In the remodeling industry, successes (and failures) come in a range of shapes and sizes. As the industry matures, some are seeing a trend toward specialization and niche focus. But plenty of companies have found success in diversification, running some combination of full-service, single-line, commercial, franchise, and insurance restoration operations under one roof.
Diversification is often intended to grow revenue. Just as often it's a hedge, generating an additional stream or streams of revenue to protect against the failure of any one. In other cases, remodelers diversify to meet a need in the market, or to enter a new market and gain cross-market business. Sometimes, too, your company diversifies almost by accident, either because you luck into a new opportunity or you're chasing one out of desperation. Whatever the motivation, if your company is entering a new business, you face a host of challenges and tough decisions. In the following pages, we profile contractors who have succeeded by refining the scope of their companies' operations.
SCOTT CIERZAN First Call Construction, Urbandale, Iowa
For some in the industry, the smartest strategy is to find a core service and master it. Scott Cierzan doesn't have any less regard for mastery, but he's not content to limit his company to just one source of revenue. Instead, Cierzan aggressively seeks new opportunities, believing that if he doesn't take advantage, his competitors will.
“You have to be innovative to stay in business,” he says. “If you're standing still, you're not going to last long.”
Cierzan's company, First Call Construction, offers insurance restoration and a full complement of residential remodeling services. And now Cierzan is making a push into the commercial arena, taking on smaller-scale jobs such as interior reworks, finish-outs, and small additions.
“We're trying to hit a niche where we basically can do the remodeling work on commercial buildings that large contractors would prefer not to do,” Cierzan says.
The benefits, he says, are twofold: First, the new work offers a growth opportunity (Cierzan expects to add 15% to 25% in revenue over the next two years); and second, by adding a revenue stream that runs on a commercial rather than a residential cycle, First Call Construction is insulated from a residential slowdown.
“We're always looking for market niches,” Cierzan says of the ambitious philosophy that has guided him to add insurance restoration, a design center, basement finishes, and home theater installations to his original full-service business. “We're looking for innovations that enter the market that we can learn and try to be the expert in,” he says.
Cierzan takes the expertise part seriously, always preparing himself and his employees for a new line of work before diving into it. Before entering the restoration market, he received training and earned industry certifications that gave him credibility even though he lacked hands-on experience. Though it took time, Cierzan knew he'd be better off laying the foundation for long-lasting relationships with insurers.
“I didn't want to knock on any insurance company's door without being certified and having that expertise,” Cierzan says. “When I first went to insurers and told them that I knew what I was talking about, I really did.”
Aggressive as he may seem compared with some of his peers, Cierzan says he leavens his ambition with a healthy dose of skepticism.
“We're not big on just jumping on anything,” he says, noting that he has resisted industry trends that he feels are just passing fads.
“I hope I'm in the middle of the road — entrepreneurial enough to take advantage of opportunities but cautious enough not to chase everything. Finding the balance is the hardest part,” Cierzan says.