The Design Builder's Blog

3 Financial Strategies for a More Scalable Construction Business

As 2017 dawns, the outlook for the construction industry is optimistic. Despite setbacks experienced during the Great Recession, the industry is set to add 790,400 jobs over the decade of 2014 to 2024, accounting for the majority of new jobs in the goods-producing sector. Real output will grow 2.8 percent annually during this period. In 2017, total U.S. construction starts will increase 5 percent, reaching $713 billion, anticipates Dodge Data & Analytics.

For contractors, this is great news, but it also presents the challenge of scaling up to meet growing demand. Scaling up requires not only hiring more workers and buying more material, but also adjusting your financial strategy to cover your increased overhead expenses without hurting your cash flow and profits. Here are three financial strategies for successfully scaling up in 2017.

Scale up Revenue while Scaling Down Costs and Expenses

A scalable remodeling business model is designed to allow you to increase revenue while holding both job costs and overhead expenses down. To be scalable, your financial plan should aim for gross profit margins of 40 percent or more (minimum of a 1.67 markup).

To achieve this level of gross profit margin, one fundamental strategy is increasing your revenue. The key to increasing your revenue is improving your marketing and sales. One of the most efficient ways to improve your marketing is by improving your positioning through a better unique selling proposition (USP): a brief statement that summarizes what you offer customers that your competition doesn’t.

To refine your USP, narrow down your ideal target market. For instance, is there a certain neighborhood or a certain type of building that would be more profitable to specialize in? Research what your target market is most seeking in a construction contractor. For example, are they price shoppers or are quality or service bigger priorities for them? Craft your USP to emphasize what your target market most values and make sure all your marketing material reflects your new USP.

Along with increasing your revenue, the other half of keeping a high profit margin is keeping expenses low. Many construction businesses fail because they can’t cover the cost of overhead. Finding ways to reduce the money you must pay for running your business is key to minimizing your expenses. Taking the time to research different organizational charts, industry best practices, project management methods, business management software and employee compensation strategies based on performance.   Investing in these areas now can help your business reduce overhead through efficiency of operations as well as economy of scale as the business grows.

Maintain Efficiency through Automation

Another effective strategy to lower job costs is automation. Automation can help you lower the costs of materials by helping you plan more precisely to avoid unnecessary waste. J.E. Dunn has partnered with Autodesk and Microsoft to develop Lens, a cloud-based software tool that combines 3-D virtual modeling with instantly-calculated cost estimates for each component of your building project.

Although not common yet in residential remodeling, another way automation can help cut materials costs and waste is by using 3-D printing. 3-D printing allows you to select from a wider range of cost-efficient materials, while speeding up the building process. Last year, Chinese company Huashang Tengda was able to assemble a 3-D-printed house in just 45 days.  Remember, many said nail guns would never catch on!

Keep Costs and Expenses Down with Outsourcing

Outsourcing is another proven way to cut labor costs both in the field as well as the office. Many successful large companies outside our industry have used outsourcing effectively to streamline their labor expenses. For instance, Google relies heavily on revenue from pay-per-click advertisers who pay to have their results featured in search engine rankings. Maintaining its advertising revenue requires a large sales support team, which Google has outsourced. Amway is another company that outsources its sales, relying on a distributor model to promote direct sales.  In our industry many contractors already outsource activities such as design, engineering, building permit procurement, sales, lead intake and prequalification, RRP demo, specialty trades and even general carpentry.

As these examples illustrate, you can outsource functions that are part of your core business if it is more efficient to delegate them to specialists than to maintain in-house talent. For instance, there is no need to pay for the expense of in-house 3-D drafting when you can easily outsource it. With the right plan and system you can also easily outsource routine peripheral functions such as bookkeeping and payroll.

These 12 Hard Questions Can Help You Decide if You Own a Remodeling Business or a Low Paying Job

Are you pretending to be a remodeling business owner but in reality you are actually just a "job owner"?  The questions below are tough and may make you feel real bad about yourself depending on how you answer them. But that’s not why I assembled them. Don’t kid yourself. If you are not cut out to be a business owner recognize that reality now. Don’t wait until you lose you all your money, your home and maybe even your family.  If being in business is not your calling keep in mind the industry is desperate for good employees.  Real remodeling business owners offer good jobs with great pay and benefits.  Answering these questions might just be the best thing you do for yourself this year.

1. Are you one of about 85% of remodeling business owners who have no clue regarding how to calculate your required markup and gross profit margin (WAG)?
2. Are you one of those business owners who uses a convoluted scheme for marking up different things at different markups even though you have no idea whether you are buying or selling jobs (WAG)?
3. Are you one of those business owners who doesn't know the difference between markup and margin, or worse you think they mean the same thing (WAG)?
4. Are you one of about 80% who do marketing without a marketing plan?
5. Are you one of those business owners who has no idea whether you made or lost money until your taxes are done in March or April by your “historian accountant” (WAG)?
6. Are you constantly getting tax filing extensions because your books are a mess and or because you don't have the money to pay the taxes you were surprised to find out you owe (WAG)?
7. Is your business up to its eyeballs in debt and you have no idea how or why you got there, or how you will ever get it paid off (WAG)?
8. Are you, or will you be, one of the 52% of Americans ages 62-65 who have less than $25K saved for retirement?
9. If you divided your total pay Wage plus net profits) by the number of hours you worked this past year are some or all of your employees making more per hour than you?
10. Are you able to still say you’re still in business because of your wife’s job and health care plan?
11. Do you brag that you do no marketing and totally rely on referrals but at the same time complain about the jobs and customers you get?
12. If you answered yes to most or all of the above are you ready to do something about it?

Construction is a large umbrella ranging from handyman projects to large, multi-funded developments. Some contractors are all tools and skill while others are masters of management and leverage. Fitting all of this under the single category of e-commerce is futile. To truly create a web presence, you need to know your marketing voice and develop your site around the things that drive your audience.

Expert Driven Design

Some people are selling themselves as experts in their industry. For this central marketing message, a blog may be the best. Blogs tend to be written in first or second person, using “me” and “you,” which automatically develops a bond between the writer and the audience. They are usually descriptive, telling the reader how and why something should be done. Take a look at the Amway blog as a good example of a business blog concentrating on industry expertise. Inc Magazine has some good tips for creating content for a great business blog as well.

The Supply Chain Site

In manufacturing, the supply chain is extremely important. The supply chain is the total process from inception to customer care, including suppliers, marketers and the title company that assists in closing. In construction, this is project management and some e-commerce sites use its unique issues as the driving message. An e-commerce supply chain site will be broken down into specific topics of project management. One section may have a supplier and a shopping cart for these items. Another section would have human resource information and your services listed. The idea is that the website will guide a user through the entire breadth of project development.

Product as the Traditional E-Commerce Website

When most people think of e-commerce, they think of Amazon with its departments and lists of item after item. If you are selling products, the traditional e-commerce rules apply. Your site needs to have an easily identifiable navigation bar and solid search functions. The images need to be clear and sharp, being part of a good preview system. Your descriptions should be both poetic and specific, enumerating the product specs in bulleted form. As part of a larger marketing plan, the site and every individual item needs to be easily shareable on social media.

Social Motivated Websites

Where some contractors are focused on their expertise, others are social and friendly, providing a marketing message centered on trust. In the construction industry, this is huge. A trusted contractor is worth his weight in gold. Like the expert site, the social site is content driven but here it is a dialogue instead of a monologue. It should revolve around active social media feeds that allow for a conversation format. A question and answer section will keep people on your site longer and keep them coming back, both being keys to successful e-commerce sales.

The Mix

The gut reaction is to try and do everything, but the reality is that you do not have experience in every facet of the construction industry. Your specialization should be reflected on your website. As your e-commerce site is developed, some things will be added while others will be discarded. A shopping cart is only useful for selling products but generally not for services. Just make certain the website can be shared on social media since it is a good source of marketing.

How Contractors Can Build and Better Their Client Relationships

Though going above and beyond with the project at hand is usually the No. 1 priority for contractors, creating and cultivating client relationships follows closely behind in position No. 2. Any business owner and manager knows that building and maintaining great relationships with clients — otherwise known as relationship marketing — is key to a company’s success. Many companies, however, do not employ a dedicated customer relationship manager (CRM). But that doesn’t mean relationship marketing should be pushed to the wayside. We’ve gathered four tips on how you can help cultivate positive relationships with clients right now:

Connecting the Dots

One CEO says her best tip is to be a connector. In other words, when meeting a potential new client, or even a current client, ask yourself what you can do for them. Aside from the job or project at hand, perhaps you’ve gleaned from the conversation that he or she could use a referral to a good painter, or even something as minor as a good place for lunch. Giving clients or potential clients access to your network can help them gain confidence in your advice. Always having an “I can help” attitude, even if it doesn’t directly benefit you, will leave a positive effect on people...and could result in more business or a referral one day.

Get Clear

Experts also agree that clear communication goes a long way in keeping clients happy. They say to be upfront from the very moment you meet with clients or potential clients so you can bid in a fair and accurate way. Also, be sure you are completely clear on client expectations and that they are clear on what you can deliver to ensure a united vision. Additionally, using layman’s terms with clients who may not have excessive construction experience can help them understand better and not feel awkward by asking for clarification.

Further, deciding from the start who the point of contact will be on both ends, as well as determining the preferred mode of communication — whether text, email or phone calls — can help avoid ambiguity.

Number One

Another best practice is to treat every client like your most important client. Since satisfied clients are more likely to refer you, it is wise to provide each and every client with your very best service, no matter if they are bringing you the largest payment or the smallest. Just like in life, you never know who people know, and who they may (or may not) refer you to. Not to mention, today’s startup could be tomorrow’s Fortune 500 Company. So provide service accordingly.

Tokens of Appreciation

While offering clients your own company swag — pens, T-shirts, etc. — is a nice way to share your appreciation and get your name out there, it is wise to consider doing more. Sometimes, even the smallest form of a “thank you” is deeply appreciated by clients. Don’t underestimate the power of something as small as a hand-written thank-you card. However, if you’d like to go above and beyond, an unexpected gift delivery at the end of the project or on a holiday can send a bigger message of thanks.

An unexpected delivery can brighten anyone’s day. Perhaps you know that your client is a wine enthusiast or enjoys a good microbrew. As such, a gift delivery with these items offers a personal touch. If you’re unsure of what to send, custom gift baskets full of luxury spa items, gourmet chocolates or sweet treats and cookies are always a safe bet. Beautifully designed and wrapped, FTD gift baskets offer a touch of class and will be something your client is sure to remember and appreciate.

Guest Blogger: Sheryl Coonan is a lifestyle, fashion and business writer from metro Detroit.

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."

Three Ways To Get Fewer Leads But Close More Remodeling Sales

If you have been getting business by providing free estimates for everyone who calls your business you are most likely wasting a lot of money making time. Are you really an expert in your industry if you have been letting those who buy from you tell you how to run your business?  If these things have been happening to you it’s time to recognize the value of your time and expertise.  It’s also time to limit offering them to only those who find value in what you offer, how you do so, and are willing to pay you well for your expertise. Here are three ways successful contractors reduce their lead flow, improve the quality of the leads they get, and sell more jobs at higher prices. Yes, it is true, read on!

#1: Describe your process on your web site and find ways to entice visitors to check it out.

Do you have a define process for how you do business?  If not, create it. If you do have a define process document it with words and pictures and put it on your web site.   By explaining how you do business on your web site you can save a lot of time and make more money because:

You won't have to explain it to everyone you meet, over and over again. If they have not yet checked out how you do business when they call your office send them a link to the "How we do business" page at your web site. Additionally mutually agree to when you will then call them back to see if they still want to meet with you.

Because the information is presented in writing at your web site prospects won't be able to interrupt you as the typically do when you try to explain your process to them at live sales calls. If written well they will either recognize that your process works as a solution for them, or they will know why it’s not right for them. This can help you eliminate defending your process as you try to explain it to them live and in person.  If they don't like your process after checking out your web site they won't waste your time.

#2: Charge for creating specifications and a fixed price proposal

Another thing to explain at your web site is why estimates are free but a fixed cost proposal from you requires paying a fee.  Think about it.  An estimate is just a guess. Any experienced contractor should be able to provide a best guess estimated cost range for project types he or she has past experiences with.  In a logical way explain why you charge to go past a free estimate.  If they still call you selling your services to create the proposal will be much faster and easier.  If you want some guidance on what to write read on below. If you don't have a web site read on anyway to find out how you can still do this live and in person.

If they want a fixed price why not help them recognize what it will take to get to a fixed price. Help them discover, say and agree that plans and or specification will be needed before you or any other contractor can determine a fixed price for them. Help them identify whether they will need plans to visualize the project before being able to confidently commit.  Help them decide if they need help finding and differentiate between product options and their price points. Help them recognize the effort and hours you and your trade partners will need to dedicate to preparing a proposal for them.  If they recognize the need for these things you can then ask them if they would like to discuss your design and specification process; as well as how you charge for it.

#3: Require a return visit to present your proposal and get their decision

Even if you are not ready to charge for them, before committing to preparing plans, specs and a proposal make an agreement with your prospect. Let them know that to prepare a proposal for them you require coming back to sit down with both of them to review, discuss and get a yes or no decision on your proposal and about working with your company.   Remember, you will have more time to do this because by being more selective you will be creating fewer estimates and proposals. Those who won't meet with you probably aren't interested enough in working with you anyway.  Perhaps they were just hoping for more free ideas from you before hiring the cheapest contractor or performing the work themselves. If they won't commit to meeting with you to review your proposal that's one less you have to do; freeing you up to concentrate on those prospects who respect you as a professional and value your process.

Related article: Is A Contractor Really A Salesperson If He Or She Hits Send?

I know there will still be lots of non-believers after reading this article.

By committing to fewer estimates and proposals you will gain the time you need to put together and present proposals that differentiate your business from other contractors. By being different you will attract clients who want different.  Consumers who want different know they have to pay more to get it. Those who don't want different buy from the commodity contractors who sell on price

It was definitely my experience as a contractor that the three pre-qualification tactics I suggest here help reduce leads, increase lead quality, and at the same time increase sales.  Please help me out. If you have had success using similar strategies please share your successes here. I am hoping that third party endorsements from those of you who have experienced similar success will help me win over a few more believers!

How Contractors Can Build & Protect Their Brand Reputation

For contractors, brand reputation can make the difference between winning and losing a big contract. A case in point is DuPont. Over the past two decades, DuPont has built a reputation as a safety leader in the chemical industry, enabling its Sustainable Solutions unit to generate $3.9 billion a year training other companies in workplace and environmental safety. Now, that income is at risk after a series of fatalities, lawsuits, investigations, and fines have led the Occupational Safety and Health Administration to place DuPont on its list of severe workplace safety standards violators. Subsequent negative publicity has DuPont's clients questioning the company's safety reputation and whether or not they want to continue using them as a contractor.

DuPont is big enough to take a hit and recover, but for a smaller contractor, even a few negative online reviews can quickly add up to significant lost business and revenue. Whether you're a large or small contractor, it's in your best interest to keep an eye on building and protecting your online reputation.

Building Your Good Name

International consultancy and construction company Mace has won Building Awards Major Contractor of the Year recognition by committing itself to putting its clients first and providing superior quality and high delivery standards. As this illustrates, customer service is the foundation of a good reputation.

Construction management consultant Paul Netscher identifies ten variables that affect your company's reputation, all of which boil down to delivering superior customer service. At the top of the list is delivering projects on time. Delivering on promises instead of overpromising and underdelivering, rectifying mistakes, honesty, and quality are also high priorities.

Overall, satisfying and exceeding your client's expectations is the foundation of building a good reputation with your customers. Making a corporate commitment to achieving this ideal is a first step towards building a solid reputation.

Promoting Your Brand Reputation

Delivering superior customer service lays a foundation for a good reputation, but in today's digital environment, it's also important to get customers to talk about you online. What customers say about you on sites such as Google Places and Yelp has a huge impact on your online reputation.

Your customers will definitely talk about you if they're not satisfied. Contractor Nation writer Richard Fencil says the biggest reasons people complain about contractors online include shoddy work, rudeness from company representatives, high or misquoted prices, not following through on promises to get back to customers, and keeping customers on hold too long. To avoid these issues, train your staff how to communicate with your customers

You should also take proactive steps to ask satisfied customers to post reviews of you online. For instance, after a project is completed, a sales representative can contact the customer to see how it went and ask for a review. Marketing representatives, office personnel, and project managers can also take opportunities to ask for reviews.

Providing online tools on your website to make it easy for customers to review you will increase your odds of getting good reviews. Amazon is a great example of how automation can facilitate customer reviews.

Managing Your Brand

Building your brand's reputation is one thing, preserving it is another. Within your organization, you have to make sure everyone's on the same page about your brand's core message and understands what image is to be projected to customers. Outside the organization, you need to make sure that your brand image is being communicated consistently in all your contact with your customers, both online and off. You also need to monitor what customers are saying about you online in order to ensure that your message is being received, that complaints are being addressed, and that any negative publicity is being met with a positive response.

Managing all this manually can be challenging, especially considering all of the contact you make with your customers and with all the websites and social media platforms that are out there. To make this easier, WebDAM offers brand management software which gives you a single interface to make sure your brand's image is being maintained consistently throughout your organization and across all marketing channels.

Handling Complaints

One of the biggest keys to protecting your brand's reputation is how you handle complaints. The most important step is to listen. Empathize with the customer's situation. Make sure you understand what the problem is before you attempt to resolve it, and make sure they agree with any resolution you propose before proceeding. If you can't resolve the issue yourself, find out where to best direct their complaint. The International Association of Professional Contractors provides more detailed guidelines for responding to customer complaints and negative online comments.

If One Of These People Asks, Can You Explain How Your Remodeling Company Does Business?

Most contractors can't explain how they do business, they just make things happen.   In a smaller remodeling business, say up to about $5-700K of installed work, this may get you by.  But as you grow your business, particularly if you want to grow past $1M in installed remodeling sales, the list of people below will want and or need to know how you do business.  

Would you be able to explain it to them?  Or will you let them tell you how it will happen?

To grow a successful construction business these people in your path will need to know how you do business: 

Be careful here.  If you don't explain how you do business before winning the bid on an architect driven remodeling project you might just be told how you will do business.  Examples include how and when you will be paid, what will be considered a change order vs. what you should have assumed to be included, what margin you can earn on change orders, and what hoops you will need to jump through before receiving progress payments and final payments.  Be sure to carefully read any AIA Contracts before signing them.

Four Considerations for Contractors Offering Design - #4 is Most Important!

With a well thought out strategy for offering design services contractors can differentiate their businesses and attract better quality clients and projects.  However if their offering is not well thought out contractors can lose a lot of money and waste a lot of time.   

If you want to offer design services consider these four important areas before you go for it.  If you are already offering design services, these same considerations can help you validate and or think a bit more strategically about your offering.

#1: Compensation

Nothing is free, neither is design.  Even if you offer it for free to prospects doing so still adds to your business overhead costs.  Charging each customer for their design is one option.  If you don't charge consider how many free designs you will complete to sell one job and add the anticipated costs for doing them to your overhead budget before you determine your markup.  How you choose to go forward with this consideration should be based on the targeted customer type you identify in your marketing plan.  

Offering design comes with risks. I also strongly recommend getting Design Liability Insurance and adding the cost of coverage to your pricing strategy. 

#2: Create a clearly defined process

To control costs and manage customer expectations you need to decide what level of service you will offer, and whether you will offer your design services at a fixed price or on an hourly rate.   At my business I used a fixed/defined process and price strategy limited to concept design.  This was because as a Design/Builder our goal was to quickly get to a contract for construction.  Completing the plans for permit application only happened if we built the project.   For our target customer type that process worked well and kept the upfront cost of making decisions and getting to a fixed price quote down for our clients.

The image below shows the first half of the Design/Build process I share with my clients.

#3: Ownership of the plans

Consider whether you are selling design services or plans.  If you sell plans your clients may see their project as a commodity and may want to use those plans to collect bids from other contractors. Allowing that to happen also definitely increases your design liability.  My recommendation is to differentiate your business by selling personalized design services, not plans.  Then, only offer design services to prospects who intend to hire your business to complete the project.  Plans for permit can then be created and shared with them after they commit to construction.

#4: Use a supporting marketing and sales strategy

After thinking through and deciding on the considerations mentioned above the business will need a way to market and sell their offering.  The right marketing should help define your offering so prospects can prequalify whether what you offer is right for them, or not.  Doing this will help attracted your targeted prospect and save salespeople a lot of time on sales calls. This is because by doing so prospects will only need to clarify and confirm your offering when they request to meet or speak with you, you will no longer need to introduce and explain your offering. 

Your web site is a great tool to use for marketing and explaining your design services. And, if the information is on your web site, you can direct prospects to it from the other marketing tactics you use, or when they first call your office to inquire about a project that requires design.

Other Design related articles you might find helpful

Managing Risks With The Right Design/Build Insurance Options

Design and Spec Considerations for Remodelers Looking to Break $1Million

All Plans and Specifications Will Be For The Exclusive Use Of …

As Designers, Are We Honest in our Business Dealings?

10 Ways Some Architects Do A Disservice To Contractors & Home Owners

Design Options for Design/Builders: Partnering for Design

Design Options for Design/Builders: In-House Design

Marketing System Considerations for Remodelers Looking to Break $1Million

Most remodelers, but certainly not all, rely heavily on referrals and repeat customers as they grow their businesses.  This may keep a contractor doing a low volume of work busy, but relying so exclusively on referrals won't be adequate if you want to become a construction business owner, break the $1Million installed sales threshold and develop a constantly growing business.

The fact is waiting for the phone to ring, having no idea what type of prospect will be calling your business, or what types of projects they will be looking for is a risky and uncomfortable way to grow a business.  Remodelers who attempt to grow without a marketing system in place will experience a roller coaster like ride of sales volume from year to year as well as season to season throughout any one year.  Plus, when leads are slow business owners may compromise on their pricing and even who they allow to become customers.   Doing business this way can be very stressful and frustrating for the owner as well as the employees.

To successfully grow past $1Million at your remodeling company, and sustain that growth from year to year, a strategic marketing plan and system are needed. Here are several important marketing related considerations remodeling business owners will need to address if they want to get up to $1Million. They will also need to already have these things in place to profitably grow past $1Million and comfortably sustain that growth.

Decide your niches

There are many customer types out there all with their own expectations when it comes to working with a remodeler. Successful remodeling businesses are those that strategically decide who they will be and who they will serve. If you choose to work for people who buy on price and expect more than they are willing to pay for, you will get more work from them.  And because people tend to hang out with other people just like them, your past customers will refer you to more customers just like them. Before you do marketing to grow your business decide and define who you want as your customer. Also, think about the project types that make sense for the business you want to develop and grow. For example pull and replace kitchens and bathrooms may not be sexy or all that challenging to you, but remember you are building a company and a team of employees to complete what your company decides to sell. If you decide to build complicated and or highly detailed projects you will need the appropriate systems and staff to estimate, sell and produce that level of project to the expectations of your targeted client type. Choose wisely.

Develop a marketing plan

Marketing is only a cost if you don't know why you are doing it and or if you are doing it wrong.   By having a marketing plan and a way to measure against the pre-established goals in your plan, the money you spend on marketing is more likely to be an investment with high ROI.  Keep in mind a list of marketing tactics you intend to employ is not a marketing plan. Tactics should only be considered and developed after you have decided what you want to accomplish.  To help with the delegation of marketing related tasks the business should also create a marketing calendar identifying not only when defined marketing tactics will be used, but also when supporting activities must be scheduled, delegated and completed to support the on time delivery of the tactics to be used.  I refer to this as "franchising" your marketing because your system and calendar will help you manage the day to day work and activities required to keep it going without the need for micromanagement of the staff doing it. By having a plan you can also estimate the cost of your plan and include that cost in your overhead budget and calculated markup for pricing jobs.

Be strategic about how you do your marketing

Your marketing should serve two very important purposes.  The first is to help your target customer type(s) find you. The second is to convert leads into sales. The marketing tactics you use should support these two goals. One marketing tactic that can be really effective at accomplishing both could be your company web site.  For example, done well, SEO can be used so prospects searching online for certain services and contractor types can find your business, and find it on the first page of search engine results. Goal #1 achieved. But once you get them to your site you also need to differentiate your business from other businesses in the marketplace or risk being seen as a commodity. As discussed above, if you know your target niches you can then offer them additional information about those differences and can include customer testimonials as to why those differences were important and mattered to them.  The right information will help prospects decide if your difference matters and they should contact you, or that your difference doesn't matter enough to pay for it and they should look elsewhere.  

Summary

With the right marketing in place growing a remodeling business past the $1Million threshold is much easier and far less risky.  Choosing the right customer types and job types will make it much easier to develop cost effective and highly targeted marketing tactics.  By franchising how it gets done the owner can gain more time to work on other high value activities that keep the business healthy, profitable and growing. The right remodeling consumers want different and they will pay more for the right difference.

(Note: This is the seventh article in a series of articles written specifically for remodelers who want to successfully break past doing $1M/year in installed sales. Click here to see a List of all the articles in the series.)