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Remodelers need to work backward from their most successful and fulfilling jobs to figure out how they can bring in more jobs like that, says Patty McDonald of Boardwalk Builders. (Courtesy of Marc Clery)
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By Craig A. Shutt
Ever feel like you're spinning your wheels? Working hard all year, doing lots of remodeling jobs—and still not feel like you're moving your company ahead? That's the feeling you can get if the jobs aren't building the business in a particular direction or creating a specific niche–or offering the level of profit they should.
Unless a remodeler's projects fit into an overall strategic plan for growth, they may be disguising the business's true (lack of) success, maintains Patty McDonald, president of Boardwalk Builders Inc. in Rehoboth Beach, Del. But many remodelers don't have a specific plan to ensure they have targeted the proper niche to ensure long-term success.
"The time to begin doing a strategic plan is when a remodeler decides he has time to work on the company, not just in the company," says Patty. "A lot of remodelers don't plan well. They've got a natural understanding of tradecraft and even for selling projects, but they don't have the financial backing to plan for the long term. And money has its own rules."
The key, she says, is to understand your own numbers. That means ensuring your accountant understands the remodeling business and can work with you closely. It also means tracking project costs and profits by type of job, neighborhood and other categories that can help you decide where to focus.
"You want to look at the data to find a pattern for the jobs that you enjoyed the most, that brought in the most profit, that went the smoothest and easiest, whatever criteria you want," she says, adding that most remodelers look to see where profits are highest by ZIP codes, project size, project type or customer type.
Back to the future
Determine where the best sources of work have been in the past, then work backwards to figure out how you can gain more of that work. This requires knowing details of your company's processes, such as the percentage of leads that are closed. That in turn will help determine how many jobs need to be completed to reach a certain profit figure and how many leads are needed per month or year to close that many jobs.
Outside advice can help. Many business-management courses include basics on planning. Both the National Association of the Remodeling Industry and the Remodelors Council of the National Association of Home Builders offer management-oriented manuals with planning information. It also helps to read trade magazines, visit websites, and talk with other remodelers at trade shows and local association meetings to gain perspective on different strategic approaches.
Formalized peer groups, such as Remodeler 20 and Builder 20 clubs, also can help fine-tune your thinking, but only after the other steps are taken.
"You need some experience and understanding before a peer group will be effective," Patty says. "It may seem overwhelming to create a strategic plan, but you can take it in small steps and achieve the results you need."
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