Is Your Business Ready For The Expected Surge In Remodeling Spending?
Remember back in 2006 before the great recession how much work there was for remodelers? Remember how busy you were and how easy it was to sell your services? And, back then, there was a good supply of experience workers and subcontractors. Then the recession came and things changed forever. Well, the remodeling economy has become healthy again and is predicted to get even better for the next year. According to one article in Qualified Remodeler magazine the Harvard Joint Center for Housing Studies predicts an 8% increase in remodeling spending between now and the end of 2017. That means a lot more work for remodelers, but only if they and their businesses are ready for it.
Below are three things to consider if you want to be ready to take advantage of the surge in sales predicted to begin in the first quarter of 2017. How you address the third one could make or break your ability to take advantage of the surge.
Decide what your price point will be:
When demand for services picks up so does the market price for those services. If you have been selling on price and as a result haven’t been making enough money to live the lifestyle you desire, both today and when you eventually retire, now is the time to start charging more. And, in addition to raising your prices, be careful how much work you say yes to. The point here is to make sure you don’t pre-sell a whole bunch of work at your current margins. If you do you will prevent your business from being available to sell and complete work when demand and therefore job prices rise due to supply and demand. Although having a good backlog of work can be comforting, coming to realize you could be making a lot more money may lead to strong regrets. Also, keep in mind that material and subcontractor costs will also climb due to supply and demand. Make sure you estimate direct job costs based on when you will actually do the work, not what it would cost if you were doing it today.
Related article:
Why Building a Backlog of Work Could Cost Some Contractors a Lot of Money
Be selective about customers and job types
The surge in spending will lead to a surge in job leads. This will afford remodelers the opportunity to be much more selective about who they will allow to become customers as well as what job types they will accept from those customers. Remember, the customers you serve will be sending you referrals. Those customers hang around with other people just like them. If you work for customers who beat you up on price and micromanage how you do business, their referrals will likely want to do the same. To avoid working for the wrong customers first define the profile of your target client. Then, armed with that information, make sure you also have a great prequalify process to help you filter through you leads. When it comes to job types be selective there too. If you have been doing so I suggest you stop allowing customers to buy their own materials. It may save money for them to do so, but at the same time it costs your business if you cannot get any margin on those materials. Instead concentrate on material intensive project types like kitchens and baths. Earning gross profit by selling more and more expensive materials is much easier than trying to do so by selling and managing labor.
Related article:
25 Sample Questions Contractors Can Use For Prequalifying Prospects
Get your production resources ready
Selling the work and selling it at high margins is one challenge. But in my option that’s a much easier challenge these days than trying to find and keep enough quality production staff and trade subcontractors to keep up with the work, and complete it with quality. Don’t wait until you already need the help to start looking for them. Instead, recruit good workers now and test them out to be sure they are right for your business and your business is right for them. During the winter months many employees are let go or laid off by contractors who lack good sales and marketing skills. This makes the winter a good time to look for prospective employees because there are more to choose from and because their options of available jobs are limited. Use the next few months to vet out the good ones and send the underperformers back out looking for jobs. Using this strategy it’s likely you will be able to produce the work you sell much easier while your competition has to do the best they can with the workers you passed up and or let go.
Related article:
Afraid To Hire Employees For Fear Of Running Out Of Work For Them?
The real returns on investment are the benefits they’ll experience as soon as the remodeling project is done. That’s what they’ll be paying for. As soon as they’ve realized that the benefits make the cost worth it, you can then tell them that as a bonus, they can recoup a good part of their investment when they sell their home in the future.
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!
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.
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.
One of the very important things that hands-on contractors who seek to become construction business owners need to get ready for is bringing on sales staff to help the owner sell an adequate volume of work as the business grows. Below is a 10 item checklist contractors can use to help them get ready for this critical step in the growth of their businesses. From my own experience of hiring my first remodeling salesperson many years ago number 10 is the most important.
Establish Sales Goals and a Performance Based Compensation Strategy you can share with candidates as you interview them and your business will use once they are hired.
Well before attempting to break past $Million in installed sales remodelers and home improvement contractors should already have an established and tested sales system in place. The system should be well defined. Those involved with selling, as well as supporting the sales department at your business, must be trained and held accountable to using it correctly and consistently. 
Decide what Sales System you will use
I want to stress that consistency of and with your company's sales approach will be really important as the business grows. Without consistency it will be difficult for the owner to become a sales manager, or transfer sales management to someone else, because each sales person may approach selling in a different way. And, without consistency of sales approach, repeat customers and their referrals may not experience what they expected when a new salesperson visits them. Plus, by having a consistent sales approach that successfully helps prospects buy the right solution, you can market the advantages of that sales system with confidence prospects will experience what they expect if they respond you your marketing.
For large ticket, complex projects face to face presentations are generally preferred simply due to the scope of the project. But if I have done my job correctly up to the point of presentation, I should already have the job. I should have already established whether they can afford the project and if they have selected my company. The bid is just a formality. Price is WAY at the bottom of issues, as is the method of delivery. For most projects, we would have already met multiple times up to the point of presentation and that’s where I do my selling. Whether I email the quote or hand deliver it is immaterial in my experience of selling projects for over 15 years. I personally prefer a face to face meeting, but have found it unnecessary in most instances and base that decision on the customer and their personality. I have never been the cheapest bidder and tell people up front that I never intend to be. Yet my closing rate/ratio remains extremely high.
I find that our current speed of living in general is much faster than in the past and people get irritated with too many required face to face meetings. They most often prefer the email method so they can make a decision at 10pm after work is done, the kids are asleep and they can focus. Am I serving them or are they serving me? I always ask what their preferred form of communication is and then I respect that. If I have established myself as the contractor of choice, reflected in our discussions (phone or otherwise) that I have accurately heard them and understand their needs/wants, established a comfortable budget, and minded the details, why waste their time and mine with an unneeded additional meeting? Let’s do this!
If like Milt you disagree with something I post at my blog please feel free to let me know. Milt did a great job explaining his viewpoint in a respectful and thoughtful way. I must admit I agree with his approach as well. When Milt emails his proposal he is doing so to confirm in writing the agreement he has already made with his prospect who has agreed to become a customer. Milt is certainly not an order taker, but rather a great example for other contractors seeking to improve their sales abilities and results. 
Another opportunity to differentiate yourself, your business and your solution and become a trusted advisor.
If you are having challenges selling jobs and or getting the price you need to earn a good living and 
For many home owners choosing the right contractor to work with is just as important as the quality of the workmanship. Consumers who have already done remodeling and had a bad experience with a contractor are great candidates for this tactic. The purpose of the tactic is to get them talking about what happened last time, how it affected them, and how they will feel if the same thing happens again. With this prospect first ask something like: “Is there a reason you aren’t working with the contractor who did your…?” If this reveals you are on the right track says something like “Why haven’t you already hired one of the other contractors you have met with so far.” Then, depending on their answer and the context, consider saying something like: “Were you hoping I could do something different than the other guys?” Now, at least with this prospect, you’re back in sales mode! Move to tactic #3.
The fist would be to pre-educate prospects about your business, your products and or services, and how you and your team do business. This can save a lot of time during the sales process. By pre-educating them at your site on a variety of considerations using additional content, you will not have to spend as much time doing so at a live sales call. Busy contractors can speed up the sales process and gain more time for other business activities if they invest in publishing the right content.
Marvin Windows Remodeler Summit Attendees, August 2013
