Homeowners remodel for a variety of reasons. They might need more room for an addition to the family. They might see something they like at a neighbor's home, or on television, or in a magazine, and decide they want it, too. They might just want a change of scenery. And parts of the house — roofing, windows, and siding, for example — simply wear out and need replacing. Taken together, all of the reasons homeowners choose to remodel make for steady demand for a wide variety of remodeling services.
The fact is, however, that most remodelers don't take full advantage of that situation. They limit themselves to larger jobs, such as additions, bathrooms, kitchens, and whole-house remodels, leaving the small replacement projects to specialty contractors. In many cases, it makes sense to stick to what you know. But for some companies, specialty work represents a lost opportunity that could well be worth considering.
Fish In A Barrel “If you've already done a [project] for a homeowner, you have their trust,” says Rick Grosso, a consultant to the home improvement industry who specializes in selling and marketing. “To not be able to go back and re-market to those people is shooting yourself in the foot and admiring your aim.”
Jason Larson, president of Lars Construction, in La Mesa, Calif., started Jacor Door & Window after receiving a number of calls about replacement windows. “We did it to diversify a little bit, to expand,” he says. “If I'm going to buy windows and give profits to a window distributor, I might as well give that profit to myself.”
Indeed, adding a window or siding division can be a real income generator. “If you look at the 100 [biggest] remodelers in the country, many of those folks are single-line,” says Jimmy Waller, vice president of development at Waller Group, a Lakeland, Fla., company that has branched out from full-service remodeling to roofing, emergency services, and commercial real estate, all in the last decade. “There's money to be made.”
Waller started its first specialty division — Waller Roofing — for a different reason. “If Waller Construction got 10 complaints, eight of them would be about roofing,” Waller says. Dissatisfied with most of the outside vendors available, they wanted to do their roofing in-house. Waller recommends taking a hard look at your company and identifying which trades you tend to have problems with, and investigating those as possible divisions within your company.
Be forewarned, however, that it's not something you can just do. “Before you get into it, ask yourself if it's really for you,” says Sal Ferro, president of Alure Home Improvement, in East Meadow, N.Y. “It can be quite a culture change.” Alure has lived by the theory that the best way to grow is to “add products and services and leverage your existing customer base,” according to Ferro. The company, which started as a painting company, has followed an aggressive growth strategy, rapidly adding a kitchen and bath division, an Owens Corning Basement Finishing System franchise, a sunroom division, and a division for roofing, siding, and window replacement. That type of growth isn't for everyone, of course, and a company looking to grow slowly or maintain a steady volume may not want to take on a single line.
Ways To Expand There are several ways to add a division to your business, each with its own pros and cons. One is through the purchase of a franchise. The advantages of this method are obvious: the systems are proven and have been established for you, and you are trained in how to use them. The downside is that there are royalty fees you must pay, and there is less wiggle room to adapt the franchise to your existing processes. Additionally, you or your geographic area simply might not be a desirable candidate for the franchisor, or there may already be a franchise in your territory.
A second option is to purchase an existing business. Waller Construction bought what would become its roofing division from a roofer in a nearby county who had grown weary of the business side of things. This method can bring with it an established clientele as well as years of industry knowledge, but it also means a fair bit of undoing or revamping systems that have been in place in the new company for years. Plus, it may be tough to find a company worth buying, or one that is willing to sell.
You can also start a single-line business from scratch, as Larson did. The major advantage here is that everything is under your control. The downside is that all that control brings with it a significant of amount of work, some of it unfamiliar, and none of it will have been done for you ahead of time.