Top Concerns

The past four years have been a struggle for many remodelers. While the Washington, D.C.-based Bureau of Labor Statistics reports the national unemployment rate at 8.1 percent, the residential construction industry is probably closer to 50 percent, says Rosie Romero, a facilitator for the Washington-based Remodelers Advantage Roundtables, a peer group that provides remodeling company business owners with support in a noncompetitive environment. He and Judith Miller, another facilitator, spoke to Qualified Remodeler about what challenges remodelers still face and why having a support system, like Remodelers Advantage, is invaluable.

QR: Based on what you’re hearing at your Roundtables meetings, how’s business for remodelers these days?

Romero: My most recent meeting was about six weeks ago in Boulder [Colo.], and a contractor from Charleston [S.C.] told me he has had more leads in the first four months of this year than he had all of last year. Meanwhile, members from Toronto said business has never slowed down for them. I think business is very spotty, but there seems to be less of a dark cloud over everybody’s heads.

Miller: I recently was in Michigan at a wonderful company where the owner said something similar to your guy from Charleston: “I’ve never had more leads in the past six years than I had in the past quarter.” But he lost three jobs in the last two weeks because of a combination of occurrences that are happening to people all over the country. One person got an appraisal back, and it was $50,000 less than he anticipated; the second person was transferred for his job; and the third person got cancer. So this remodeler lost $1.2 million out of his pipeline in two weeks. I’m hearing these types of things more than I’ve heard them in the past.

QR: These are unexpected challenges. How can a peer group mentor a remodeler through situations like that?

Romero: This is when Roundtables is a great advantage; if you’re sharing this type of information, there are maybe two or three companies in the room that have experienced the same thing. They can help you get over it and get focused. This is your board of directors. If you use Roundtables appropriately, you’re not alone anymore. You don’t have to reinvent the wheel, and you can pick and choose amongst the people in the group you’d most like to emulate.

QR: What would you say are the biggest issues facing remodelers today?

Miller: The past four years, regardless of your attitude or expertise, have been a shock to the system of most remodelers I know. The remodelers who remain are still being challenged, and the more mature the company the greater the challenge. A lot of younger contractors are coming into Remodelers Advantage and they don’t have the overhead, they’re not putting their kids through college, and they don’t have the need for the salaries the more mature contractors do.

Romero: I saw the turndowns in ’78, ’83, ’89, ’96 and 2002, and what hurt about this one is there were great remodelers who really were fundamentally sound businesspeople who held on to employees whom they had so much invested in, thinking, “It can’t last much longer; I’ve spent my profit and loss statement and my liquidity.” Many of them kept going and they knew what they were doing because we had spent 15 years educating them about how to manage their finances and line up their lines of credit, which all got called on them. All the new bank regulations that dropped all of our lines of credit cut us off at the heels.

The young companies, like Judith is talking about, come in and they’re flexible. They’re hearing other people’s survival strategies, and they don’t have the 10 or 15 years of doing it the same way that they completely have to rethink to survive. That’s the value of being a Roundtables member the past three or four years: You were flooded with survival ideas, and you could pick and choose which ones you were going to use.

Miller: The younger people are doing things I don’t remember the mature companies doing. They’re asking whether they should be design-build, should they be architect-driven or should they have a showroom. I want to see some of these more mature companies bring in some pups to nip at their heels and get them out of the emotional and psychological doldrums they’ve been through and start reinvigorating the energy of the company.

QR: Remodelers Advantage also has a lot of mature members who have remained incredibly successful through the downturn. What’s their secret?

Romero: These members implemented what they learned about basic fundamental financial analysis. They got a handle on receivables, made payables current, got out of debt, managed their assets, understood their balance sheet, put a marketing calendar together and created a cushion, which got them through ’08 and ’09. By mid-’10 their success depended on how flexible they were to change, how deep their pockets were, or how much of their balance sheet they were willing to loan against.

Miller: I just finished facilitating our high-volume group at Iris Harrell’s company [Harrell Remodeling, Mountain View, Calif.] and that company does everything right. This company has fought through every issue other companies have fought through; however, they have a few things in place that allowed them to be more flexible. One of them is an ESOP [employee stock ownership plan]. Iris is a former teacher, and she’s really good at getting everybody in the company involved in the issues. Imagine how well any company would do if they had more than one owner dominating the conversation!

QR: What are Roundtables members most interested in now to keep moving forward?

Miller: There is enormous interest in the development of a sales staff. Most people didn’t need to do that before 2008 because there was just so much demand you could pick and choose whom you were going to sell to. Now remodelers need to have much more in potential backlog than they’ve ever had before. Most single owners can’t create that backlog, so they need to develop a sales hiring process and an evaluation process, and they need to maintain these processes.

Romero: People are coming out of the frame of mind of “What am I going to have to do to survive this?” and now are wondering how to take everything they learned the first 20 years in business, modify it with everything they’ve just been through and come up with a new model for a successful future. That’s how we end a lot of our meetings. We reassess procedures.

QR: For someone who has never been to a Roundtables meeting but would like to attend, what advice would you give?

Romero: I would tell him or her that during the three-day meeting you’re going to be hit with no less than 50 ideas you will be burning to get back to the office and implement in the first 10 minutes. However, you need to take another day wherever the meeting was held and reduce those 50 ideas to three great company-culture-changing ideas and implement those three.

That’s the hardest part about your early indoctrination in Roundtables: You’re flooded with information and you may go back to your office and do nothing because you’re frozen by what we call “implementitis.” People really need to go into Roundtables with focus because they’ll get exponentially more out of it if they go into it with the right frame of mind.

Rosie Romero brings home-improvement experience to the Roundtables meetings he facilitates. He joined Remodelers Advantage in 1992 while a remodeler and transitioned into the role of a facilitator in the late ‘90s. After selling his remodeling business in 2002, he now focuses full time on a Saturday morning home-improvement radio show that airs on nine Arizona stations, as well as manages a contractor referral directory for the state.

 

Judith Miller brings her experience as a financial consultant to the remodeling industry into her role as a Roundtables facilitator. The foundation of Roundtables is financial counseling in which each member opens his or her books to the rest of the group to discover areas in need of improvement.

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