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.

Checklist for Getting Ready to Hire Your First Remodeling Salesperson

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.

Contractor’s Checklist: Getting Ready To Hire Your First Remodeling Salesperson

1. Make sure you already have a Marketing System already in place that generates enough quality leads for you and your new salesperson before you hire.
2. Make sure you have decided on and have already implemented a Standardized and Documented Sales Process so previous customers and their referrals will enjoy a consistent experience and you can manage your new salesperson’s use of your system.
3. Make sure you do a budget to determine the Markup and Margin you will need to sell and produce at to cover the cost of your new salesperson as well as the additional business overhead that comes with the changes.
4. 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.
5. Make sure your financial system is setup as needed so you can accurately measure produced gross profit margins on sold jobs. It should also be set up to help you and your new salesperson accurately calculate sales commissions earned.
6. Make sure you have the ability to perform Estimated to Actual Job Costing so you can be sure jobs are being properly estimated by or for your new sales person. Commission based sales compensations plans are impossible without this ability.
7. Be clear on who will do the Estimating and how it will and needs to be done (formatted) so your production team gets what they need to build sold jobs on their own.
8. After you do all of the above write a detailed and clearly explained Job Description for your new salesperson position so you can use it to attract, evaluate and manage your new hire.
9. Have Quality Audit Forms ready to go that you can use to capture feedback about your new salesperson’s performance from the prospects who do not buy as well as the customers who do buy.
10. Establish the “Go-No Go Criteria” you will use so you have predetermined how as well as when you will make the absolute decision to keep or replace your new hire.

As I indicated above I decided number 10 proved to be the most important consideration after debriefing my learning experiences with hiring a first salesperson. As one sales seminar speaker once quoted at a seminar I attended early in my career:

“Never carry an employee longer than his/her mother did!”

Now Might Be a Good Time to Remodel How and Why You Do Marketing

On April 2^nd, 2015 I presented a half day marketing workshop titled "Choosing and Targeting the Right Customers and Projects Types for Your Business". The workshop was billed as the keynote session for the Builders Association of the Twin Cities (BATC) annual trade show in Minneapolis.   At the workshop I shared new ways contractors can think about and do their marketing so they can attract their desired customer and job types. It’s what I call strategic marketing.   For those of you who missed the workshop here are some of the key points we discussed at the workshop.

Take advantage of the timing 

The economy and residential construction are both picking up.  At the same time the majority of attendees agreed with me in that we are not yet confident that the pace of the current surge will be sustainable considering the uncertainties businesses and consumers still have about the economy.  With that in mind this is however a good time to take advantage of the surge to concentrate on developing market share in a strategic way.  It’s my opinion that most contractors would benefit from becoming a specialist in what they do and how they do it.  After all specialists typically command higher prices than generalists.  And, true specialists are always in demand, even in down economic times. Now is a good time to specialize, as long as you also work on branding to establish and maintain your position as a specialist in your desired market areas.

Here are some specific tactics contractors can consider and use to strategically build market share

Pick your customers, don't let them pick you:

Stop taking just any customers and jobs.  Be selective about who you will let become your customers.  For example why not only work with people who would say they are "working with" you, not those who would say you are "working for them".   Also, be selective about the project types you go after.   For example why not attract people who want high quality products.  If you sell using one markup across all cost categories the gross profit dollars earned on material intensive projects due to higher price point products is an easier way to meet overhead and net profit goals, both now and in the future, particularly when compared to selling and producing labor intensive projects.

Stop competing, differentiate:

Being different comes with pros and cons

If you decide to use these example strategies many prospects will go away.  However, the ones that see value in your differences will become cogs in your new referral generating machine and will pre-sell the value of your differences to their referrals so you won't have to.  I call those types of referrals "layups".

Think of how you do marketing in a new way

The old traditional marketing methods of trying to find prospects who want your services now and interrupting them to get their attention no longer work.  Today consumers are the ones deciding how they will find and qualify their project ideas as well as the contractor they will work with.  Instead use inbound marketing tactics that help consumers find your business.  This should be one of the two primary purposes of your marketing and can be accomplished on your web site using SEO tactics and good content on your site’s pages as well as your blog.  The other primary purpose of your marketing, particularly at your web site, should be to help prospects decide if what you offer and how you do business are right for them.  In other words your marketing should help them prequalify themselves so they either want to contact you or know they shouldn't.

Final Thought- Marketing shouldn't just be limited to creating leads

At the workshop I also shared one more new way to use your marketing; to advance the sales process.  Consumers want to gather information and ideas about their project, but they want to be sure they are getting accurate and useful information.  Savvy contractors are now using the content at their web sites to educate consumers before they call to setup an appointment with a contractor.  This saves both the prospect and the contractor a lot of valuable time.  In addition to offering project and product related information, you can also educate them about how and why you do business the way you do.  This can not only speed up the sales process, it can also help clearly differentiate your business and therefore improve the quality of your leads.

Checklist: Is Your Remodeling Business at Risk of Becoming Mediocre?

As you grow your business day to day management and leadership considerations can quickly creep up on construction business owners.  Profitably growing a remodeling business to any volume, but in particular growing past the $1M threshold in produced work, definitely requires advanced business skills.   Growing and running your business by the seat of your pants is a sure way to create a mediocre business that will never generate maximum profits. This article offers several ways business owners can determine if they and their businesses are headed for mediocrity.  It also offers options to help you and your business get back on track.

Here is a checklist of indicators that your business is becoming mediocre:

• Your business lacks written policies and procedures.
• Even if you have policies you do not have predetermined consequences for violating them and or you do not enforce them.
• You complain about things customers and or employees do or don't do; but then do nothing about them.
• Concerned employees point certain concerning things out and you do nothing to address and or correct things.
• Your employees point things out to you and you actually make them feel guilty for doing so or that they are annoying you by pointing them out.
• Your customers offer feedback or complaints and you make excuses for why things happened, rather than embrace their help and use what they share with you to make improvements or corrections.
• Long term customers stop doing business with you and you don’t bother to ask them why.
• You create artificial harmony by ignoring culture deficiencies and or tension between team members and pretend everything is OK.
• When something happens you always find a way to make it someone else's fault rather than take responsibility as the leader.

If these things are happening at your business you have two options

The first is to let them keep happening.   If you allow things to continue you will likely lose customers, compromise your brand, have high employee turnover and you will never fully achieve creating a successful and profitable business.   Eventually, when your family and others ask you why you never really succeeded in business, you will again have to resort to rationalizing why it was someone else's fault.

Your other option is to recognize these things are happening and start addressing why they are happening.  Only until you know and recognize why they are happening will you be able to work on preventing them from happening.  

Preventing these things from happening may require two different solutions

The first is to stop certain things from happening all together by no longer tolerating them.   Put your big boy or girl pants on and be the leader you should be.   To hold others accountable make sure you create and follow through on consequences.

The other is to change how you do things so they just don't happen anymore.  Put policies in place and make sure they are enforced.   Those policies should also include clear consequences for violating them.

Lots of remodeling businesses are becoming mediocre as they try to grow in this improving economy. Will you join them or will you stand out from the crowd by becoming the reference standard for what it means to be a professional contractor in your marketplace?

Want To Sell Your Construction Business Someday- Consider These Buyer Types Today

In a previous blog about selling your construction business I had suggested business owners write a for sale ad describing the business they plan to sell in the future. In this blog I describe the two typical construction business buyer types that became obvious to me as I worked towards selling my business.  By considering your target buyer you can make better decisions about what to do and put in place as you build your business to get it ready to sell.

First is the investor. 

This person will want to buy a business that pretty much runs on its own, needing little hands-on attention from the buyer. This buyer will be looking for time tested systems and industry best practices already in place and well documented.  This buyer will also be looking for a business that already has technology and software in place to proactively predict and measure business activities.  This buyer will also be looking to keep most or all of the existing employees in place. To attract this buyer type make sure you assemble a great team of high performing and self directed employees who work well together and embrace the systems and technology you will put in place.

This investor buyer will need a leader/manager to run the company. Before offering your business for sale to this buyer type I suggest you transfer the leadership and the day to day management of your business to a well qualified employee over a period of time. During the evolution you can test and prove his/her effectiveness as a general manager in advance of selling.  By taking adequate time to accomplish this important consideration at my business both me and my employees felt good about and respected the new leader, before I fully transitioned out of the day to day.

Some key advantages of selling to an investor can include a high selling price assuming you have a great business with future growth potential.  And, this buyer will also have the funds or can get his/her own financing for the purchase. My experience proved this could be a great way to go, but due to the reputation of our industry, the pool of potential buyers was very limited. I think this is still true today, but may not be the case in the future.

The second type of buyer will be the owner operator. 

Likely an entrepreneur, this type of buyer will want to take over an existing business and jump right in physically working in the business.  This buyer will want to see steady profits and a strong customer list, but as an entrepreneur with energy to burn will also be looking for growth potential. 

Having systems and employees in place will be important, but you might want to assume that this buyer will likely change or evolve the systems you have put in place.  As a result the employees described above might not like and/or agree with the changes. In particular experienced management employees may not tolerate any loss of the independence they have already earned in performing their day to day roles. If you plan to sell to this type of a buyer, I suggest you assemble employees who desire to follow a leader and will go with the flow. 

Also consider selling to this type of buyer will not command as high a price when you sell. On the other hand you will likely find more potential buyers because of the lower price.

The best of both worlds?

The sale of my business was in several ways a hybrid of the two models described above. I ultimately sold to my general manger. He had already earned the leadership role and had participated for many years in the direction, growth and day to day management of the business. All of the practical experience he gained during that evolution prepared him to be a well trained, experienced and motivated candidate to buy and continue growing the business. To make the purchase practical I had to finance the sale. In my case I felt financing the purchase was worth the risk because the buyer had proven his competency, trustworthiness and ability to not only maintain the business, but also grow it in a strategic and manageable way.

Selling a Contracting Business: Are You Building Yours On Speculation, Or Is It A Custom?

Since selling my remodeling business in 2004, many remodelers have asked me for help and insight about how I did it and how they too could sell their businesses some day. They ask great questions. The challenge is that there is no easy one size fits all answer. In this article I will share a few big picture considerations to help guide you.   In a follow up article I will discuss typical buyer types you can consider as possible prospects to sell to.

What kind of business should you build?

Most remodeling businesses were not designed, they evolved. Each business will be unique because each owner is unique and has unique motivations that drive the evolution of his or her business. In addition, each buyer will be looking for specific characteristics when assessing which businesses to look for and ultimately buy.   These are facts that became clear to me as I thought about and planned for the eventual sale of my business.

Rather than share specifics about what I did, I think you will find more value in the related considerations I discovered that helped shape the direction I eventually went in. Perhaps by considering my suggestions below, you can make a plan for and evolve your business in a specific direction to increase its potential salability and value.

Begin with the end in mind

First, I suggest it is best to be thinking of your exit strategy now so you can keep your future options open. By planning now you can identify what you will need to do to get your business ready for sale in the future.  The idea is to always be getting your business ready to sell, even if you never sell it.  If you do it right, in addition to the selling option, maybe someday it will be worth keeping. If you keep it you can collect the net profits, while someone else leads the business and manages the day to day.

Put your strategy in writing

To get started, I suggest you write an ad today to describe the company you will be offering to sell some day.  When writing your description, think about the things that will make the business worth more money and at the same time more attractive to your target buyer.  By writing the ad I suspect you will be able to identify and list the positive characteristics your business already has and should work to keep. Then you should list those characteristics you will need to work on and or add to make your for sale ad valid by the time you want to sell. 

Consider who you will sell to

If you’re considering selling your business some day you will need to consider the types of buyers out there as well as their typical motivations for buying one business versus another.   In my next blog I will discuss the two typical buyer types you will want to consider as you make you plan and write your for sale ad.

If you haven’t done so already consider subscribing to my blog so you will be notified by email when new blogs are posted.

Five Remodeling Business Myths That Get In The Way Of Growing Your Business Past $1M

There are many remodeling business myths that seem to have become truths for way too many remodelers. That’s too bad. Believing those myths may be holding them back from being able to grow their businesses. Allowing these myths to remain in place will definitely prevent remodelers from successfully growing their businesses past the $1 Million installed sales threshold.

Schema leads us to believe what we experience as true

In an April 2010 Remodeling magazine article I defined and discussed schema. We all have our own schema. Schema is our way of interpreting things and information based on our past experiences.   Without previous experience with something one cannot have schema in that area. We can also have a limited schema about certain subjects if our experience in those subjects is limited. With limited schema our definition of what is true may also be compromised. In other words, if you have schema, but it is limited, you may end up believing something to be true, even though it is a myth.

I suggest the video below makes my point

Here are five remodeling business myths that are easily debunked with some schema

If you don’t do marketing to expose how your business is different you will be perceived by consumers as being the same as most other contractors. That puts you into price competition to get jobs. Check out these two articles and try what is suggested to gain some new schema on this topic: Generic Contractors Are Fading Away, Brand Names Are Shining and Why Some Contractors Can Raise Their Prices But Most Others Can’t

Myth #2: Home owners won’t pay for estimates:

Most contractors say they can’t charge for estimates in their market place because all the other contractors do them for free. First, that is not true, many contractors successfully charge for estimates. Second, remember your mother: “If all the other kids jump off the bridge on the way to school does that mean you should jump off too? Maybe learning some ways to do it and them giving them a try could change your perspective about charging for estimates. This article can help get you started: Tips For Contractors On Ball Park Pricing and Charging For Estimates

Myth #3: Contractors have to wait until each phase of work has been completed before getting paid for each phase:

Again, will you jump off the bridge, too? Will Delta Airlines let you pay after you land?   Completing remodeling services without being paid for them before you do them is in my opinion foolish, and a huge risk for most remodelers.   It instantly creates cash flow challenges in a business where cash is king. Breaking $1M without good cash flow might be the death of your business. Here is how you can create payment schedules that keep you ahead of your customer: Payment Schedules That Create And Protect Cash Flow

Myth#4: There are no good employees out there to hire:

Finding good employees is tough and doing it well requires a well thought out recruiting process. However most remodelers get bad employees because they don’t establish well thought out job descriptions before seeking to hire. When that is the case the job description is often being created during the interview, perhaps by the candidate. Check out this article published in JLC magazine for some help in this area: One Simple But Powerful Tip For Hiring The Right Employees 

Myth #5: If I give my employees too much training they will leave and start a business of their own and become my competition:

I personally found just the opposite happens. If you don’t give them enough insight and schema regarding what it takes to own, run, lead and finance a business they will leave to start their own. In addition to the training offer them leadership positions at your business, along with a good performance based compensation package. Doing so will make it more likely they will stay. These two articles will offer you some options to address this myth. The first was published in Remodeling magazine: Shared Responsibility: Advantages of Creating a Team of Leaders and Helping Employees to Think Like Owners

(Note: This is the fourth 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 that have been published.)

What Should You Do To Improve Your Remodeling Business In 2015?

It’s that time of the year when many forward thinking Remodeling Contractors contemplate and commit to the strategic business improvements they will make in the New Year.  If you want to grow your business and or make more money in 2015 having a plan to help you get there will make it much more likely to happen.  

If you already know what changes you need to make assembling your plan will probably be easy.  But if you aren't confident about what to do you might just invest your time and money in the wrong areas.   

Here are three important considerations to take into account before you commit to a plan:

First, make sure you work on the right areas in your business.

This may seem obvious but unless you already have a lot of business training and experience will you be sure you are working on the right things and in the right order?  For example it might not make sense to work on your sales skills if you’re  to not confident you will be properly marking-up your estimates cover your new overhead costs as you grow.  By making this mistake you might just be buying jobs instead of selling them and the growth could put you out of business.

Second, work to get your business in balance. 

To help clarify what I mean by this suggestion ask yourself if your business has systems or a system.  If you have systems maybe each system is working OK on its own, but by looking at it that way each might not be contributing as much to the overall success of your business as they could.  On the other hand if you work to balance the advancement of each of your business systems in the right order they could better unite together to form a system that produces far greater results.  Think of it like the cross pollenization of plants where, working together in balance, one plus one can equal three.  But, sticking with the plant analogy, if you only water and fertilize half of your crop the weak plants will not be contributing as much pollen as the healthy ones and the overall harvest at the end of the growing season will have suffered.

Third, recognize your own weaknesses as the business' leader and commit to a plan of self improvement. 

For example if you add employees so you can get out of the field will your personal management and mentoring skills be adequate for the task at hand?   If you end up being a micromanager instead of a leader you may end up holding back inspired employees who want to grow.  If that happens you could lose them as well as the investments you made in attracting them in the first place.  Remember, most employees don't leave because they are not happy with the company they work for; most employees leave because of the boss they work under.

Do a business assessment before you commit to changes

Creating a solid plan for what you will do to grow your business is not easy for most remodeling business owners.  Depending on your business experience it may actually be impossible to do.  To help you assess where your weak areas are and what things you should work on you can download my free Remodeling Business Assessment Worksheet.   By filling it out, it can help you see where your business is out of balance.  In the example to the right the business is producing work faster than it is selling it, probably due to a lack of sales staff.  With this information the business owner will have a much better idea regarding what areas to work on to help get the business in balance and grow it.  

If you download and fill out the Business Assessment Worksheet please share some comments here about your experience using it and what it might be indicating to you.   I bet what you share can be very valuable for other business owners.

Once you have your business in balance you will be closer to having a “system” instead of “systems”. 

Breaking Past $1M in Remodeling: Getting Ready To Do It

(Note: This is the third 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 article in the series that have been published so far.)

In a previous article I discussed how important it is that a remodeler decides whether he or she wants to remain a contractor or become a construction business owner before passing the $1 Million threshold in remodeling. Again, either choice can be a good one, but if you want to keep growing your business and offer growth opportunities to great employees, you need to become a construction business owner.

In yet another article I stressed the point that putting off that decision can lead you and your business from controlled chaos into disorganized chaos. The disorganized chaos happens because the labor intensive and disparate systems being used that got the business to $1M are no longer adequate to handle the increase in activities that come with the additional growth and inherent risk.  You can read my article titled "Invest In Your Remodeling Business Now Or Pay Forever" for more on this topic.

Before you decide to become a construction business owner

Becoming a construction business owner can be very rewarding for many reasons.   It’s also not a very easy thing to do successfully. It will take time, money, patience, vision, leadership skills and diligence.   Before you make the jump check out the business owner considerations and the business goals below. These are the kinds of things you will need to work on to help get yourself and your business on the path to successfully break past $1M and increase profits at the same time you grow.

Remember, growing your business faster than your systems can handle is the most common reason for construction business failure.

Business Owner Considerations during the Take-Off Stage:

• Owners should seek to put a more refined structure in place for the purpose of better, faster, and more accurate information. This is a critical step towards the owner’s ability to evolve away from the micromanagement of employees.
• The owner should develop measurement milestones and incremental check points relative to a achieving a refined long term vision for the business.
• The owner must learn to recognize, adapt to and take advantage of changes in the market place, because a lot of changes will happen over the time it takes to grow the business.
• The owner should seek to add mid level management employees as soon as possible assuming earned gross profit and/or reserve funds can support the required overhead.
• The owner must focus on implementing critical and timely business adjustments identified by business reports, trends and the opportunities brought to light due to an advancing schema.

Goals during the Take-Off Stage:

• Develop the ability to track business activities without relying on the hard drive capacity of the owner’s CPU (brain and memory).
• Start the process of developing written job descriptions for how business should be happening.
• Increased use of standard repeatable methods and create supporting documentation and forms.
• Give salespeople the support they need to support sales less on their own, sell more and keep them selling profitably.
• Develop standard contracts and agreements, reviewed by legal counsel to protect the business.
• The ability to collect supporting data company wide electronically.
• The ability to manipulate and interpret the data.
• Add and ramp up a full time sales person to relieve the owner of some sales volume, allowing the owner to concentrate on other high level activities.
• Train and allow lead carpenters to be owners of their projects and managers in the field.
• Identify a production manager candidate, preferably from within the existing lead carpenters.
• Mentor the production manger candidate into a full time role.
• Accumulate cash reserves adequate to finance your ability to grow into the next stage.

Breaking Past $1M in Remodeling: Typical Characteristics of the “Take-Off Stage”

(Note: This is the second 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 seriesthat have been published.)

Every remodeling business and its owner are different from other remodeling businesses and their owners. This is because remodeling businesses are typically not designed, they just happen.  As a result, both the business and the owner evolve forward based on and limited by the skills and knowledge the owner brings to the business.  

Successful growth of the business depends on the owner

Hard working entrepreneurs have what it takes to get the business going, but most entrepreneurs lack the business skills, practical experience and insight to successfully grow a remodeling business past $1Million. This doesn’t necessarily mean they shouldn’t do it or they should replace themselves as the business leader.  It does however typically require they get the outside assistance and guidance needed to help make the required changes happen.

This stage of business growth is what I refer to as the “Take-Off Stage” for a remodeling business because either the business takes off successfully, or it doesn’t.  Another way of looking at it might be either the business owner commits to doing it and doing it right, or accepts the status quo of accidental and unplanned growth.

In this article, from a high level perspective, I want to share some typical characteristics of a remodeling business on the doorstep of the Take-Off Stage.  If your business has already started on and or put these items in place your business is at that critical point where you must decide to remain a contractor or become a construction business owner.  Putting off the decision can lead you and your business from controlled chaos into what I call disorganized chaos; where discovering and dealing with fires everyday overwhelms the business owner and prevents proactive business growth activities.

Typical Characteristics of Take-Off Stage

• Produced volume somewhere between about $750K to $1.2 Million of installed sales. Note: Volume can range because for example if your markup is really low (10%) you might be installing as much work as a remodeler using a very high markup (75%)
• Through experience an advanced schema has developed in both the owner and a few key employees. As a result:

• Computer and software use has increased dramatically, but consists of segregated off the shelf solutions.
• The owner is working many hours, performing multiple job descriptions and for the most part is just keeping up with day to day activities.
• The owner realizes what he he/she is currently doing will not take the business to the next level.