A few years ago, Rob Mathews, president of Curb Appeal Remodeling in Dallas, had an awakening moment — he realized he couldn't meet payroll. “I'd been losing money for some time and just couldn't seem to turn it around,” he says. The problem? “Horrible slippage. My field employees could not bring in a job on budget,” he says. “We had meetings before the job was sold to review the numbers, and every time I'd ask them, ‘Can we do it?' And every time, they said, ‘Yes.'” But they didn't. Mathews tried a variety of tactics to help — a bonus program, pre-construction reviews, job completion meetings — but nothing helped. So when he realized the depth of the company's financial problems, he let everyone go and made a vow to start over differently.
SUBCONTRACTORS RULE This time, he chose to use subcontractors for the production work. “The company turned around almost overnight,” he says. “By working with subs, I have all of the costs up front so we have a sense of security with the sales price we present.”
Wright Marshall, president of Revival Construction, in Atlanta, made a similar change, but for a different reason. “We always wanted to do fewer but larger projects,” he says. “But it was hard to find and keep enough good field staff to handle the very large projects we began to attract.” So Revival Construction began using subs to supplement its existing staff and allow the company to grow its volume. “Not only can we hire who we need when we need them, but I no longer have the management headaches that often come with employees,” Wright says. “In addition, we're finding that by using subs, we're getting more accurate numbers because we rarely coded our own expenses as accurately as the subcontractors do.”
EMPLOYEES RULE Bob Sturgeon went in exactly the opposite direction. Six years ago, the president of Westside Remodeling, in Thousand Oaks, Calif., was using subcontractors but now he uses employees for all carpentry needs. “With the subcontractors we were using, the customer service wasn't up to our standards,” Sturgeon says. “I found them too hard to manage or to train to handle the job the way we wanted. Our customer ratings were going steadily down.” Because they rely so heavily on referral leads and repeat business, it was critical that Westside Remodeling leave its customers delighted with the work.
“Now that we're using our own employees, everyone knows what's expected of them and every job gets glowing reviews,” he says. “And we're able to charge more for our work because our clients appreciate the level of service they receive. This means that we can pay our people better than the average, which helps us hire and retain top people.”
Either system can work for a remodeling company. Before making a move, think through the goals for your company. Chances are that the best route will become clear. —Victoria Downing is president of Remodelers Advantage, a national consulting firm specializing in the challenges of running a remodeling company, and home of Remodelers Advantage Roundtables. 301.490.5620; www.remodelersadvantage.com.