent of consumer financing even before he started his own company.

“I sold remodeling projects for a company in Pueblo, Colo., before we started our business,” he reminisced. “The company had a consumer financing program backed by a couple of local banks. I learned then that financing was often the difference in whether or not you made the sale.”

Judson instinctively knew that two of the biggest impediments to selling are indecision and delay. With an efficient financing program, he could minimize both these obstacles and move consumers closer to signing the contract.

“Nobody wants to sit in a bank and ask for money,” he explained. “I knew that if I could offer financing on the spot, and at a payment they could afford, we would get the sale immediately. Financing allows the salesman to control his own destiny, rather than putting your destiny in the hands of the consumer and a banker.”

K-Designers began operations in Casper, Wyo., in 1978 with just four employees, but the company had a consumer financing program from day one. FinanceAmerica had a branch in Wyoming and took on the fledgling remodeling business as a partner. The company experienced immediate and spectacular success, signing four times as many contracts as their competitors who didn’t offer financing.

“We simply could get more business because we offered financing,” said Judson. “But it didn’t take the competitors long to figure out our secret.”

Surviving a Crisis

Judson’s company was a buzz saw during its first two years, expanding to Billings, Mont. in 1980 and later to Rapid City, S. D. But in 1981 the building business slumped badly as the prime lending rate soared from 7 percent to 21 percent in just six months. The interest rate situation put remodeling plans on hold as homeowners tightened their belts financially. For a company built on consumer lending, this could have meant catastrophe.

Like most good builders, Judson is a problem solver. He also has more than his share of determination. While other contractors were preparing for a dismal year, Judson was talking with his bankers about how to revitalize his consumer financing program.

By 1981 he was working with regional lender First Federal Savings and Loan of Rapid City. He persistently badgered the bankers to come up with an idea that would make lending affordable for his customers.

At Judson’s insistence, the bank devised a new plan that would allow homeowners to borrow money for remodeling at 16.9 percent, a full four points lower than prime and far lower than any other contractor or banks could afford. They did it by allowing K-Designers to “buy down” the loan.