In an ongoing effort to raise the level of professionalism in and establish benchmarks for the industry, REMODELING surveys remodeling company owners every two years. While the editors appreciate the efforts of those who participated in this year’s survey, the sample was too small to deliver results that would be statistically significant.

In lieu of research data, we instead offer profiles of four successful full-service remodelers from different parts of the country and with annual volumes ranging from $500,000 to $7 million. It is our hope that readers will use the figures presented here to get a baseline against which they can evaluate their own companies.

Everything Counts

“Itís important to know what youíre spending on everything in your business,” Strock Enterprisesí vice president Trey Strock says. “The hidden costs can eat you alive.”
Stacy Pearsall Everything Counts “Itís important to know what youíre spending on everything in your business,” Strock Enterprisesí vice president Trey Strock says. “The hidden costs can eat you alive.”

Trey Strock

Strock Enterprises Design & Remodel , Charleston, S.C.

Strock Enterprises is a family-owned business that, according to vice president Trey Strock, “creates alliances with trade partners and gets the best people in each field” to work with it. Company volume has been relatively flat the past several years. “It’s important to know what you’re spending on everything in your business. The hidden costs can just eat you alive,” says Strock who is in charge of sales, marketing, estimating, and budgeting.

Marketing: 1.3%
SEDR decreased its spending on marketing from close to 2% to about 1.3% ($14,000), but Strock says it’s “a lot more direct.” The company does more home shows, invites clients out to eat, and takes part in local charity organizations to get its name out. Strock is reevaluating the Google AdWords http://www.google.com/adwords program — “We spend $400 a month ... and don’t see a lot of return” — but has ramped up his social media marketing, especially on Facebook. “We track trends with a Facebook Insights program that comes free with a commercial Facebook account,” he says.

Leads: 20 per month
Leads have declined slightly since the downturn, and Strock says the company is “working harder to get each lead and [the jobs are] a lot smaller.” He figures his cost per lead is about $500, which includes the website, plus all expenses for brochures, home shows, newsletters, meals, photography, and weekly letters to new homeowners.

The best lead source is home shows. “We put a lot of work into it and our booth is different from most,” with large-format professional photography, Strock says.

Insurance: 3%
SEDR holds commercial, auto, major medical, environmental, and bond insurance. Strock says workers’ compensation and general liability costs have gone down this year.

Technology: 0.19%
SEDR uses a cloud-based contact management system called Highrise. Once a job is secured the company switches to Basecamp  calendar- and task-based project management software.

Office: 2.9%
Expenses include property tax, phone, supplies, repairs, and pest control. Strock owns a building through another company and rents it back to SEDR. SEDR sends as many as 60 letters per week, so to lower printing costs, the company invested in a professional-quality printer.

Warranty work: 0.39%
On paper the company has a one-year warranty, but “in reality, if someone calls us with something years later that is something we should have done better, we’re not going to charge them. We just fix it,” Strock says.

28%–35%: Your field labor burden will likely be in this range. About 18% of that will be for insurance; the rest will be for paid vacation, education, vehicle expenses, etc. As for health insurance, “the ability to offer it isn’t tied to volume,” REMODELING contributor and consultant Judith Miller says, “but rather when you become the type of company that can consistently raise your gross profits every six months. That is hard to do right now.”

Anthony Slabaugh

Anthony Slabaugh Remodeling & Design, Stow, Ohio

Anthony Slabaugh said “No” to the recession. Though times were lean, he says, “The only thing we cut back on was debt.” In the past few years, Slabaugh has moved from a home office to a lease-to-buy space, taken on a line of credit, paid off his trucks, opened a 2,000-square-foot design center, and increased marketing expenditures. The money he spent on marketing is showing results. In 2009 he paid off the credit line and says he’s gaining community recognition.

Overhead: 16%
Slabaugh’s overhead expenses (without his salary) were about 16% of his volume in 2010. Expenses went up as he moved into a new space and invested in a design center. He will hire a part-time marketing manager and production manager in 2012 but projects higher revenue.

Marketing: 5%
Slabaugh increased his marketing budget from 3.5% in 2009 to 5% in 2010. “Rather than hunker down ... I decided to be more aggressive,” Slabaugh says.

He also re-focused the money he spent. Slabaugh, whose business in Stow is 30 miles south of Cleveland, used to advertise in the surrounding 10 cities. Now he markets only in Hudson, a relatively upscale town closer to Stow; he saves on gas and can better service clients.

His best lead sources include Angie’s List; local events such as home shows and the Taste of Hudson; a letter and e-newsletter follow-up to the local “Welcome Basket” program for new home buyers; and networking through the Chamber of Commerce.

Leads: 15 per month
In 2010 the company had 179 leads and 31 job completions. “We had record years in 2009 and 2010,” Slabaugh says. This year he’s on pace for fewer but larger jobs than in 2010. Slabaugh doesn’t track costs per lead, but attributes the success to his new design center/showroom.

Insurance: 2%
In 2009 Slabaugh could finally afford health insurance for his employees. He spent a total of $9,500 for all insurances including auto, liability, and medical. In 2011 that figure is $14,000.

Technology: 1%
This money went toward computer updates and software, especially for the design center. He bought an iPad for his own use and plans to buy them for his staff this year. Each employee has a smartphone.

Office: 0.66%
In 2010 Slabaugh had a home office and spent about $3,300 on supplies, Internet, phone, postage, etc. For 2011, Slabaugh has been leasing with an option to buy. Although his overhead has risen, Slabaugh says that moving was important for employee morale. “I wanted to make this a more desirable place to work,” he says.