You install, or maybe restore, a lot of windows. Is it time to break that out into a separate business, connected to but formally detached from your general remodeling company?
If the business you're thinking about entering is window installation, a key fact to consider is whether or not you can buy windows at a dealer rate.
Three years ago, Jason Larson, owner of Lars Construction, a San Diego design/build company, decided to create a division dedicated solely to installing vinyl windows.
Why a division? To gain credibility with suppliers. "Most window manufacturers won't open you up as a national dealer if you're a general contractor," Larson points out. "Their fear is that every contractor in town would be a dealer, bypassing their dealer network." In fact, Larson says a "ton of window vendors" were initially reluctant to deal with him, dismissing him as "a contractor playing window man."
He overcame that by establishing a separate corporate entity, with its own license, insurance, and office. Last year the company, called JCor, did a little more than $1 million in volume, with two full-time salespeople operating two mobile showrooms.
Leads, leads, leads
Another consideration is where business will come from. When fast-growing Bartelt/Filo Design/Build Remodeling formed an exteriors division to consolidate roofing, siding, window, and gutter jobs, the company was able to feed its new division window leads (manager Mark Fennema estimates windows are 20% of volume) partly by piggy-backing on Bartelt/Filo marketing but also by being listed as a recommended window installer on the Marvin Windows Web site.
Bill Connor's Connor & Co. Quality Builders, in Indiana, includes general construction, handyman, and design/build divisions in addition to the window restoration division Connor set up in 2002. A recent job, for instance, involved restoring 800 steel windows in a Princeton University dormitory. The company picked up the windows and transported them to Indiana, where all 800 units were subjected to a multi-step process that involved sandblasting, priming, painting, and reglazing.
Each company division, Connor says, is its own profit center. The advantages are financial control and marketing, much of which is done via a company Web site.
"It allows us to monitor job costs and watch sales in that division," Connor says. The overall strategy of divisionalizing, he adds, "gives us different margin centers and allows us to be flexible and resilient."