Like Father, Like Daughter: Committed to Remodeling

Cindy Knutson-Lycholat, CGR, CR, CAPS, laughs when she remembers her first assignment working for her father and uncle at the residential construction company they owned, Knutson Bros. of West Allis, Wis. She was asked to wear short bib overalls, to smile and greet potential customers at a local home show.

Suffice it to say that, over time, her role in the company greatly expanded beyond this humble beginning. She took drafting classes and eventually began turning out kitchens, room additions and other projects for several years. Ultimately, her father, Norvin “Charlie” Knutson took her as a full apprentice, training Cindy in estimating and sales. This was a big step, says Knutson-Lycholat because it took a lot for her father to allow family members into the business at all.

Charlie Knutson and his brother Orville had founded Knutson Bros. in 1955 as a building and remodeling company. Later they learned that new construction and remodeling are “two very different businesses,” says Knutson-Lycholat. “But nobody really knew that back then.”

The brothers committed themselves fully to the remodeling side of residential construction in the late ’70s and became deeply immersed in local, state and national issues facing the emerging remodeling industry. Orville attended NARI meetings while Charlie became the first chairman of the NAHB’s Remodelors Council in 1982.

“He became a true spokesman for the industry and talked it up a lot when it didn’t really exist,” Knutson-Lycholat told QR last year when the magazine honored her late father as one of its Top Innovators. He passed away in 1996. “He was forthright about sharing his knowledge with contractors and getting new ones into the business — and ensuring they stayed there. He knew what were hard costs and soft costs, and he ultimately understood that remodelers had to charge more than they were.”

By the early ’90s Knutson-Lycholat was ready to strike out on her own. With the guidance of her father and the partnership of her husband Gerry Lycholat, they launched Knutson Bros. II, in an area farther west of the Milwaukee suburbs in East Troy, Wis. Since that time, the company has grown a reputation for quality work and has stayed small on purpose. Like many of the best remodelers, Knutson-Lycholat believes that her business is and should be an extension of her personal goals. “Whatever your business needs, you need to have a budget; you need to understand your lifestyle. That is what we do.”

And if her business is a means to an end, then improving the remodeling industry is one of her personal goals. Like her father, Knutson-Lycholat is on the road many weeks each year on behalf of industry association work. She wants to help raise the level of professionalism in the remodeling industry and to help dispel the perception that remodelers must be viewed with caution. That is why the bulk of her work on behalf of the Remodelors Council at the local, state and national levels has centered on education.

Education Matters

Business accomplishments aside for a moment, Knutson-Lycholat would be among the last people to tell you all that she has done and is doing on behalf of the remodeling industry — in particular on behalf of the industry’s certifications programs.

The month of September is a good example. First she traveled to the NAHB Fall Board of Directors Meetings in Salt Lake City, Utah, where she serves on many committees and is a trustee of the Remodelors Council nationally. In addition, she also serves as vice chair of the council’s Certified Aging in Place (CAPS) Board of Governors. CAPS is the fastest growing designation within the entire NAHB University of Housing and might be the fastest growing professional designation in any industry in the country. This took a full week away from the business.

Then, only a few days after returning from the Salt Lake City meetings, she was back out to NAHB headquarters in Washington for another week of meetings, this time with other remodeler leaders to help update the Certified Graduate Remodeler and CAPS professional designation programs. Holed up in front of a PowerPoint projector for more than eight hours a day that week, she and the others slogged through hundreds of tedious decisions to update the programs. That was September. Two weeks in the office. Two weeks doing the work of the national association and its education platform.

But that is not the extent of her national commitment to remodeling education. She assists the publication department of the NAHB’s Home Builders Institute by serving as a peer reviewer of book manuscripts before they are published. To date she has helped guide five publications. She has been a member of the NAHB Education Committee where she helped create and develop an education “needs assessment survey.”

She is a frequent speaker at the International Builder Show. She is a founding member of the council’s Remodelor 20 Club peer-group called “The Parrot Heads.” She has served on the education planning committee of the Remodelers Show. And in 2004, she was approved by the NAHB to teach the “Home Modifications” portion of the CAPS course in all parts of the country. This year she was approved to teach four additional Home Builders Institute courses: Working with and Marketing to Older Adults; Sales and Marketing for Remodelers; Business Management for Building Professionals; and Estimating for Builders and Remodelers.

Locally Knutson-Lycholat works even harder. She helped develop and improve an annual Construction Career Connection Day. She speaks at the event each year, encouraging about 200 high school students to consider jobs in residential construction. In addition, she applied for and won a $25,000 grant to investigate the opportunity for a construction charter school in Walworth County, Wisconsin. This work led to the foundation of a Building Trades Academy — a two-year high school program among five area schools to provide an industry overview and to teach basic carpentry skills. Today the course has expanded beyond its original night school format and can be taken as an elective in two of the five high schools that participate in the Building Trades Academy. She is deeply involved in the local home show and has chaired the seminars committee. At the state level, she helped form the state Remodelors Council, and served on a committee to develop a regional trade show to provide nondues revenue to the state association and to provide another venue for professional education. This led to the 2004 launch of an innovative professional conference for builders and remodelers in Wisconsin “Better Buildings: Better Business.”

For Knutson-Lycholat, work on behalf of education is a job well worth doing and is a real labor of love. “I am all about raising the bar for remodelers.”

Business Know-how

For those fortunate enough to own a vacation home in the Southern Lakes district of Wisconsin — the service area for Knutson Bros. II LLC — the bar for professional remodeling has been set very high. Since 1994, Knutson-Lycholat and her husband Gerry, (and for the past six years with office and production manager Debbie Berndt), have run a lean and mean remodeling company. Specifically, they have carved out an impressive niche serving the needs of out-of-towners who own homes on the many lakes in the area.

They typically hit target revenues of about $1 million by building room additions, kitchens, baths, decks and whole-house makeovers. More to the point, they have been successful at holding gross and net profit margins to a point where they feel the effort and risk involved in running a remodeling company is properly rewarded.

“Our simple philosophy is that we don’t work to lose money,” says Knutson-Lycholat. “If we don’t get our markups, we don’t take the job. Sometimes I get accused of being money driven, and I am. But if there is not enough money in it, why bother. Why work to put money in somebody else’s pocket, making no money, or to be the good guy? Why would you put yourself through all of that risk? Put your business at risk? Put your family at risk if there is nothing in it to put food on the table at the end of the day?”

Bearing full in mind that each job is a not only a new opportunity but also a new array of risks, Cindy and Gerry are sticklers for detail when it comes to planning. Each fall, they conduct an annual planning session for the coming year over a two- or three-day period, away from the office. Everything is on the table — dates for travel during the coming year, the number of jobs in the pipeline, their goals financially for themselves and for the company. They plan the amount of marketing they will do to get the jobs they need. And to the extent possible, they forecast cash flow as far as six and nine months out. It is this type of planning that allows them the opportunity to be away from the office and to not have to constantly be monitoring their business.

Once the plan is in place, everyone knows what to do. Debbie Berndt handles the day-to-day activities of the firm: scheduling, expediting, paying bills and dealing with vendors. Cindy is the designer and seller. And Gerry sells and runs jobs during the busy winter construction season. (Most of Gerry’s professional career has been devoted to the electronics industry, in particular in sales with Motorola Inc.) Because their clients are primarily summer residents, the construction typically gets done in the October through March time frame. Summer is the time to meet with new clients, to sell new projects, to design them, and to win the necessary permits and approvals to build.

Interestingly, when they set up shop in 1994, the duo did not set out with the intention of serving a vacation home niche, they really felt they would serve the many small towns in the area far west of Milwaukee. And they do have many full-time residents as clients. But over time they realized the many advantages of catering to out-of-town clients. For starters, says Knutson-Lycholat, they are not typically present on the jobsite everyday and they are not living with the inconveniences of a remodeling project. Secondly, because the clients own at least two homes, they are typically well-healed and able to pay for the quality design and construction. A final advantage is that Knutson Bros. II is able to supply a much appreciated steady stream of work to its trade contractor partners during the slower winter months.

Once this niche was identified, Cindy and Gerry began looking for ways to communicate with part-time and weekend residents who live, for the most part, in suburban Chicago. Through trial and error, they hit upon a series of mailers that hit target lake areas, at different times during the year. In February 2006, they sent postcards to residents of a dozen lakes. On August 15, they send a second, more targeted mailing, using public records. This mailing includes an introductory letter, a questionnaire, a brochure and a Knutson Bros. II refrigerator magnet. Lastly, a company newsletter for past and current clients goes out each March and October.

“Remodeling is a service-based business, not a product-based business,” Knutson-Lycholat explains. “And you need to market well to maintain the presence in the marketplace that you need. People think we are a huge company.”

To help control their selling time, to basically ensure their prospects are properly qualified, everyone who calls in and asks for an appointment must take the time to fill out a questionnaire. With this information in hand, an initial meeting is set with both Cindy and Gerry. An experienced salesperson, Gerry takes the prospect through a well-conceived flip book to sell the company’s achievements and credentials to the prospect. Cindy’s role is to look the home and hear what the prospect wants done and quickly sketch out a preliminary price range. The end result of a successful first meeting is a signed “pre-construction agreement” and a $2,000 check that is applied to any work that is done.

“I figure out the numbers based on what we see. This is how we know if their budget is realistic or not,” says Knutson-Lycholat. “We do it like a grocery list and we add it up. There is a big range but lots of choices and they get educated and say yes or they choke a little.”

Debbie Berndt is a key player on the team; she keeps the books, maintains the schedule and keeps on top of draws to help ensure proper cash flow according to plan. By keeping the company on track, Cindy and Gerry are able to remain on track with her numerous industry commitments, carrying on a legacy of industry involvement that originated with Cindy’s father Charlie and running a prosperous business as well.

“I think what Cindy is happiest about,” says Gerry Lycholat, “is that if someone came and bought this business, we would not have to be here for it to keep running. They would be buying our systems. And I think that everything here flows very well.”

Editor’s Note: Those attending the International Builders Show, can see Cindy Knutson-Lycholat at the seminar The 10 Best Practices from the NAHB’s Remodelor of the Year. It will be held Feb. 8, 2007 at the Orange County Convention Center in Orlando.