The New Reality
The Top 500 Share Their Reactions to the Remodeling Market and the Year Ahead
It has become a tradition for Qualified Remodeler editors, in conjunction with the compilation of each year’s Top 500 list, to ask those fortunate enough to be included in the latest edition of the list for their thoughts about the state of the industry and their prognostications for the future. The economic and housing trends that began in 2008 have become the new reality for most remodelers—not just a temporary downturn but part of a trend that will likely endure for the foreseeable future. Most remodelers who have been in business for any length of time are no strangers to the cyclical nature of the business, but many are saying the current economic adjustment is unlike any they have ever seen.
In addition, they’re willing and eager to talk about what they’ve experienced during the past several years. The response to this year’s questionnaire was overwhelming, delivering far more responses than could be shared in the print edition of Qualified Remodeler. Additional replies are included below.
1. Has the remodeling business changed dramatically over the past several years, or do you feel this is just one more cycle in the series of booms and downturns that characterized recent decades? What’s in store for the future?
2. Some remodelers appear to have thrived and even grown in what has endlessly been called “difficult” economic times. What’s different about these remodelers who have succeeded, apparently against the odds?
3. What is the one most significant change in the market and/or how you do business?
4. In response to changing conditions, have you done something in your business, good or bad, that you thought you would never do?
5. Have changing market conditions presented you with opportunities as well as challenges? If you discovered new opportunities, what were they?
6. How is your business different than it was several years ago?
Robert Williams, General Manager
Olneya Restoration Group
1. While the remodeling industry has experienced change, I do not feel it was too dramatic. With any business, the parameters of success change with time, and businesses need to adjust accordingly in order to ensure survival in their particular field. The new housing market continually tends to go through booms and downturns. However, the remodeling business tends to stay fairly consistent for the contractors who adjust with time and trends. The future will continue to have the same patterns as in the past, but the contractors who thrive will be the ones who stay consistent with their product and their message while satisfying each client on the level of expectations that were set up front and delivered upon. In a nutshell, I believe that if you continue to satisfy your clients while staying dynamic in your industry, the changing economy will have little to no affect on your company’s overall success or failure.
2. The remodelers that thrive are the remodelers who embrace the past trends while adapting to the new trends. By maintaining a strong focus on being true to the clients and your own core values, your efforts will be rewarded. In the end it’s all about how the client feels about their project and their desire to refer your company to their friends and family.
3. The most significant change in the market is the client involvement after the job has been completed. Ten years ago it was almost mandatory to bring new clients to a completed client’s new basement, kitchen, or bathroom remodel. Today it is almost impossible to pin down both the past client and prospective clients’ schedules to have that on-site meeting to show the quality of work and get that face-to-face referral. Asking someone to be on a reference sheet with their cell phone number is borderline insulting in today’s sensitive world. The trust between the average consumer and business professionals has sincerely dwindled because of untrustworthy companies and corporate practices. Earning that level of trust and comfort back from your customers is easily the most difficult process of doing business and something to strive for with each person we come in contact with.
4. The changing conditions have required us to hire additional staff to be able to communicate instantaneously with each client about the status of their project. In many instances, the client is better informed than the company since the onsite project manager or employee hasn’t updated the company from the current days activity. In the past, it was acceptable to respond within 24 hours. Today it is required to communicate within a couple of hours of any call-in. The addition of staff requires additional overhead, which is unfortunately passed on to the client. Going against the grain of lower overhead is startling but necessary to keep with today’s trend of instant gratification. If you have a personal and professional goal of helping others and satisfying your clients, adding staff to accomplish those tasks is a necessary evil to our industry.
5. The changing market conditions always present opportunities for any company that is planning for the next year. We have discovered many new opportunities in the form of great people from different industries that have applied their experience to our industry to make us more efficient and a better value to our clients. By partnering with others who have the same values and beliefs we do, it will not only strengthen our company on the corporate level, but it will bring better service to our clientele.
6. Our company is different as it applies to how we use technology. By attempting to better ourselves through more advanced systems, we can make each project for the homeowner more organized, efficient, and better tracked to ensure their comfort throughout their project. Today we use all web-based contact management and project tracking. This advanced software lessens the stress and paperwork load for our employees, which in-turn makes the remodeling process flow better for our customers. We also use GPS systems in our Technicians and Quality control vehicles to track trends and billable hours. Overall, we feel that taking on new technology is something that reduces our workload and gives us a leg above the rest who choose to not to adapt to those exciting features in their own businesses.
Power Home Remodeling Group
1. While it may not yet show in the numbers, we’ve noticed a positive sentiment growing among consumers and businesses alike that things are starting to turn around. People seem more confident in general, and more willing to spend money on their homes to increase their value. We expect this upward movement to continue, homeowner confidence to grow and that ideally, contractors doing quality work will reap the benefits.
2. The remodelers who have succeeded are those that have stuck with what they know best during difficult economic times and have taken advantage of a slower period of business to focus even more on providing the best possible customer service. Nothing beats quality work and service, and homeowners know that. The businesses who played to their strengths and emphasized their ability to provide solid work are the ones who have thrived over the recent economic downturn. When homeowners are spending their increasingly sparse budget on a project, they want to have a good experience and feel like the money was well spent
3. We haven’t noticed a change, and instead have worked to remain consistent in the quality of work we offer our customers. Sometimes that focus is the most important thing a business can do to stay successful in a down economy.
4. In the past few years, we’ve invested heavily in our IT infrastructure to develop a more efficient, company-wide software program that allows all aspects of our process to be streamlined and helps projects move from sales to installation without a hitch. From the ability to automatically request products from manufacturers to compiling all customer interactions into one place, the new software has improved all parts of the business. It’s been a great addition, thanks to a significant investment in an area that wouldn’t typically be thought of as an urgent need in our industry. We took a leap of faith and it’s already paid off.
5. One of the opportunities we’ve discovered is that while the unemployment rate unfortunately remains high, we’ve actually found better and brighter people as a result. We’ve been lucky enough to recruit so many valuable and talented employees who may not have immediately considered a career in the remodeling industry in a better economic climate. In addition, as I’m sure many others in the industry have noticed, the amount of homeowners who have decided to invest in remodeling their current homes instead of purchasing new ones has increased and in turn, created a lot of opportunity for new business.
6. While our core values and commitment to customer service remain the same, we’ve grown exponentially in the past few years. We’ve expanded into new locations and regions, including our upcoming foray into the Midwest with the opening of a Chicago location, and have introduced new products such as roofing. We’re excited to continue that growth in 2013!
Huseby Homes LLC
1. I believe that all small business has principles and characteristics that transcend current cycles and even our lifetimes, such as the power of earning our clients’ trust and referrals. Specifically the remodeling business requires us to do what we say we will when we say we will do it and that we do it well. As remodelers we are almost guaranteed that unforeseen problems will arise on every job and we have choices to make in how we resolve them.
While the basics are the same and should be the center of our focus, the remodeling business has dramatically changed over the past several years. Prior to the ‘08 downturn, our clients had a lower set of expectations for us and our competition was not as hungry. I remember that most of my potential clients were sufficiently impressed that I showed up for sales appointments and presented estimates in an expedient fashion, that I normally was awarded the job. Currently homeowners are doing more homework, interviewing more builders, and expect an exceptional value. One of the greatest challenges is that many competitors are presenting unrealistic budgets and are selling cheap. While these companies will likely not survive long term, it causes us to meet with more clients in order to be paired with good clients that appreciate our professional approach.
I do not think this is simply one more cycle in a series of booms and downturns. I think the overall recovery is and will be a slow and long road. I do not anticipate significant changes in the overall remodeling market over the next 5 years. I always thought it would be at a ten year slump and slow recovery.
Despite the reality of the changes, I am extremely optimistic that good opportunities are present for all of us. The market forces us to become better and to be visionaries in relation to the adjustments we need to make to find strong business niches and long term success. Our company is definitely a different company that it was in ‘07; it is a better company that has matured and has the confidence that we can navigate any change or challenge as we believe we can meet all of our goals.
2. Our company has thrived and we believe it is because we truly believe we are able to be successful. It is more than positive thinking or simply being energetic or having great customer care, it is a deep rooted confidence that whatever the challenge there is an answer and there is an avenue for our company to not only succeed but thrive. Remodelers that have succeeded and beat the odds must have good foundations that started long before the recession and are willing to tenaciously pursue new goals and new ways of doing business. We are not able to fake it; people are perceptive and know when a group is confident. We truly believe we are great at what we do and that we will have better opportunities each year. We must go up because it is very difficult to “maintain.” I believe that those who plan to maintain usually lose ground.
Furthermore a characteristic that is very important, in addition to true confidence, is creativity. I believe that those who are thriving are not going about business as usual and are constantly collaborating and thinking of creative ways to increase market share and do things better.
Another characteristic of the companies that are thriving is an intense effort to care for our clients. It is surprising what some companies will do or not do in the arena of customer service in this market. We have been very intentional about not leaving any of our clients unsatisfied; if they share any areas of dissatisfaction we do something to change that no matter what the cost. The cost of unsatisfied clients is far more costly than the cost of making it right even if we feel our clients may be wrong.
3. The single biggest change in how we do business is the level of detail that we offer in all of our business whether it is our accounting, project management, hiring, attention to branding/image, and workmanship. We truly are more detailed in all facets of the business.
5. Prior to the changes in 08’, I sensed that I needed to create an avenue for smaller jobs that were not necessarily luxury based. This led to a new brand called L J Huseby & Company that markets itself as an exterior renovation specialist. The new company also offers a maintenance plan that opens doors for many smaller projects. People will always have rotten wood and need repairs on their homes. This new brand is complementary to our activities at Huseby Homes. The two companies provide referrals to each other and benefit from the lessons learned in each arena.
Another opportunity is to hire good employees. If you are able to secure the enough work, there are many great carpenters and other craftsmen available for hire that would not otherwise be available. On the same note, our trade partners appreciate us more than ever.
6. Our business is deeper in each area, whether it is the sales process, estimating detail, marketing efforts, branding, production, or the way we manage jobs financially. In short, we are simply better than we were because we are not willing to decline and will thrive. We have also reached out to more consultants such as RA, Judith Miller, sales coach Craig Deimlar, and David Lupberger. We are also very proud of our presence in our area and we have a lot of mojo!
Jackson Design and Remodeling
1. The remodeling business has changed in that consumers are much more savvy and well informed. Their money needs to go farther. We create a project within their budget and then give them options to meet their final desire. We find that success is in store for design build firms. Consumers want a unified team of designers, architects and construction professionals all under one roof for ease, communication and cost. They enjoy having one firm with the same vision.
2. As a remodeler that has grown, we feel it was important to not stray from our core business model. Also a commitment to market and tighten up policies and systems for efficiencies and surround ourselves with long term industry partners.
5. The changing market conditions gave us time to focus and assess what we could do better. We gained market share and even purchased assets of other companies.
6. JDR’s commitment to communication is the key to our success. Established in 2011, we created a CRM (we like to call this a Communication Relationship Management instead of Client Relationship Management) system. This custom designed CRM is not only the pinnacle of departmental interaction and client communication but also is a one-stop shop universal location for employee HR needs and company announcements. Along with streamlining communication, it has also provided better productivity and has given us back hundreds of hours to devote to things that matter.
Michael & Robin Baine
Baine Contracting, Inc.
1. The remodeling industry has definitely changed - the economy, social media, communication, knowledge at homeowner's finger tips, home builders now remodeling - just to name a few. We feel that moving forward you have to be sensitive to the changes and adjust your business accordingly so that people want to work with you. We have so many living generations now, that you need to tweak your presentations, marketing, communication styles to accommodate them and moving into the future it will be very important to incorporate this into sales, project management and final product for our companies.
2. We actually had one of our best years in 2010 and that is because we become creative with our marketing and jumped into social media as a way to reach out and have a internet presence. This enabled us to stay in current customers’ minds as well as tap into our past customers for referrals and relationship building.
3. We have had to reinvent how we obtain leads and market our company. Our most significant change was keeping in touch regularly with our past customers via mailings, telephone calls and social media.
4. We actually did two things: YouTube and a business coach. If you had told me 10 years or 5 years ago that we would have our own YouTube channel, I would have laughed. However it has been a great success for us in many ways. We also hired a business coach to help us maximize all facets of the business - he has truly been a great help keeping us focused and growing.
5. Our biggest challenge was we could not continue to do business the way we had been. The phone was no longer ringing and work was drying up We learned what a great asset our past clients were to our future. We now provide a maintenance service for past clients -- we have become the place to call for referrals of trade contractors, product information and general maintenance they might need. We now continue the client relationship passed job completion.
6. It is almost a completely different company. We are more organized and structured and we know our numbers and data to use forward into the coming years. We are always testing and measuring what works and what doesn't. We actually have a marketing program instead of just winging it. One of the biggest wake up calls was that our "business" needed to be run like a business.
Rob Levin, President
DFW Airport, Texas
1. The difference in this cycle and the previous four I have been part of is the lack of availability of lending sources and much tighter credit requirements. After three years of this cycle, we see more customers who are paying cash or using credit programs that are no interest for a period of time, and just purchasing products they could write a check for if they needed too. This has created a smaller ticket on items like windows and sunrooms where they can do the full job in stages.
2. Our company returned to our 2007 Revenues last year in 2011, mostly due to diversification of our product lines. I believe that is the model for most of the successful companies in the specialty remodeling area.
3. We see more cash customers today than previously, which I feel is a good thing for the economy, since they are not taking on more debt. The biggest change in our business is adding more field supervisory personnel to manage the number of jobs we install due to the diversification of our product line.
5. The biggest opportunity for us has been to open new markets with the support of the strategic partners we have developed over the last 18 years.
6. Until 2007, we only had three products, windows, siding and sunrooms that we were selling. Since then we have added bathroom and kitchen remodeling, walk in tubs and energy products, and these products now represent over 40% of our volume.
2. The difference is that some remodelers made the changes in more than one aspect of their business. These changes include marketing and advertising, product offerings, and reducing overheads. Just because we are in difficult times, means that you stop advertising. Allocated dollars for advertising must be used, just used more wisely and different from before. Instead of spending tens of thousands of dollars of television and radio, invest in past clients and prospects. Set up an account with Constant Contact or a similar company for mass email marketing. This is only $30.00 a month and emailing is free. You can also set up social media as a way to promote and advertise for free. Facebook, Twitter, You Tube, Pinterest, Blogs, and Houzz are just a few that are out there. Setting up these accounts and maintaining them only requires a few hours a week. Offer discounts, promotions, and giveaways and watch your followers grow leap and bounds and turn prospects into customers. One can also, send out post cards in neighborhoods where your current project is underway. Introduce yourself, let people know you are working on one of the neighbors, and then give them a reason a to call with a special offer!
The second change is offering new products. A down economy is a perfect opportunity to negotiate with a new manufacturer or distributor and help get costs down. You can either pass these discounted prices to your customer to help close the deal or keep them for yourself and increase your profit margins. Also, find products that are different and separate you from your competition. Something you know they cannot find and have to have it. This will make your customers not able to shop that product and eliminate your competition.
Finally, reducing overhead will help the bottom line and keep your business afloat and more profitable. As mentioned earlier, one can save thousands a year by implementing a different marketing strategy. Limit credit card processing is a big one that we discovered a few years ago. On average we were processing 2 million a year on plastic, at 3% for fees that equates to $60,000.00 per year! Ouch!! We took away the credit card machine and it did not even interferes with sales. What we discovered is that people just want to get the rewards on their credit cards. I have not lost one client that wanted to pay with a credit card and we said no checks only.
These are a few ways that have helped out through these so called "difficult" times. We have found that our sales are in line with the pre-recession but much more profitable than ever before. This means that we are much better off today than before the market crashed!!! What recession???
Lance Smith, President/ Owner,
Affordable Contracting, Inc.
1. We believe that business operates in cycles as does our economy. It does appear that business is getting stronger with each day.
2. Our company has grown each year during these changing economic times. Our success is a direct result of our focus on customer satisfaction and the generation of raw leads. Each and every customer has to be treated as if they are your only customer and our focus on lead generation is a top priority.
3. We have begun to use technology so much more in our business. Our entire sales and production process is evolving towards a paperless process.
4. We now consider ourselves a sales, marketing and customer service company so much more than a construction company. When we began, we were a construction company.
5. We have had to find new resources for advertising than what we were using years ago and we have opened our sales team to sale anything and everything related to home remodeling. We can no longer focus on certain market segments.
6. We are stronger as a group of people who are focused on growth of the business more than ever before. The entire team really appreciates what we have been able to accomplish together.
Rain Gutter Specialties
South Jordan, Utah
1. The future is bright. This is just another cycle. The swings might be a bit bigger, but part of history.
2. They haven't given up. They haven’t stayed status quo. They have adjusted and are forward thinkers. They are determining their own fate. They determine how much they have and not let the economy do that for them.
3. For us we have been consistent in our advertising. This has allowed us to gain big market share.
4. Yes, we raised our prices. Our closing percentages haven’t changed, so this has allowed us to stay profitable and still give the customer a good job.
5. We have had to be creative. We have had to work harder. We have been evolved in CCN, I think that has helped a lot.
6. We are a much better. We are a well oiled machine. The slow times have helped us work on our business.
Midtown Home Improvements Inc.
3. The biggest challenge has been to find new sources of financing for our customers' projects. The large group of lenders that participated in the remodeling arena has shrunk to but a few.
4. We never thought we would "double down" and spend more on marketing during a time that the "media" keeps describing as near depression times. We did and continue to spend more on marketing in a focused manner and it has greatly paid dividends, our revenues continue to grow against the trend of bad news that is trumpeted by the news media on a daily basis. We have a great product and service to offer and there are many customers who need it and appreciate it.
Jim Kabel, CR
Owner and GM
CASE Design/Remodeling of San Jose
San Jose, Calif.
2. Our company did not grow during the first two years of the downturn (for us - 2009 and 2010). But last year, we grew by 32% and are on track for another 15% growth this year. We did several things:
-- Invested back in the company from our savings
-- Shifted to a strong design/build positioning in the market
-- Restructured our production team with new leadership to improve gross profit
-- Shared sacrifice - Everyone took a 10% pay reduction for 2 years. (We just reinstated that in early 2012)
-- Maintained our investment in marketing
3. We present our design/build story on the first sales call, even for basic kitchen and bathroom projects We no longer do estimates on design oriented projects without a design agreement. We target clients that see the value in professional design assistance coupled with a strong remodeling company. We sell our in-house design staff and bundle our design costs into the overall project cost.
Director, Marketing & Market Development
Window World Corporate
North Wilkesboro, NC
2. Window World has been fortunate to continue our growth over the past few years in what has been challenging times for many remodelers. We have aggressively marketed the brand, promoted financing and expanded product offerings in 2011 to promote sales growth.
3. Window World has focused on and grown our ancillary products significantly during the last few years while remaining steady in our core category, windows.
6. The uncertainty of our economy has slowed our rapid growth. However, referrals from our large customer base have helped keep our business relatively strong.
Universal Group Inc.
1. I believe that we have been spoiled in the last decade with the extensive boom in the economy which has begun with a creative banking system We will probably never see again. The fact that the banks were handing unqualified individuals with free money obviously lead construction to uncharacteristic highs. I believe neither the banks nor the government will allow this mistake to happen again. If interest rates remain relatively low house values should stay consistent and construction should remain moderate.
2. Given the fact that there was a rapid drop in the economy, many fly by night construction companies went out of business and the strong survived. The simple reason is that there was / is less competition and prospect clients take it into consideration nowadays to acknowledge a company that is still around after the drop is more creditable than a new inexperienced competitor and would rather pay more than pay less and inherit a nightmare.
3. Design, we make options more visual through virtual cad programs. By allowing a prospect customer to visualize a job it is more helpful to sell additional options rather than trying to sell options as the job progresses and it being too late
4. Huge drop in pricing and extreme diversifying; we extended our in-house abilities by over 2 times allowing us to offer more for less
5. By diversifying we opened new doors to more prospective clients and therefore created more revenue
6. Not as lucrative, i feel that the work load is similar but the profit margin is staggering much less
Happe & Sons Construction Inc.
1. Our company has been in business going on 26 years. This is unlike anything that I have ever experienced. I think there will be continued pressure on pricing.
2. I can’t count the number of articles I’ve read and seminars that I’ve attended over the years that have always preached to not sell based upon price. In this environment there are a lot of good contractors competing for projects. We have experienced some very successful years the last couple of years but we have had to completely shakeup the way we have always done business. In order to win work you have to always put the absolutely best, most cost effective, team together. You can no longer put whatever crew you have available out on a job. If you don’t have the best people available for that job you have to use efficient, quality subcontractors.
3.We used to walk away from customers when they were getting multiple quotes and focused on price too much. We now figure out ways to be very efficient and put much more effort into closing the deal.
5. In 2009-2010 we completely overhauled our company. If it wasn’t bringing enough dollars in the door it was gone-both equipment and personnel. We are a lean, mean efficient machine.
Trent A. Ketchum, CGR CGP
Fulford Home Remodeling
1 The remodeling industry has changed dramatically over the past several years. With government regulations rising and oversight over those regulations lacking, we have seen a significant increase in fly-by-night contractors. Thusly the price gap between reputable contractors following the new regulations and contractors that are ignorant or indifferent to the new regulations has increased significantly. Beyond the government squeezing small business, consumers are more leery, and leads have been harder to come by as more “players” have entered the game (unfortunately unprofessional players).
5. The silver lining is that there has never been a greater time to clearly separate your company from the other “players”.
6. We are a leaner and more well-oiled machine than we ever have been in our 25 years in business. The market has forced us to become more than one of the best; we are now the best in more areas than one!
Wichita Falls, Texas
1. I feel that the remodeling business has changed. It is always changing. Even if one sector of industry is doing very well (oil, e.g.) there is still uncertainty in so many other areas that spending patterns have changed for everyone. In my opinion the cycles are more frequent AND severe. I am reluctant to speculate about the future.
3. I believe the average project size is decreasing in a significant way. We are running a greater number of smaller sized projects concurrently. We have 5 employees and all of us run projects. In addition, we all perform the hands-on work of our own projects and assist others with their projects. Communication and coordination of schedules seems to be our greatest challenge in this phase or our growth.
4. It is frightening to realize that I am willing to do almost anything for anyone to make a profit. I don’t know whether this is good or bad. We may discover some niche market or develop new skills that prove profitable; or we may end up wasting resources battling the learning curves. Time will tell.
5. “Handyman” type work has become an option we would not have previously considered. It fits within our core values (we are customer service driven problem solvers) and gives us an opportunity to sell based on our reputation. But making decent money providing these services is challenging.
Remodeling Concepts LLC
1. We felled extremely optimistic about the future. We have continued to increase volume year after year. The main thing that we are seeing is that you have a work harder and continually service the customers more now than ever. They want to feel like they are getting a total package for their money, whether it be $500 or $50,000. We strive to constantly give the customers this experience and for that we have a high referral rate.
2. Giving the customer a full packaged experience and. It just an end product. I feel you have to make them aware that they aren't just paying for a single guy and a tool belt. This theory has lead to repeat customers and strong referrals for us
3. Have to work harder. Most people arent Willing to just go with the first person. You have to explain what makes your company different and give them the time to meet with others and make their own informed decision
San Antonio, TX 78217
3. In this technology and information era, the remodeling business in general comes under frequent scrutiny. No longer can remodelers count on clients who have randomly flipped through the yellow pages and just chosen the first name on the list for their project. People want to know detailed information about the companies they are considering, as well as what their previous clients have to say about their work, and the internet provides all of this information in abundance. Companies are learning the value of being referable and transparent as part of their whole company culture in order to continue growing and thriving.
Paul L. Sullivan CGR CAPS CGP
The Sullivan Company, Inc.
1. There is no question that our industry has dramatically changed in the past several years. Of course there are cycles but we've never had one as long and drawn out as this one. As a third generation remodeler, I've seen three of these cycles myself and this is a whole new ballgame. Consumer cnfidence in real estate has dropped to unprecedented lows. In years past when there was a recession, people still felt confident investing in their home if they had money. Now, even if they have money, many people are believing that their home is not the safe haven it once was. This is a complete paradign shift that has been overlooked by many.
2. Willingness to change. My firm focused on large scale whole house renovations running anywhere from 500k to over two million dollars each. Those jobs dried up completely. We had a small handyman division and we refocused on repair and maintenance and "preserving" the value of our clients homes. That has kept us in business
4. No. We remain committed to customer service and standing behind every job. That is the core responsibility of every good remodeler and that doesn;t change.
5. There are pockets of wealth or certain lifestyle aspects that people will hang on to. In our area, the ski resort 2nd home market has hung in there. We recently opened a second office in a resort north of Boston and are doing well with this serving 2nd homes.
6. Frankly it's a lot smaller. Look back at 2001-2003 Top 500 lists....... To really answer your question though; We are leaner, wiser and little tougher than back in the days of six month lead times and name your price attitudes that prevailed a few years ago.
All Aspects Waterproofing
I think my response will be broad and reach into several of the questions you have posed.
The remodeling industry has changed. I believe we have weathered the worse and things will be brighter in the future. Although, our company has continued to grow and succeed each year that we have been in business we are relatively a new player. The differences, that I see, between contractors that have succeeded and those who have failed is related to how they operate their business. The old contractors not willing to change their business model or adapt to new types of social media marketing are going to fail. The dinosaur or antiquated mentality of putting out sub par work and not backing up that work is over.
People are able to report or review your your company in a matter of a few key strokes. I have personally seen companies go from one of the best to dissapearing in a few years. They are trying to keep their head above water and don't believe in social media, therefore they will ultimately die a slow death.
All Aspects being a new player with the willingness to change has helped us grow. We believe in strong customer service and quality. Having working owners that care about their customers and their employees, keeping control of growth to be sure it is managed. By being involved asking your employees what they see, having direct contact with customers and being able to understand. With social media today that can make or break a company in months. You can't say we have been in business for twenty years we are your best choice.
Kopke Remodeling & Design
St. Clair Shores, Mich.
Here's my take, from a Detroit suburb point of view.
1) The business of remodeling homes has not changed much in the last several years. We add up materials, labor, and sub.s - then we add mark up to cover overhead and profit. We sell the job, install the job, and collect payments from clients. In most respects that will always be the same.
There is a definite up and down in our industry, mostly related to the weather, as we are in a northern climate.
The 2 items that have changed our business the most are the lead RRP rules, and the lack of access to good financing for clients. Also, the negative media about the housing mortgage crisis has sent the homeowners into the wait and see mode, which has created a pent up demand for remodeling. Once the fear subsides, and confidence rules again, there will be a boom to those remodelers that have weathered the storm.
The future looks bright for remodelers that adjust to market conditions, keep their overhead in check, and most of all, attract and keep good talent.
Since the downturn has been so long (more than a year or two), many of the trades workers that would usually have waited for a year or two, have left the field all together, and moved on to another more stable field of work.
So, when the remodeling industry comes back strong and grows rapidly to handle the pent up demand, there will be a severe shortage of qualified talent to do the work.
In 1987, if we put out an ad for installers, we would have a line out the door and down the sidewalk of young men ready to fill out an application. Today we are lucky to get one or two semi-qualified applicants for a field worker job opening.
More Sales + Labor Shortage = Bottlenecks and Backlogs = Unhappy Public
2) We are very small but we have had a sales increase for the last 4 consecutive years, due mostly to a rebuilding effort after sales fell dramatically years ago to 1/2 of our highest volume.
To me, it's all about budgeting, and building a war chest of cash in the good times, to be prepared for the bad times. We can't hope. We have to know our numbers every day. We have to cut, cut, cut, then add, add, add. Keep monitoring and adjusting.
Marketing is an important function to keeping leads coming in. We have embraced the technology, and are trying to keep up with the ever changing marketing arena.
Asking for help has been good for us - through consulting services, etc.
3) No major changes for us......
4) Lowered everyone's pay, including myself, by 30%, and no-one quit!
5) Our best new opportunity was increased market share in our area, due to the failure of the competition. Until more people open up businesses, we have the upper hand.We also were able to raise prices, since the low ballers are the first to fail in a tough economy.
6) Better, Faster, Stronger, Smarter, Braver, Ready for Growth!
Nevada has been 3rd in the nation in foreclosures and 1st in loss of construction jobs since the downturn in the economy. It was so bad two years ago that we were just glad to have a job as we saw other remodelers and suppliers close their doors to long standing businesses. We were lucky and count our many blessings every day. We have a niche in the business-insurance restoration, taking care of the customer and the adjuster. In essence, we work very hard keeping everybody happy. Insurance restoration has kept us working but the extra spendable money for upgrades/change orders has not happened. Our customers are not opting to spend a little more to get those upgrades and our insurance companies have not increased their prices even though loss of suppliers and the high cost of transportation have increased the price of all of our material. We haven’t been able to give out well deserved raises and we watch expenses around every turn. But, we have not laid anyone off and recently we hired two new carpenters. We are optimistic when we see permits applied for new construction, bidding wars over older homes and road construction every where we look. It has given us hope that we’re coming out of this-cross your fingers!
Raymond J. Wiese, CMKBD, CR
The Wiese Company, Inc
1. I believe that the remodeling industry has been changed dramatically over the last 4 years primarily. Boom and bust were present in more sectors than housing; combined with the depth and length of the recession- consumers changed more than discretionary spending- they changed the way they think. I do think that eventually there will be the forgotten history and other trends that affect consumers- But depression era children are the ones you see saving gift wrap paper… and the households that were affected deepest in this recession won’t soon forget to be more frugal.
2. I think there are a few groups who prosperd- smaller projects or specialty products like siding, windows and energy were boosted by tax advantages and consumers who would have previously made larger improvements were still able to do smaller ones. Also, younger companies with lower cost, overhead and paradigms about overhead(LOL) fed better on price driven consumers.
3. Job size… every good remodeler I know that is full service has shared a similar story. Our firm went from $350k avg. jobs to $75k avg jobs wile total revenues dropped. This created the need to quickly re-strategize our process and overhead in regards to how we staffed. We went 3 PM’s and 5 Leads to 1 PM and 3 leads and we currently run smoother with one manager of field ops. And a few great minded carpenters… Better company, better attitudes, better service and better profits.
4. Last November I let go of 2 of my best friends. They were loyal, experienced and trustworthy. I had to decide that I was going to make the best decision for my company and our customers and re-organize without regard to my relationships… it was heartbreaking but necessary.
5. I opened a kitchen and bath showroom (a subsidiary) to better compete with the kitchen and bath segment.. I am a CMKBD and it was always a dream and passion- the synergy has been tremendous for business as well as my spiritual well being?
6. Several years ago my business grew and prospered with elementary business practices, even though they were proper and typical of a well-run company… today my business prospers because everyone on the team understands we are in business- where the customer matters more than anything and none of us will settle for working with anyone not giving 100%.
Hawkeye Construction LLC
2. To have a successful business you not only have to do high quality work, but you also have to make sure potential customers know that you do high quality work. It is hard to get new clients if you hide in the shadows.
4. I have learned to give up control of minor day to day activities to focus more on business development and customer relations.
5. Energy efficiency has become a rapidly growing market segment and we have been able to enter this field with the aid of utility program rebates and other incentive programs to help consumers afford these home improvements. These home improvements not only increase the comfort level of the home, but also save the homeowner money for years to come.
6. We now focus on smaller job sizes, service contracts and repeat business from existing customers more than constantly chasing after larger new jobs where there is much more competition.
Joey Gates, Owner & Operations Manager
The Shower Shop
1. I've been in the remodeling industry for over 20 years and have worked for 5 different QR-Top 500 companies before getting my own business on the list in 2011 & now again in 2012. One trend that has always been consistent, election years are historically a little tougher on us...especially the last quarter when everyone is "waiting to see who gets elected". So, we may not have seen the worst that 2012 has to offer yet but with careful planning, we will have greener pastures next year...no matter who gets elected.
2. As challenging as these economic times are, I think our current situation still plays into the hands of remodelers since many homeowners are staying put and investing in their property rather than buying new homes.
3. We have had to compartmentalize and insure that each department is striving to be profitable on it's own rather than just waiting for the big remodeling projects to feed them work. Our shower glass division now sells more "glass only" jobs and the same is true of our granite shop....they can't just sit around and wait for an order today, they have to create orders for themselves too.
4. I have let outside sales people go and starting running majority of the "prospect leads" myself again. I've stopped dreaming of expanding to new markets this year and instead tightened my grip on details to insure the proper margins are in every project we build this year.
RFMC Construction Inc.
The remodeling business has changed in the last 3 years it gotten a little better not a lot but a little. I think because realist ate has bottom out and people who have bought these bottomed out housing are starting to put a little money in them. I think the reason some remodelers are doing better is that this guys have been in business along time and their clients are spending a little money. The biggest change is contractor are more mean and lean, this helps. My business is different because we are mean and lean, this is the time to get rid of all the dead wood and prune the branches . I am doing just that.
North Vancouver, B.C.
1. For us the industry has been steadily increasing year after year – no matter what the economy is doing. This last year, however, we found that customers were hanging on to their money and not making the decision to get into bigger projects – so we experienced our first down year since we started 20 years ago.
2. We thought this was due to the underlying need for homes to be improved as they were reaching a critical point in their life cycle. This comes about no matter what the economy is doing. If you are a well-established company in your area then the people will come to you as they trust you have their best interests in mind. Never every stop your marketing and, if anything, kick it up a notch so you keep yourself noticed – in these down markets there are a lot more guys out there willing to work for less or work under the table and you need to place yourself in front of them.
3. The volatility of the world markets – this has a direct effect on my clients’ ability to spend. Clients are also very apprehensive about spending while there is so much uncertainty.
4. We invested in buying and renovating our own office space. Our thoughts were that we needed not only a better working environment but a good place to bring clients and show off what we can do. We wanted to place ourselves at the head of the pack in relation to our competition. The downside to this decision is that it took out cash flow from the company when the market went sideways – thus increasing our dependence on the bank.
5. The only opportunities that we have had are not related to the market at all – with the slow down we have been working on our systems and fine tuning some of the data entry and analysis. We have seen that the job sizes have shrunk considerably from our “normal” averages. This has caused us to look at the smaller jobs closer – although we have not made the plunge into that market as we believe it doesn’t suit our model. This may change, however, if the market doesn’t pick up for us sometime very soon.
6. We are a bigger more streamlined company. We are also more keenly aware of our changing clientele – they are generally a lot better educated about the process and what they want from their contractor – this puts added pressure on the team to make sure all the bases are covered at all times. Even with this heightened awareness we still have the day to day issues that arise with clients that need special attention. The more things change the more they are the same!
Vineyard Homes LLC, dba Vineyard Services
1. I believe the remodeling business has changed dramatically in the past several years. With the dramatic flow of REO Properties and Short Sales in the market, the common theme on remodel work was all about simplicity, low cost, and not over-improving. Now that homeowners can see their equity beginning to return, the scopes of the jobs have become more substantial, and traditional work is happening again. The REO remodel work related to this boom will continue for us for the next 2-3 years, but we are forecasting a disproportionately larger amount of regular remodel work for private equity firms and homeowners who are trying to improve the value of these properties.
2. The market has been difficult, but the opportunity for remodeling has never been better. These remodelers have to have the mindset to deliver recurring results at high volume no matter what circumstances they face. Having the infrastructure to manage large amounts of volume allows for efficiencies to take place, and through this scale these remodelers can set themselves apart from the traditional remodeler. This infrastructure and employee overhead requires capital reserves and the management team that is experienced in dealing with tight timelines and clients who are demanding. If the staff can adjust and manage these variables, the remodel firm can be successful.
3. The most significant change in the market is the recent surfacing of many multi-billion private equity firms who have the capital and business acumen to buy large portfolios of homes and remodel them correctly so they can be put into rental portfolios or be flipped to owner-occupants. Our business has become the leading remodeler in this space with national operations in many states because we can deliver and manage construction on hundreds or thousands of properties for these clients each month. Adjusting to the demands of institutional clients is very different than servicing an individual home owner. We still do both types of work, but have different team members managing the communication to each client type, so that the expectations of each type of client is met and so we are successful in the end results.
4. Yes. I never thought we would have business in over 10 states, have a staff close to 150 employees, have hundreds of approved vendors on our team, and be managing thousands of properties simultaneously. We started as a custom home builder and made the full commitment to this new economy which allows us to reap the rewards of being a first mover in the space. Many of our peers come to us for advice and we generally tell them that the only way to succeed is to adapt to the expectations of the clients and maintain high integrity and ethics on a daily basis during the interaction with them.
5. Since we have achieved scale, we are now seeing additional new types of business presented to us each month. They are tangential types of work that is not very different from what we do. We can assign new tactical team members to these new ventures and pursuits and analyze if they would be a good fit for our enterprise.
6. We have morphed the business to handle volume and scale yet still find the interpersonal relationships with our homeowners who trust our firm with their homes. The big difference is hiring several talented Vice President or Director level employees to manage the relationships, instead of having a single sole-proprietor (owner) manage all the operations of the business. It is refreshing to see how dedicated and amazing my team is each day in how they do their business, and the collective brain power of this team is far superior to one owner’s capabilities.
The remodeling business is constantly changing but economic conditions have certainly taken it’s toll as it has across many industries. There are those businesses that sit and wait for the phone to ring and there are those that actively market their services and generate leads. Homefix is one of the latters. We are always looking for new ways to bring business in and really haven’t found anything Earth shattering. We are still old school- canvassing and telemarketing are our primary sources. We struggle to grow our marketing efforts while keeping our cost per pitch in line with our business model. Our biggest change has been the product breakdown of sales. We used to be a window and siding company and now we’re a roofing company. We push hard for the window and siding leads but siding sales have been down for several years and roofing has grown exponentially. We feel that roofing is a tougher sale and therefore our closing rates are down as is our slugging percentage (net sales divided by leads run). We offer our marketers higher incentives for window leads to help offset the increase in roof leads. This is the main difference with Homefix between 5 years ago and today. We also consolidated multiple locations down to just a couple and are still generating roughly the same revenues from the remaining branches as we were with 7 locations. Opening up the roofing department has allowed us to gain confidence that in the future we can offer even more products to increase sales volume. One other challenge we faced is the damaging effects of the internet. Nowadays there are several bogus websites that allow anyone to post bad blogs (or any type of blogs) that any individual wants. This can become very damaging when others read them. We’ve found so many ex-employees or enemies of our employees that would make negative posts and we lost leads as well as sales as a result. We now employ a fulltime web developer to manage our web presence. This change has been a real winner as she has made a large impact on our web presence.
Mike Lumary & Greg Friend
Everlast Home Energy Solutions
1. It has changed a bit in the past few years. Through internet media & sophistication of the home owners you need to be savvy, sharp, & on your game to stay updated on the changes is the manner in which we market. Production levels have gone down and expenses have gone up. Were constantly hiring & training to keep up to date to keep ourselves as sharp as possible. At the same time, we feel that the economy is heating up again and that credit is loosening up (a little), both of which bode well for the future of our industry.
2. Everlast opened for business on Jan 2, 2009 - in the midst of the recession. Many of our vendors advised against it as they had contractors going out of business. Our mantra for the first year was that "we refuse to participate in the Recession". Not only did we have a successful 2009, but we have enjoyed tremendous growth every year since. We believe that companies like us who aggressively engaged in finding business and not waiting for the phone to ring are the companies left standing. There’s definitely been a thinning of the herd.
3. Marketing costs have risen. In some cases, Lead costs have nearly doubled.
4. To continue to grow and expand our revenue numbers, we have labeled key people as “Franchise Players” and implemented creative ways to maintain and engage them in growing the company together.
5. Expanding our product line has improved our ability to bring in new business.
6. Several years ago, customers could tap into their equity much easier. Often now, they either don't have the equity or are unwilling to borrow against it.
Burgin Construction, Inc.
North Tustin, Calif.
1. Yes, I'd say the remodeling business has changed over the past several years and I think it will continue to do the same in the future. The "Well-off" will continue to do most of the remodeling due to their ability to pay with cash and borrow with good terms.
2. I'd say hard work, perseverance and the ability to adapt to change.
3. It's all about customer service!
4. I'd say we have become flexible.
5. We have added the certification of becoming a CAPS (certified aging in place specialist) to Brads resume! We understand that this is an important aspect of home remodeling and we are proud to be able to offer it.
6. Several years ago, pre-recession, focus was about customer as revenue. We now look at customers as client for the long term, repeat, referral, etc.
HomeSpec Advanced Basement
1. We have seen sales driven more by need more than desire. Also, financing sources dried up in 2007 -08 but has returned. It is still much harder though to get a customer approved for investments in a home that may have no equity built in.
2. We went lean fast. And when others were not advertising we put more of our resources into marketing. We needed more leads and jobs to make the same as we made in the past.
4. Yes, we dropped our prices to a point where we were really just keeping our employees employed.
5. We have taken over key personnel from 4 different companies that were put out of business by the economic climate. We profited by obtaining these valuable resources.
6. We are less willing to take on projects that have a chance of not being profitable in the end. We spend a greater amount of revenue on marketing to obtain leads.
Brindisi Builders LLC
1. I would characterize this to be similar to the mid-seventies The labor force overall will be reduced due to the economic changes
2. Our longevity in the business and our commitment to customer satisfaction has allowed us to thrive thru all.
3. Marketed towards commercial renovations not just residential
6. Our company has reduced its staff from 48 to 32. This accounts for positions eliminated or combined
Gary Callier, President
Callier & Thompson Kitchens, Baths and Appliances
Our business is still down some 35% from our high in 2008. We are still down 20 employees. With the cuts we made we have remained profitable. Our average job has went down 25%. Our average client is getting at least 3 bids. Compared to 1 -2 four years ago. The tough part is the ups and downs from month to month. Most of my people have never gone through this kind of economy.
Mark Gandy, CGR, CGP, CAPS, CLR
Bath, Kitchen and Tile Center Lewes
1. Perhaps the largest change I have seen since 08 is an increase in bathroom remodels over kitchen remodels. I attribute this to 2 factors; 1 - People ofter remodel a bathroom because they "have to" due to leaks or mold where a kitchen remodel is more of a "want to". Also, with the average bath remodel being 15-20K versus 35-40k for a kitchen, it is a lower ticket purchase. The other large change we have seen since 08 is more of a call for our mid-priced semi-custom products and low end production products. Our high end kitchen sales have drastically diminished. We have seen at least 3 local competitors, one of which specialized in high end remodels, go out of business.
2. Longevity and a smart business plan has been our key. Our company has been family owned since 1963 and the officers have invested wisely back into the company over the years. We had to make some tough choices including laying off installation crews and warehouse personnel, using temp labor in busy times, using temp labor for our main receptionist position, cutting hourly employees to 32 hours per week, and reducing managers salaries. We had to adapt our sales approach to the changing market, and adapt our company polices and procedures to the changing market conditions. We are seeing drastic improvement in 2012. Our company as a whole is having the best sales year since 2008. Our beach resort location has increased it's sales every year since 08 and is having it's best year since it's inception approximately 12 years ago.
3. I'd say the most significant change in the market has been how our retail remodeling buyers shop. Where the rule of thumb used to be that an educated consumer would get three bids on a project, we have seen that number increase drastically. It seems as if our remodeling prospects are shopping more and harder than ever before, thus creating a more competetive market place. We have been forced as a company to accept retail jobs for lower profit margins than we would have in 08 or before due to market conditions. We have continued to sell our service and benefits to our clients being very conscious of our competition and our advantages over our competition. We have seen the same change in the commercial remodeling portion of our business. It is not uncommon to now have 20 bidders on the same project.
5. While it is sad to say, the negative down-turn in the industry has caused many competitors to go out of business. Our company strength and ability to weather the storm has allowed us to benefit from the loss of competition. Where other companies have eliminated or decreased their marketing efforts, we have ramped them up and found new ways to market our business including billboards, radio info-mercials and interviews, live radio broadcasts from our showroom, movie theatre slide shows, and increased print. We also revamped our entire web site and invested in a monthly SEO campaign, which has been very succesful, and purchased, remodeled and opened our 3rd showroom in Delaware.
6. The biggest difference is that there are fewer leads. The biggest challenge is that the sales are much harder to come by. The good news is that we are seeing drastic improvement in 2012.
Mark J. Olson
Legacy Design Build
From my perspective in Scottsdale, AZ, I believe that the remodeling business has evolved somewhat – rather than being characterized by just another downturn….and I’m sure that our experiences aren’t dramatically different from most remodeling companies in other geographic locations. Our average job size dropped by 80% from 2008 to 2012, which undoubtedly reflects changing consumer attitudes, as well as diminished real estate values. Today’s clients no longer presume that they will receive a return on investment for their remodeling projects or that their homes will increase in value significantly in the near future; so, the projects are more modest. People are more focused on necessity.
Further, as competition has increased from out-of-work tradesmen and idle custom home builders, consumers have sensed greater opportunities to save money by soliciting a greater number of bids from a wider range of candidates. And they seem willing to accept a greater degree of risk by hiring unlicensed contractors.
On the positive side, all of these factors have caused people to research alternatives more carefully and utilize the internet to an even greater extent. Consequently, this has provided us with a wider audience than we would have otherwise had - as we upgraded our website and concentrated on effective SEO strategies. For the first time in the company’s history, in 2011 we generated a greater percentage of business from the internet than any other source. (Referrals were second.)
Gary Volpe, President
Volpe Enterprises, Inc
2. We are one of the remodelers who have done well in this economy and I am asked this question all the time. The short answer is we have expanded our services. We use to do only exterior renovations (roofing, siding, windows, and doors). In 2008 we started offering construction services including additions, kitchens, bathrooms and basements. It isn’t just that easy. A roofer isn’t going to install someone’s kitchen properly so some adjustments were required. First, we had to change or add more construction oriented employees to our production staff. Second, we approached our previous customers and advertised heavily about our expansion. Third, we hired and trained knowledgeable sales staff to establish our creditability within the total remodel industry.
We have increase sales every year up to and including this year.
Janeen S. Welsh, CKBR, CAPS
Welsh Construction, Inc
1. The remodeling industry has changed over the past several years, but not nearly to the extent of new construction. Because remodeling is basically a constant, in that even during tough economic times home owners feel committed to keeping up the value of what they already own, we did not have the instant shut down that new construction contractors faced. What has changed in the industry is that home owners are being more cautious about what they spend on a home which they do not intend to keep for the long haul. What has not changed is that, when remodeling, a buyer still wants a contractor who offers value and owners are making their decision to buy based on a total package and not just price. We have not lowered our prices once, ever, and we have been in business since 1993. Although our projects have decreased in size, our closure ratio has not changed. We’re spending more on marketing to create more volume and that solution seems to be working well for the most part. I do think that this is a cyclical adjustment, albeit a more serious one, because the industry could of course not sustain the high at which it had peaked. Regarding the future, I think there is going to be a substantial boost in business when the economy settles down a bit due to pent up demand. Those who have been sitting tight over the last five to eight years will be seeking out the services of those contractors that have been able to withstand the economic drought. I think the future is bright and those long neglected projects will soon be receiving our tender care.
2. I think the remodelers who have thrived have been the ones who responded early to the market change and have made adjustments accordingly. We took the advice from trade journals and beefed up our marketing even though it was daunting to spend the cash. Although we made some changes to tighten overhead, we really didn’t make substantial changes to our budget. We kept in close contact with our past clients and that proved to be very profitable. They already understood the value of our services and were staples in our financial diet. As soon as we realized that the larger size projects; additions, whole house remodels, high end kitchens, etc. were not moving forward to contract, we switched our marketing focus to kitchen and bath upgrades, handyman services and even a long term home maintenance plan we developed for attending to items in the home which needed annual inspection and servicing. Our clients really responded well to this focus on helping them maintain and protect the integrity of their home without having to commit to a large investment at this time. We know that when they feel more confident about spending money, they will remember the small services we provided and will call on our company.
3. I think the most significant change in the market is that home owners are leery of over investing in their homes. If they are planning to remodel for their own desires and are planning to remain in their homes they are more likely to sign on the dotted line. If however, they have to keep resale in mind they are gun shy. Market value declines have really taken their toll on available equity for remodeling and on what one can invest in a home at this time. Customers are being very cautious about adding construction costs to their mortgage in fear of taking a hit.
4. One might expect to hear that we cut prices or laid off personnel, but in fact we were able to turn this new climate into an opportunity to expend our energies into fine tuning our operational systems.
5. We’ve been updating our estimating data base, re-writing procedures manuals, evaluating job descriptions. Soon we plan to have a meeting with our key employees to share and discuss DISC test results that they will each be taking within the next month. Our clients have had the benefit of the extra attention and one on one time that we can spend with them as we attend to their home maintenance needs and have really expressed gratitude that we were willing to handle the little things with which they needed help.
6. I like to focus on the fact that we are operating at a much more manageable pace in both the office and the field. While there is the constant stress of not having the 6 – 9 month backlog that we were used to, there is the benefit that we aren’t running at 110 miles an hour trying to meet all of the client needs associated with multiple high end projects. Although we have a larger number of jobs with smaller selling prices, we have less details in need of attention. Screened in porches, decks, bath upgrades just don’t require the same amount of diligent attention and product research as a high end historic restorations. So there’s the added stress of a more unpredictable backlog, but the benefit of a little time to breathe and catch up administratively. We haven’t changed our business model as of this time. We still employ a full time designer/estimator and a part time assistant, our bookkeeper, an administrative assistant and eight field employees. We are a husband and wife team and our sales approach has remained constant: we sell a process, a service and our expertise. The scopes of the projects have changed but how we approach each project and the care we extend in carrying out the production of each project has not. We still love what we do!
House Works LLC
Prior to the 2008 economic problems, House Works had been petitioning various insurance companies to do their restoration work. At the time, it was believed this work would be a good adjunct profit center to the company’s home repair and remodeling business. As it turned out, this insurance restoration work grew substantially over the years and soon more than overcame our loss of remodeling business due the 2008 economic slowdown. It now represents approximately 85% of House Works revenues and it has increased company sales threefold since 2008.
Castle Building & Remodeling, Inc.
1. I believe it has changed. Having been in the industry since 2002 I only know two cycles: boom and brakes. What’s in store for the future? More brakes. Consumers thinking twice before spending and making smarter and longer term investments in their homes.
2. The ability to change. A good quote I like to share with my employees is from - General Eric Shinseki (U.S. Army Chief of Staff) "If you don't like change, you're going to like irrelevance even less."
3. We have shifted from a company that focused on selling large projects over $100k to a company that specializes in kitchens and baths with an average projects size of $18,000.00.
4. Never say never. We brought labor back in-house so we could be really competitive on bathroom remodeling.
5. The opportunity to employ really good people who want to work hard and are willing to work for fair wage.
6. More focused, much larger, more efficient, and better managed.
Rhett Wilborn, Owner
Innovative Home Concepts, Inc.
Crystal Lake, Ill.
1. Since the end of 2008 the remodeling business has definitely changed dramatically, in fact, it's almost unrecognizable. The housing boom leading up to the big recession seems almost like a dream now. We had more leads than we knew what to do with and even a poor sales rep could close like a pro. Since then nothing is easy, leads are treated like delicate china, and our sales people need to be on top of their games just to make things happen. But like everything, there is a cycle. It appears we are at the bottom of the cycle now and in the next few years the companies that are still around, if they take advantage, should grow steadily.
3. We have completely changed the way we do business. Instead of spending 100% of our efforts on attracting new customers, we have implemented systems and procedures to cultivate our relationships with our existing customers. Early in 2009, we held a meeting, as a company, to determine what direction we wanted our company to go. Out of that meeting, came the mission statement that had guided us to this point, "To make Happy Customers and Lifelong Clients". Every new system, new procedure, and new employee is implemented, measured, and accessed based on achieving this mission. We want to be the company with the happiest customers who wouldn't think about hiring anyone else to work on their homes.
5. The changing market has given us the strength, (or rather the push in the back) that we needed to expand and diversify our product offerings. We were a one pony show for years and would never even consider going out of our comfort zone. As things slowed down, we realized we needed to expand our offerings, not only to attract new customers, but also to offer our existing customers more services and our company more opportunity for additional sales.
6. We have tightened margins, expanded services, implement procedures to measure performance, but most importantly we have aligned the company behind a single goal, to make happy customers and lifelong clients. This has led to a huge increase in referrals, repeat customers, proud employees, lower marketing costs, and higher profit margins.
Rick Johnson, General Manager
Melton Construction, Inc.
Boulder, CO 80301
1. We think it’s a cycle. The remodeling business will come back strong, just like the stock market eventually does after a crash or downturn.
2. I think what we’ve seen is survival of the fittest, not survival of the low cost leaders. In our geographic area, the companies that survived were the well-run, more mature businesses that were already good at marketing and sales and were solid financially.
Scott Lemons, Vice President of Operations
1. I don't think the business has changed, we are all still offering the same services, but I think our customer has changed. They have become more informed about the products that they are purchasing and they are doing their homework before selecting their contractors. The contractors who is not willing to adapt the way they do business has probably suffered the worse.
2. The difference is the mindset of the business owner. There is no doubt that sales have been tougher, leads may have dropped off, but it boils down to the mindset of the business owner. If the business owner doesn't buy into the mindset of "down economy" then the problem does exist with his team. As contractors we have to focus more on the customers’ needs and what is the right job for their project / situation, not on how to come up with a cheaper price. Our business has grown in volume over the last few years, but the key to that is the fact that our unit of sale has increased almost 30%. It is easy to throw more money into marketing to generate more leads, but it doesn't do any good if you can't close the sale. While most of our competition is trying to lower their price we are offering bigger, better projects, and our sales are increasing, not only in size but in the amount of new contracts.
6. The big change in our business is to focus on each customer and their specific needs. We try to operate on their agenda and not ours, our goal is capitalizing on every lead. We focus more on non-sold projects, to make sure that they don't fall off the grid... Follow-up, Follow-up, and more Follow-up. Each new customer is a new referral source once their project is complete. They also become a target for marketing our other services to.
Scott R. Young
Advanced Home Technologies Inc.
1. I believe people think differently about spending money than they did when money was given out more readily. The downturn hasn’t really affected us that much, we have been in business for over 45 years and have been through several other downturns and survived. I believe the future will be better if the media would quit spreading doom and gloom.
2. I think the difference is in how well you treat and take care of your customers. We have relied on our customers for referrals and add-on business more than ever.
3. We have been watching the numbers more closely to make sure every dollar of advertising counts.
4. It has been pretty much business as usual.
5. We did try to add a new product in anticipation of losing revenue from our existing line. That only proved to hurt our core business. We have since deleted it…..in hindsight we wouldn’t have needed it to start with.
6. It really hasn’t changed that much……we are looking for an exciting future…….it seems like financing is just starting to loosen a bit. I hope it keeps up.
Rock & Tait Exteriors LLC
Eau Claire, Wis.
1. As home values accelerated, a phase of new construction took place until the conclusion of 2008 values flattened and then dropped. Because of this, many families who had built to live in the home for a couple years, sell, and do it again couldn’t sell. We have been seeing more and more remodeling especially on higher end homes which have been affected the most by falling home values. Home shows in the spring of 2012 showed a lot of interest in new builds so it will be interesting to see the next steps. Of course as more and more homes and buildings go up each year it only increases the need for maintenance and remodeling, so the work will always be there but it’s critical that the families in these homes can stay working and feel confident to remodel. Only God knows what the future has in store, but if we were to guess, the work will be there as nothing lasts forever.
2. The home is a system of systems all put together in an order for comfort, durability, energy efficiency and functionality. We have seen remodelers that have the abilities to address the home as a system have been able to do more things that all need to be done at the same time.
3. A strong focus on building science to fully understand the systems of the home has provided necessary training to address all components of the shell of the home preventing subcontracting components of projects keeping our top installers versatile and busy. A strong focus on quality knowing that there is less quantity and adjusting the business structure to that has been one of the biggest changes.
4. We did tons of schooling on solar electric solutions hoping that adding one more division to the business structure would help keep us stay busy and realizing that with every $1 spent on energy efficiency offsets about $3-$5 of solar costs making a decision very easy for a homeowner to improve the thermal efficiency of the home before placing thousands into a solar array.
5. Yes, I would say the changing market conditions have presented us with various “opportunities for challenges!!” With the rapidly changing and unstable market we never knew day to day what we were really in for. The changing market has helped us prepare for all different types of situations that we face daily in this industry. We discovered that when you educate yourself of all the different types of programs and rebates available to consumers nationwide, you will open up a new door of basically untouched opportunities for advancement.
6. Several years ago we started as roofing contractor, and now we have built homes, additions, garages, kitchens. We have a strong focus on Roofing, Insulation, Siding, Windows, Soffit/Fascia, Seamless Gutters and Gutter Protection, Drywall, and Solar. Staying focused on quality and getting amazing results with projects promoting word of mouth is more important than ever before. Building science and certifications in every service we offer has showed us that improving the home’s performance is key during all remodeling projects keeping us different from much of the competition that is unable to re-invest into proper training and compete.
Robert Wadden, President
2. What's different with them is that they've realized the need to adapt their business model to market conditions.
- Customer appreciation and service
- Quality materials and craftsmanship
- Positive, optimistic attitude
- Strong sales staff
Bill Simone, President
Custom Design & Construction
El Segundo, Calif.
1. The future looks bright as we see it. The decrease in new housing stock, the aging of the existing housing stock and the decrease in the mobility of our population, all point to a remodeling market that will trend upward over the next 3-5 years.
2. I think the remodelers who have thrived and grown in recent economic times are those that have systems in place: marketing systems, sales systems, and production and warranty systems. This allows them to continue to produce replicable results, even in hard times.
3. We have to invest more time and money in the way we market than in the past. Clients are more cautious about "pulling the trigger." And the scope of most projects have shrunk in size resulting in the need for better systems to deliver more projects.
4. Our core philosophy has never changed in the 26 years we have been in business. That is, build relationships and projects will follow.
5. One of the key opportunities for us has been the ability to provide our in-house financing for clients. Many remodeling projects have been postponed due to changes in commercial lending practices and having internal financing available allows us to help our clients get their projects moving.
6. Our business really hasn’t changed. We concentrate on working with the "right" clients; ones that buy into our systems and procedures, understand our philosophy and that we are going to be comfortable having a long-term relationship with.
Window World 0f Harford
Bel Air, Md.
2. Companies that have grown or thrived during a down turned economy have either found a niche in the market or, as we are, very customer service oriented and offer an exceptional value to our customers. In speaking with perspective client, I find that high pressure sales tactics on over priced items is how most of our competition operates. The consumer is becoming more educated and less likely to enter into a contract without getting several quotes. I prefer to deal with an educated or savvy customer because they are not fooled by a bogus two or three for one offer and refuse to be pressured into a buying decision. In order for most businesses to prosper in a bad economy, they must always remember that they are there for the customer and not vise versa.
James Barton Design Build Inc.
Apple Valley, Minn.
1. The biggest change that our company has seen is the inability for good qualified clients to secure financing. The banking industry has gone so far the other way that good people with good credit cannot get financing. We have stopped looking at the person and we are only looking at our house values. I talked with a local banker that is older and he stated that before the housing market boomed we use to look at the person and determine if they were a good credit risk. Now the under writers look only at house values and most of the time our personal history and our ability to repay the loan is considered minute in the decision making process. I personally believe the economy cannot come back until we starting moving money again and that starts with the banks and the feds. I money isnt in circulation the economy just cannot rebound. Its time to start looking at the person not just the numbers.
2. Well, for us 2011 was a record year for us both in gross sales but also net profits. What we found is there are fewer consumers spending right now but they are also being more careful when it comes to hiring a contractor. I believe that doing the right thing for the customer and actually running the business has allowed some to prosper while others struggle. You also have to be willing to make the unpopular decisions as a business owner for the sake of the company and put your personal feelings aside. If you truly love what you do and put your whole heart into it and surround yourself with good employees I don’t see how you can fail.
3. The biggest change that we have made is doing more work in-house that we use to hire companies to do. The biggest one being marketing, all of our marketing used to be outsourced now we do all preliminary work in house so we are only paying for those services that we are unable to accomplish. We didn’t want to decrease marketing but needed to cut the budget. We are able to do more marketing while bringing our costs down. The unfortunate thing for the economy is when companies do more with less that means other companies and other industries also feel the pressure and in the end it ends up with less people employed doing more work.
4. Yes, we actually decreased our staff to ensure we were as lean as we could be and still service our clients. I always had the feeling that we could ride out any downturn without affecting staff, welcome to the new normal. It was the hardest thing I ever did as I view my employees as family as does many small businesses. I take it very personal when I do something that affects the people that I feel responsible for. In the long run though it was the best thing for the company as our jobs have gotten smaller and we didn’t need such a large field staff but rather there was more pressure on our office staff as you have to sell more smaller jobs to do the same volume so we actually hired on the design side of the company.
5. It is true the saying that for every negative there is a posative. As some companies fail it allows others to take market share and grow. We have actually benefited by other companies downsizing by picking up some very good and qualified employees that were let go by our compeditors. It also alows us to showcase to potential clients the benefits of a stable company and why price should not be there only consideration when choosing a contractor. I think it has allowed us to really focus on what we do right and how to convey that to the consumer.
6. I think we are a little bit more cautious and are careful not to get too comfortable. When one job sells there is little time for celebration as you are onto the next one to ensure that you have work for the crews. What is funny is we are busy and things have changed but it seems to have brought everyone closer and everyone seems more willing to step in and help someone that may be behind even if it isn’t their job. Maybe years down the road we will all look back and say this was the best thing for all of us. Hard to see that side when we are all knee deep right now.
Leah Krueger, CEO/CFO
L.H. Krueger and Son, Inc.
5. Social media and internet networking. We have the ability to reach customers at virtually zero cost using the web. It helps customers make informed decisions while building relationships and making the construction process more personal.
Clark Renovations Inc.
Bethel Park, Pa.
2. It’s not "location, location, location in this business. It's "REPUTATION, REPUTATION, REPUTATION !"
3. The number of competitors has increased. As a result of the economic downturn, everyone and their brother is now a remodeler. Home builders, their subs, even the local lumber yards have become remodelers. Competition is stiff and "two men and a truck" are racing to the bottom.
4. Good and Bad! We were always "too busy" with our new customers to solicit the old ones (except a Thanksgiving card). Every year 65% of them just called on their own for more work (Thank Goodness). After 42 years, we finally got smart and sent postcards offering "Specialized Services" to those previous clients - with the offer to do everything on their "honey do" list. We now have very little down time, more revenue and happier marriages.
6. Previously we were kept busy by servicing homeowners in about a 15 mile radius of our showroom. We increased that to 25 miles, worked with a local radio station at the Pittsburgh Home and Garden Show (gave away a bathroom makeover) which also led to some radio advertising and more clients. I guess never say "NEVER!".
Meridian Restoration Inc.
2. I believe most successful companies operate sound business strategies, the separating factor is exceptional customer service and timely response to problems or concerns, that’s how companies succeed above the competition.
3. The greatest challenge is finding the skilled labor to operate a first rate business, the dwindling labor pool has become and will continue to be a problem. More kids need to be introduced to the construction trades through technical schools, kids need to be introduced to skilled trades that do not require a college degree, such as, carpentry, trim, welding, plumbing, electrical, etc.
Engstrom Siding & Window Co.
1. This is different. Normally when new construction is down, remodeling gets stronger, haven’t seen that trend. The future looks difficult.
3. We return all our phone calls!
5. Yes, steel roofing, customers want a product they can count on over time.
6. Fewer employees, tightened up.
Lee J. Brown, CEO
Storm Tight Windows Inc.
Boynton Beach, Fla.
2. It boils down to two things in economic tough times "How well do you market? and how aggressive is your approach" I preach to our entire staff about positive growth and I put the money behind it to make it happen. We've grown every year, and the bottom line has grown as well!!
6. Technology has come along way in the last few years, that has changed my business ten fold! I travel far less due to the fact that my offices are set up through telepresence. I hold meetings, conduct interviews when needed, and can even do sales training from 800 miles away. I’m not talking about Skype, I’m talking about a direct link to my offices from anywhere in the world! I’m in all my offices every day and couldn't do that effectively just a short time ago.
Jim Stringham, owner
South Beloit, Ill.
1. Yes, the business landscape has changed dramatically over the last 5 years. In order to stay competitive, businesses need to stay on top of the advanced technology and offer top of the line products/services. Technology will continue to change the landscape and eco-friendly products will become more available.
2. Those remodelers who are willing to adapt to the ever-changing environment, are able to learn from mistakes and who are consistently looking for different avenues to succeed are the ones who will remain competitive in this economy.
3. The most significant change we have seen is the need to implement the latest technology to improve processes and customer service.
4. In order to recruit and retain qualified staff, we have implemented more of a "corporate", organizational structure which offers better benefits and incentives for employees.
5. We took advantage of the extra capital we had from years past to build a state-of-the- art Corporate Office & Training Facility. This helped us distinguish our business from others by being able to offer hands-on, in-depth training for staff.
6. Our business has changed drastically over the past years. We have a new client relationship system, new in -office technology, evolving organizational structure and an overall strategic goal to remain highly- trained in all areas of our business.
S.E.A. Construction Inc.
San Mateo, Calif.
1. Yes, on every level. Clients knowledge of what and how we do our jobs has increased via the Web, unfortunately so has the amount of confusion about best methods and practices. If the Building business wasn’t a service industry before, it certainly is now. Clients demand, and deserve more attention during both the Design and Build process and exercise a more active approach to the daily running of the job. These changes are permanent, and there will be more on the horizon.
2. The ability to change, quickly, to market demands and conditions. Opportunities are created in times like this, but taking advantage of them requires commitment and patience
3. Reduced opportunity and client focus on price, while still demanding value and quality have brought about leaner companies, reduced margins, a and the need to shop vendors, subs and suppliers vigorously. Reduced overheads are here to stay
4. In depth reviews of all systems, employees and overhead line items. Tearing it all down after 20 years and rebuilding it to be competitive in today’s atmosphere
5. Larger market share due to reduction in sheer numbers of builders, increased awareness of necessity of a systems approach to Design and Build, building closer relationships with design and production team members
6. Leaner, meaner, eyes forward. No looking back at what “was”. More dynamic, flexible and able to change more quickly as the market changes.
Heartwood Construction Inc.
2. I think the remodelers that have grown or prospered are remodelers that have focused on “Quality Clients vs. Quantity Projects”. When the economy fell off, the volume fell off, but good clients are still out there. And if you have a good relationship with those clients, they’ll continue to hire you and quality clients tend to refer to other quality clients.
3. The biggest change is we focus on service. Everyone in our company, from manager to driver, knows our success is based on how we treat the client. All of our staff is courteous, polite, and professional. It’s a simple concept, but finding genuinely personable staff, with skills, in a culture of construction that has historically been “rough around the edges” is the key. We’ve tried to become the mechanic that the homeowner trusts, and always brings their car to.
4. In the last five or six years when we’ve had an opportunity to grow, we focused more on quality subcontractors than adding employees. With creating a good network of subcontractors that you trust it allows us to take on more jobs when we’re busy but does not affect our workforce if things slow down. I think the biggest surprise has been the partnership among other contractors and subcontractors to work together and really build a business network.
5. One of the biggest discovered opportunities that we’ve seen is creating a good network of subcontractor and vendors. Years ago, it was common practice to always shop subcontractors or vendors for the lowest price. About five or six years ago, we decided we wanted to focus on quality and always work with the same businesses. What we found with creating a horizontal business partnership that focused on quality is that quality vendors and subcontractors brought quality clients and projects with them.
All Seasons Construction Inc.
2. We have succeeded by
1) Not believing all the doom & gloom
2) We upped our advertising budget
3) We have stayed in touch with our old customers
4) We do a lot of smaller projects that lead to bigger projects: i.e. small 2 window job that leads to siding job or bath remodel
4. We are doing 0% financing that we thought we would never do.
John Murphy, Owner
6. It feels like we have re-wound to about 1995, shortly after I moved the office out of the house. I am back to sales, design and some project management, which isn’t all bad but I am trying to figure out how to grow smarter by avoiding some pitfalls that I didn’t miss the first time around.
Craig Durosko, founder and chairman
I think with any challenge comes an opportunity. It forces you to change to survive. In that change we learn valuable lessons about ourselves and our companies. I am happy to say Sun Design is a stronger company today from these challenges. We had been open book, by adding forward forecasting it has allowed us to make changes as we see them coming and allows employees to have an impact rather than sharing historical numbers and not be able to effect the outcome. Also, measuring the client and employee experience with the Net Promoter score has allowed us to measure the improvements we are making in those areas.
Joseph A. Giorgi, Jr., CKD, President
Giorgi Kitchens & Designs
2. Presenting clients with good design and pricing the job right has helped us get thru these difficult times. Taking advantage of special offerings by our suppliers and passing them on to the client has been a big advantage in motivating clients to sign.
3. Everyone seems to be looking for a good value or discount the past few years.
5. The market changes made me look at my product offering to better fit our clients’ needs and budgets. As a result of the changes we’ve made it has helped us sign projects we would not have before and also presented us with leads we may not have received without the new products. The key is to make changes that make the most sense for our individual business needs.
Kyle Whalen CGR, President
President BACK Construction Co. Inc.
1. The industry has absolutely changed. I liken it to the changes in the homebuilding industry the last 25 yrs.
2. It is less about the “big” job remodel and more about sustaining a lead flow of much smaller jobs. It is less about the owner and more about the sales force and management team.
3. Our biggest change is our impetus on marketing to sustain a flow of leads for a growing sales force. It is also about finding new products to compliment the ones we have now.
4. We thought we would never partner with Lowes or any big box, but they are definitely a part of the “new reality”.
5. The changing market has made us a much better company, with better planning, marketing and business practices in general. We have a much more predictable business model and are less reactive to the eb and flow of leads, we now control that flow.
6. We are much more like the replacement contractors that we did not look as favorably toward much less desired to emulate.
Stephanie Bullwinkel, CBD
Imperial Kitchens and Baths, Inc.
History is always repeating itself, and we see this as being cyclical just like everything else in this world. There is only one constant and that is change. When we hit the economic downturn, we really thought that recovers were going to be "the thing." People who still needed work done would be looking for ways to economize their money to get more "bang for the buck." But it really wasn't the case, and that surprised us. People were either buying or they were not buying. No one was really looking for a cheaper option.
So, with that being said, we're not really sure what is in store for us in the future. The key to being around to see it, whatever it is, is to be flexible and go with the flow. The jobs we take now are not the jobs we took before things headed south; the internal structure of our company has changed as well. More subcontractors, less staff installers. Follow the money, where are the profits and what changes do we need to do in order to make profits on the projects that are not making us money. We have been analyzing our business more in the past few years than we have ever done before in our four decades of existence.
So many of us have had to cut back on our marketing and advertising, which we have been told is the kiss of death. But with little to no money, the dollar can't stretch as far as we need it to and if we charge more "than the other guy" we'll lose jobs. So, our answer is to make every job our best job, we give our client more than they expect even if it ends up costing us a little. Your client service is your marketing, and that takes us a long way in this day where online reviews can make or break a company. Word of mouth is always the best bet. We may not see a ton of leads coming across our desk, but about 90% of those that we do get buy. We have received more business from our reviews on Angie's List than we've ever seen with a lead generator... and they don't cost us a cent.
New York, N.Y.
1. Our guess is that it's cyclical. We're expanding and very optimistic.
2. It took some retooling of our system but we've been growing slowly and steadily since 2009. We stayed focused on solutions, kept looking for and pursuing leads. It doesn’t hurt to be in a wealthy and highly populated vertical city.
3. Our market hasn't changed much, though there is more competition. People are still buying condos, coops and houses in NYC and want them to suit their needs and style. We make sure they know we have many references and we thoroughly detail the work scope.
4. No. We've stuck to our core competency of doing only all in one remodeling projects, in which we guide the clients in design, product selection and handle every aspect of the project for them.
5. The challenge has been less leads and more competition. The opportunities side is to further distinguish ourselves from the competition by adding more value as an all in one to the extreme, taking care of everything from design and orders to installation and a thorough cleanup. Also, getting projects approved through the building management companies. Communicating this message how convenient we are through our references and marketing.
6. We closed one location and consolidated. We let our project managers go and hired designers who are also project managers. We have a more thorough process, forms, etc.
Josh Shonkwiler, Owner
Platinum Remodeling & Handyman Services
1. I have grown up in the business being a 3rd generation construction company owner and there have allows been recessions and boom years, but I think this previous downturn was much harsher than any I’ve experienced. It was the first downturn while I was behind the wheel, but it was pretty harsh and maybe a much needed reality check on spending and inefficiencies.
In store for the future...depends on how a company positioned themselves during the downturn. If they curled up in their shell like a frightened turtle, then I would say there is a long slow upward climb for them. If they saw others curling up in a shell and recognized the opportunity that presented itself to take the “turtles” market share away from them, then they probably had a great year last year. They also are likely on pace for an even better year this year, are light years ahead of the “turtles” and probably have barely have anything in common with the companies that 4 years ago they considered competition.
2. They were not afraid to take a calculated risk and spent marketing dollars when others refused, or they evolved and adapted to their new reality better and faster than others around them.
3. We put all our marketing dollars into Angie’s List, the first resource for smart, informed, affluent, motivated consumers and we also network with others that are going after the same client for other reasons and can pass referrals to each other for nearly every client we come in contact with.