The Benefits of Specialization

From job-to-job, remodelers face unexpected design and construction challenges that continually make the profession — let’s say — interesting. Those who’ve seen it all, tell stories about simple time-and-materials jobs that lead to much bigger issues, stories about small half-day jobs that expand to fill half a week or even half a month.

That is why many of the most successful remodelers, through experience, find ways to limit the number of potentially negative variables they face. One way to impose limits on these variables is to impose limits on the type of jobs you do. Instead of shouldering the immense range of knowledge required to be all things to all clients, you can become a true expert in a specific remodeling niche. Today the remodeling industry is increasingly composed of specialists in all areas from basements to decks to kitchens and baths.

A onetime cabinetmaker, Darius Baker, CR, of D & J Kitchens and Baths in Sacramento, Calif., can attest to the benefits of focusing on just kitchens and baths. Last year the company completed 43 jobs with revenue totaling $2.28 million. Even more impressive, the firm was able to earn a “net, net profit” of 10 percent for the year.

“If you look at a typical kitchen remodel, there is a sequence that has to happen, and it is extremely difficult to mix that up. You have to tear it out. You have to do rough plumbing. You have to do rough electrical. You have to do some framing. You have to put up the wallboards. You have to do this before you can do that,” Baker explains. “And I think the value of specializing for us is that once you get that process down, it allows you to examine it even further. We have gotten to the point where we wire a light switch the same way every time so if Joe does the rough wire and six weeks later Jason comes by to set finish, he knows exactly what wire he is pulling out of that box.”

Beyond the speed and efficiency gained during production, Baker and his partner John Scofield, CR, bring decades of accumulated knowledge about kitchen and bath design to each meeting with prospective clients. “You sell better. You can design better. You can price better. You can convince clients to do things that work better because your conviction shows through to the client, particularly if you are doing the design part of it.”

Baker and Scofield, were a two-man operation until 2000, when they began a planned growth track that allowed them to work on their business instead of in it. Today the firm employs six full-time field staffers who build-out nearly all of their jobs, with the exception of tile-setters, granite fabricators and painters. With more time to manage and administer the company, Baker implemented a system of job costing and post mortems that exposed opportunities for greater profitability. Through this process, Baker was surprised to learn that he earned a 10 percent higher gross profit on bathrooms. He also learned that his most profitable kitchen remodels were not the bigger jobs, but the ones priced between $60,000 and $80,000.

We do extremely well on projects where we are not getting into a lot of structural changes,” Baker says. “If we just get into kitchens that we like to call ‘remove-and-replace,’ where most things are going back into the same spot, those types of projects we just smoke right through them.”

 

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