Last month in this space, I reviewed a series of market projections for 2014 from Harvard University as well as the industry’s leading associations.
Corner Office: HighCraft Builders stays strong with smart choices
Careful diversification has paid off for the Fort Collins remodeler.
While the Fort Collins, Colo., remodeling market has stayed stronger than a lot of others, it still poses challenges.
But even in a challenging environment, the owners of HighCraft Builders haven’t been afraid to take chances on expanding and changing the company.
“The phones are still ringing pretty well for most of the contractors here,” says co-founder Dwight Sailer. “Capturing the work is very difficult. Everybody’s working for less margin, smaller jobs and just an all-around tougher situation.”
Sailer and his business partner Bryan Soth founded the company in 1998 after working together for a local builder. They say that partnership has allowed them to make it through the toughest period in the company’s 12-year history.
“It’s worked because our skills and our interests are opposite of each other, so we each have our areas of responsibility and we’re out of each other’s way and we complement each other really nicely,” Soth says.
In general, Soth manages the pre-construction portion of the business, while Sailer runs the field operations, with both working together on marketing and other major business decisions. That division of labor has helped them to see things clearly and make major decisions to keep the company strong even in the current downturn.
“One of us would struggle, whereas together we do really well,” Soth says.
Spending where it’s smart
One thing Sailer and Soth haven’t been afraid to do is spend money on the important stuff.
Like most remodeling companies, HighCraft is facing more competition from builders, former subcontractors and the like for a piece of the smaller remodeling pie. HighCraft has made several changes to further accentuate the company’s differences with smaller, less established competition. One example is expanding HighCraft’s interior design offerings, by converting an existing brick building on its property to an interior design studio.
“We made a very conscious decision to treat interior design as a division within the company, which we hadn’t really prior to a year ago,” Soth says. “We recognize how important it is to the success of a project, so we are devoting the resources to that.”
The new studio is a differentiator, as it also allows clients to make product selections at the HighCraft office instead of driving around to multiple showrooms, Sailer says.
In a climate where many companies – not just remodelers – have been cutting their marketing budgets, HighCraft has also doubled-down on promotion.
For the first time, HighCraft has a full-time employee dedicated to marketing. The owners initially set out to hire a receptionist, but found the right person with the right talents and took advantage of the opportunity to bring those extra skills on board, Soth says.
“I can’t imagine not having a full-time marketing person now,” Sailer says. “That explains why our phone continues to ring.”
No single element of the marketing plan has been the key to success this year, but rather it’s having a fully integrated program.
“Referrals are still our leading source of leads,” Soth says. “It just seems like the more things we do, the better things get. There’s not one thing that stands hugely above the others.”
HighCraft has beefed-up it’s website (www.highcraft.net) to keep it better attuned to search engine optimization, making it a larger source of leads. The HighCraft team has also put a lot of time and energy into developing a consumer guide to remodeling – available in book form or as a PDF on the company’s site – that is an effort to educate homeowners on process of hiring a contractor. Homeowners have to enter their name and e-mail address in order to access the guide, allowing HighCraft to collect valuable information for future marketing efforts.
HighCraft has also taken advantage of the new design studio to host consumer seminars on a variety of construction and design topics, with content provided by either HighCraft or the company’s trade partners. The seminars can seat about 30 people and have been another good driver of business for the company.
At the same time, Soth and Sailer aren’t afraid to spend less where it makes sense, either. HighCraft keeps its vehicle budget low by having its employees use smaller trucks, with most driving smaller two-wheel drive Toyota pick-ups or smaller cars that get better gas mileage.
“We’re just really making an effort to leave that large truck image and look a little more mobile, a little more aware and also not have our finances go into maintenance, but still maintaining uniformity,” Soth says.
Following the market
With increased demand for smaller projects, HighCraft has also started a new division, HighCraft Home Services, to tackle those less complex jobs.
“It’s something we’ve talked about for a long time actually, and it did seem like the time was right,” Soth says. “I don’t think we realized how much demand there actually was. It’s really taken off.”
Sailer and Soth saw the Home Services division as an opportunity to not only grab new business, but also to serve past clients that had projects too small for HighCraft Builders to take on. It has worked out well, but not quite as they expected.
“We thought it would be a lot of handyman-type work and what there has been much more of is smaller scale remodels that still require planning, still require extensive estimates and scopes of works,” Soth says. “Rather than a guy just showing up ready to sell the job and just do it then and there, we’re learning that we need to run a smaller version of what our company already is.”
Although there’s still some “gray area,” HighCraft has a basic three-point test to
decide if a project goes to the Builders or Home Services side of the business.
• Design – Any project that requires architectural design goes to the Builders side.
• Cost – Generally, any project below $30,000 is a Home Services job.
• Trades – If there are multiple trades involved – which means it will be more management intensive – it’s a Builders project.
The smaller projects have presented some new challenges, most notably completing them more quickly while still preserving quality.
“In the construction of a typical remodeling project, you can have a scope of work that goes into detail of the complexity of the project and that’s harder to do with the quick turnaround on the smaller projects,” Sailer says. “You’re relaying on your subs and trade partners more for their help. Things are just very fast.”
The other major challenge is dealing with the “tire kickers” that are easier to avoid with a larger project.
“It’s very hard to gate-keep the phone calls on the Home Services side of who’s serious about what they’re doing and who just wants to have somebody at their house to tell them how much everything they point at will cost in remodeling fees,” Sailer says.
Sidebar: Online project management