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Avoiding the Pitfalls of the Remodeling Business
The 9 Most Common Mistakes of Remodeling Contractors
By Paul Montelongo
The days of “That is the way my grandfather taught me to do it” have long passed. Becoming a successful remodeling contractor in the new millennium takes much more than the old fashioned traditions of doing business. Regretfully, there are still many remodeling contractors who fail to see the need to change with the times. They are just too stubborn or fearful to take the necessary steps to move their business to the next profitable level. Many contractors still fall into the same pitiful way of thinking. So I have taken the liberty to point out the 9 most common mistakes that a remodeling contractor can make to stifle his progress and profitability.
1. “That’s the way my grandfather did it”. With all due respect to dear old gramps, the times ‘hava-changed sonny’. The world moves at a pace that is at least one hundred times faster than it did thirty or forty years ago. Sure, I know customer service and quality was the name of the game in the 50’s, 60’s and 70’s. Those are still important factors in the success equation. Now, however, you have to add speed, efficiency and timeliness. That is why your crews use cordless pneumatic tools instead of hammers and nails. That is why you use computer-estimating software and email instead of a paper bid sheet. The customer demands speed and accuracy today and you have to produce it.
2. “You can be all things to all customers”. Wrong bucko. To achieve any measure of real success as a remodeling contractor, you must niche your business and your services. The reality is the more narrow your niche, the more profitable you can be. Now, I am all for diversification. Have I got you confused yet? If you want to be known as a kitchen-remodeling expert, then focus on that segment of the industry. The same is true with room additions, historical renovations, fire and water restoration, handicap accessibility remodeling, or even birdhouse building. Grow your reputation in a niche and customers will search for you because of your expertise. What about that diversification thing I mentioned? Once you become well known in a niche, then go for another niche. It should be closely related to the first niche and that will greatly reduce your startup costs.
3. “You must have a nail-pouch past”. So you are really proud that you can plumb and line a 2” X 4” framed wall. You have paid your dues by pouring concrete, installing 3-tab composition shingles and sweating copper pipes with the best of men. Big deal. Possession of carpentry, plumbing or roofing skills does not in itself award you the right of passage to start your own remodeling firm. How are your selling skills? What about your management and people skills? In order to be a real entrepreneur in the remodeling business, your visionary aptitude will be the single most important tool in your pouch. Remodeling can be a very profitable business venture. The operable word in that last sentence is ‘business’. Treat your enterprise like a business and it will grow, prosper and reward you for many years to come.
4. “If you build it, they will come”. Pardon my grammar, but this ain’t no field of dreams and I don’t ever remember hearing that Kevin Costner owns a remodeling firm. Just because you decide to hang a shingle over the front door doesn’t mean that customers will flock to your store. There is no getting around it. This business takes hard work, dedication, persistence, creativity, stamina and an intestinal fortitude that would make the marines proud. Every day, every week, every month and every year there are new challenges. Every project has its own uniqueness and rewards. Every client has his or her own set of special circumstances. I suppose that is what keeps you noble folks in the industry – the challenge, the variety, the praise and significance when you turn out a great looking project.
5. “Customers will only remodel once in their life”. That is grandpa talking again. The reality is that we live in a very mobile society. The average family only lives in their home about five years these days. They move up to bigger homes or move to new cities all the time. Our industry is now to a point that is seeing repeat customers for the fourth or fifth time. What does that say about your commitment to customer service? The statistics speak for themselves.
6. “It’s hard to find good subs and employees”. OK, I’ll go half way with you on this one. Sure it is a challenge to find good sub contractors or employees. It is even more challenging to retain them and to keep them happy. However, this is a huge country and despite what your perception is, there are still thousands of hard working, honest, quality minded trade contractors and employees just looking to get matched up with a similar-minded general contractor. Think of it like a marriage; a good one that is. It takes work, lots of work. It takes open quality communication and a commitment to the institution of marriage. Things are not always smooth, but the long-term dedication to the project keeps you in the game. The most difficult part of working with sub-contractors and employees is that many times the problem originates with that person you see every morning in the mirror. Just like a marriage, agree?
7. “Cut back your marketing budget when the economy slows”. I see this time and time again. Remodeling contractors think the first place to make budget cuts and tighten their financial nail belt is with the marketing budget. Wrong buffalo brains. Your marketing and promotional dollars need to be stretched, not cut. In fact, I would cut out the hunting trips, golf club memberships and Wrangler blue jean allowance before I touched my marketing budget. When the economy slows it is time to increase your company’s visibility in the marketplace. Even in a tight economy, there are still qualified buyers out there with plenty of disposable income. Invest more in your marketing plan and you will reap the benefits.
8. “Cut back your marketing budget when the economy booms”. Complacency is a cancerous disease that can kill your company. Just because you have all the work you can handle doesn’t mean you retreat from your promotional strategies. Use a strong economy to increase your customer base. Use it to get higher quality projects, wealthier clients and more complex projects. You can even use your marketing budget in boom times to try something fantastically unique with your advertising schemes. The hard cold facts are that you must consistently maintain your presence in your marketplace. Investing more money in your marketing plan during boom times will give your a stronghold in your niche.
And the biggest mistake a Remodeling Contractor can make is...
9. “You are convinced that you are in the remodeling business”. What? I thought this whole article is supposed to be about succeeding in the remodeling business. It is. That is why you can’t be in the remodeling business. Oh sure, remodeling and renovating property is the service your company provides. However, the real business you are in is the marketing and sales business. Everyday, you must wake up and think...”How am I going to promote my business to the world today?” “What do I have to do to let my prospective customers know what a great company I have?” And...“How can I improve my sales and marketing strategies?” It is no different for a baker, a florist, a mortician or Bill Gates. Your business success is driven by your market visibility. When you begin to think in terms of becoming a marketing machine, the service part of your company will take care of itself, as will your profits.
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