Dan Bawden
Legal Eagle Contractors
Bellaire, Texas
Big50 1996

Our 2009 budget adjustments include:

  • Increasing the cost of everything to cover gas prices. There are obvious increases via suppliers and subs, but I also need to add for gas cost increase by giving gas allowances to myself and my staff. I haven’t decided whether to build the extra cost invisibly into my estimates or add a “fuel surcharge” and show a cost added to the job as a line item. I’ll probably do both!

  • Downsizing. I am closing and selling my beloved showroom and moving my office back to my home, where I built second-floor office space. My overhead will be much lower, so cash flow will be better and I’ll be able to give my staff much-needed raises.

  • Comparing subcontractor prices. I plan to get a couple of prices from key subcontractors instead of just taking my regular guy’s bid. I have a feeling I am overpaying. I have been trusting my trade partners’ prices for some time without checking the market rates.

Glen Miracle
NVS Kitchen & Bath
Manassas, Va.
Big50 2008

One expense that will change for sure will be our marketing budget. We will be forced to spend more of our resources attracting new clients. The more potential clients you can sit in front of to tell your story to, the more opportunities to sell them on hyour company.

Paying for increased marketing expenses won’t be as easy. You can’t pass it onto your customers, who are already hard to find and even harder to get off the fence to make decisions. We have been looking at labor costs on our jobs, and believe we can do more with less. We have to look hard at total labor hours figured into projects, and then put the pressure on our production department to get the jobs done within budget. So far this year, doing this has kept our numbers where they should be.

Our fuel expenses are up 26% over last year, and our health care is up 20%. Fuel might level out in ’09, but health care probably won’t. We have been looking hard at every position, and if we feel we can do without it, we will cut it.

The good news is that when the market does turn around, we will be lean and mean. We feel we will keep our share of the remodeling pie and be even more profitable in 2009.

Max Isley
Hampton Kitchens of Raleigh
Wake Forest, N.C.
Big50 2000

I expect to see business increase substantially in 2009 and am budgeting accordingly. We will increase our marketing budget and expect some of that to come from increased business and some from reserves. (Reserves! Now there’s a word you don’t often see in this business!) The reserves will then be replenished from higher profits.

Travel and vehicle expenses will need to rise, due to oil costs, but these can be offset by a 2% increase in overall pricing. We also will stay on top of material costs for job estimating, since they can change so suddenly.

I will continue to outsource every function I possibly can to reduce my risks and overhead. The fewer overhead expenses I have, and the more I can convert them to job costs, the higher my profits.

Jan Jacome
Crossroads Contracting
Londonderry, N.H.
Big50 2007

It’s hard to say [what will happen in 2009], but I have made some budget changes in the past few months. I have changed our medical insurance policy from covering each employee’s entire family after a three-month waiting period to covering the employee only.

Our bonus plan used to be based on individual jobs, but the new plan will pay bonuses on the net profit of all jobs per quarter.

Marketing changes include reducing the size of our Yellow Page ad and using that money for direct mail post cards.

Rick Caccavello
Central Kitchen & Bath
Winter Park, Fla.
Big50 2007

We will be making subtle strategic changes to our budget. I will continue to be the eternal optimist who lives under the philosophy of “Expect the best, but always prepare for the worst.” With that in mind, one of the most important elements of our budget has always been to feed our reserve account (interest-bearing, of course). This “rainy day” strategy has put us in a position where we can support the business for six to eight months if not one client signs a contract with us.

We have also branded our business through steady marketing even when we could not possibly take on any more business. That strategy will now allow us to modify our commitments in a way that adds up to a significant savings without sacrificing our exposure. We will move to smaller ad spaces, in some instances, and reduce the frequency in others. We will also discuss the option of moving to lower-level sponsorships of events.

I have also made some payroll reductions. I decided not to replace a high-level administrative employee who retired. Other staff members have absorbed those responsibilities very well, and I will continue to monitor this as business gets stronger. I also made the difficult decision to lay off a design assistant. During strong sales times, this position was a necessity, but as things slowed it became a luxury.

The positive side to having more time on our hands is the ability to step back and take a good look at ourselves, recognize the things that were a hindrance to us performing at our best, and take the necessary steps to improve them.

John Murphy
Murphy Bros.
Big50 2007

It seems that the building slump and falling home values hit the Midwest before much of the rest of the country. As a result, we had to make some significant cuts for our 2008 budget and are now evaluating those results and other changes to consider for 2009. Our right-sizing for 2008 included letting go of excess staff, scaling back our office space and renting out the extra space, and looking hard at every line item in our budget to see if it was absolutely necessary.

One area where we made a significant budget reduction was in marketing, where our budget had been about 2.5% of sales volume. We decided to reevaluate the data from different initiatives over the last eight to 10 years.

We found that demographically targeted direct mail that worked well six to seven years ago performed dismally in 2006 and ’07, so we removed this from the budget. We also stopped doing “branding” approaches that involved any broadcast media, and we reduced our phone book advertising to just a bold-line listing.

What we have focused on is home shows, mailings to our own client database, and improving our Web presence.

As a result: After reducing our marketing budget by 40% for 2008, we had 293 leads for the first six months of 2008. At the same time in 2007, it was 277 leads. Average job size is down, but we are holding our own.

Travel is another budget item that fell on the axe until we have a three-to-four-month backlog in the pipeline. It has been a struggle to keep a two-month backlog so far.

Chuck Gabbert
C.T. Gabbert Remodeling and Construction/DreamMaker Bath & Kitchen
Peoria, Ill.
Big50 2006

We anticipate increasing our marketing portion of the budget by around 20%. We also are continuing to remodel and replace older models in our showroom. We feel that we need to stay up to date with cutting-edge products and more green remodeling options. Since we’re spending the money to update inside and out, it’s only fitting that we tell everyone about it to drive more business through our showroom.

We are also budgeting close to 25% in 2009 for additional educational training. We will be paying for some of this with retained earnings, and the balance will be covered with 2009 projected growth. We are a pay-as-you-go company, so we will need to keep a close eye on our numbers, but we feel confident of our projection for 16% growth.

Our production crews are maturing into a very efficient team and adding daughter, Kari, to our design/sales team has boosted productivity in that sector by leaps and bounds.