With a Little Help from My Friends

There are times in every person’s life when he or she needs advice. The best guidance often comes from someone who has experienced a similar situation and is willing to share the successes or blunders that occurred. The remodeling industry is fortunate to have many peer-group options that can offer insights into business systems and processes, sales and marketing, lead generation, management and much more.

Although dollars are tight, investing in peer-group membership may better equip you to battle the downturn than had you remained an island unto yourself. “My advice to people who aren’t thinking about joining a peer group because of the expense is you will earn back the money you invest within the first year based on the lessons you learn the first time you go,” says Todd Drury, principal owner of TR Building & Remodeling, New Canaan, Conn.

Remodelers Advantage

Drury is a great example of someone who found success through involvement in a peer group—in his case, Remodelers Advantage Inc. Drury joined the group in 2007 because he had read articles in which remodelers said peer groups were the best thing they had done for their businesses. “They all seemed to say the same thing: It was something they wished they had done a long time ago,” Drury remembers. “About the third or fourth time I read that from a different remodeler, I started looking into it.”

Remodelers Advantage was established in 1991 by Linda Case and Victoria Downing, president. The organization works with remodelers of all income levels in many ways, including Roundtables Peer Groups. The roundtables, which consist of 10 to 12 noncompetitive members, are designed for remodeling companies earning $1 million or more annually.

The groups meet twice per year for three days in varying locations. The main focus of the individual groups is to go over performance metrics—65 data points that cover all areas of their businesses. Remodelers Advantage shares the data in a confidential composite report specific to each group. All groups also are ranked and compared against the group average and the average of the top 25 percent of community members.

“This is what drives our discussion,” Downing explains. “It’s facts, numbers, metrics and objective data. We use that information to ask, ‘What are you doing that gets you so many leads in this area? Why is your production cost so high? Why do you have slippage of 5 percent?’”

In addition, the groups go on excursions for further business enlightenment. In the spring, they visit a member company’s offices and focus on the business operations. “They look at the paper flow, leads, marketing statistics, and they meet and interview the company’s people,” Downing says. “They do an analysis on the business for the owner and come up with action plans to take advantage of the opportunities and overcome the weaknesses they see.”

In the fall, the groups visit a business outside the remodeling industry, during which they receive private tours, hear from company leaders and learn what makes the business successful. Remodelers Advantage has visited Kohler Co., Kohler, Wis., and Zingerman’s Delicatessen, Ann Arbor, Mich., as well as participated in the Disney Leadership Institute, Anaheim, Calif.

Downing says the greatest benefit of a peer group is it helps members find information, implement new processes and develop systems in half the time it would take them on their own. “You’re talking to other smart, motivated businesspeople who also are dedicated to continuous improvement,” she says. “You share so much: systems and processes, know-how and contacts. As members start putting best practices into place, they see their income and time increasing.”

Drury can attest. “The most important thing I learned was that I wasn’t charging anywhere near enough for my jobs,” he admits. “The second biggest thing I learned was I needed to get out of the field, which was preventing me from working on other parts of my business. It’s easy to tell yourself ‘I can’t do that in my market; my market’s different.’ But when you have 10 other guys saying you don’t know what you’re talking about, it kind of opens your eyes.”

PRIME

Joy Kilgore, president of PRIME, was assisting with a peer group when she realized she wanted to create a new one, which led to PRIME. “I really enjoyed the interaction, but I wanted it to be different,” she says.

Kilgore connected with Mark Richardson, co-chairman of Case Design and Remodeling, Bethesda, Md., to assist in facilitating and to help her grow the group. PRIME held its first meeting in October 2008. Membership consists of about two-thirds contractors and one-third manufacturers. PRIME’s membership is restricted to remodeling firms with certain revenue levels. “They’re probably in the top one-tenth of 1 percent of the contractors in the U.S.,” Kilgore says. “More than $1 billion in remodeling activity is represented around the conference table.”

PRIME meets three times per year for one day in different cities across the country. All PRIME members meet in one room. “This has been a successful blend because they learn so much from each other,” Kilgore states. “The manufacturers have a lot to offer because they have resources no single remodeling company could afford. They also have the opportunity to really learn what is going on in the individual contractor’s world, which informs their business.”

Bruce Christensen, general manager, Home Improvement Products Group, GE Capital, Dallas, is a member of PRIME because it helps him learn about the industry. “You can never get enough education about what really happens in the marketplace,” he says. “At PRIME, not only do I get perspectives from the contractor members, but also from the manufacturer members. It’s nice to be able to talk to somebody to learn what they’re experiencing or how they are working with contractors.” (To read about why Christensen and other remodeling service providers have set up their own peer groups, see “An Informed Business,” page 24.)

Although PRIME is limited in its participation, it welcomes involvement from multiple members of a company’s team. “We have general sessions, but the members have their own confidential sessions where they can discuss things openly,” Kilgore explains. “The marketing leaders will go into a different session where they dig into marketing topics, and we added a breakout for sales leaders to do the same thing.”

PRIME invites speakers from outside the industry who generate ideas for business. For example, a Six Sigma Lean specialist discussed processes, and a retired Army lieutenant colonel spoke about leadership, explaining that a good general in peacetime may not be a good general during wartime. “That really gave the group something to think about because the members were good generals when things were great, and then things got tough and being a general was a greater challenge,” Kilgore notes.

Kilgore says one of PRIME’s greatest strengths is the relationships created within the groups. “We had some internships develop as a result of PRIME,” she points out. “Scott Mosby’s son spent time with Neil Kelly Co. in Portland [Ore.] and Tom Kelly’s son went to Case Design and Remodeling. It’s part of the synergy that is created.”

Scott Mosby, president of Mosby Building Arts Ltd., St. Louis, has been a member of PRIME since it started and enjoys that its focus is on maintaining a sustainable business. “When I go to PRIME, there are owners in the room but also marketing managers and others, so I’m sitting with significant people who have employee and training needs. These are really smart people even though they may not be the owner. They may be the general manager, but that’s who helps me the most.”

Mosby says one of the best benefits of PRIME is it has helped him determine how to transition out of his business. “As we focus on systems and training, we run into our own mortality. I’m 58 years old and nobody lives forever,” he says. “With that in mind, my son, Alex, who’s in his last year of architecture school, went and interned with Neil Kelly Co. Alex came back saying he wants to be in this industry; he wants to be part of my business; he wants to know my exit strategy and his career path. I sent away a boy and a man came back!”

20 Clubs

Mosby also has been a member of a 20 Club for 12 years. 20 Clubs, which are networking groups maintained by the Washington, D.C.-based National Association of Home Builders, comprise 20 similar builders or remodelers from noncompeting markets. Each group meets a couple times per year, often at a member’s office. Members share information about their businesses, including financials, and rely on each other to problem solve.

Donald Dyrness, president of Spectrum Construction & Development Co. Inc., Succasunna, N.J., has been a 20 Club member since 1997 and considers it his board of directors. “We have similar types of businesses,” he says. “We have created business and marketing plans together; we discuss advertising, social media, websites, monthly newsletters, etc. When one person figures out something that works, he shares it with the rest of the group.”

The 20 Clubs are coordinated through NAHB, but the individual clubs run themselves. If someone retires or leaves the business, a new member is brought in who fits with the group. When Dyrness’ group isn’t meeting in person, it stays in touch via email. “If a question comes up, I send it out to the group, and I get answers right away through email and the phone. Usually somebody has run across the situation another group member is posing.”

Dyrness considers the 20 Club one of the best benefits of his NAHB membership. “I have become personal friends with a lot of the guys,” he says. “I can pick up the phone and talk to any of them any time, whether it’s personal, business or a product issue. These guys will drop what they’re doing and help. I never stop learning from them.”

Dyrness’ sentiment is echoed by other peer-group members—no matter the group. Drury sums it up: “Joining a peer group has been the single best thing I’ve done for my business; there’s no doubt about that. I encourage competitors to join because if we were all members of a peer group, we’d all be earning better livings, and we wouldn’t have guys charging minimal markup on their work or working for a day’s wage. It would improve the industry as a whole.”

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