The Design Builder's Blog

Remodeling Prospects Need A New Process For Coming To A Buying Decision

Consumers need a new process for coming to a decision.  This definitely includes consumers considering remodeling projects at their homes. They can no longer assume they will increase the value of their home just because they remodel.  Even low price might not be a compelling reason to buy.  They need new reasons to go forward, and it becomes the salesperson’s job to help them find those reasons. 

Every consumer must go through due diligence before making a buying decision and this is further complicated because each one will have a different path; one that is personal to them.  They are journeying into new areas and might not even know how or where to get started.  The new remodeling salesman must be a decision engineer, methodically guiding consumers through their specific emotional and intellectual considerations relative to making a confident buying decision. 

Notice I said guide them

They must feel like the decision and the process they went through was their own and that they didn’t miss anything that should have been considered.   The old school approach of telling or convincing a prospect what to do will no longer work.  Once they come to realize a process for making their decision, the salesman must then become a trusted adviser, with the knowledge and ability to offer appropriate design, product and project delivery options. 

The consumer has come to expect options

Manufacturers can and should provided information and education relative to product options, differences and price points.  Retailers selling to remodelers should be getting this information from their distributor and manufacturer reps.  The entire supply chain should be sharing this information with contractors through trade shows, educational events and personal interaction.  

To improve sales and ultimately business results, I suggest remodelers find good retailers to do business with who will provide this information; then attend their offerings and study up.

There Is A Place Where Businesses Can Review Bad Customers

The recent Lawsuit against Jane Perez by Chris Dietz, owner of Dietz Development, has certainly sparked a lot of conversation and opinion on the internet.   I first posted a blog about the Angie’s List and Yelp reviews lawsuit just yesterday and the comments started pouring in right away.   Most were from contractors who expressed their gratitude to Dietz for what he is doing.  Many of these same contractors shared stories of how they too felt they were abused and taken advantage of by unreasonable and what many referred to as “crazy” clients.   One common theme I have picked up in the comments on my site and others is the desire for a web site where business owners can post reviews about bad customers.   So I did some research to see what’s out there and I found two:

It appears that Rate My Customers is a free service, but Bad Consumers does charge a fee after a six month free trial.   

I am not recommending or encouraging business owners use either of these services.  My purpose here is to make my readers aware of what’s out there because they asked.

Here are a few things you can do at these sites:

• Post reviews about problem customers and or consumers
• Tell problem customers and consumers you will post a review about them if they do not work things out with you.
• Read about what other businesses have posted about consumers and customers before you decide to do business with them or not.
• Help other businesses avoid the “Customer from Hell”
• The data base of info at Rate My Consumers can only be searched in alphabetic order by name.   On Bad Consumers you can search by name and zip code.

Success Stories might make you feel good about leveling the playing field

Rate My Customers offers a few “Success Stories” from business that used their site.  Here are a couple of examples:

" After seeing my previous post at this website, Mr. C____ contacted us and offered to settle his debt.  We were happy to mitigate late and finance fees and he paid when he said he would. "

“Thanks for your site; the minute this woman saw her name listed on your site she called us and offered to work it out. We finally got paid. Thank You so much!"

“I am a building contractor and was contacted by a person on your "bad customer list" and was concerned about doing business with this person. When I asked him about the complaint that the other contractor reported on your site this person suddenly went crazy and it became obvious to me I did NOT want to business with him. Thanks for your web site, it saved me a big headache I am sure... "

(Click here to take the quick Dietz Lawsuit Survey)

Before You Start Reviewing

I suggest if you want to consider posting a review on either of these sites that you first consider the downstream effects of doing so.   You might want to consult with your attorney first rather than after your review generates push back from a consumer.  Also, keep in mind, if you are a business and a consumer decides to sue you; as a business you will be considered guilty until you prove your innocence.  And, you will have to cover the costs of doing so most likely without the ability to recover your legal costs even if you win.

What do you think? 

Would you post a negative review about a consumer or customer?  If you would, why would you do it; what’s your purpose?

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?

Remodelers, Make Sure To Pay All The Taxes You Can This Year.  Really?

The holiday season is now upon us.  For small business owners, in addition to celebrating the holidays with family and friends, it’s also the time of year to start making plans and doing budgeting for next year.  To increase your after taxes net profits next year you might want to consider paying more taxes this year.  Here is why.

At the end of September I posted a blog about the impending Fiscal Cliff.  In that blog I pointed out several ways the Fiscal Cliff decisions might affect remodeling businesses.  I also pointed out that how our country’s leadership ultimately decides to deal with the pending changes would depend quite a bit on who won the presidential election.  The election is over and President Obama will be our leader for the next four years.   With that in mind I suggest small business owners re-read that blog post and look into the list of possible tax changes that are now more likely to occur with President Obama remaining in office.

(Click here for a pretty good Fiscal Cliff summary by NPR)

A Few Ways You Might Be Affected:

The House Committee on Small Business has offered a chart on its web site to show the potential changes and affects on small businesses if the current Bush Era Tax Cuts are not extended.   Remodelers could be hit really hard because many of them are organized as “pass-through” entities, where their business gains or losses are reflected on their individual tax returns. Several that could really affect the after tax profitability for remodelers includes:

• An increase in capital gains from 15% to 20% (33% increase!)

• An increase in tax rates on business dividends received by individuals will be treated as ordinary income (higher rates) rather than as capital gains, currently 15%.

• Tax rates in the top four brackets will be increased to (from current rate): 39.6% (35%), 36% (33%), 31% (28%), 28% (25%)

• Small businesses with undistributed taxable income will no longer be taxed at the current rate on dividends (currently 15%), but rather will be taxed at the highest individual tax rate (up to 39.6%).

What To Do:

So, to limit your tax liability I suggest remodelers speak with their accountant ASAP to fully understand how the potential changes and ultimately any actual changes will affect you and your business.   Remember, profits can be used to reinvest back into your business, but you must pay tax on those profits first, leaving only the remaining profit available to invest.   The same holds true if you were planning to use business profits for other personal purposes such as paying for your children’s’ college education or buying a new home or RV.  Back when I owned my remodeling business my accountant helped me strategize how to claim certain revenues and profits in one year versus the other depending on my effective tax rate for each respective year.  By doing so in one year I saved over $20,000.00 the next year!

Make Sure You Have The Right Accountant:

There nothing worse than the feeling of working really hard to earn a profit only to find out that you could have reduced your total tax burden (and the amount of profit you get to keep) by taking advantage of simple and completely legal tax strategies.   A big lesson for me when I owned my remodeling business was making sure I had the right accountant and financial advice.   Saving money on an accountant’s fees might just cost you far more in taxes than the money you might save if you have chosen your accountant based on price rather than value, strategic advice and timely services. 

My second accountant cost me twice as much as my first.  It was well worth paying the difference because of the money I saved in taxes.  It still is!

Three Considerations for Controlling the Destiny of Your Remodeling Business

Many remodelers start their business with little real planning or consideration for the future other than to grow the business and make money.   For many this tends to work out alright, particularly during a good economy.  But the current recession has definitely exposed to remodeling business owners some of the natural consequences that come along with a lack of a long term vision for their businesses. A couple of obvious examples might include the current cost of excessive overhead accumulated when work was strong, and the overwhelming workload and responsibilities the business owner had to absorb due to staff layoffs.   However, an anticipated improvement in our economy offers an ideal time for businesses owners to rethink how they will move their businesses forward as the economy eventually improves.  Planning for the future now can definitely put you on a much better path and using what you have learned in business so far makes that planning much easier and more likely to protect your business when the next recession shows up.

This summer I will be participating in several Remodeler Summits sponsored by Marvin Windows and Doors to be held at their training center in Warroad MN.  As part of the Summits I will be presenting seminars to attendees to help them strategically grow their businesses.  Here are three things I will be asking the attendees consider about themselves and their businesses before new opportunities for business growth appear as the economy and the remodeling market improves.

(1) Are you an Entrepreneur or a Craftsperson?

This should be your first consideration.  Be honest with yourself.  Do you really want to be a business owner running and growing a business where your role is to develop your business so it creates the opportunity for employees and subs to perform the work, or is your love for the tools and craftsmanship what motivates you to go to work each day?  Either one can be a good choice, but the business you build will be dramatically different depending on your choice.  If you choose the craftsman route be sure to consider your age and health; now and in the future.   Will your body be able to handle the work type your business sells as you get closer to retirement age?   Also, as you age, will you be able to maintain the productivity required to earn the money you need to live and eventually retire?

(2) Will you hire to complement your skills or to maintain your authority?

Regardless of your choice to the consideration above, few business owners can know and or do everything needed to run a profitable business and still have a life outside work.   When seeking to add new employees, consider how you chose your previous employees.   Did you hire people who required constant supervision and instruction, or did you hire people who added skills and knowledge to your business that you didn’t have yourself?   Who you hire going forward will make a big difference in regards to what you will have to do yourself and how much of your time will be spent where.

(3) Will yours be a Practice or a  Growing Business?

A business that is a practice depends on the participation and the skills of the owner every day.  If the owner is on vacation or can’t come to work for any reason the business stops operating very quickly.  If you plan to run your business as a practice keep this reality in mind.   Your ability, as well as your employees’ abilities, to pay the mortgage and feed the kids can quickly become compromised.   Be sure to consider options like disability insurance and a reserve fund to protect yourself.  If you plan on growing your business be sure to take the two considerations above very seriously.  Also, make sure you choose employees with the cognitive abilities and desire to grow with your business.

There are two schools of thought regarding destiny

Destiny is often seen as either a fixed sequence of events that is inevitable and unchangeable, or that individuals choose their own destiny by choosing different paths throughout their life.  Marvin Windows and Doors is helping contractors shape the destiny of their businesses.   How about you:

Will you let destiny happen for you and your business?

Are you shaping your destiny on your own?

Are you getting help shaping your destiny, and if so, who's helping you?

Please share your comments and thoughts.   Other contractors looking for options could benefit from what you have to offer!