In 2007, Synergy Builders, in West Chicago, Ill., was flying high. The company had completed 120 basement renovations at a healthy gross profit margin. Then the recession hit. Revenue plunged. “That year, we completed only 12 jobs—10% of the previous year,” owner John Habermaier says. “And our margins on those jobs were very thin.” But this story, unlike others to come out of the recent recession, has a happy ending. Habermaier and his partner Steve Taylor credit their peer review group for getting them back on their feet. Here’s how they did it:
The group challenged the pair to think like businesspeople, not contractors. “[We had to] commit to learning our financial numbers inside and out,” Habermaier says. “Not only did we understand them but we learned how to explain them to others so that we could receive the best input on our issues.” Knowing this information helped them recognize how precarious their financial position was.
Then Habermaier had what he calls a “crucial conversation” with group facilitator, Judith Miller, an industry consultant (and a REMODELING columnist) with a focus on forensic accounting. She told them that they didn’t have enough cash reserves to get through the time without making significant changes. Even then, they might not be able to get through it at all. She encouraged them to move quickly and stretch out their available money for as long as possible. And, if they were “forced to crash and burn,” to do it as gracefully as possible by avoiding huge debt, staying current on bills, and making sure that their clients would be taken care of.
Habermaier laid off employees, cut expenses to bare minimums, and decided to diversify to attract more of the types of projects that homeowners were likely to buy in tighter economic times. The money they saved by cutting expenses was invested in positioning the company for the future, broadening their offerings, and rebranding. “It took us six months to completely rebrand the company and begin to see the results in the kinds of leads that were coming in,” Habermaier says.
He and Taylor also revamped their management techniques after visiting Zingerman’s Delicatessen in Ann Arbor, Mich., with their peer group. “We were very impressed with their management paradigm and their ability to spread responsibility and accountability down to their very front line folks,” Habermaier says.
Their gamble paid off. Today, Habermaier says, “The main reason we survived was because of our peer group. We are phenomenally well-positioned.” Revenue is now double what it was in 2007 and margins are fantastic. —Victoria Downing is president of Remodelers Advantage, an organization dedicated to helping remodelers build high-performance, profitable businesses, and home of the industry’s largest peer organization, Remodelers Advantage Roundtables.