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.
A Different Buzz
You'd think these were boom times, judging by all the remodeling my friends and neighbors are doing.
You'd think these were boom times, judging by all the remodeling my friends and neighbors are doing. Some might say this remodeling buzz is not surprising. After all, interest rates still are low, sales of existing homes are up, and home equity appreciation is healthy.
But this is a buzz with a difference. It lacks the "go for it" gusto of remodeling in true boom economies. This time, most homeowners are approaching remodeling with unusually rigid financial constraints. Phones are still ringing, but the homeowners who call want smaller projects. Jobs take longer to sell. Even past customers are calling around and price-shopping for contractors. High-end clients still insist on having some luxury products, especially for kitchen and bath updates. But these days, if those products push the budget over their price ceiling, many clients table the job - for months, a year or permanently. Many homeowners are postponing nonurgent maintenance jobs, as well, if the estimates seem steep.
Get used to this. It's likely to continue at least for the first half of 2003. To keep your company strong, I recommend the following five techniques.
Market aggressively. Develop and implement a dynamic marketing plan aimed at establishing dominance in your niche. When prospects consider remodeling, their knee-jerk reaction should be to pick up the phone and call your company. Use advertising, mailings, slogans and signs to drive home the message that your company is the clear choice in your region or specialty area.
Sell smart. Even if you avoided bidding wars before, you are in them now. You probably are competing not only with similar companies, but also with contractors that easily can underbid you. "Silent competitors" are the homeowners themselves, if they decide not to remodel at all after discovering that their wish list exceeds their budget.
Manifest your company's competence at every opportunity. Although price is a high priority in today's remodeling market, homeowners still demand reliability, trustworthiness, expertise and skill. Educate homeowners about the price-quality-service connection. Sell value. And be flexible. Work through the budget with prospects, moving them toward doable, satisfying projects while winning their allegiance. Be patient; they might deliberate for months. Stay in touch.
Offer total service for repeat clients. Don't give repeat customers a reason to hire any other contractor for any remodeling work. Contact them and let them know you can take care of all their remodeling needs, from half-day projects to whole-house jobs, from maintenance to design. This reminder might be all they need to drop other contractors off their list. Besides, your call might nudge them forward with projects they have been contemplating.
Make it easy for customers. Don't let clients be scared off by the remodeling process. Reinforce your reputation for on-time, on-budget, well-supervised, well-built jobs. Be the company with the answers. Even if you don't offer financing, use your relationships with lenders to expedite and simplify the financing process for your clients. Offer design services, including interior design, landscaping and lighting, even if you have to subcontract them.
Be a diligent manager. Monitor your company's telltale financial indicators, such as lead costs, estimate versus actual job costs, and overhead. When the numbers veer off track, immediately make changes to bring them back on course.
A quarter-century remodeling veteran, Shirley Blayden, co-owner of Blayden Design/Build in Renton, Wash., has positioned her company to stay strong through the current business buzz. Her advice: "If you weren't already on top of your business, now is the time" to get there. I couldn't agree more.