The Design Builder's Blog

Guest Blogger:  Paul Lesieur is a 203K consultant/contractor and writer within our industry.  If you are interested in learning more about the 203K opportunity you can go to his  websites www.203kloanmn.com and 203kcontractor.  There you can also find some links to the HUD website where you can learn more.

Success Guide For Contractors Seeking To Do 203K Loan Work

To do a successful quote for a 203K loan you must write a detailed line item bid, you should do this anyway but what works best is to break out your costs.

Here are some examples of how to write specs into your bid:

• 1000SF of 3 tab asphalt roofing @ $1.26SF for materials is $1260 and $1.86SF for labor is $1860 to total $3120.00.
• Or remove old washer and dryer and install owner’s new appliances for 2 @ $120ea labor to install for $240.00.
• Remove 80SF of sidewalk and replace with 80SF of new concrete sidewalk @ $20.00 a SF = $1600.00

The better you detail the better chance you get the job and make money. On the Streamline 203K your bid is checked by the lender who likes to see details.   The bank will not accept a bid that says simply "Paint house $5000" or "Reroof house $8000". When I am the 203K consultant and get this kind of bid from a contractor I disallow it.

Successfully Pricing and Getting Paid When Involved With A Full 203K Loan Project

A full 203K loan uses the services of a 203K consultant. The consultant writes up a scope of repairs which always includes the minimum health and safety requirements of the FHA. After the minimum standards are called out the homeowner can add anything they want as long as their loan is approved for that amount.  NEVER do your bid before the consultant does the work write up, you will probably end up doing it again when the appraiser gets done. The consultant does a scope with prices attached and then you bid using his mandatory items and the homeowners’ desired items.

You the contractor then bid the job.

Pricing is what the market will bear.  I have thrown out bids that were too low, and occasionally items that were too high.  So charge what you need to be profitable and assume everything is negotiable just like any other job.

Your first draw can be called whenever you feel you want some money.

The consultant then inspects and approves your completed work. If you are installing vinyl windows at $1000 each and I get there and five are installed I will allow payment for five windows or $5000.  The five windows you say you will do after lunch don't count and the fact they are sitting in the living room means nothing to the bank. These draws (up to 5 are allowed) cost the homeowner $150 to $250 each, so we try to use them to the best effect.  If you run out of money consultants will do more draws but the consultant will get a check from you the contractor when he visits.

You will get paid!

• No payments are disbursed unless you show proof of permits.
• On a streamline 203k which is under $35,000 you will get 30 to 50% down and the rest after the project is complete. The Streamline 203K allows for 2 payments.
• The Full 203K which can go up to $365,000 or higher allows no down payments. This means you need to be strong enough to operate until the first draw.
• All draws are subject to a 10% holdback which is released 30 or 35 days after the last draw.
• It takes on average 7 to 10 days to get a check which is mailed to the homeowner with your name and theirs on it.

Change orders

Change orders are allowed and are most often used for upgrades by the homeowner or hidden conditions.  If you mis-measured you’re out of luck, HUD does not pay for your mistakes. Get detailed or stay away from these jobs.

This type of work goes best when you are part of a team that knows what they are doing and as a 203K consultant I find you can't always count on that being the case. Educate your buyer by being the answer person for their 203K.

Problems?

Problems that come up most often are inexperienced 203K consultants and inexperienced lenders new to selling 203K loans.

Also, homeowners who are first time home buyers who don't understand the difference between a $40,000 quote and one for $19,000 for what they think is the same scope of repairs. Educate your subs and clients and you will have fewer issues.

Regardless of the issues I have not had any problem large enough to make me want to leave this program. There is billions of dollars of work out there to fall under the 203K loan program and for any contractor willing to adapt a good opportunity is waiting.

The Five Biggest Financial Related Mistakes Contractors Make

Having worked with hundreds of remodelers to help them improve their businesses and achieve their goals has exposed me to the common reasons their businesses run into financial problems.   Here my list of the five biggest mistakes I see contractors make that lead to money problems, and some suggestions on how to avoid or prevent them.

1. Guessing at the markup used to determine selling price

Pricing your work without knowing the true cost of being in business is referred to as using the "WAG" method, or “Wild Ass Guess” method.  Unless a business knows what markup to use to determine the right selling price it puts itself at risk of actually buying jobs instead of selling them.   Unless you know your minimum required markup to cover overhead, how do you know how low you can go when the prospect wants to negotiate?

Don't Put Your Business at Risk by Guessing At What Markup to Use

2. Using different markups on different cost categories without knowing the impact on required gross profit.

This is like a Super-Sized WAG!  Unless you use a single across the board markup on all estimated costs, you will need to be very accurate when anticipating how much you will sell of, and how much you will markup, each category of costs your business includes in estimates throughout the course of the year.  Most contractors who do this have no idea how to do so.  Keep in mind that if you do drop the markup on one item you will need to increase the markup on another to make up for the drop in gross profit dollars on the first one.  One contractor I know said he believed contractors who use this method have what he called “Head Trash” about money.  He went on to say they should “get over it” and should learn how to sell.

3. Not factoring for the cost of non productive time in the labor rate used when estimating.

Most contractors have no idea how to handle this one.   Using the wrong labor rate can have a double negative effect.  Not only will you not charge enough to cover labor costs, you will also lose the markup on the missing labor dollars! To bring in the money you need to pay your employees when they are not producing work you need to include that money in the billable hours they do work. 

How to Cover the Cost of Non-Productive Time in Your Estimates

4. Not estimating and job costing apples to apples.

First, this assumes the contractor even does job costing, most don’t.  As one example I estimate that fewer than 10% of contractors can job cost their labor costs the same way they estimate them.   If you use a burdened labor rate to estimate the dollar cost of task hours, your total labor cost will include things like workers comp insurance, non-productive time and employee benefits.   If you use QuickBooks for job costing, and you enter employee time card information into QuickBooks, typically only the employees wage and employer paid payroll taxes are expensed against the job budget in job cost reports.   This will falsely make the actual labor cost appear much lower than the labor budget from your estimate.   To solve this, use my free labor cost worksheet to calculate your true burdened labor rates for each employee and then work with a QuickBooks expert who knows how to set up the software to include labor burden assumptions in job cost reports without affecting the accuracy of your P&L.

5. Not factoring for actual costs at time of production when estimating

If you sell work that you won’t be starting for some time, in your estimates you will needed to include the actual costs you will incur at the time you produce the work.   If you don’t do so the extra costs will eat away at your planned net profit until it’s gone.  If the extra costs exceed your anticipated net profit you will need to use your own money to finish that customer’s job.  Keep in mind that some reports anticipate many construction materials will increase in cost as much as 25% this year.

Anticipate increases and include them in estimates before jobs are sold

Guest Blogger:  Paul Lesieur is a 203K consultant/contractor and writer within our industry.  If you are interested in learning more about the 203K opportunity you can go to his  websites www.203kloanmn.com and 203kcontractor.  There you can also find some links to the HUD website where you can learn more.

203K Loans Mean Business Opportunities For The Right Contractors

A HUD/FHA 203k loan is an insured loan where one loan payment covers the purchase and remodel costs.  The 203K has been around for years and is by owner occupants to purchase, repair, and renovate a home.  Or, it can be used to refinance if you are looking to do a remodel on your existing home.

Learn about these loans and you can have another revenue stream for your business, and we’re talking major opportunity. I know one contractor who did 2 million in sales related to 203K last year and another who will do over a million in sales on just the203K work while still doing the high end kitchens he is well known for.

If you understand meat and potatoes contracting this is an opportunity, and the most successful 203K contractors are organized and detail oriented. The 203K requires patience and good communication skills and isn't for sloppy operations.

How to get 203K jobs

Best way to get going is to find a lender who does 203K loans, they are always looking for competent contractors.  Realtors can get you some leads also, and advertising like I do gets me very good results.  Just type 203K loans in your local search and see what comes up; those listings are your target.

There are two types of 203K loans

• The streamline 203K is a loan where you can do up to $35,000 in remodel or repair costs and it can include paint, carpet, furnace replacement, kitchen, bath and many other improvements. It is not allowed when structural improvements are needed.
• The full 203K loan allows structural work and just about everything homeowners want or need done. Luxury items are limited but not necessarily disallowed.

What contractors need to know about the 203K

This is a great loan with a lot of upside for contractors.  The money is escrowed and it’s insured so you don't have to worry about a homeowner gambling it away at the bingo hall Friday night.

For contractors to get 203K rehab work from home owners or buyers they must be approved by the lender offering the loan. This usually means a credit check naming a couple of suppliers, some subcontractor references, customer references , license and proof of insurance. Some banks also ask that you have cash reserves, but not all.

Watch for Paul's follow up to this blog titled " Here’s What’s Involved If You’re A Contractor Seeking To Do 203K Loan Work"

How Contractors Can Make More Money, Faster and By Doing Less

With only so much time in a day, contractors need to maximize the revenue and or gross profit they earn each day in order to cover business overhead costs and contribute to their desired net profit goals.   Selling and producing more work is certainly one option to consider.  However, why not implement ways to increase the selling price and earn more gross profit without having to do any more work in the field or add anymore labor costs at the job site.

Options to consider

If you want to increase your sales volume and earned gross profit you can either produce more work or increase the selling price of your projects.  Here are a few things to consider:

• Producing more work at the job site means you will need more labor and the project will take longer.  Finding and keeping more employees busy can be challenging.    
• Increasing your selling price doesn’t have to be limited to raising the prices of what you sell.  Increasing your selling price can also be accomplished by increasing what is included in the selling price.
• Assuming you mark up everything you sell, if you find the right prospects and sell them higher price point products than you have used in the past, your average sell price goes up and the gross profit earned on each job goes up as well, without adding more labor or days to the project schedule.
• Also, consider that selling product options can be another way of increasing the sell price and earned gross profit, again without having to add any more time, do any more work or add any more labor to get the work done.

Here’s one example of what I am talking about 

At a recent Remodeler Summit event I participated in for Marvin Windows and Doors at their Warroad MN manufacturing facility, contractors learned about Marvin’s new option of prefinishing the interiors of their window and door products.   By selling this option to their customers, contractors can increase the cost of each window they sell by offering an additional service to their customers.  And, they can do so without increasing the production time of a window project and without having to add any additional on site labor to their projects.   The windows are prefinished at the factory, under controlled conditions and can either be prepainted or have a clear finish applied.   Because the prefinishing is done off site, all the mess of prepping and finishing is avoided, no extra job labor is needed and the smell of any finishing products is avoided at the job site.  Selling prefinished construction products can be a win-win, both of the contractor as well as the homeowner.  Selling prefinished products means more gross profit earned for the contractor without doing any more work.  The home owner benefits because more work is done in less time, with less mess and disturbance to their home and their daily lives.

Here’s one more example

At a tour of Reliable Truss and Components Inc., a division of National Lumber in Mansfield MA, I found out they offer prefabricated custom structures and components.  Using this service contractors can have components of their projects prebuilt and even prefinished in a controlled factory environment.  The components are then delivered to the contractor’s job site ready to install.   Partnering with a vendor who can offer this type of service helps the contractor earn more money by doing less work in several ways.  

• The contractor can earn gross profit on the labor as well as the product being provided by the vendor.
• At the same time, the contractor can be earning gross profit on the labor and the products being installed by his own crews while they get the project ready for installation of what is being built off site.
• Some vendors, including Reliable Truss, will also come prepared with the equipment needed and help your crew install the prefabricated and prefinished items at the jobsite.

It just keeps getting better!

Both examples above can help contractors earn more money in less time.   Both examples offer ways contractors can get more work done without having to add any additional talents or skills to their crews.  Both examples also eliminate or reduce the need to find and bring in sub contractors to do work the contractor’s own crews either don’t have the talents for or might not be cost effective at doing.

I bet more and more contractors will be thinking this way as the increasing costs of labor and the lack of available skilled labor puts pressures on their businesses and their profits.

Carpenters Should Read This Before They Interview For Their Next Job

If you’re a carpenter looking for a better job and career opportunity you might want to consider a lot more than just compensation before you decide which remodeling or construction business you will work for.  Sure, what you get paid is important.  However, considering how much money you will make over the course of your entire career might make far more sense than only considering how much you will get paid next week.

At the Providence RI JLC Live Show coming up in March I will be presenting a seminar titled “A Call to Action and an Opportunity for Carpenters and Business Owners” on Saturday morning March 23^rd from 7-8:30 AM.   At the seminar I will be sharing some strategies carpenters can use to help them if they would like to improve their careers and compensation.  This same information can be used by business owners if they want to attract and keep quality carpenters for their production teams.

Below is a list of some of the considerations an aspiring carpenter might want to use when searching and interviewing for a new job and career opportunity.  As part of my presentation I’ll be reviewing and discussing this list at the seminar.  My hope is that by discussing these considerations attendees can determine whether they are working at the right company already, whether they should consider looking for a new company to work for, and how to evaluate the businesses they interview with.

Topics to be discussed at the JLC LIVE Seminar

The Company You Keep: Financial Considerations

• Does the business have a financial budget for the year?
• Can and does the business run budget to actual reports to track progress?
• Does the business have a formal estimating system and method?
• Does the business share the estimate with field staff?
• Does the business do job costing on a consistent basis?
• Does the business share job costing info with field staff?

The Company You Keep: Company Structure Considerations

• Does the business have an organizational chart you can look at?
• Do they have a growth plan and organizational charts to show future staffing needs?
• Do they have and will they share written job descriptions?
• Do they use a production manager driven or lead carpenter driven production system?
• Does the business have a place of business?
• Does the business operate legally?

The Company You Keep: Opportunity for Advancement

• Does the business plan to advance employees as it grows or hire to fill future positions?
• Has the business defined career paths for employees, in writing?
• Do job descriptions include educational requirements and or expectations?
• Does the business have an adequate budget for employee education?
• Does the business have a formal and scheduled review process?
• Does the business have an objective method for establishing compensation rates?

The Company You Keep: Current Leadership

• What are the goals of the owner; Practice vs. growing business?
• Is the owner a craftsman or business person?
• Is middle management already in place?
• Is the owner or manager “present” at the job interview?
• Does the owner share financial information with employees?
• Does the owner conduct him/herself in a professional manner?

Thinking about attending this JLC LIVE seminar with Shawn?

Below is the summary slide from my presentation.   In case you’re considering joining me that morning, the slide should help give you an understanding of what I’ll be discussing at the seminar.

Other seminars Shawn will be presenting at JLC LIVE in Providence RI:

EPA RRP Certified Lead-Safe Renovator Training & Certification (Also covers MA and RI Certification)

Three Keys to Building a Profitable and Sustainable Business

Leadership Skills For The Lead Carpenter

Unhappy With Government Policies and Regulations Affecting Remodeling Business?

On February 5, 2013, the nonpartisan Congressional Budget Office released a projection that the economy will remain slow this year. Unemployment is expected to remain above 7.5% through 2014 for a sixth consecutive year, the longest stretch in the past 70 years. While the CBO forecasts that the nation’s yearly deficit will dip below the trillion dollar threshold, it is projected to rise again later in the decade. Responsible spending reductions are needed to change that trajectory. By 2023, the national debt is projected to equal an unsustainable 77% of the nation’s economy (Gross Domestic Product), and still be going up.

Recently, the House Small Business Committee launched a new resource to help small businesses help shape federal regulations and add some real world common sense to the process. This initiative, “Small Biz Reg Watch,” will highlight proposed regulations that will likely affect small firms, and inform business owners of how to make comments to the appropriate federal agency.

Chairman Sam Graves Discusses Small Business and the Economy

Make Your Opinion Known

Most small businesses do not have lawyers or lobbyists to help them with regulatory compliance, like some larger corporations do. Not all regulations are bad, but many can be unnecessarily burdensome, so it is important that small companies get to express their concerns before rules become final. Small businesses bear a regulatory cost that is much higher than the cost of compliance for large businesses. This initiative will help small companies make their voices heard. 

On select proposed rules that impact a large number of small businesses, the Committee will communicate about the regulatory comment period via email, social media, and even district events around America. Small businesses are also encouraged to join the hundreds of small firms that share insights with the committee at their interactive web platform, “Small Biz Open Mic.”

Note:  Most of the content of this blog post comes from the Weekly Update email newsletter published by Sam Graves, Chairman of the House Committee on Small Business.  Click here to sign up for the weekly e-mail newsletter and other e-mail alerts.

Checklist of Consideration for Contractors Offering Snow Removal Services.

When winter snows and ice dams hit many contractors see offering snow and ice dam removal as an opportunity to make money.   If you’re considering snow removal as an opportunity for your business thinking ahead about how and where you offer it, as well as how you will perform the work, can help protect your business from inherent risks.  Thinking ahead about your approach can even help you drum up additional work after the snow has disappeared.

Offering snow removal services makes sense for many contractors 

After all, if work is slow during winter months, snow removal can bring in extra revenue.   Also, many projects come to a halt when the weather makes working outside impractical or makes going in and out of a building while working on interior renovations dangerous and messy.   If you price it correctly, offering snow removal and ice dam removal can help keep employees working and help contribute gross profit to cover business overhead.

How the snow removal checklist list came about

Several years ago I helped one of my remodeler coaching clients plan out how to offer and perform snow removal services.   He called me because he realized there were a lot of things he should consider before just sending his guys out with there with shovels and axes.  Below is a list of considerations from my coaching session notes created during my discussions with him.   By sharing my notes my hope is that you will find them helpful, you will price the work for profit, you and your employees will be safer while performing the work, you can use the opportunity to create new customers and you will generate future work from those that hire you.

Checklist of Snow Removal Services Considerations for Contractors:

• Suggested he consider the work is labor intensive, he will not be earning his typical gross profit on subs or materials, be sure to price hourly rates accordingly.
• Agreed on $300 first hour with two men, $80/hr per additional man hour.
• 4 men doing it currently.  Full employees with Workers Compensation (WC) coverage. 
• Discussed properly equipping his employees to avoid risk and health problems. Confirmed he has fall protection equipment needed to meet OSHA requirements and employees know how to use it.  Should try to do as much of the work as they can from the ground.
• Confirmed that he knows which WC classification workers will be in while doing the work and what rate he will be charged on all related payroll.
• Discussed a variety of ways to do the work to limit residual damages.
• Discussed setting realistic expectation with clients before doing the work. Agreed that only using a verbal agreement about services would not be acceptable.
• Help home owners understand nature of the work, let them know that damages will happen and that he cannot guarantee preventing leaks or any possible damages inside or outside.
• Suggested he have an agreement; created and or reviewed by legal counsel.
• Suggested he disclaim in the agreement any water damage prevention and or remediation responsibilities.
• Look at the work as a good way to meet new clients.  Because there might be more demand than he can service, be selective about who he will work for, make sure they fit within his target customer/location niche.
• Suggested he make follow up calls to verify home owners are all set and happy, ask if they should come back if it keeps snowing.
• Collect contact info including e-mail addresses so he can re-market for future work.
• If he uses any subs make sure they are properly insured and follow OSHA requirements.  Make sure subs know not to attempt to solicit or accept any work from his customers.
• Keep emergency contact info on site and or in each vehicle.
• Suggest he ask about future work, both snow related and remodeling.
• Could create a checklist of things to ask or tell customers related to the work and future work; what his company does.  Said he has already created a simple sheet listing other work they do.
• Suggested he should be prepared regarding how to differentiate his business from other businesses offering the work. Discussed one way is to offer all clients an insurance certificate that lists the home owner as an additional insured, sent direct to the client from his insurance agent before work starts.  Verify his agent is prepared and capable to do so.
• Suggested considering doing a YouTube video commercial about the service and put it on his website ASAP.
• Discourage use of Red Bull, maybe even coffee. Suggested hot chocolate and donuts.
• Suggested refrigerator magnets would be a good leave behind.  Also consider 5-5-10 door hanger package we had discussed on a previous call about jobsite marketing.
• Asked him what his top three takeaways from our discussion were:

1. Caution regarding liabilities, set expectations with clients in writing.
2. Realizes the marketing opportunity, concentrate on working for his target customer.
3. Keep an eye on the big picture to avoid liabilities and not miss an opportunity by being blinded by a just getting the work done mentality.

To Be Successful In 2013 Create a Business Plan And Do An Estimate

For me, when I still owned my remodeling business, getting ready for business growth meant I would first need to do two things; make a plan and create a budget. 

Create your plan

First was to create a plan for what I wanted to do and how I would do it.  I considered what projects I would specialize in, who I would work for, where I wanted to work, and how I would market my business so the right people would find me.  I determined how many employees I would need as the business grew and what skills they would need now and later so I could delegate some of my current responsibilities and include the money needed to do so in my selling prices.  After determining the how, I needed to predict how much.

A business budget is kind of like a project estimate

The first budget I created was very simple.  By looking at the end of year profit and loss report, the financial history of my business from the previous year, I was able to list the majority of the expense categories I would need to consider to predict the costs of my new plan.  For anything I wasn’t sure about, I would call my accountant or another remodeler I knew at my NARI Chapter for advice.  Just like a remodeling project estimate, I listed the related expenses and then got current prices for each of them.

The Numbers Game

Creating that first budget for my plan to grow the business seemed very overwhelming.  After all, I had never done one before.  Looking back, the hardest part about doing it was actually sitting down to do it.  

Once I had become clear on the financial definitions and formulas used, the budget actually went together fairly easily.   I admit it was very time consuming that first time.  However, because I kept notes on how I had determined certain expenses and where I got the information, the second budget I did was a breeze.  I did not have to completely recreate or try to remember the entire thought process.

Planning and budgeting assumptions

As a result of living through the experience, I developed four simple assumptions, in addition to keeping notes, which helped organize the way I looked at the process.  They should be completed in the following order as well.

1. Commit to making a real profit, establish how much, and think of it as an expense that must be paid.  You only need a budget if you plan to make a profit.  
2. Be clear on how you will define and separate direct and indirect costs.   Once you identify which is which, recast your current accounting software's account list.   This requires moving misplaced accounts and costs to their proper locations as either cost of goods sold or overhead expenses.
3. Look at the big picture.  Consider your annual budget as just one project, like a whole house project that takes a year to complete.  Use your profit and loss report for the previous year as a start to estimate the coming year’s budget. Then start making adjustments for each account to reflect any price changes and or your new plans for the coming year.
4. Be sure all of your direct costs will somehow show up in your individual project estimates.   Pay particular attention to labor costs, equipment purchases and repair, and general miscellaneous supplies.  Make sure the hourly labor cost you use is burdened over and above the wage you pay employees to include all labor-related expenses and benefits.  If you own and repair your equipment, and or you use assorted hardware and supplies that do not end up as line items in your estimate, establish a percentage to add to your estimated direct costs so you will cover and include these costs before you add your markup.

Using this simple process year after year, I came to learn how important it was to my business’ success that I planned ahead for what I wanted to accomplish.  With a plan in hand, and a budget for what it would cost, I had the confidence and motivation I needed to make success a planned reality.  I also had full confidence in asking for the real price I needed to sell each project.

Contractors: Try This Self Quiz To See If A Properly Setup Financial System Can Help You:

Unfortunately, the facts show that about 85% of residential construction business have no idea what it costs to be in business and cannot properly and accurately track where they are making and or losing money.  If only these contractors had and would use a properly setup financial system they would reduce a lot of the stress related to owning and running a construction or remodeling business.

Here are my simple questions for those of you who don’t have an adequate Financial System:

Not sleeping well due to money issues and is it affecting your ability to do your job and have a life?

Would you rather go to bed at night wondering if you’re screwed, or knowing that you’re screwed?

Take this self quiz to see if a properly set up financial system would benefit you and your business:

• Do you know if you will make a profit this year? 
• Do you know how much money will pass through your company at any given time?  
• Do you always have enough money to pay monthly bills on time or meet payroll (cash flow)?  
• Do you know whether you are buying rather than selling projects? 
• Do you know how and when to predict increasing costs of doing business?
• Do you know what your options are for smart business growth?
• Are you confident about making it through the current recession?
• Will you and your business be ready to thrive when the economy turns around and the volume of work picks up?

How did you do?

If you answered no to one or more of these questions, you are definitely not alone.  For many Construction Business Owners financial management skills are not necessarily part of their educational background.  Plus, have you ever tried to get an accountant to explain this stuff to you? 

A properly designed and setup finacial system would give you the ability to answer yes to all of the above.

What are you waiting for?

If you do not have the financial system you and your business needs, ask yourself why.   If you need help setting one up, get the help you need.   If you want to work with someone who can explain things to you in a simple way, help you understand your options and get your system set up; contact me today to discuss your needs.

Five Great Books for Remodeling Business Owners

 I have always loved reading to learn about new subjects.  When I was first in business as a remodeler I read a lot of articles in trade magazines.  They offered great ideas, best practices and sample paperwork or forms I could put to use right away.   However, right about the time I sold my business I also started reading books on business related topics.   After reading a handful of titles I came to the realization that the articles in the magazines were helpful and offered individual solutions for a variety of typical business challenges, but the books I was reading offered much broader and more comprehensive views about big picture business strategies and opportunities. 

In many ways the books I read helped me understand how I had grown my business, what made me and my business more successful than many other remodelers and their businesses, and they helped me better understand why my business had salable value beyond just the value of the hard assets.  I quickly came to the realization that, had I read those books much earlier in my career, perhaps I could have increased the level of success I enjoyed.   I also came to realize that I would have dramatically reduced the time it took to build my business had I read those same books when I first started my business.  

The books in the list I offer below fall into the top five books I think remodelers should read if they want to grow a successful business and reduce the total time it takes to do so.   More importantly, these books can help remodelers avoid the frustrations, wasted time and wasted money that come with the trial and error approach of going it alone as a business owner.   Even if you still can’t build the business you want on your own after reading these books, you will definitely know what help you will need to get there

“The E-Myth Contractor” by Michael Gerber

This is one of several E-Myth books by Gerber.  They are all worth reading, but if you’re a contractor this one gets right to the point about what you need to do to build a contracting business that runs without you needing to do everything yourself and be there every minute of the day so things get done.   If you ever want to sell your remodeling business, or at least be able to take an extended vacation, make sure you grab this book.

“Good to Great” by Jim Collins

Many business owners are happy having good businesses.  Others decide that their businesses, when compared to other businesses, fall into the good category; a term sometimes referred to as relative success.   If you want more than just a good business Collins and his team has done the research to figure out how it’s done.  He offers some great strategies to consider as well as some great examples of companies and their leaders who made the jump from good to great.  He also shares the importance of and the type of leadership required to achieve greatness.

“The Great Game of Business” by Jack Stack

 If you would like to have an open books business that involves all employees in the creation of and sharing of company profits you should definitely read this book before you do so and well before you start creating your plan.  Not only does Stack share strategies for doing so, he lets you know the challenges to expect, how to get ready for them and how to identify employees who will never go along with the changes.  He also shares a process to use to help educate employees about business financials relative to their job positions, how profits are earned and how they can measure their individual contributions in ways that are real for them.  As I mention in my blog about profit sharing, businesses that share profits often earn more profit as a result!

“Selling the Invisible” by Harry Beckwith

Back before the September 11^th attacks my remodeling business was humming and qualified leads came in faster than we needed them.  Then, after the attacks and up through February, we had only sold about $15,000 worth of new work.   I had to do something to get the business back on track.   That’s when I found “Selling the Invisible” and it changed forever they way I looked at and did marketing.   In his book Beckwick discusses the difference between the “outside perception” people gain of your business from traditional marketing and the difference a business can enjoy if its marketing projects the “inside reality” customers who do business with you come to know.  Customers spend way more money to get something they consider different.  If your business has an inside reality that really differentiates your business from the competition you will not regret reading this book.

“Managing for Excellence” by David L. Bradford and Allan R. Cohen

There are all kinds of books available on the subject of business leadership and I’ve read at least a handful of them during my career.   In my opinion this is the best book on leadership that I know of.  If you looking to not only be a great leader yourself, but also create a whole team of leaders at your remodeling business this is the book that best describes how.  As a word of caution; if you’re afraid that one of your employees might become a better leader than you, don’t bother getting this book.  As you will learn in the book, the only way you can become a great business leader and create a great business is to create other leaders who can replace you.  If you want to sell your business someday you need to read this book.