The remodeling economy in most of the country is sluggish and weak. Remodelers are working harder for less. Successful years are still possible, but only for those who plan carefully and work their plan.
Could it be worse? Absolutely. Imagine being in Michigan, where the job loss streak is the longest since the Great Depression. The state has endured six straight years of job losses — 336,000 so far — with no end in sight. Unemployment is projected to rise this year to 7.7%, the highest rate since 1992. And the state's major industry remains in deep decline, with a pessimistic ripple running through the entire economy.
Meantime, competition for Michigan remodelers is streaming in from two directions: new-home builders, which typically charge inadequate new-home markups for remodeling work; and newly unemployed “handyman” providers.
MAKING IT I've watched a number of our Michigan-based remodeler clients with trepidation, only to be amazed by their resiliency. They're working hard but making it. By focusing on the basics, they are pulling out solid years yielding good net profits. What can remodelers in the rest of the country learn from them, given the uncertain outcome of this downturn with a war, a wavering stock market, and this subprime-whatever-it-means mess?
Our Michigan advisers are Paul LaRoe of LaRoe Remodeling in Ann Arbor, Kirk Morris of Morris Builders in Rockford, and Ben Thompson of Thompson Remodeling in Grand Rapids. They offer these six key gems of advice.
It's about attitude. “I realized that complaining would give me neither comfort nor more business,” Thompson says. “As a $2 million company with a 1:6 raw close ratio, I know that I just need the phone to ring 300 times. I don't need the whole economy to rebound.” This attitude adjustment includes all staff. “Negativity will kill your business faster than the mythical power of the economy,” Thompson predicts. “If an employee becomes negative at the lack of success, it is time for them to leave.”
Morris agrees. He says he and his staff carry “a strong and positive mental state of mind from our first contact, to the lead carpenter. This installs a confidence factor for our customers that is unwavering.”
Embrace change. “We changed and adapted,” LaRoe says. “We could no longer continue to do business as we used to. It was either change and adapt, or be gone.”
Master guerilla marketing. All three remodelers emphasize the critical role of marketing. For Morris, this means calling on the local network he has developed over the years. LaRoe stresses becoming more focused on reaching “ideal clients and the projects that are most likely to be done during the downturn” — in his market, that's bathrooms. Thompson is networking and “rubbing bellies” with every past client.
Streamline sales. Don't be tempted to massage every possible prospect, LaRoe advises. “Pre-screening prospective clients better before scheduling an appointment is a must,” he says. “Work on improving your sales skills and get to ‘no' faster.”
Increase efficiency. “Being overstaffed creates an environment of malaise and waste,” Thompson says. “I need everyone on our team so busy that we don't have time to be depressed.” LaRoe advises reducing staffing to those “who can do more with less and are self-motivated.” Price is playing a greater role in how homeowners select contractors, so review your production systems.
Take care of yourself. “Get on a workout routine,” Thompson advises. “Work out to burn off the stress [and] the extra calories of stress eating.”
Finally, LaRoe says: “There is no magic pill for surviving a major downturn in your market.” In his experience, staying above water has hinged on “the willingness to change, the desire to continually work at making incremental improvements, and a strong will to never give up.”
— Linda Case is founder of Remodelers Advantage in Laurel, Md., a company providing business solutions through a network of experts and peers. 301.490.5260; email@example.com.