FEATURES

  • The Liability Insurance Crisis

    A decade of soft pricing, extravagant claims, and investment losses has the insurance industry scrambling to recoup profits, and residential construction is the first casualty.We call it the 'battlefield,'" says Susan Brodahl, a Washington-state insurance broker, confirming reports that remodelers...

     
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    Mediterranean Makeovers

    Although the construction and layout of these houses, known as Mediterranean or Spanish style, are most suited to the climates of southern California, Florida, Texas, and Arizona, the style has since gained popularity across the country.The design includes stucco siding, clay roof tile, wrought...

     

Before and After

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    Returning a neglected Mediterranean-style home to its former splendor

    After a year's worth of planning, McDaniel proposed renovating the three-bedroom, 3,700-square-foot building into a fully landscaped 10,000-square-foot compound that would include the house, restored as much as possible to its original condition, with an addition atop a porte cochere (a roofed...

     
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    Before+After: Southern Comfort

    Atlanta remodeler Danny Feig-Sandoval started working on this house in 1996 and hasn't left. Over the years, the owner of Small Carpenters At Large and his crew have worked on the kitchen, baths, study, attic, and garage. "I think there's only one bedroom in the house we haven't touched," he says.

     
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    Before+After: On A Tight Rein

    Costs were cut on this Palo Alto kitchen remodel. But in the end, not a lot of sacrifices had to be made.

     

Cost vs. Value Report

  • Master Suite

    Minneapolis remodeler Marty Schirber observes that potential home buyers often like some feature of a house simply because it's something they couldn't imagine building for themselves. One such example is a master suite, which Schirber calls "sanity space."

     
  • Major Kitchen Remodel

    This year's study offers two gut-and-replace kitchen remodels: a mid-range price project at $43,213 and an upscale kitchen -- same size, different components -- at $70,368. The price difference in specing granite vs. other types of materials for countertops, for example, may be $5,000, Dawn points...

     
  • Siding Replacement

    Depending on the product and the color, new siding can change the whole shell, the character of the house, as defined by the outside look, says San Antonio real estate agent Pat Clay.

     
  • Roof Replacement

    As Minnesota remodeler Marty Schirber points out, a homeowner thinking of selling might solicit 10 bids from 10 roofing companies and go with the cheapest.

     
  • Window Replacement

    Bob McCay, owner of McCay Building Company, Birmingham, Ala., says prospective home buyers with experience -- that is, those who've already bought and sold homes -- notice windows. In this year's Cost vs. Value Report, an upscale window replacement project -- with a national average of $15,502...

     
  • Two-Story Addition

    People usually add on to stay put, points out Kerry Butler, owner of Butler Construction Services, a full-service remodeling company in Kelso, Wash. "They like the neighborhood, the school district. They've looked at newer, larger homes and decided to invest in the home they have and stay in the...

     
  • Contributors

    Resale values for the 2001 Cost vs. Value Report were estimated by the following real estate professionals.

     
  • Bathroom Addition

    Seen strictly from the standpoint of resale, carving a bathroom out of existing space, especially in a home that has only one or one and a half baths, might be the most productive remodeling project you can undertake. Even first time buyers, whose expectations may not be as high, "want a master...

     
  • Bathroom Remodel

    For Stephanie Witt, owner of Kitchens by Stephanie, Grand Rapids, Mich., the question comes down to, "Do you want a payback on your investment or the room of your dreams?" Replace all fixtures to include standard-sized tub with ceramic tile surround; toilet; solid-surface vanity counter with...

     
  • Basement Remodel

    About one-third of the projects built by Ryan Schleper, owner of All City Builders, Buffalo, Minn., are basements. Schleper says clients want their basements finished for two reasons: They need space, and it's usually about a third of the cost of an addition, because mechanicals, foundation, and...

     
  • 2002 Cost vs. Value Report

    Does remodeling pay? Our annual report gets to the bottom of the age-old question.

     
  • Family Room Addition

    Anytime you increase space that's centrally heated and air conditioned, you increase the per square foot value of the house," says San Antonio real estate agent Pat Clay. Homeowners usually add a family room because the family's grown or because they're dissatisfied with the configuration or size...

     

Reader Panel

  • Reader Panel: Profit Slippage

    Typical profit slippage -- the difference between estimated and produced gross profit--is 5% or more according to our survey.

     

VIEW POINT

FIRST WORD

  • Don't Take This Personally

    Any industry consultant will tell you that most small remodeling companies are undercapitalized.

     
  • Crystal Ball

    In response to the stress and pace of the runaway expansion of the '90s, remodelers are deliberately slowing down. That means figuring out what you're good at, then being more selective and learning to turn down work that doesn't fit your business goals.

     

News + Notes

  • Wallboard Manufacturer Puts Asbestos Claims to Rest

    New NGC (dba National Gypsum Company) recently announced a $347 million settlement that will protect it from present and future liability claims stemming from lawsuits against the recently bankrupt Asbestos Claims Management Corporation.

     
  • A Look Back

    Looking back on trends and changes over the past year, I find it difficult to separate what's going on in the larger world from the home remodeling industry. Mark Richardson is president of Case Design/Remodeling, Bethesda, Md., (301) 229-4600, mrichardson@casedesign.com.

     
  • Lead Paint Case Still Unresolved

    The suit sought to hold the makers liable for lead poisoning in approximately 35,000 children in the state since 1993. Officials in at least six other states are contemplating bringing lawsuits against companies who once manufactured lead paint.

     
  • Mold on the Hill

    Mold has long been a hot-button issue in the remodeling industry. The bill's sponsor, Rep. John Conyers Jr. (D-Mich.), became interested in the issue after one of his staff members moved into a home that had a mold problem.

     
  • Housing Market Survives Recession

    A study released in June by Harvard University reported that construction activity on single-family homes hit an all-time high of $206 billion in 2001. The majority of our report doesn't deal with future projections," says Rachel Drew, a researcher at Harvard's Joint Center for Housing Studies...

     

MARKET WATCH

  • Sluggish Recovery

    At 49.3 in the third quarter, the RMI for current conditions is down from 52.7 in the second quarter; the Future Expectations Index dropped to 48.0 from 52.2 a quarter earlier. Consumer confidence Consumer confidence fell for the fifth straight month in October. Second mortgage interest rates were...

     
  • Tough All Over

    Consumer confidence fell for the fourth straight month in September, according to The Conference Board. Sales of existing homes declined by 1.7% in August, even as already very low mortgage rates continued to drop. Another sign that the economic recovery is threatened comes from a third straight...

     

COMMENTARY

GUEST COLUMNIST

  • Jury of Your Peers

    When my husband and I started our remodeling business in 1978, he was a craftsman and I knew some bookkeeping. I remember Paul working all day on a site, then estimating and meeting with potential clients at night.

     
  • Double Trouble

    For years we've been located in Phoenix, and from there we serve the entire metro area for jobs of every size. We set up the computer network system so that all processing was done at our Phoenix location.

     

LINDA CASE

  • Consistent ways of managing and communicating with employees

    When I consult with remodeling companies, I often recommend the same action to cure many of their ills. And often they report major improvements when they follow this relatively simple advice.

     
  • 'Tis the Season

    Gary Stokes of ADR Builders, a remodeling company in Timonium, Md., is a great gift giver. Take each individual employee to lunch during 2003 for the express purpose of learning more about that person.Create a safe psychological environment where each worker feels welcome to suggest solutions and...

     
  • Hire Education

    Your company's growing and you're faced, again, with the prospect of sifting through resumes, interviewing, and hiring. Hiring shouldn't be a chore; it's an opportunity--a time to define the job as well as the attitude and values we want and to find the very best fit.

     

WALT STOEPPELWERTH

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    Dandy Handymen, Part 2

    Partly because handymen have traditionally been solo operators, professionalism is an issue in the industry.That will mean that successful companies will provide a higher level of service -- and it will usher in an increased respect for handyman companies, as well as increased pay for the services...

     
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    Dandy Handymen, Part 1

    Are you thinking about hiring a handyman or starting a handyman division for your company? But before assigning a staff member to be your company's handyman division or running out and hiring someone, it's important to be clear about what a handyman is, what he does, and what kind of client...

     

YOUR BUSINESS

Sales and Marketing

  • Marketing Check-Up

    Like other business owners in the wake of September 11, Skeeter Coleman watched his business revenues drop off this year, from $2.6 million in 2001 to less than $2 million. Coleman hired a marketing consultant to help him create a strong brand identity by tweaking the company logo and rethinking...

     
  • Gym Night

    Rosemont Remodeling owner Ed Sutherland went to the gym to bulk up his business. "I couldn't have done any better as far as dollars spent and the people I want to talk to."

     
  • Living Large

    A Web site can multiply your business presence, but more likely it's just the icing on the cake, the final stroke that solidifies your reputation. With that philosophy, design/build remodelers Sharon and Jeff Rainey, owners of Home Equity Builders in Great Falls, Va., launched a postcard campaign...

     
  • Selling Feasibility Studies

    For many salespeople, the best way to make a sale is to ease their way into it.The study's cost can become part of total project cost if the client proceeds, so you can argue no additional money is spent.

     
  • Building a Better Client Base

    Marketing hinges on a simple truth: No recognized, admitted need goes unfulfilled. The trick is finding potential clients with recognized, admitted, yet unfulfilled needs who can pay for services. Buy good mailing lists from reputable sources.

     
  • Green Marketing

    Neil Kelly Co. partnered with its local utility company to promote the restoration of a 1928 English cottage using sustainable remodeling and energy efficient practices. Tom Kelly, president of the Portland, Ore., remodeling company, says although the goal of "The Legacy House" was to win business...

     
  • Marketing Workshop: Before+After

    Critique courtesy of Janet Wagner, Ph.D., associate chair of marketing, R.H. Smith School of Business, University of Maryland, www.rhsmith.umd.edu. Wagner holds a B.A. in graphic design from Cornell University; her graduate degree is in marketing.

     

BOTTOM LINE

  • Start a Retirement Plan

    A Keogh will do nicely if you're incorporated, but sole proprietors and partnerships need to look into traditional or Roth IRAs. --Howard Scott is a business writer and small business tax preparer in Pembroke, Mass.

     
  • The Selling Price is Right

    There are two common ways to use a percentage to arrive at a selling price that includes gross profit. Selling price for the same estimated costs as in the above example is still $3,732 ($2,650 x 1.4085).

     
  • The "Doomsday" Ratio

    As the name implies, this liquidity ratio is the most demanding because it measures current liabilities against cash alone. --Judith Miller is a Bay area construction business consultant and trainer.

     
  • Five Fundamentals

    Spending time on the production team and systems will get the results you want. --Mark Richardson is president of Case Design/Remodeling, Bethesda, Md. (301) 229-4600; mrichardson@casedesign.com.

     
  • Accounting for Replacement Costs

    Repair and replacement costs can take a bite out of your operating budget. Philbin's crews also pay to repair their tools, unless the damage was due to negligence of a co-worker, but Philbin pays to sharpen or replace bits and blades.

     

BY DESIGN

  • Grand Entrance

    During the remodel of a 1960s ranch-style house in Texas, architect Dave Fazio used the entryway to introduce the contemporary rectangular theme that runs throughout the house. To meet the homeowners' desire to bring light into the house, Fazio created a wall of fixed glass panels set in a...

     
  • Portal Power

    When architect Dean Brenneman needed to hide some ductwork in this whole-house renovation, he used a simple yet strong design solution. Staff carpenters in the design/build firm crafted the matching ceiling panel on site, fitted it with cast aluminum registers from Reggio Registers, and painted...

     

FIELD NOTES

  • Online Safety Training

    Companies can now use online safety courses to provide employees with up-to-the-minute OSHA training while tracking records and proof of compliance. Rochester, N.Y-based Element K, through a partnership with Vivid Learning Systems, offers the Workplace Safety Library online safety training with...

     
  • Trail to Success

    Remodeler Mark Sass assigns his carpenters 14-foot enclosed trailers to attach to their trucks for tools and equipment. "It's a reward for working to grow the company and themselves," Sass says.

     
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    Sending Field Staff to Trade Shows

    Trade shows usually have educational programs to provide a wide variety of training. You may have a few questions about sending your field staff to shows.

     
  • Round the Clock

    Dick Seibert turned to a time clock system to track employee hours for two reasons. First, many members of his crew had worked independently and were used to making their own hours.

     
  • The Right-Sized Crew

    The number of people working on a jobsite should be determined by need and not by the traditions of the industry. Many accidents occur when one person attempts work that should be done by a crew.

     

Tech at Work

  • Building a Better Web Site

    Assume prospects know nothing about working with a contractor. This way, your company is instantly the most qualified and, so far, the easiest to work with.Show pictures and plans and explain why prices differ.

     
  • A Useful Digital Sketcher

    The InkLink tracks the position of the pen on the paper and sends the result to either a computer or PDA (personal digital assistant). --Joe Stoddard, a technology consultant to the construction industry, can be reached at stoddard@cbczine.com.

     
  • Organize By Numbers

    Computers have made it easy to packrat away all kinds of data, but not so easy to find it again. The numbering scheme can be something you create, but it's probably better to base it on an established source like NAHB's Chart of Accounts (see www.nahb.com/builders/chart.doc).

     
  • Online Matchmaker

    Chris Paquette says an online referral service has been a boon to his business. It outdistances similar services because people, not computers, match clients with contractors, according to the Philadelphia-area remodeler.Paquette, who usually does $350,000 annually in kitchen, bath, and cabinetry...

     

Ways + Means

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    Ten Commandments for Subcontractors and Vendors

    The Reijnen Company in Bainbridge Island, Wash., focuses on very large, very complex remodeling and custom home projects. Because these resources are outside his direct control, Reijnen wanted to be sure that all of their subs and vendors clearly understood exactly what was expected of them.

     
  • Life Expectancies

    When one of Marty Schirber's 1,287 former clients is thinking about buying a house, the Minneapolis contractor is often called in to give his opinion.In addition, when clients sell the house, they usually recommend that new owners contact Schirber and his company, Castle Building & Remodeling...

     
  • Executive Decisions

    Leadership, Joss points out, "is defined not by your title, but by taking an action."About three years ago, management, recognizing that many of those best practices originated among carpenters and laborers in the field, began soliciting their input and inviting them to planning meetings.

     
  • Budget Busters Not Allowed

    Whether it be from client-generated change orders, contractor-generated change orders, or unforeseen conditions, the reason doesn't matter. Jill Liptow, of The Remodeling Center, a Pewaukee, Wis., design/build firm, calls it "the final agony."

     
  • Tall Orders

    One of the biggest reasons remodeling companies don't make money is because job costs are greater than the amount estimated.

     
  • In for the Long Haul

    Usually a warranty ceases to be in effect when it expires in writing. That is "on the high side," but not excessive, compared to that of other companies in a peer review group Wills belongs to.

     
  • Service 24/7

    Gary Crowley, owner of Crowley Construction, recently came back from a 12-day vacation and nobody even knew he was gone. A year and a half ago, fed up with solicitations he received at the office and not particularly happy with the "repetitious and impersonal" nature of answering machines, Crowley...

     

BIG50

CLOSE UP

  • Profile: Jim Maguire

    When he was awarded Big50 in 1989, Jim Maguire had just finished a $2.5 million year doing insurance restoration and remodeling work.The company, now based in Waterbury, Conn., only does insurance restoration, cleaning, mold remediation, and building envelope drying. The system initially paid a...

     

FACE OFF

  • Naming the company after yourself

    It would be fine with me to change the company name to accommodate this, when the time comes for me to sell.Ben Auger, Auger Building Company, Portsmouth, N.H., Big50 2001

     
  • Face Off: Should profit margins be smaller on larger jobs?

    I'd love to say no to this question, but the reality is when you get into upwards of $600,000, the homeowners--lawyers, bankers, all tough negotiators--are looking for deals. We aim for a 40% markup to produce a 28.5% margin, but there's no way I'm getting a 1.4 markup on an $850,000 job in my...

     

Live + Learn

  • The Elderly's Statesmen

    If you want to study a company that took a fresh look at an old industry, or that knows how to find and train employees who take customer service to heart, consider Sunrise Assisted Living. Paul and Terry Klaassen learned about the senior care options available in this country when Terry's mother...

     
  • Looking In

    Drywall contractor Dennis Redden has two beefs with contractors: Jobs frequently aren't ready when scheduled, and GCs don't pay promptly.Redden, of Rightway Construction in Oakley, Calif., has six employees and works with about 30 contractors, doing 10 jobs a year for each. They yell and scream to...

     

SECOND LOOK

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    Second Look: Randall Fenton

    When Randall Fenton was named Big 50 in 1987, he was pushing to expand Inrecon into a nationwide insurance restoration business. Yellen says the remaining partners and BELFOR intend to double the company's sales volume in the next six years.

     

SOLUTIONS

  • 20/20 Hindsight

    The stock market slump affected sales in our target market, Silicon Valley, as residents lost the portfolio liquidity to fund home remodeling projects. Doug Dwyer, DreamMaker Bath & Kitchen, Waco, Texas, Big50 2000

     
  • Q+A: To B-I-Y or Not to B-I-Y

    For our DreamMaker franchise, where budgets are tight, we allow homeowners to buy their own materials.

     

KITCHEN AND BATH

DESIGN CLINIC

  • Master Kitchens Rise and Shine

    Homeowners are demanding more amenities to create the ultimate master bedroom retreat. One such luxury is having a "morning" kitchen to brew coffee in the room. And the morning time frame can stretch to evening, with small refrigerators to chill wine for a relaxing night. Mini-kitchens are more...

     

SPEC BOOK

  • Ceramic Tile With European Flare

    Current ceramic tile designs echo an American sense of proportion and style, but with a distinctly European flare. Rustic textures and colors on floors, walls, and surfaces create a welcoming effect in kitchens and baths, while cool metallic accents maintain a sleek look.

     
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    Bathroom Lighting

    The Ambiance Lighting System offers many solutions for task or accent lighting. Also available in an antique brass finish, the fixture extends 9 inches from the wall and measures 24 inches wide by 9 inches high.

     

Management

  • Tub Liner Franchises

    For kitchen and bath dealers, buying into a tub liner franchise can expand their business into a new area and position them to serve the middle market.Linda Brakel, vice president of franchise operations for Bath Fitter (www.bathfitter.com), says the product sells in residences in all areas --...

     
  • Professional Help

    A new Web site provides a forum for professional kitchen and bath designers to share knowledge and information. The site, www.kitchenbathpros.com, is the brainchild of designer Susan Serra of Long Island, N.Y.

     
  • Q+A: Ask the Experts

    Last year, designers Amy Sussek and Jackie Zager launched a Web site called www.askthekitchendesigners.com. We wanted to give homeowners a place to educate themselves about materials and the remodeling process, so that when they start shopping at a showroom, they won't be overwhelmed.

     

REPLACEMENT

ROOFING

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    Roofing Safety Check

    Besides endangering a worker, a roofing accident is bad for PR, leaves the job short-handed, demoralizes the crew, raises insurance premiums, and creates paperwork.

     

Windows

  • Additions a Sales Opportunity

    By Jim Cory. Additions often present an opportunity to suggest clients change out the windows in the rest of the house to match the windows going in the addition. "We're always working budget-backwards," says Jim Strite, Strite Design + Build, Boise, Idaho.

     
  • Name Brand Recognition

    Rich Gaspar, owner of Gaspar Construction in Seattle, notes that there's a 20% to 30% price difference between nationally known window brands and locally produced brands. The clients who choose the lesser products run a heightened risk of the windows failing," Gaspar says.

     
  • Look Before You Leap

    By Phil Rea. A: First, ask yourself why you want to take on a new product or service. --Phil Rea is president of Phil Rea and Associates, a firm offering sales consulting, motivational speaking, and a monthly newsletter.

     

PRODUCTS

IN FOCUS

  • Interior trim products

     
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    Efficient HVAC Put Homeowners in the Comfort Zone

    Few systems in a home are as important as its heating, air conditioning, ventilation, and air treatment systems, and few systems cost the homeowner as much to maintain and use each year. According to the Department of Energy's Annual Energy Outlook 2002 with Projections to 2020 report, energy...

     
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    Tool Storage Products - 2002

    The ToolPak FannyPak organizes small tools with three internal partitions and tool loops in the lid. The Cargobat Storage System cargo tray fits into the canopy of most truck caps and mounts on the truck's bedrails, leaving the truck bed unobstructed.

     
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    Truck Accessories

    The Ducks Unlimited LSII hard tonneau cover is equipped with a lift assist system that makes opening and closing the cover easy, says the company. Also pictured is the Ducks Unlimited CX series truck cap.

     
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    Stucco Products

    The new One-Coat Stucco System is a pre-blended mix to which sand and water are added on the jobsite. Sto Corp. Powerwall Stucco is a factory-blended cement, lime, fiber, and additives mix that yields a Portland cement stucco base coat that is breathable and resists wind-driven rain and...

     
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    Basement Waterproofing

    A two-part waterproofing system prevents leakage, condensation, and seepage. Xypex Chemical Corp. HD-150 penetrates into the structure of concrete walls and floors, creating a non-soluble crystalline formation that seals the concrete.

     
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    Power Tools Go Ergonomic

    Ergonomics in the hand and power tool industry is the applied science of designing and adapting tools to accommodate the physical needs or capabilities of the user. The results of all these tests will be a Hand Tool Ergonomic Data Sheet defining the ergonomic strengths and weaknesses of a...

     

ON THE JOB

  • It's All In the Flashing

    I've remodeled houses for more than 25 years and am still amazed at the amount of water damage caused by poor flashing details. Even the best products won't work if they're installed improperly.According to Paul Fisette, a building products scientist at the University of Massachusetts, housewrap...

     

READERS CHOICE

  • Reader's Choice

    Jeff Bangs has been installing Corian in countertop applications for 13 years and has found the material easy to repair, allowing homeowners to maintain their countertop's appearance through the years. 6.0 Contact Management & Business Software, by Best Software Company, www.act.com.

     
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    Glass Act

    KS Remodelers has been installing Hurd Windows for 15 years, says Ken Skowronski. "From the lap siding, the corner boards, and the cedar look-alike gables, to the soffit, fascia, and the eyebrow work on the arches above, they're all Hardie siding products.

     

TRENDS

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    Taming the Wilderness

    The garage has traditionally been one of the least organized spaces in the home, surpassed only by the attic. Photo: Courtesy GarageTekGarageTek's Tek-Panel PVC wall panel system comes with a variety of accessories for storage.

     
  • President Bush Outlines "Healthy Forests" Initiative

    By Stephani L. Miller. Some groups have even said that the president's plan would hand over national wildernesses to the whims of lumber companies while it ignores the needs of communities along the edges of forests.However, some lumber companies, such as Weyerhaeuser, see little value in...

     
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    Open-Air Kitchens With All the Conveniences

    Outdoor kitchens have become increasingly popular with homeowners, and manufacturers are responding by creating a wide variety of appliances especially for the outdoor kitchen. KitchenAid's stainless steel outdoor refrigerator provides ample chilling space.

     

LAST WORD

Bench Mark

  • Benchmark: Fair Compensation

    In the March 2001 issue, we set the benchmark for owner salary at 10% of gross revenue. Fortunately there are lots of other perfectly legal ways for company owners to compensate themselves.

     
  • Benchmark: Holes in the Net

    Back in the June 2000 issue, we set the REMODELING benchmark for net profit at 10%. According to financial data collected twice annually by Business Networks from each of its 100-plus remodeling company clients, the average net profit actually reported is just over half of the benchmark.

     

OTHER ARTICLES

  • Take Control

    Some business owners who aren't particularly strong in financial management rely on their office staff and outside consultants to help them understand and analyze the data that could have significance for their company. Walt Mathieson, CPA, and president of Mathieson Consulting, Brookeville, Md....

     
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    Countertops

    Whether for the bathroom vanity or the kitchen counter, surfacing materials are getting back to nature with colors and patterns that evoke the many shades, textures, and shapes of landscapes --from forest to desert, beach to prairie, and even to the stars and sky.

     
  • The Cost of Unpaid Time Off

    Most companies know that scheduled downtime, like vacation and holidays, costs money, and they figure it into their labor burden. Halsey Platt recently discovered that absenteeism is a bigger drain on his company's profits than he'd ever imagined.