Moses showed up at the Baltimore Convention Center Friday in the guise of Alan Hanbury, Jr., co-owner with his brother, Bob Hanbury, of House of Hanbury Builders in Newington, Conn. His seminar – 10 Commandments of Successful Remodelers: How I Went from Practicing to Professional – might not have come from a Biblical mountaintop, but his 32 years as a remodeler certainly gives him a Moses-like air of authority.
“You won’t agree with everything I say,” Hanbury says right at the top. “But I work just outside the seventh poorest city in the country [Hartford, Conn.], so keep that in mind as you listen today.”
Commandent No 1: Make money on everything you do.
For Hanbury, 56, that means charging what he’s worth, with no freebies or giveaways. “I will charge what the local franchise car dealers get,” he says. “If I’m charging $55 per hour and the franchise dealer is getting $105, then I’m leaving $50 on the table.” His no freebies mantra includes not giving away plans or estimates for free. Change orders? Those are profit opportunities.
Under Commandment No. 1, his list of “will nots” includes: not allowing clients to buy products themselves, not giving discounts, not working for cash (it’s not professional, gives the client leverage and legal advantages, and sets up a company for endless audits).
Commandment No. 2: Know your financials.
That means benchmarking against professional goals and getting some basic education when it comes to reading a balance sheet, learning about ratios, keeping track of working capital, and gussying up a pitch if there’s a need for a loan or to prepare for the business to be sold. “I’ll track down my gross profit margin on each job both at close-out and at the end of the month, I’ll track my net profit monthly, and will budget for overhead,” says Hanbury. “I will have revenue targets, matched to the seasonality of the company by month and a yearly target. I will account for slippage in my business plan and pricing. I will make all my employees stewards of my gross profit margin. And, finally, I will take a paycheck weekly, coming out before net profit.”
Cash flow is another important financial to watch. It’s the gas for a business, and it’s crucial to track when you get it and from whom. Also important: planning ahead for cash when it’s not needed. In many areas of the country, the time to get a line of credit was 12 months ago. Now is too late.
Commandment No. 3: You can’t be all things to everyone. Not everyone is my client.
It’s important to choose by job type, client personality, job profitability – even by neighborhood and demographics. Stay away from doing work for family and friends, and don’t work just for referrals. Keep staff capability in mind. Hanbury’s bottom line: Choose to be choosey.
Commandment No. 4: Don’t go it alone.
Being a Long Ranger doesn’t work in the long run. Join associations, trade groups, and local networking groups. Find a mentor and avail yourself of professional advisers (including accountants and coaches). Get all the trade magazines that you can; read them and save them.
Commandment No. 5: Plan for your success.
Create a business plain that contains what Hanbury calls “smart” goals. This means be specific and list measurable goals that are realistic, action-oriented, and time-bound.
Commandment No. 6: Plan for the unexpected.
Create a budget for both a great year and a “lesser” year. Prioritize for extra spending (great year) as well as expenditures that could be cut (lesser year). Publicize any potential “hit list” with staff. And be sure to have six months of overhead coverage built in.
Commandment No. 7: Keep score.
There’s no such thing as too much information here. For Hanbury, keeping score means tracking leads (by source, type of job, address, time from first visit to signed contract) and by profitability on all these factors. It means job-costing everything, including labor and labor burden, subcontractors, and the owner’s time. Make sure everyone on the payroll fills out a time card. Audit jobs in progress, and try to rescue them before it’s too late. Dissect jobs upon closeout. Track productivity of leads, carpenters against budgets, and leads/carpenters against each other.
Commandment No. 8: Delegate, train, and plan for your successor.
Train in house for safety as well as company culture. Train others to do those things that you do poorly or give no priority. Trust your gut on hires, but institute a system of checks and balances for new employees. Have an exit strategy (aka, a way to “get out alive”).
Commandment No. 9: Aim high.
Recognize that mistakes will be made (consider Murphy to be your partner). Have someone else look over your math, markup, field conditions, hidden conditions, and other assumptions before giving a price. Don’t be afraid to use variable markups to leverage your skills in pricing. Remember that estimates don’t make you money, they just protect profits. Finally, be sure to account for slippage.
Commandment No. 10: Don’t accept mediocrity; create cheerleaders.
Vow to hire the best you can afford and treat them fairly. Use products that align with your company’s philosophy and pricing. Hold subcontractors responsible to follow job site rules and do their own cleanup. Fire any malingerers, even those that do quality work. Always under-promise and over-perform. Finally, leave the job site as clean as possible. Clients take notice of that much more than a perfect crown-molding seam.