The New Reality

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 experienced.

Jobs are smaller. Clients are more demanding and more price-conscious than ever and come with a new set of expectations, a phenomenon driven in part by social media and the sheer amount of information available online. Competition is more ruthless than ever. Remodelers are doing things and taking on jobs they never thought they would just to survive.

And yet, those who have weathered this storm—and others before it—remain optimistic and ready to meet challenges, armed in part with traditional values and principles but willing to apply those philosophies to a new set of circumstances.

Also, 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 can be shared in these pages.

Following are a few samples of what this year’s Top 500 remodelers are thinking:

Q:Has the remodeling business changed dramatically during 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?

I believe all small businesses have 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. 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.

—Craig Huseby, Huseby Homes LLC, Nashville, Tenn., No. 343

With any business, the parameters of success change with time, and businesses need to adjust accordingly to ensure survival in their particular field. 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 if you continue to satisfy your clients while staying dynamic in your industry, the changing economy will have little to no effect on your company’s overall success or failure.

—Robert Williams, Olneya Restoration Group, St. Louis, No. 158

There is no question 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 ball game. Consumer confidence in real estate has dropped to unprecedented lows. Now, even if they have money, many people don’t believe their home is the safe haven they once thought it was. This is a complete paradigm shift that has been overlooked by many.

—Paul L. Sullivan, The Sullivan Co. Inc., Newton, Mass., No. 404

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 used 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.

—Gary Volpe, Volpe Enterprises Inc., Norristown, Pa., No. 171

Q: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?

The difference is 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 doesn’t mean you stop advertising. Allocated dollars for advertising must be used—just used more wisely and differently from before.

—Jim Deen, Kitchen Kraft, Columbus, Ohio, No. 353

They haven’t given up. They haven’t maintained the 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.

—Tim Brown, Rain Gutter Specialties, South Jordan, Utah, No. 382

I can’t count the number of articles I’ve read and seminars 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. The last couple of years have been very successful, but we have had to completely shake up the way we have always done business.

—Jeff Happe, Happe & Sons Construction Inc., Evansville, Ind., No. 270

Q:What is the one most significant change in the market and/or how you do business?

The average project size is decreasing significantly. We are running a greater number of smaller-sized projects concurrently. We have five 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 is our greatest challenge in this phase of our growth.

—Jeremy Steinruck, Axis Construction, Wichita Falls, Texas, No. 498

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.

—Leah Rattray, Southwest Exteriors, San Antonio, No. 242

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 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 competitive marketplace.

–Mark Gandy, Bath, Kitchen and Tile Center Lewes, Harbeson, Del., No. 195

Q:In response to changing conditions, have you done something in your business, good or bad, that you thought you would never do?

Last November I let go of two 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 reorganize without regard to my relationships. It was heartbreaking but necessary.

—Raymond J. Wiese, The Wiese Co. Inc., Sherborn, Mass., No. 423

 

I have let outside salespeople go and started running the 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 ensure the proper margins are in every project we build this year.

—Joey Gates, The Shower Shop, Rowlett, Texas, No. 430

Q: Have changing market conditions presented you with opportunities? If so, what were they?

The only opportunities we have had are not related to the market at all. With the slowdown, we have been working on our systems and fine-tuning some of the data entry and analysis. We have seen job sizes shrink considerably from our “normal” averages.

—John Friswell, CCI Renovations, North Vancouver, B.C., Canada, No. 237

We have taken over key personnel from four different companies that were put out of business because of the economic climate.

—Craig Ceccarelli, HomeSpec Advanced Basement, Ypsilanti, Mich., No. 406

Q: How is your business different than it was several years ago?

I like to focus on the fact that we are operating at a much more manageable pace in the office and the field. While there is the constant stress of not having the six- to nine-month backlog that we were used to, there is the benefit that we aren’t running at 110 mph trying to meet all the client needs associated with multiple high-end projects. Although we have a larger number of jobs with smaller selling prices, we have fewer details in need of attention. 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 have not. We still love what we do!

—Janeen S. Welsh, Welsh Construction Inc., Lexington, Va., No. 364

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