Remodelers always try to do the right thing by their clients and employees. However, with today’s economic outlook, owners need to be prepared to make tough decisions in order to survive. When the time comes to make changes, don’t hesitate or ignore the situation. Create an action list now, so you’re prepared. The list should include some of these points:
Make sales your priority. Bring in any and all sales that are in your field of expertise.
Calculate the lowest price you can charge for projects.
Cut your overhead. Review every aspect of overhead. For example, if you’re renting office space, consider moving the office to your home. If you can’t break the lease, ask the landlord to lower the monthly rent.
Decrease your labor expense. Consider dropping your hourly rate by 15% or lowering the percentage you pay for medical coverage. Most employees will understand — they want to keep their jobs.
Consider having subcontractors do more of your work. When you subcontract, you have a fixed cost. There is currently a large pool of good subs. You have a chance to upgrade and be more competitive.
Negotiate lower prices with your suppliers and subcontractors or go to other suppliers or subs that offer lower material pricing or rates.
Bid the job exactly as requested by the homeowner. Offer suggestions only if they ask for them. Provide options in a separate price list.
Create a list of which positions in the company will be terminated when, and in what order. Consider sharing your list with at least your management team if not the entire company.
Realize that you are going to go through the worst business experience that you have ever been through. The only way to survive is to react in a timely manner.
—Les Cunningham is president of Business Networks, a peer-review organization for the remodeling and insurance restoration industries. les@businessnetworks.com.