Not all remodelers come to the business by way of the craft. In the examples collected here, the ability of four individuals to adapt skills and expertise from other vocations enabled them to overcome a lack of hands-on construction knowledge and build successful remodeling companies.
Game for Business
As a former accountant, Janice Donald is a contractor who has made numbers a part of everyone's business. Rather than relegating profit and loss to a back-room numbers cruncher, Donald wants to coax her company's 15 employees into "playing the game of business."
"I've got the numbers thing down," Donald says. But unless the whole company buys into the numbers, she believes profits will be lessened. She not only has an open book policy where employees can see the numbers, but they also share in the profits.
She has made up games that have included guessing what sales were going to be for the month, or what gross profits would be for the next month. "Cheating" was allowed. Employees could ask anyone anything. The person who guessed closest won a gift certificate for dinner or a hotel night.
Another game revolved around a neighborhood where the company, Eren Design and Remodeling, Tucson, Ariz., should be doing work but isn't. The game was for employees to drive the company's logo-emblazoned trucks through the neighborhood frequently. If the company received a signed contract by a certain date, everyone would get a $500 Christmas bonus. Unfortunately, that didn't happen.
There is some skepticism among the crew -- one craftsperson won't play the games at all -- and until one of the games results in a big win, skepticism will likely remain. But Donald is patient and believes it will take time for the concepts to sink in.
Until a few years ago, Donald's work life was focused entirely on numbers as the owner of an accounting practice. One of her clients was Eren Design, which was founded in 1986 by Eric and Ellen Schneider, who built it up to more than $2 million a year in sales. Just about the time Eric Schneider got burned out running his remodeling company, Donald was burned out with her accounting firm. So the Schneiders hired her as CEO in 2000, and last year she bought the company outright. "The process of interpreting financial reports is second nature," she says. "It's not work. It's like reading a site plan. I know how to slice the numbers to really get at the heart of the matter."
Every Friday, she gets a series of reports from her bookkeeper that include updated lead statistics, that week's check register, the unpaid accounts payable, the unbilled invoices, and the open accounts receivable items. She analyzes gross profit from each job on a monthly basis and gross profit per day with each estimate that is generated. She re-examines those numbers again with the jobs as they close.
But for as much as her accounting background has helped her establish her business, not having a construction background has created some obstacles for Donald, even with the insights of her husband, a company project manager. "It has taken me a while longer than I'd like to learn how to measure the accuracy of an estimate," she says, citing her lack of crafts knowledge. That, she says, is improving.
Her lack of sales savvy was devastating and expensive until she "got backed into a corner," stopped relying on hired salespeople who couldn't seem to sell the excellent product the company has a track record of delivering, and took the sales role on herself. "I wasn't sure I could do it," she says, but ended up finding it easy and satisfying to sell the company's product.
She now has more than $4 million of design/build business in the pipeline. Joining a remodeling peer review group put her in touch with other remodeling companies striving to improve, and she has no problem borrowing practices and systems that work for others.
She views all her obstacles so far as "just part of the game," she says. "And I love winning the game."
Outsider's Perspective
* Institute an "open book" policy so employees see all the numbers.
* Create a profit-sharing program so employees are more aware of the effect they have on the bottom line.
* Create games to make business numbers interesting to employees.
* Analyze budget to actual numbers on all jobs on a biweekly basis to avoid surprises in cash flow.
* Analyze gross profit by each job on a monthly basis and again with each job as it closes.
Courting Good Client Relations
Did you hear the one about the former lawyer who's remaking a remodeling company so that it does everything possible to stay out of court? That would be Dan Weidmann, who claims that legal actions in remodeling cases are rarely justified, cost-wise. Plus, you hurt your reputation. And, worst of all, even if you're right, there's no guarantee you'll win in court.
In fact, Weidmann puts little faith in "watertight" contracts. "I know, as an attorney, I can argue anything," he says. The more surefire ways to avoid litigation are well-managed client relations, glitch-free communications, and stellar scopes of work.
Weidmann learned the ins and outs of the law as a commercial attorney in Florida. In the early 1990s, his older brother Bill asked him to join Weidmann amp; Associates near Atlanta, and by 1995, Dan Weidmann admitted he disliked practicing law and decided running a remodeling company would be more fun.
Today, the brothers co-own the company. Dan, 42, is president, and his 50-year-old brother is vice president and CEO. There are 18 employees, and volume has been a steady $5 million.
In the beginning of the partnership, using skills he gained in the Air Force as a project manager of weapons systems testing, Dan ran the production side of the company. Now, he concentrates on fine-tuning client relations through the process, from first contact to exit interview and, hopefully, into future referrals. The first step for litigation-free business, he says, is good client relations, which begin with getting the right clients and turning down the wrong clients, particularly those who are overly suspicious and distrusting of the company.
After one homeowner had his attorney excessively amend the Weidmann contract, Dan Weidmann told the homeowner, "I don't think we're interested in going to contract." When the homeowner asked which provision was troubling, Weidmann said it was no provision in particular but the lack of a trusting relationship in which to resolve the many issues that arise during any remodel. Eventually, the homeowner came into the office and displayed enough trust so that Weidmann took on the job. After the exit interview, the homeowner called to say his attorney would be referring a neighbor.
Even with a reasonable client, however, a poor scope of work can lead to misunderstandings and unmanaged client expectations, which Weidmann considers the source of future legal troubles. The scopes of work at his company are much more complete than when he came on board -- and are getting better. During the job, client concerns are recorded in a job log, which project managers are asked to fill in daily and homeowners are asked to read and sign daily. Inside the job book are cell phone and home phone numbers of all key contacts, including the emergency number, which is Dan Weidmann's cell phone. The same numbers are laminated on a business card that homeowners carry with them. However, Weidmann says homeowners who have many avenues to reach the company tend not to get frantic. "As long as you have a system in place, you don't get the calls at night."
Weidmann will do nearly anything to maintain good client relations, but if a situation can't be resolved, he says sometimes you're better off walking away and licking your wounds, rather than taking legal action. The trick is to keep your customers current on payment. "Don't put yourself into a situation," he says, "where you can't afford to walk away."
Outsider's Perspective
* Don't overrely on contracts to protect your company. Turn down distrusting clients in favor of trusting clients with whom you can establish a good relationship.
* Reduce ambiguities with complete scopes of work. As change orders are the equivalent of an up-sell, they should be set up through the salesperson rather than through the production side.
* Give clients many chances to voice concerns so issues don't escalate.
* When something goes awry, ask clients what you can do to make it right. They usually want less than you'd offer. Consider the cost a marketing expense.
* Rather than taking it to court, even when you're right, it's usually better to put principles aside and just settle or walk away.
Sell High, Deliver High
Whether he's selling $3,000 luxury chairs or $100,000 remodels, Alon Toker considers managing clients and their expectations the key to success. In fact, Toker learned to avoid promising high and then delivering low by working for a company that did just that.
It was more than 20 years ago when Toker, a native of Israel, left his sales job at a chair company for his first taste of contracting: a sales slot at a high-volume Los Angeles "paper contractor." The now-defunct company marketed and sold renovation jobs, then subbed them out, turnkey, to contractors.
"The name of the game," Toker says, "was to promise the sky so that incredible premiums could be charged and then only provide for minimal standards."
Though very successful in what he now calls "sales boot camp," Toker also became frustrated with the company's ethics, so he started his own company, Mega Builders Construction and Remodeling, in Chatsworth, Calif.
Toker does all sales for his $2-million company. But for years, he tried to parlay his sales savvy into a high-volume firm (he eventually reached $8 million a year) by training a legion of outside salespeople. He created a two-week sales training program that included a 280-page training manual, videotapes, and audiotapes.
But after growing tired of supervising "capricious" salespeople rather than working directly with clients, he admitted defeat. He reorganized his company and laid off his sales force. "It's more of a mind-set than a skill set," he says of selling in the honorable, ethical manner he demands.
Toker's specialty is helping clients who are stuck in fear, frustration, or indecision to move forward. He shows them a professional presentation book and provides a folder with licenses, references, and other documents. Knowing that some people have a hard time visualizing the remodeled space, he draws and gestures to help clients imagine how the new space could feel, how the sun would flow in, or what the new views would be like. The specifics of prices and brands come later. If a client gets stuck on some element, he suggests putting that decision aside until later.
For Toker, the sales process doesn't end when the contract is signed but continues past job's end, into the referral stage, and even beyond the warranty stage. When a former client calls with a problem, Toker extends his company's services to maintain goodwill. His company sends notes to acknowledge such personal dates as birthdays, an anniversary of the completion of the remodel, or a warranty expiration date.
High among Toker's "client management" priorities is empathy for his clients' fears and limitations and a hyperawareness that people perceive things in dissimilar ways. "From the same document, from the same conversation, people understand things differently," he says. For him, the solution is to put everything on paper, in words or in drawings.
The lack of trade skills isn't an obstacle for Toker but a blessing. "Many contractors I know tend to fall back on their hands-on skill when a challenging task is at hand, when they need to save costs on a tight job, or when there isn't much else going on," he says. "This tendency is ill-advised, as it belittles and takes away from ... planning, client management, and care."
Outsider's Perspective
* Create a presentation book that radiates competence. Show large photographs of well-designed, well-lit projects.
* On sales calls, talk to clients about design, function, and budget, and estimate later. Clients want a feeling for the space, not its specifications.
* Don't succumb to the desire to overpromise, or, almost by definition, you will underdeliver. Client satisfaction is measured in a longer time frame, not in one rewarding instant.
* Provide service calls long after the warranty expires. Be helpful, offer solutions, give advice, and follow up. That way, clients will think of you as "their contractor."
Ministering to Business Needs
For contractor John Miller, an ordained Lutheran minister and former church pastor, remodeling a Minneapolis kitchen and working at Hospitality House in the blighted core of St. Paul-Minneapolis have one thing in common: an opportunity to serve.
"I wanted to help," Miller says, recalling his college days as a sociology major and inner-city volunteer. "I wanted to make a difference in people's lives." After graduation and seminary, Miller spent 11 years as a church pastor in Washington state, but he found working so intensely with people stressful. While doing an addition to his house, with the help of a church member who was a contractor, he realized remodeling was "wonderful therapy. You can see what you've accomplished," he says, unlike working with people, where "you can't see what you've done."
For a much-needed sabbatical from the constant pressures of pastoring, he sold his house and moved his family to Oxford for a summer and then to Princeton for more study. When another minister job didn't materialize, he returned to the Twin Cities and started a remodeling company, now called Waldenwood.
Miller's company employs nine, including the son of the contractor who became his mentor. He does about $1 million a year.
Miller's past profession as a pastor to hundreds gave him advanced skills in several areas: public speaking, team building, scheduling, preparation, and writing. He needed to have his thoughts organized and to sell his ideas to the congregation, much as he sells a job to a client or his standards to a sub.
Ministering gave him a perspective from which to view so-called calamities that occasionally come up on remodeling jobs. "This isn't a man calling me in the middle of the night for comfort when his wife is dying. We're talking about a house. We're not talking about a life."
Outsider's Perspective
* Promote in speech and actions such qualities as trust, integrity, and honesty. Make it company policy that a promise made will be a promise kept, whether to clients, co-workers, or others.
* As a boss, care not just about employees' work lives, but about their families, hobbies, and spirituality, too.
* Insist that all employees take at least one "mental health day" per month, no questions asked.
* "Tithe" a percentage of company profits to charitable causes each year. Encourage employees to take time to do charitable work. If financially feasible, pay worker wages for a week or so to take on such projects.
* Keep your own performance in perspective. Remember, it's your job, not your entire life.
--Freelancer Kathy Price-Robinson writes about remodeling from the central coast of California.
