Most remodelers say they have been surprised by growth, and the group is split on whether growth is necessary to remain healthy and vital.
Has your business growth ever been unmanageable? Why?
"Yes. Last year, the business growth was unmanageable because I had one person leave, had to get rid of another person who was an inappropriate hire, and I had the old syndrome of having my eyes bigger than my stomach."
--Nasse Chachoff, A.C. General Contractors, Cincinnati, Ohio
"We did get to the $750,000 to $1 million range, to the point where it was all our staff could handle. We hired more staff, we grew, but unfortunately the staff we hired wasn't properly screened, or couldn't handle the additional loads, and we had to rearrange and re-manage everything. We lost money just because of mismanagement."
|Have you ever been surprised by growth?|
--Leo Meerman, PROMEER Builders & Remodelers, Sugar Land, Texas
What have you done to avoid being sideswiped by growth again?
"Better planning. And we throw in a lot of 'what if's' early on and try to get answers."
--Mike McKean, McKean Building & Remodeling, East Syracuse, N.Y.
"Keep an accurate sales backlog sheet and monitor my estimators to accurately forecast job starts. In our market, you could have a six-to-10 month track for job start-up. Monitoring that and pushing that, or holding back, can affect start dates and keep growth on a more even keel."
--Terry Wardell, Wardell Builders, Solana Beach, Calif.
"Be very conscious of our crew's capabilities. And during slow times, using some of our capital to hire and train guys so that when we have the desire to grow, we'll have the crew ready. Then, we can initiate our marketing program to bring more jobs in."
--Ed Bartlett, CGR, Edward Bartlett & Sons, West Creek, N.J.
|If growth becomes unmanageable, this is what suffers most:|
|Customer service 54%|
|Product quality 14%|
|Financial controls 14%|
|Employee morale 5%|
|Other * 12%|
|*Includes personal life, your own drive, everything, productivity, and all of the above.|
Do you believe growth in company volume is necessary for a business to remain robust and healthy?
"If you're looking to create something that's going to last, there's a limit to how long you can stagnate. It's necessary to grow and expand the business."
--Leo Meerman, PROMEER Builders & Remodelers, Sugar Land, Texas
"Company volume and profit go hand in hand. But a company can do as much volume as they want, with little profit, and go out of business. So I think the first thing a company needs to do is realize they need to make a profit. Work the budget from the bottom line up. That will tell you what kind of volume you need to do."
--Tom Duncan, E.H. Duncan, The Bath & Kitchen Center, Poland, Ohio
"Until recently, I was trying very hard not to grow. I wanted to stay at a manageable volume. But I'm thinking this has contributed to some burnout. The remedy has been changing focus, adding design without build, and working toward association with the American Institute of Building Design."
--Bill Capp, KooserRun Construction, Somerset, Pa.
|Annual revenue growth of firms surveyed, over the past three years:|
|Up to 3%||17%|
"Volume is the big myth of our industry. It's the thing you brag about in bars and at trade shows. But volume means absolutely nothing. It's the efficiencies of making sure each person can install or inspect or administer the most amount of volume without adding another person to the staff. That's when you start making money."
--Alan Hanbury Jr., CGR, House of Hanbury Builders, Newington, Conn.
|43% of remodelers surveyed prefer steady volume and profit. 36% prefer to grow with fewer jobs of larger volume, and 19% prefer to grow by adding more jobs. 2% had no opinion.|
"I like to evaluate our company compared to others to find out if the problem is strictly within my company or if it's the business climate. If it's internal, I look at price structure -- am I bidding this high? Am I getting my quotes out in a timely manner? If I get them out later, that has an impact on not getting the jobs. I might change my marketing strategy. I might throw something fresh out there, change the look of my advertising."
--Lenny Patera, The Hampton Remodeling Co., Hampton, Conn.
If you restrict growth, how do you do it? Do you turn jobs down? Raise prices?
"We take a more focused look on what our market niche is, then try to focus solely on the niche."
--Dave Dunlap, Consolidated Construction Group, St. Louis
"We turn jobs down. Raising prices can backfire on you, because if you get the job, then you've got to do the work."
--Larry Schaffert, CGR, Schaffert Construction, Myersville, Md.
|Annual profit margin increases, over the past three years:|
|Up to 3%||18%|
"When our job board is full, we raise prices. We also turn down a lot of difficult jobs -- jobs that really have a big learning curve but don't make a lot of money. We're not into building monuments for people; we're into trying to make a profit and doing a wonderful job for our clients."
--Bob Barber, Homestead Remodeling, Lansdale, Pa.
"We would qualify our prospective clients much harder and be more selective about who we do business with."
--Peter Schrader, Schrader and Co., Burnt Hills, N.Y.
|Is revenue growth necessary to remain robust and healthy?|
What planning tools do you use to decide how much to grow? What do you do if you miss those targets?
"Setting a conservative sales goal allows us to cover overhead costs with a reasonable profit. Anything above that sales goal results in added profit."
--John Sylvestre, CR, Sylvestre Construction, Minneapolis
"I track sales, overhead, and waste. If I miss the targets, I find my weakest link."
--Ralph Woods, ABC Construction & Restoration, Youngstown, Ohio
|When you see you're not going to meet your growth goal, what do you do first?||
|Boost sales efforts||35%|
|Use in-house staff||22%|
|Cut operating costs||16%|
|Lay off employees||3%|
|* Includes no specific growth goal, evaluate company compared to business climate.|
|The top three hardest parts of growth:|
|1||having enough qualified field personnel 45%|
|2||having sales keep up with production 16%|
|3||scheduling and production 15%|
|The top growth methods that bring the most pain:|
|1||Expanding the crew size 33%|
|2||Opening a new office 19%|
|3||Increasing the number of jobs 15%|
|4||Expanding territory 12%|
Taking on more difficult, high-end jobs 11%
|6||Taking on different-sized jobs 6%|