The Design Builder's Blog

With the Remodeling marketplace booming this spring and predictions of close to a 10% increase in remodeling spending this year over last there will be plenty of work out there for remodeling contractors in 2016.   With the surge in mind I have been coaching my contractor clients to be smart about how they do business.   I have been stressing that they should take advantage of this surge by being selective about the customers they choose to work with and by raising their margins now before they get too booked up and regret becoming unavailable.  If this makes sense to you and for your business read on to find out how to do fewer sales calls but at the same time close higher margin deals.

Agree on an agenda before committing to a sales call

Before you even commit to a sales call get your prospect’s commitment to discuss and commit to an agenda for the first sales call.  Doing so can help you control the sales call as well as how your valuable and limited time will be invested.  

The agenda should include the things they want to accomplish as well as the things you want to accomplish at that first meeting.   If you can’t or won’t agree to what they want to accomplish, or they won’t agree to what you want to accomplish, then simply let them know you won’t be able to help them. 

These three things should be part of your agenda

After you hear and approve of the items they want on the agenda ask permission to share the items you want on the agenda.  You can include anything you want on your agenda but make sure at a minimum you get a commitment to discuss these three things before asking them if it still makes sense to invite you over:

Can we talk about why you want to do your project?

You will need to know this info to create a unique solution and to have confidence in what you suggest to them when discussing options.  You will also need to know this information to avoid becoming a commodity contractor by just giving them a price on what they thought they needed.  You know, just like pretty much every commodity contractor does every day.

Can we talk about your budget for this project?

Let them know you will either need to get a realist budget from them in order to help them, or that you can let them know what they should assume for a budget.  But, be clear that a requirement of getting together will be to discuss and decide if there is a fit between their budget and the scope of work they would like completed.

Can we talk about how you plan to make your decisions?

You need to get their commitment to discuss how they will decide about important project details as well as which contractor they will ultimately partner with.  If you don’t know how they plan to make these decisions how can you possibly help them make decisions and why should you be surprised when they don’t or can’t decide? 

If they don’t know how they plan to make decisions think of it as your job to help them figure that out.  That alone can help differentiate you from the commodity contractors.    

Setting the agenda shows you’re serious and filters out the commodity buyers

Many of my consulting clients are now using what I call “the agenda step” as a way to prequalify who they are willing to visit.  By creating this agenda they essentially give their prospects some homework to do to get ready for the visit.  After my clients get good at setting the agenda they experience much better close ratios and they all report selling to much better customers.  They also report most of these better customers are also willing to pay higher prices.  

After setting the appointment several of my clients even send a follow-up appointment confirmation email documenting the agreed agenda.

One more thing to keep in mind

Good customers who are willing to have honest discussions and are willing to pay more for “different” hang around with other people just like them.  After successfully putting the agenda step in place at your business, like my clients, you will probably get referrals to more good customers who will pay more for different.

Contractors are joining the ranks of workers who bring their own devices to the workplace. A Texas A&M survey found that 72 percent of professional contractors now use smartphones such as the Samsung Galaxy S7 Edge at work, while 53.9 percent use laptops and 50.1 percent use tablets.

Mobile devices are assisting contractors in virtually every phase of construction, from finding clients and managing projects to making estimates and bookkeeping. Here are some of the top ways mobile technology is helping contractors on the job.

Any construction job starts with a client, and customer relationship management tools such as Improveit 360 make it easier to find and manage clients. The Improveit 360 app is especially designed with the needs of contractors, remodelers and home pros in mind. It includes tools for:

• Phone and email marketing
• Centralizing your incoming lead database
• Tracking and managing leads
• Preventing duplicate leads
• Appointment scheduling
• Sales

The bidding process is a big part of landing clients, and bid invitation apps like SmartBidNet are designed to make it easier for you to win projects. SmartBidNet provides a communications dashboard, where you can send, receive and monitor your invitations to bid. The app includes templates to help you:

• Formulate and start the draft bid process
• Customize subcontractor access options
• Share calendars to manage bid deadlines

Estimating is one of the most important and time-consuming parts of the bidding process. Construction calculator apps like BuildCalc make estimating easier by providing a spreadsheet-style layout, where you can enter and calculate bid data. BuildCalc comes with design layouts for different parts of a building to help you develop details of your estimate, material estimation tools and quick conversion tools for distance, area, volume, weight and angles.

With today's technology, digital building information modeling is the most efficient and least expensive way to plan projects. The Autodesk app allows you to do BIM from your mobile device. The app also helps you build more efficiently and cost-effectively by letting you create 3-D models of your building projects that you can rotate and even animate.

Once you start a construction project, use your smartphone to manage it through an app like Fieldwire, which is designed to assist construction managers and workers in the field. Fieldwire enables you to:

• Pull up blueprints
• Share files with your crew
• Create and assign tasks
• Track issues using photos from the field
• Receive notifications when tasks are updated

Safety comes first on any project. From a technology standpoint, the Safety Meeting app makes it easier for contractors to comply with OSHA safety meeting regulations. Safety Meeting allows you to:

• Schedule meetings
• Pull up safety meeting topics
• Document meetings
• Receive incident and near miss reports

The success of any construction project depends on accurate data collection, and field data apps like Canvas make it easier for you to collect the information you need. In addition, Canvas lets you:

• Create and fill out forms
• Capture photos
• Obtain GPS coordinates
• Perform calculations
• Send emails and files to crew members

Bookkeeping is a necessary chore for any contractor, and accounting apps like QuickBooks Online take much of the labor out of bookkeeping by letting you automate the most repetitive and tedious bookkeeping tasks. Use your mobile device and let QuickBooks Online:

• Manage your cash flow
• Send invoices
• Accept payments
• Scan receipts
• Make and record deposits
• Pay bills and expenses
• Create monthly statements
• Print or email reports
• Export data into tax preparation software

Owning a business can be uniquely rewarding, but rewards do not come without risk.  Perhaps the most dreaded of those risks is a lawsuit.  While some contractors who get sued keep that worry in the back of their minds, others avoid thinking about legal issues altogether, or worse; they assume it can’t happen to them.  But contractor law suits do happen. Often.  While you can’t guarantee that you won’t be sued, you can prepare yourself by having a plan of action in the event of a lawsuit.

Here are the steps contractors should take if they get sued:

• Take notes about service of process.  Each jurisdiction has rules governing service of process (how you were informed of the law suit). Take note on how you were served so that you or your lawyer can determine whether there are grounds to challenge service.
• DO NOT ignore the Complaint! Do not throw the Complaint in a drawer and try to forget about it. Failing to respond to a Complaint could result in default judgment against you or your company. The sooner you act, the more control you have over the situation.
• Review the Complaint. Read the Complaint to gather some basic information about the suit. Who filed the suit?  Is the plaintiff suing your company, you, or both?  Why has the plaintiff filed suit? How much money is the plaintiff demanding? 
• Contact a lawyer. Do not attempt to engage the plaintiff on your own. Contact an attorney experienced in construction law.  Your attorney will help you analyze and understand your risks. If the amount in controversy is small, your attorney can advise you on how to best represent yourself. After consulting an attorney, you will be able to make an informed decision about how to proceed with the lawsuit.
• Contact your insurance company.  If you think that you may have insurance coverage for the plaintiff’s claims, contact your insurance company immediately, since most insurance companies require prompt notification of the claim. Your attorney can also assist you in reviewing your policy and obtaining coverage.
• Collect and preserve documents: Collect all documents, photographs, correspondence, etc. (electronic or paper) related to the case so that you can review them with your lawyer. Do not delete or destroy anything.  Hiding information from your lawyer can only hurt your case.  You could also face severe sanctions from the court for destroying or withholding information during the case.
• Be careful who you speak to.  Your conversations with your attorney are generally privileged. However, anything you say to a third party could make its way to the other side.
• Consider whether you can settle the case right now.  The vast majority of lawsuits end in a settlement.  Settling the case at an early stage can save a lot of cost and

You can’t guarantee that you won’t ever be sued but you can prepare yourself by having an action plan in the event of a lawsuit.

Note: This article is for informational purposes only and is not intended to serve as a substitute for consultation with a legal professional.

Guest Blogger:  Renee Schwerdt, Esq., Owner/Attorney at Plumb & True Legal Consulting and Representation.  Renee is an attorney and the owner of Plumb & True Legal, a law firm that serves contractors, architects, vendors and others in the construction industry.  Her new blog, Level Up, is available here.

How To Handle Mold And Avoid Liability As A Contractor

Mold remediation experts are not the only contractors who encounter mold on a fairly regular basis. Often times, the homeowner does not learn that there is mold in their house until a contractor points it out. This may be a restoration contractor, an HVAC contractor or even a plumbing contractor.  Read on to find out how contractors can handle mold at their job sites and avoid liability.

Contractors should always warn homeowners if they spot mold on the job even if that is not why they are there. Mold can pose a serious risk to the foundation of the home as well as the health and safety of the inhabitants. The homeowner can then contact an Indoor Environmental Professional (IEP) to fully diagnose the problem.

This should be good news to the homeowner. However, this puts the contractors in a tough position. Over the past few years, there have been a growing number of lawsuits against contractors who pointed out the mold to the homeowner. The homeowners often attempt to place the blame on the contractors as the source of the mold, but why?

The number of claims made to insurance companies regarding mold damage began to skyrocket in the 90s and 2000s. This was good for the homeowner because the insurance providers paid to have the mold removed and the area restored. It was also good for the restoration contractors because the insurance companies were paying them to do their job. The only entity that didn't benefit from this growing awareness was the insurance provider who had to cover the costs.

Insurance companies found a way out of this predicament by including new and more severe mold exclusion clauses in their policies. This meant the insurance companies were no longer paying for mold remediation. The funds had to come from the homeowner, the contractor, a lender, or a third-party source.

Homeowners didn't want to be stuck with the bill so they began opening lawsuits against contractors claiming that the mold was a result of their work. This greatly increased the risk of working for homeowners as well as in commercial buildings.

How Can Contractors Avoid Liability?

Contractors must rely on their own insurance policies to avoid liability in many cases. Their Commercial General Liability (GPL) insurance policy is a standard tool of protection. However, there is a pollution exclusion clause included in this policy. The exclusion states that the insurance does not cover any bodily or property harm caused by the escape, dispersal, or release of pollutants.

Whether mold is considered a pollutant that is not covered by this policy is a widely debated issue. Court cases often tip one way or another without offering any universal standings. Some cases have found the policy to be too ambiguous with their definition of pollution. Others have classified mold as an airborne pollutant.

Contractors are not advised to leave their career up to chance. Instead, contractors should consider investing in new insurance policies that are specifically designed to cover mold and pollutants. (As well as the standard GPL policy) Contractors Pollution Liability (CPL) covers liability for such pollutants with a clear definition that includes mold or fungi.

CPL may be the best tool currently available for contractors to avoid liability when mold is discovered on a property. That is in addition to proper risk management. Properly managing risk means carefully choosing what customers to work with and how the problem is approached if detected.

Dealing With Customers

The customers a contractor chooses to work with, how well they document their work, and how they approach the customer regarding mold will play a big role in how the situation unfolds. First, it's a good idea to avoid working with customers that already seem disgruntled with insurance companies.

This is especially true for mold remediation contractors where the homeowner already knows of the problem and isn't happy that their insurance policy doesn't cover the loss. They may still try to pin further damage on the contractor that outweighs the bill for the services provided. These customers are time bombs that should be avoided when possible.

Addressing the issue as carefully as possible is the final point of recommendation. It's important for contractors to put themselves in the homeowner's position. Mold remediation can be expensive work and the insurance providers have dumped the costs on the homeowner. They need to approach the subject carefully, with empathy, and with a proper course of action.

Risk Exists

It is impossible to work as a contractor and avoid risk altogether. However, by utilizing ethical work standards, by carefully choosing and approaching customers, and by adding CPL policies to their arsenal they can greatly reduce the risk associated with mold.

Guest Blogger: R.S. Hall is the owner of several successful businesses and the publisher of the website www.moldremovalrescue.com which provides solutions for mold problems.

Guerilla Advertising: Transform Boring Ideas into Surefire Sales

If you are Bechtel Construction, with more than $17 billion in operations, you need not worry about advertising under budgets in such a way that would prevent you from putting food on the table.  After all, most in the construction industry, including designers and architects, are sole owners, with few if any employees. But for those of us who don't have a million-dollar advertising budget, we can turn to and rely on guerilla marketing and advertising to get our brand message out there.

Guerilla Marketing Defined

Guerilla marketing is generally characterized by unique or unconventional advertisements that create buzz because they are so mind-blowing. Since it relies more on cleverness than mass reproduction, guerilla marketing is hallmarked by being very cost effective and, in some cases, free.

Michael Serazio, author of Your Ad Here: The Cool Sell of Guerilla Marketing, calls this marketing style the “cool sell,” because of its strategy to use buzz to promote brand awareness, as opposed to a hotter sell of directly advertising the product.

Goals of a Guerilla Campaign

Word of mouth is still one of the best marketing tools a business can utilize. In the world of social media, word of mouth is amplified by the power of the Internet.

Likewise, guerilla marketing uses this phenomenon to get people talking about your brand by doing something clever and worthy of conversation. Named for its analogy to guerilla warfare, this marketing strategy ambushes potential customers using the element of surprise, sabotages competitors in the domain of brand reputation, and uses tactics to reach potential target demographics in a more efficient way.

Tap Into the Buyer's Persona

Of course, any marketing campaign has the ultimate goal of driving sales. You want consumers to recognize your company, but you also need them to use your business.

Guerilla marketing is excellent at influencing consumer purchasing habits. Because it relies on cleverness, this marketing technique inherently sends a message that your business is smart and savvy. The assumption is that you can use this brainpower for the benefit of your clients; all they need to do is pick up the phone and call you.

Going Green and Other Niches

Guerilla marketing is limited in size to a specific advertising platform. In business, this is called a niche market.

Working a narrow demographic of like minded people will lower your advertising costs, make it easier to find ideas that resonate with consumers, and increase your brand reputation. The “green” niche is particularly well suited for the construction industry. Since regular advertising is generally viewed very skeptically, green guerilla marketing can be a trusted alternative.

Case Study

Now that you have an understanding of the components for guerilla marketing, it would suit you well to examine the strategies of some of the more successful companies.

As an eye-catching and surprising motif, various zoos across the country have used the sides of buses drawn to look like a snake or a rhino denting the vehicle for their guerilla marketing efforts.

Because contractors are constantly on the road, it would be beneficial of them to use their vehicles for advertising purposes. If the vehicle is banged up, then look into purchasing a new or used vehicle and write it off as a marketing expense. From there, your job is to get creative. Make your vehicle look like it's overloaded, and paint the motto “we are full of your dreams."

More Work Coming In Than You Can Produce? – Here’s Some Guidance and Advice

The Joint Center for Housing Studies at Harvard University indicates that the dollars spent on remodeling will increase by 8.6% by the end of 2016.   Most remodelers are already feeling this surge in spending as their backlog of work keeps increasing and at the same time the number of estimates they need to push out is also increasing.  Smart business owners seeing this happening are already increasing their field staff capacity to take advantage of the work.  Adding staff can help get more work done.  However if production efficiency and organization are challenged due to the growth profits can quickly drop. To help these contractors out I have searched out and assembled the list of articles below. Each article is helpful, but collectively they can help identify a plan of action contractors can take to protect the profits they expect to earn by growing their businesses.

A good number of contractors have been contacting me for help in this area.  Most share now that they have more staff they are challenged to properly manage them and the sequence of work. Others report they have come to realize they may have hired the wrong staff.  The solutions to these problems are actually not that difficult to put in place.  What typically gets in the way is not knowing what systems to put in place to support the growth and how to get things started. 

Here is one message I got just today, from an employee:

“Hello. I was hired 3 years ago as an estimator. We had 2 carpenters and a super. We now have grown into 7 carpenters, super, production manager and additional secretary. None of our carpenters are "lead carpenters" but about 4 think they are. We are experiencing some growing pains for sure so any input would help. Thanks.”

So, here is my list of helpful articles for contractors seeking to advance and grow their production capabilities.  The articles will help enlighten you to what your options are as well as several important considerations to be aware of before you jump in and get things started. I hope you find the info helpful and motivating.

List of articles about growing production capacity at a Remodeling Company:

Options for Managing Production

What’s the Difference Between a Production Manager and a Production Supervisor?

All I want for Christmas… Is a Real Production Manager!

Is He Really a Lead Carpenter?

Key Differences Between Carpenters and Great Lead Carpenters: Part 1

Key Differences Between Carpenters and Great Lead Carpenters: Part 2

Checklist for Implementing the Lead Carpenter System

Considerations for Putting the Right Employee on the Right Job

Help With Evolving From Contractor to Construction Business Owner

How To Renew Your MA CSL Online

You can renew your MA CSL by mailing in your application or going in-person to renew it at the Department of Public Safety in Boston. One other option for renewing your MA CSL is to do it online. One great advantage of doing it online is that the process is instant and you don’t need to have already received your renewal application from the state to do it. I recently renewed my MA CSL License online. The experience was not all that difficult and it didn’t take too long to do it. Read on to find out how to do it and what you will need to have available before you start the process.

Note: To renew your MA CSL online this article will give you an overview. If you would prefer detailed step by step instructions click here.

If You Want to Renew a MA CSL Online

You will need to register first

If you have never renewed your CSL licensee on line before you will need to first register at the state’s web site before you can complete your on line CSL renewal. To register you will need to pull a few things ready first. Make sure you have your Social security number, your date of birth and CSL license number ready before you begin.

Once your registration is completed you can login right at the confirmation screen to access your account and begin the renewal process online.

Get Your MA CSL Completion Certificates Ready

Before you begin the online MA CSL renewal process make sure you have electronic copies of your completion certificates available on the computer you are using because you will need to upload the certificates as part of the MA CSL online renewal process. Be aware that scanned documents must not be larger than 3 MB in size. Also, only documents with the following file type extensions will be processed: .doc .docx .pdf .jpg .gif .png.

Your new license will need a photograph.

If you already possess a MA Driver’s License you can grant permission for use of that photo during the CSL renewal process. If you do not have a MA Drivers License or do not want to give permission to use that photo you will be required to upload a photo. If you want to do this you will need an ID Photo that meets US Passport 2" x 2" photo specifications.

When ready to log in:

Log in using your user ID and password. After logging in you will be at the “Licensing Home Page” and should see your MA CSL license record information. You will need to select your CSL License for renewal by finding it in the list (assuming you have more than one license) and then click on “Continue”.

After clicking “Continue” you will be taken to the “License Renewal Application” page where you can click to begin the renewal process for your MA CSL.

As you follow the screen prompts you will have opportunity to confirm or update your address information.

At the “Application Questions” page you can choose to allow use of your MA Driver’s License photo or upload a photo that meets the renewal requirements. After answering the remaining questions click on “Submit”. You will be taken to the “Attach Documents” page where you can upload your MA CSL CEU Completion certificates as well as a photo.

Repeat the upload process as needed to upload all the certificates needed to meet the credit requirements of your CSL license type.

Click here to see what the required categories of license credits you will need

Click here to see how many credits you will need depending on your license type

After uploading your completion certificates you will be taken to the “Survey Questions” page. Answering the survey questions is optional.

Next you will be taken to the “Application Summary” page so you can review and confirm all information. Use the menu at the left side to go back and make any changes as needed.

Then you will be taken to the “Pay License Fees” page. There you will find your total renewal fee amount and can click on “Pay Fees” to proceed.

At the “Make a One-Time payment” screen you will enter your payment information and “authorize your payment.

After you submit your payment, you have sent your application and fees to the Department of Public Safety for processing and you will be brought to a confirmation page which includes a receipt number. The confirmation page is printable and can serve as your receipt.

I hope you found this information helpful. Renewing online was quick and easy for me. I hope you will have a similar experience.

Think Twice Before You Use Subs or 1099’s Who Can’t Speak English; Here’s 2 Simple Reasons Why

The government has recently been cracking down on improper classification of workers as subcontractors.  Understanding the difference, at least in the eyes of the government, can help a remodeler avoid challenges as well as the fines and penalties that come with misclassification.  I recently became aware of an additional consideration as a result of reading an article in Remodeling magazine titled “Se Habla Ingles + No = No Deal? Get Real!”   After reading the article, but particularly the reader comments, that new consideration jumped out at me.  Using subcontractors and or 1099 workers who do not speak English can put your remodeling business at risk in at least two costly ways.

Two simple ways the language barrier can put your remodeling or construction business at risk

#1: Customer service can be compromised leading to loss of repeat work and referrals.  

Let’s face facts here; if a worker cannot speak English there will definitely be communication challenges.  This is clearly demonstrated by the comment left at the article I mentioned above.  The comment was by Perry, an actual consumer who personally experienced the challenges and disappointments caused both by the workers who could not adequately understand English as well as the business that hired them:

“It's difficult to quantify or fully explain in this comment the magnitude of problems we've had on our current job, but approximately half the problems can be traced directly back to a communication problem with the workers at the site.  I witnessed our job supervisor explaining what was needed (in as good a Spanish as he could muster), the worker acknowledging his understanding, and hours later when the completed work is inspected, it's clear the worker did not understand exactly what was needed.  This has happened repeatedly, with some of the mistakes far more costly than others.”

When a customer experiences what Perry speaks to its not likely the contractor performing the work will ever get future business or referrals from the disappointed customer.  Remember, quality is not just determined by the final outcome.  Quality is also determined by the experience the consumer has as the product is being delivered.

#2: Risk of the government deciding they are employees

Contractors should be using fixed scope contracts with subcontractors.  Subcontractor agreements should detail the work to be completed, the expected outcome, when it has to be completed and include a fixed price for the services performed.  If a subcontractor and or his/her workers cannot read a written work order due to a language barrier someone outside the subcontractor’s business will have to explain what is to be done and how it is to be done to the subcontractor.   And in the absence of the subcontractor at the jobsite someone will need to explain and direct that sub’s employees.    This type of relationship with a sub and or the sub’s employees demonstrates control by the business that hired the subcontractor.

The IRS will consider a worker to be an employee unless independent contractor status is clearly indicated by the relationship between the worker and a remodeling business.   The way the IRS sees it an employee is a worker who performs services at the direction of an employer.  Subcontractors are considered to be in business for themselves and work under their own direction.  So simply stated anyone who performs services for a remodeler is an employee if the remodeler can and or does control what will be done and how it will be done.  Explaining things to a worker and orally directing how and in what order to perform their work therefore makes the worker an employee.

The fines and penalties for misclassification can ruin your business

As I pointed out in a previous blog post the determination by the government of misclassification of workers can be caused by many reasons.  Plus when it happens the government assumes you to be guilty until you prove your innocence.   If you cannot create a written subcontractor agreement, in the language of the subs you work with which details the scope of work they are to perform independently, you and or your business will be forced to orally direct the work of the subs.  Once you do that the government no longer classifies them as subs, but rather as employees.  That is therefore misclassification.   According to an article at workcompcentral, in Tennessee a company by the name of Aguilar Carpentry was caught misclassifying workers and was fined $73,000.  In another article posted to WTNH.com a CT contractor was fined $20,240 for misclassification. Those fine amounts would put most remodelers out of business.

Still unsure about your relationship with sub? Here are three possible options

For a quick answer perhaps just take the quiz Remodeling Magazine recently offered titled:  "Take the Quiz: Are You Misclassifying Your Subcontractor?"  Answer the questions honestly and then see if the government would call them subs or employees.  

If you want help from the IRS and you have a lot of time to wait you can use IRS Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.   The completed form can be filed with the IRS by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status.  Unfortunately it can take at least six months to get a determination.  Additionally, often times because determining factors used by the government are not always objective, the determination may not binding.

How to Raise Your Markup: The Short 7 Step No BS Answer

OK, I’m sick and tired of the foo-foo fluffy BS answers some magazines and bloggers put out there to answer how contractors can raise their markup.  All the BS answers I see offered by others never call these contractors out on their ignorance. Without knowing what markup they actually need to use how would a contractor who is “slowly raising” his markup know when he has finally hit the right markup? It drives me crazy!   If you are ready for the no BS answers read on…

I have observed that the most common reason contractors can’t or won’t raise their markups is because they have no idea what markup they actually need to use. Yes, the hard truth is they are ignorant to how profits are built into their pricing and how to determine what markup they actually need to use. Due to their ignorance they have to guess and therefore completely lack any confidence in the prices they quote to consumers.

OK, no more BS.

If you want to make a predictable profit as a contractor here is the short and sweet no-BS plan.  

1. Recognize you have no clue what to charge to be profitable and make a commitment to stop using the WAG Method (Wild Ass Guess)
2. Learn how the financial game works so you will know what needs to be considered and how to figure out what to charge. If you have never been able to do this on your own, consider the definition of insanity and take a different route.
3. Do the work and due diligence required to calculate the markup you need to use to be profitable, to live the life style you deserve, and to be able to retire some day (before your body gives out or you die). Knowing this number will be business and life changing.
4. Accurately estimate your direct costs to build projects and then use the markup you calculated to establish the profitable price you need to sell at.
5. Tell prospects your price and stick to it with confidence.
6. If you don’t know how to sell, other than by dropping your price, get real sales training. Remember, profits are earned during the sales process and protected during production. If you are trying to make money in production it’s probably because you’re not a business manager, you’re a carpenter.
7. If the people in your current market won’t pay what it takes for you to run a real business find a new market to work in.

Done! No more BS.

She took control of the bull.  But, will you do it?

Five Things I Wish the Remodeling Industry Would Change In 2016, But won’t

The majority of remodeling contractors who participate in the remodeling industry are holding the industry back from becoming much more professional and successful.   Remodelers forever complain about what they perceive the government and even consumers do to them to make running a business and earning a profit difficult. However in many ways remodelers are their own worse enemies, creating problems for themselves and the industry by both their actions as well as their lack of action.   Below are just five things I wish all remodelers and the industry would change, but won’t.  

Before you check out my list keep this in mind.  If you’re a remodeler and you eliminate and or address most of these things in your business you will stand out as different.  You will also be more successful, be at much less risk and can also make much more money.

#1: Stop calling them estimates, they are not estimates

Home owners ask for estimates. In most cases they don’t want a guess, they want a fixed price. Next time a consumer asks for an estimate give them one right away; “That will cost somewhere between an arm and a leg depending on your final product selections”. Then help them discover what it will really take to help them assemble a fixed price for a fixed scope of work that meets their needs. Then let them know how your professional services can help them do so; and what you charge for those services. One way to explain it is your estimates are free, you charge to help develop solutions… (Check out this Design/Build Agreement)

#2: Calling Employees Lead Carpenters when they are not

Although most remodelers really don’t know what a true lead carpenter is many claim they have several on staff.   If you don’t believe me read this job description first, then ask a few to define the difference between a carpenter and a lead carpenter.  Giving the title to an employee who is not a true lead carpenter does a disservice to the employee and misleads consumers. It’s like passing off roof cement as a flashing. It’s just not right to do so if you are really a roofer. Becoming a Lead Carpenter is an accomplishment, let’s reserve the title for those who have earned it.

#3: Claiming to be Design/Builders when they are not

Like Yoda said; “Do or do not, there is no try”. You either are a Design/Builder or you are not. If you allow others to bid on and or build from your plans you are not a Design/Builder; that is something else. Decide what you are or will be. There is a big difference between Design/Build and design-bid. (Design/Build definition) Remember, in a bid situation it’s often the biggest loser who wins! If you hate bidding become a real Design/Builder. That’s what motivated me to become a Design/Builder when I had my business.

#4: Guessing at what markup to use

Surveys of the industry as well as my own experience show that at least 85% of remodeling contractors have no idea how to figure out what markup to use.   Our industry even has a name for this; “The Wild Ass Guess”. Sadly, many remodelers are even under the false impression that markup and margin mean the same thing! What does it say about an industry when so many of its business owners are ignorant about what they need to charge to be successful and profitable? (The Five Biggest Financial Related Mistakes Contractors Make)

#5: Tolerating illegally operating business

There are probably more than one million remodeling businesses in the United States if you include those without payroll.   Sadly, I bet fewer than 20% operate completely legal. That’s probably why so many remodelers find some way to rationalize why they tolerate other illegal businesses; “People who live in glass houses shouldn’t throw stones”. Here is just a partial checklist you can use to self-assess: RRP, OSHA, permits, using 1099 workers, taking cash, proper licensing…   Need I go on?  (10 Steps To Building A Successful Construction Company)

What about you?   What would you like to see change in the remodeling industry? Please offer your perspectives by posting a comment, or two.