In 2003, Stephen Nash’s company, Upscale Remodeling, in Freeville, N.Y., was in dire straits without leads and with significant debt. Rather than filing for bankruptcy, Nash made some tough decisions that helped his business survive. Fast forward a few years to the recession. When he noticed a drop in sales leads in June 2009, Nash immediately made changes based on lessons he learned from his situation in 2003.
In 2003, Nash had no leads, no projects, and was not doing any marketing. In 2009, faced with a similar situation, he knew he had to take action. Though he started off thinking that he “would not participate in the recession,” his clients were not of the same mindset. “People in this community worried about their money and were tighter with it,” Nash says.
He knew he would have to react quickly, something he had not done in 2003. He’d also learned to tackle the tough times on several fronts. “I did not just trust one solution. [Instead, I] put a lot of things in place,” Nash says.
Process and Practice
Though he tracked project budgets, Nash also began scrutinizing them more carefully. “My recovery was based on increasing our margins because we were going to have lower volume,” he says. “I had to get to another level of focus.”
Based on his reviews, Nash could see that one carpenter’s jobs had consistent budget slippage. This person also had an attitude that was affecting company morale, so Nash let him go. Now, the company’s jobs are all within 1% to 2% of budget. The remodeler also had to lay off his office manager, taking on much of her work himself and making do with a part-time bookkeeper.
Though he found places to cut overhead, Nash did not want to cut benefits for his remaining employees. He will maintain the company’s health insurance plan and truck allowance as long as he can continue to increase sales.
Nash spoke to his team about the tough economy, and he continues to emphasize the importance of meeting project budgets. He has asked his production manager to play a major role in meeting budgets and efficiently scheduling jobs.
With just two employees in the field, Nash relies more on subcontractors, which he says suits his company size. In addition, he has increased the services his company offers by turning to subcontractors for additional requests from his clients. “[Homeowners] are willing to pay us to manage [the project] even though we are making a margin on those subs,” he says.
It took a while before Upscale Remodeling realized the results of the changes Nash made. In the meantime, the company was carrying vendor debt of $125,000 that was over 90 days old. Nash learned from his situation in 2003 not to avoid the issue. He maintained communication with vendors about his payment plans and, as of September, has cleared those debts. “It’s incredibly liberating,” he says.
Watching his margins and overhead was a big step, but Nash says he also had to make sure he had leads. He began focusing on consumer education, writing a 33-page consumer awareness guide. He includes the guide in a positioning package he sends to potential clients before their appointment. The package also contains a small portfolio of project photos, references, as well as the company’s insurance certificate and Better Business Bureau report. “It landed us three big jobs I don’t think we would have gotten had I not had the positioning package,” the remodeler says.
Though he worries about maintaining prices and margins in a recession, Nash says his previous situation taught him that “cutting prices is no way to stay in business.” The other side of this equation was selling value to potential clients. “When someone does not buy your price, you don’t have a price problem, you have a value problem,” Nash says. “You haven’t convinced that person that it’s worth that much more to go with you.” The positioning package helps him differentiate his company.
For a copy of Nash’s Excel spreadsheet to track vendor payments, his production plan, and what he includes in his positioning package, visit SteveNashBlog.com.
—Nina Patel, senior editor, REMODELING.