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.
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.
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.
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.
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.
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…
Success Stories might make you feel good about leveling the playing field
The books in the list I offer below fall into the top five books I think remodelers should read if they want to grow a successful business and reduce the total time it takes to do so. More importantly, these books can help remodelers avoid the frustrations, wasted time and wasted money that come with the trial and error approach of going it alone as a business owner. Even if you still can’t build the business you want on your own after reading these books, you will definitely know what help you will need to get there
Reason #1: Some profit sharing plans have to do with creating retirement plans for employees. Remodelers who have the ability to offer such plans can take advantage of them to attract good employees. Most remodeling businesses do not offer retirement plans, so if yours does you might be able to grab the “cream of the crop” to enhance your team. Also, properly designed profit sharing retirement plans can even help keep employees working at the business long term by including a vesting schedule that requires the employee to be at the business for a certain amount of time before all or portions of the money shared becomes theirs. If you would like to use this type of profit sharing plan one of your first decisions should be whether to set up the plan yourself or to consult a professional or financial institution for help with establishing and maintaining the plan. I recommend getting help due to the complexity of legal and tax considerations.
Reason #2: A smart remodeling business owner understands that employee performance is tied directly to how vested they feel to the company they work for. Because they can be a powerful incentive for employees to work harder for the company many remodelers are now beginning to consider profit sharing plans. By sharing profits earned the plans benefit both the business and the employees. Employees gain a sense of satisfaction from knowing they'll all get a cut of the profits. For the business, it's also likely that the added productivity will increase the overall financial performance of the company. Basically, if the business earns more profit, and the amount shared back with employees is less than the extra amount earned, sharing some with employees is a no brainer.
Reason #3: By creating and offering a profit sharing plan a business can change the culture from "let’s just get it done" to how do we get it done and maximize profits at the same time. As long as employees have a way to understand how profits are earned and can then measure how their efforts impact the company’s bottom line, the business can create a culture where the entire team feels and believes “we are all in this together” and everyone involved is focused on profit. An additional benefit of such a culture is that vested employees start holding other employees accountable to contributing towards profitability.
When some or all of the above happen:
Bonuses are compensation for employees for work performed; they are paid in addition to salary or wages. Often business owners give out bonuses without any structured plan or objective method for determining the amount or even how the bonus can actually be earned. Although typically given out around Christmas time, bonuses can be given out any time of the year. 
Profit Sharing is an arrangement between an employer and an employee in which the employer shares part of its profits with the employee. The key difference between a bonus and profit sharing is that there must be profit before any is shared with the employee. 
Keep in mind that depending on how a bonus or profit sharing is distributed the employer may incur additional costs over and above the dollar amount given to the individual employee. Depending on the employment relationship the company has with the employee, the business may incur the expense of payroll related taxes, liability insurance and/or workers compensation insurance on the dollars paid to employees. Its best to consult with your accountant regarding the total cost of offering a bonus or profit sharing plan before discussing with or offering either to employees.
A Few Ways You Might Be Affected:
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. 
Help them get mentally prepared: Let them know what to expect they will live through while the construction is under way. Tell them about things that might affect them like the noise, the dust, shutting off their water, change orders and the decisions that come with final selections and unanticipated challenges. Just as a doctor would do with patients regarding medications, a good remodeler will warn clients that it is likely there might be side effects experienced during the remodeling process. By doing so clients can recognize the warning signs so they will be able to mentally and physically adjust. Also, my experience was that by discussing these realities in advance, the fatigue might not set in as early, or at least would not be as significant, as early, as it might be if my team had not warned them.
Help them get physically prepared: Living through the remodeling process can be much easier with some preparation. For example, remind customers they will not be able to cook while you remodel their kitchen. Suggest they consider cooking and freezing easy to microwave meals and or collect take out menus before you start their kitchen renovation. Some remodelers have told me they actually provide their clients recipe books and or a collection of local restaurant menus to help with this. If you are renovating their only bathroom as part of a project, ask how they plan to deal without a toilet for a few days or more. They may not have even thought about such realities. Maybe you or they can even set up temporary spaces to tide them over until they get their homes and their lives back.
Hydroelectric energy is one of the most developed forms of green energy across the country. For generations, American engineers have been developing dams for many of our nation’s rivers. Once a river has been dammed, engineers can control how much water passes through at any given time. As that water flows, it rotates a series of turbines thus creating energy.
In order to turn wind into electricity, a new type of windmill has been developed. Often these windmills are installed in large groups referred to as wind farms. All throughout West Texas, there are thousands of new windmills that have been built over the past decade, and wind-generated power is becoming an increasingly substantial source of energy for the Texas grid.
Harnessing the energy of the sun’s rays requires the use of solar panel technology. While solar panels were once extremely pricey, prices have come down as technology has advanced. Now, many people in sunny regions, including many areas of Texas, are installing their own personal solar arrays in order to capitalize on the most abundant energy resource in our solar system.
There are many reason construction businesses fail. A read of a 2007 report by the Joint Center for Housing Studies at Harvard University titled 
First, if you don’t put efficient business systems in place as a small business your likelihood of failure will be very high even if your business remains small in size. Also, even with modest growth, unless you put systems in place your business is more likely to fail. Also consider, without efficient systems, it will be you the business owner who will have to work harder and longer to get things done due to the lack of those systems. If that is the case then burn out and or the typical resulting health problems might lead to failure. But remember, that burnout happened because of a lack of systems.
First, unless you can determine the cost of being in business you won’t know what to charge for your services over and above the direct job costs of labor and materials. If you don’t know what to charge you literally won’t know whether you are buying or selling jobs. Plus, every contractor I have helped do a budget goes forward with confidence and success selling at the price they now know they need to get to be profitable.
