The Design Builder's Blog

How To Have A Rockin 2013!

A new economy and a new marketplace are both here now, and they are what they are; for now.   Old ways of doing business or just waiting for something good to happen for you in the New Year are strategies that are probably not going to help grow your business and or your profitability.  Here’s my list of three things remodeling business owners can do to make sure 2013 will be the year they set their businesses on a new path towards success in a constantly evolving marketplace.  Don’t miss the video treat at the end!

#1: Choose your niches: You can’t serve everyone or anyone

When you serve anyone and are willing to build anything your business misses an opportunity to really stand out.  Lots of businesses already follow that model.   If you follow it too you will be just another one in the crowd.  Instead, by choosing specifically who you will work for and what work type or types you will concentrate on, you can then create and build a brand that attracts your targeted niche.  Make sure the niche market you choose to serve can support the required margins your business needs to do so and make sure to consider the skills required to sell to that niche.  Remember, the economy will be soft for at least several more years, so choose niches and work types that will be in demand in your market.   As Mick Jagger of the Rolling Stones sings: ““You can't always get what you want. But if you try sometime, you just might find, you get what you need”

#2: Identify how you’re unique

Don’t be different in the same ways other remodelers are different.  Sounds stupid but why copy another business and call that being different.  Besides, when you’re just like all the other companies the only differentiator in the eyes of the consumer might be price.   Instead, be unique.  Find ways to really stand out from the crowd in the way you do things and or the things you do.   For example maybe you only hire female field staff to build your projects.  Maybe you and your employees always wear company uniforms and name badges with your picture on it whenever you and or they show up for a sales call, service call or the first day at a new project.  Or, maybe you will only install American made products (assume that is really possible these days!).   As Jerry Garcia of the Grateful Dead once said: “You do not merely want to be the best of the best, you want to be considered the only one who does what you do”

#3: Build the right team 

You can’t do it all on your own and still have a life.  As the legendary Canadian Rock Band Bachman-Turner Overdrive sang: “I've been taking care of business, it's all mine. Taking care of business and working overtime”.   If running your business requires too much time away from the things you actually work to have or enjoy, you need to change how you do business.

Building the right team requires some engineering.   First, identify the organizational chart of job positions and the number of employees needed; today and at other predetermined milestones as your business grows and evolves.  Then, find employees who complement your and current employees’ strengths and weaknesses.   When filling job positions consider whether the assigned employees should be global or linear thinkers.   If you want employees who think like owners, hire the right ones and then give them the same experiences an owner has so they can actually think like an owner thinks.  If you want to use a lead carpenter system then hire true lead carpenters, but first make sure your other business systems are already in place and designed to support a true lead carpenter system.

I hope you enjoyed the “rockin” theme of this blog post.  

What inspired this approach you might ask.  I recently went on the Rock Legends Cruise II and had a blast.  Here’s a video I shot on the cruise of the Lynyrd Skynyrd tune “Give Me Three Steps” performed by the Artimus Pyle Band.   Artimus is one of two drummers who played for Lynyrd Skynyrd.   What’s special about this recording is that Bob Burns, the other drummer for Lynyrd Skynyrd, is on stage and both Bob and Artimus are playing drums at the same time!  I’m not sure that has ever happened before.  I hope you enjoy this recording as much as I enjoyed it live!  Artimus really pulled together the “right team” for this tune!

Artimus Pyle Band with Bob Burns and Artimus playing drums at the same time!

Guest Blog: This Contractor Avoids Bad Reviews.  Is He Lucky or Smart?

Guest Blogger: David Profitt, owner at Profitt Custom Homes, LLC is a NC Licensed General Contractor.  David’s business offers construction of custom homes and remodel/renovation projects ranging from simple decks and porches to whole house makeovers, all as a Design/Build contractor.

Avoiding Bad Reviews

Anyone who has spent much time in this business knows full well the law of averages apply religiously. Out of every 10 customers, you will have two that think you're great, one that thinks you're a thief and the rest fall somewhere in between.

I suppose the word is "thankfully", the rise in social media has been offset by the economy so the events highlighted in the Dietz lawsuit news story haven't become as widespread as they no-doubt would have otherwise. I have been fortunate that over my nearly 3 decades in the business the overwhelming majority of my customers have been well satisfied with the work I did for them. But. like everyone else, I have had a few that felt otherwise.

Lucky or Smart?

"Thankfully" may not be exactly the correct word for it, as I typically put in a lot of long hours planning every project before the first shovel hits the ground, draw out the projects in cad (3D since 2001), run structural analysis on everything affected (engineer for 11 yrs before getting into building), put only known-entity skilled tradesmen on the job, personally oversee all the projects, visit the adjacent neighbors and introduce myself before stating any project that might potentially impact them, and constantly communicate with the client.

So I wouldn't attribute the low percentage of problems to just luck, but every once in a while you're going to get that one "special" client.....

Some real examples from my experience:

• The one who, at the closing table on a completed new home, decided he wanted to re-negotiate the price and not pay for his $15k in accumulated change orders.  I went to a "pay as you go plan" after that.  
• Or the one where the client had a one-of-a-kind rooftop cedar deck built as an add-on to the original whole house remodel. She was thrilled to death with it until a trusted friend who lived 300 miles away in a totally different building-cost market told her she had payed too much for it.  Truth is I had over-charged her so badly that I actually lost money on it.
• Or the guy who wanted a financial concession out of the cabinet maker when the CM put a more expensive (turned) faux leg on his master vanity that was shown in the CM's pre-construction 3D representation. This was even though he and his wife both liked it a lot better than what they had "approved" and the price didn't change.

The more I think about it, the more I'd like to retire.

Dietz Offers His Side of the Angie’s List and Yelp Reviews Lawsuit

I spoke with Chris Dietz on Saturday December 15^th 2012.  He seemed very upbeat about the attention he has been getting from the media as well as his peers in the construction and remodeling industries regarding his lawsuit against Jane Perez due to her reviews on Angie's List and Yelp. 

He had posted the comment below on line at Leah Thayer’s Daily 5 Remodel and gave me permission to post it here at the Design/Builders Blog.  I offered my support to Chris for what he is doing and complemented him on the professional approach he has demonstrated online and in the media.   He shared that he hoped his lawsuit would make a positive difference for other remodeling contractors as well as all business.

Chris Dietz's side of the story in his own words:

I am a member of NARI, NARI-Metro DC. Thanks to a vendor I use, one of their staff is on the recruitment committee, and suggested I join. One of the best business decisions I ever made. I love my chapter and all it does for me and my fellow contractors (trainings, product demos etc).

I will not make much in the way of comments, due to litigation still in progress. Her is a bit of my side:

The issue here is simple, the client crossed the line of opinion, and into the realm of defamation. I contacted Yelp and Angieslist, with documents (legal ones, countering the defendants postings), and they refused to remove or alter the postings. I was told I had two options, 1-poster removed their own post , or 2-a judge's order removing/altering the posts. My hand was forced in filing a lawsuit. It is a true shame, that myself, and other businesses, in our line of work and others, are forced to take defamatory type comments, and just live with them, based on what everyone says. The response usually is, hey just get more positive comments. Easily said, I usually do full renovation or larger type work. SO if Iose 1 customer, my revenue can drop dramatically and ruin my entire year.

I had nothing to do with the work that was showed in the pictures. Compare the pictures shown in the press, to my portfolio. Not even close.

We need to push for legislation to change provision 230 of the CDA-Communication Decency Act, and also hold Yelp and Angieslist accountable ( and all other ISPs) for the way they permit postings and review them. Yelp is more at fault, as they claim, algorithms are to blame for the negative posts being public, and your positives being filtered. YET, for a fee, Yelp miraculously offers to fix this(Yes, I did receive a sales pitch).....Angieslist, is far better in this area.

Yes, I can really use help in paying my legal bills, as the case is far from over. Feel free to contact me privately via my Facebook page, Dietz Development. Also, there you can see that my work portfolio, is so far higher in quality, than the pictures that have been shown to the public. I sincerely appreciate the moral support I have received, and I am very determined to work with NARI-local and national, and our industry to make changes so this cannot happen to someone else.

Chris Dietz, Dietz Development

(Click here to take the quick Dietz Lawsuit Survey)

Contractors and Remodelers: Decide Your Niche and Then Go Get It!

Choosing a niche for your remodeling business should be done with care and can include much more than most remodelers might realize.  When I ask remodelers what their niche is, most cite just one characteristic, typically a work type, such as windows, kitchens or historical renovations.  Rather, I suggest remodelers consider many characteristics when establishing a niche. 

The idea is to assemble the ideal niche or niches for your business.  To do this at my own business I used the five “W’s”; who, what, when, where and why to help me.  By thinking back about past clients and their projects, I filtered out and then assembled the characteristic that consistently lead us to successful and profitable projects with customer we enjoyed working with.

Who

Looking back our ideal customer was a middle aged middle market married couple, both working with either very young or high school age children.  These people worked hard to earn their money and therefore respected the fact that my employees and I also worked hard to earn our money.  They looked at my employees as partners in the project, not nail bangers.  Due to the age of their children, they had little time to do their own work, they didn’t want to move or change school systems, and they typically needed more space at their homes.  Unlike wealthier clients I had worked for, these clients would say; “I know I will owe you the next payment on Monday, but I won’t be here.  Can I pay you today”?  I never had to use my line of credit to finance their projects because waiting for a stock dividend delayed progress payment.

What

These clients needed additions to their homes, but we didn’t want just an addition.  We wanted an addition with a kitchen and/or a bathroom.  We came to find that simple family room or bedroom additions came with too much competition from laid off framers or inexperienced low price remodelers.  If the project included a kitchen and or a bathroom, most low price completion lacked the skills to design and build the project.  We also found that these projects, because of the baths and kitchens, were material and sub contractor intensive.  We found it easier to mark up and manage more materials and subs, rather than more labor.  We also found they brought in more gross profit in less time than labor intensive projects.

When:

We purposely timed our marketing for addition work relative to the New England weather realities as well as the typical lead time required to sell, design and permit additions.  The idea was to get foundations in the ground and shells constructed before the weather made it impossible or impractical to work in the cold.  Using similar tactics, we marketed in advance for Kitchens, baths, attics and basement remodels to fill the cold months.  We marketed these projects to the same client type.  The attics and basements typically included bathrooms.

Where:

As the business grew and competition increased within our market, we decided to expand our footprint.  Through experience and detailed job costing we came to see that commuting more than 30 minutes from our office typically lead to increased costs, compromised supervision on projects, a dip in client satisfaction and therefore a dip in referrals.  We also found it ideal to work on homes built in the 60’s or later.  These homes were built with standard lumber sizes, drywall rather than horse hair plaster, PVC drain lines rather than cast iron, copper water supplies and poured concrete foundations.  These homes were easier to work on, they made it easier to anticipate and estimate costs and they were typically one of many similar homes within concentrated subdivisions.  By marketing to target home owners in target neighborhoods within 30 minutes of our office, we attracted addition projects in high exposure locations, leading to more work and more referrals in those same areas.

Why

To me the why was the easy part.  The why’s were all the benefits my business came to enjoy as a result of defining our ideal niches, the biggest being improved profitability.  If you concentrate your efforts in a defined area, you and your team naturally become better and more competent at what you do, leading to improved efficiency across your business.  We realized efficiency in our marketing efforts because we knew who and what to market for and how to get their attention.  Estimating and sales also became simplified because projects and clients were very similar.  It was easier to find and train good employees and subs because the work types were fairly consistent and the clients were almost always a pleasure to work with.  Because we could successfully deliver the right projects to the right people we enjoyed a steady flow of high quality referrals.   Because, because, because…

Just like the Dating Game?

Think of defining your niche as being similar to defining your ideal spouse or partner.  If you date enough people you will eventually recognize the qualities that come together to define a good fit, someone you want to live with for a long time.   If you have been in business for a few years and think back on all of the clients you have dated, I bet you can filter out the ones worth marrying your business up with. 

If you would like to attend a workshop offering the insight and information you need to develop a marketing strategy and the tactics needed to redirect the future of your business check out Workshop #2 of 6 titled: "Choosing and Targeting the Right Customers and Project Types for Your Business" of this Contractor Success Program that starts on January 22, 2013.

Will the Angie’s List Review Battle Benefit Professional Contractors?

Unless they have been under a rock somewhere, most professional remodelers are now aware of the pending law suit filed by a contractor who believes he and his business was falsely accused on Angie’s List and Yelp of wrong doing by a disgruntled client.  I read the complaint Chris Dietz filed in Fairfax County Circuit Court against his customer Jane Perez.  I also read the interview Leah Thayer of D5R did with Dietz where he shared his side of the story.   Assuming the details in the complaint and Leah’s interview are true, Dietz’s story is one that unfortunately many other contractors can relate to.  The difference is that Dietz stepped up to the plate to do something about it.  He got mad and decided he wasn’t going to take it anymore!

(Click here to take the quick Dietz Lawsuit Survey)

I say kudos to Dietz!

Again, I say that assuming he has been honest about his side of the story.

He sets a great example for our industry.   We are professionals and as an industry we need to stand up for what is right.  By what he is doing, and assuming he is successful, he will be establishing a precedence that consumers cannot lie with impunity about their experiences with a professional contractor.  I think it’s great that this woman will now have a taste of what it’s like to be financially challenged to defend herself, a position many contractors find themselves in when consumers sue contractors.

In my opinion what is good for the goose is good for the gander!

According to Perez the pending court case has left her reeling and potentially facing thousands of dollars in legal bills to defend herself.  She has definitely come to realize the consequences of her actions because Dietz had the guts to stand up for his rights.  Had he not done so she would have established and or helped to maintain a precedence of “let’s bad mouth that contractor so we can blackmail him for the money we owe him”.  She took a calculated risk that Dietz would back down.   If Dietz wins the calculation of risks for homeowners who use such tactics will change going forward. 

What ever the outcome, I think consumers will think twice about posting false reviews about contractors.

What do you think; is Dietz justified and if he wins will it help other professional remodelers?

How Will The Fiscal Cliff and the Elections Affect Remodelers?

The threat of a year-end perfect storm of expiring tax cuts and massive defense and domestic budget cuts could push the economy back into a recession.  A recent article on the Fiscal Times website offers some insight into this possible reality and points out that many voters are clueless about the cliff and are in for a shock.  Another article posted on Reuters warns the cuts could cause the loss of nearly 1 million jobs across the country.   Remodelers trying to work on business planning, marketing and budgeting for the New Year may also be in for a shock if they make decisions without first considering the cliff and the outcome of the elections. 

Making any business decisions in a down economy can be difficult and risky.  

Unfortunately in addition to a bad economy we also have a lot of uncertainty about what the government will or will not do.  I think the problem, at least for those who keep an eye on the economy and the political arena, is having any confidence in making long term investments and decisions.   The fiscal cliff could really challenge the economy if across the board cuts are made as planned. And because the current administration has not clarified or committed to what will be cut, we don’t know how or in what market areas the economy will be affected most.  Unfortunately, true discussion about all this by our elected leaders won’t even get started until after the elections.

The economy and remodeling could take quite a hit if our politicians can’t come to an agreement.  And, even if they do come to an agreement, what will it be and how will it affect the economy?  If it gets pushed off into the future again, it will leave all businesses including remodelers in this unconfident position for a long time.  If consumers remain unconfident, and or get laid off as a result of the cliff, they probably won’t be spending money on remodeling.

Remodelers need to be very cautious about investing in capital assets.   

If the current tax deductions for capital asset purchases go away, the cost of those assets will in effect increase.   Waiting to make such purchases is a gamble.  If remodelers invest in capital assets now before the deduction possibly goes away, the question to ask is whether they will be able to meet the payments on those assets and or actually be able to make use of them if the economy does not improve or gets worse?  If they wait to see what happens they may miss out on the tax savings if the deductions are eliminated.  Making the right decision is hard without knowing who will be elected or which party will be in control after the election.

Should remodelers consider hiring more staff if they are seeing a work backlog building up?  

In my opinion, as long as they are selling work at a price that meets their overhead costs, remodelers must decide if they will use the gross profit to hire office and management staff and reduce their workload, hours and or stress; or work all those hours and keep the gross profit as their own compensation.   On the other hand if they are not selling at prices high enough to support the overhead, hiring more staff or buying more assets are not sound financial options.  I suggest waiting to see what happens with the elections and the cliff before making any long term business investments.   If you have money you are willing to invest, I suggest using it to improve your marketing and sales skills.   Those are investments that can help a business regardless of the economy and can even give you an advantage over your competition when it comes to capturing the limited amount of work available during a down economy.

Guest Blogger: Spencer Powell, Inbound Marketing Director at TMR Direct.  Spencer joined TMR Direct to spearhead their social media marketing efforts and to assist clients who want to implement social media marketing campaigns.  He also specializes in helping builders and remodelers who are frustrated with the lack of leads they are getting from their current websites.  Recently Shawn and Spencer have teamed up to help several of Shawn’s consulting clients.  First, Shawn helps remodelers strategically identify and decide their target customer(s), project type(s) and niche(s).   As an Inbound Marketing Certified Professional, Spencer and his team then help remodelers get found by their targeted prospects on the web. 

How Your Website Can Get You Involved in the Homeowner's Sales Cycle

Just think about it for a second.  That's how you find EVERYTHING today.  Yes, I'm talking about Google.  If you're looking for a product or service, there's a good chance the first place you'll go is the web.  This is where your research process begins.  Well, it's the same for homeowners who are looking to remodel their kitchen, bathroom or any other part of their home.

Helpful information is key

So, how can you ensure that you'll be a part of their research process...and how can your website help you do that?  There are a few factors that we want to look at.  First, your website needs to have lots of helpful information that your prospect might be looking for.  This could be information on the process of going through the design phase.  It could be warning signs to look out for when selecting a contractor.  It could be information on cost and why certain things cost more or less.  It could be information on change orders.  Think about it.  The more information you can provide to your prospects, the fewer questions they'll have when they contact you. 

BUT...most importantly you'll position yourself as a trusted advisor in your industry because you're the one helping them make an important decision.

Google LOVES content

In addition to becoming a trusted advisor, the more content you create on your website, the more chances you have to actually get found in search engines like Google.  Google LOVES content, so the more you create, the more you'll be found.  Just think of your website like a planet.  The more pages and articles you create, the bigger the planet gets, and the more gravitational pull it has.  So, you'll be pulling in more web visitors. 

Once you have more prospects coming to your website because of the content, you'll notice that your website actually helps you get heavily involved in the homeowner sales cycle because you're helping them with their research.  In addition, your information doesn't all have to be readily available.  It's a good idea to have and offer much more in-depth information that a visitor can download.  This might be in the form of an eBook like "10 Kitchen Design Trends for 2012".  However, in exchange for being able to download it, they need to provide their Name, Email, Phone Number and Zip Code.

Once captured, nurture those leads!

Now you're in great position to solidify your company as one of their options for helping them achieve their goal.  This is where lead nurturing comes into play.  Lead nurturing is simply sending out helpful emails with more information that helps your prospect do research.  These emails allow you to stay in touch with the prospect all the way through the sales cycle.  How to execute a lead nurturing campaign is the topic for another post, but are you starting to see how your website can really get you involved in the homeowner sales cycle?

What are YOUR thoughts on this?  Are any of you using your websites to participate in your prospects’ sales cycles?

Characteristics That Separate Successful Design/Builders From Other Business Models Include:

• An experienced Management Team that has created and follows a strategic and sustainable business plan, implements industry best practices and continuously identifies and mentors strong leadership within the team in each department.

• A strong Financial System that that predicts, tracks and analyzes the cost of doing business and producing projects, and includes an estimating system that facilitates timely and accurate "What-if" project pricing abilities during the entire design process.

• A Marketing System and Strategy that identifies and attracts targeted prospects qualified to do business with the Design/Builder and helps them discover the unique values and advantages of the Design/Build project delivery method.

• An established and tested Sales System used and or supported by all employees which prequalifies that a prospect's purpose, budget and decision making process is a match with the Design/Builder's Business model and provides a consistent approach and results for those prospects who become clients.

• A Design System that properly identifies and documents the information needed by the client as well as the Design/Builder's project team and serves as a communication tool to make sure the design and final project serve the client's purposes within the agreed budget and timeline

• A Communication System and Process that uses technology to create, capture, manage, and distribute timely and accurate business and project information between team members, trade partners, design professionals and the client in a way that manages and meets established expectations.

• A Production System that produces a quality project and experience for all of the parties involved within the established budget and puts management of the project at the jobsite and in the hands of a qualified Lead Carpenter and or Project Manager.

• A Personnel System that identifies, attracts, advances, recognizes and rewards those employees who best support a true Design/Build Business model and project delivery system.

If you are looking for help or training to create or switch over to a Design/Build Business Model contact Shawn today.  Will you be ready when the economy improves and there is money to be made?

"The topics you touched on yesterday really hit home and the light bulb has gone off!
We will take this information and start to apply to our business immediately."

David Haney, Dave Haney - Custom Woodworking