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Steve Taylor's pursuit of basement finishing franchises helped stabilize his business.
Photo: Claire Newman-Williams |
Company: Taylor Made Construction
Location: Edgewood, Md.
Years in business: 15
Type of business: Owens Corning basement finishing franchises and full-service remodeling
Business goals: create a sustainable remodeling business with steady work and cash flow; differentiate through customer service, process and product; grow revenue and profit
Personal goals: enjoy work, pass a business on to the next generation
Creating a written business plan has remained an unmet goal for Steve Taylor the past two years, and a strategic plan isn't really on his radar. Yet his remodeling company, Taylor Made Construction, has undergone several strategic shifts and is in the middle of its biggest so far: adding basement finishing franchises to full-service remodeling.
Taylor started his own business, Basement Waterproofing Nationwide, in 1987. From the start, he focused on process as well as product, keeping labor in house to better train employees in customer service. As BWN grew its list of satisfied clients, some of those homeowners asked Taylor to do remodeling work. In 1989, he started Taylor Made Construction, a full-service remodeling firm. Since then, Taylor Made and BWN have shared overhead but maintained separate books.
By 1996, the two companies had reached $4.6 million in sales, about 15% of it in remodeling. "My goals for remodeling then sound strange and foreign to me today," Taylor says. "We did no marketing. It was either referrals or from neighbors of people we did work for. We were running away from work, and the work kept catching us.
"Our business plan was to do really good work for referrals. We didn't have a good handle on pricing, and we traded off a lot of dollars. The waterproofing business was very profitable, so I was able to get away with it."
Needs, not wants, drive waterproofing demand, so slow times occur regularly. Taylor hoped the remodeling division would keep waterproofing employees busy during downturns. "We looked at remodeling as a way to smooth out valleys," he says, "but it never has. It's a different skill set."
In the late 1990s, Taylor tried to diversify into building pools, a market demand that continues to exist, but one that turned out to be unsuited to Taylor Made's strengths. Taylor scuttled the effort after doing three pools and losing money. "It was too far afield of what I knew," he says. "If I had $750,000 to blow learning it, I could do it."
Taylor acknowledges he acts on intuition and instinct rather than analysis. "I'm not an analyzer, obviously, or I never would have gotten into pools," he says with a laugh.
His most recent move to diversify was more research-based and has been far more successful. In 2000, members of Taylor's Remodelor 20 club pushed him to consider purchasing an Owens Corning basement finishing franchise, which they thought would be a good fit. After initial resistance, Taylor talked to Owens Corning representatives and franchisees and realized that the opportunity ran "parallel" to his core business, not perpendicular. Based on his years of basement experience, he also determined that the product matched consumer demand.
"Doing 1,000 to 1,500 jobs per year in waterproofing, we know why people want it dry," Taylor explains. "We recognized intuitively there was a need. Our experience has borne our intuition out."
He purchased his first franchise in November 2000 and launched it at a February 2001 home show. Taylor Made Construction now owns five franchise areas and runs 23 basement crews. In 2003, the company sold $6.5 million in basement finishing and produced $5 million of that. The backlog is six to eight months. Production capacity has improved because basement finishing matches the waterproofing crews' basic carpentry skills better than full-service remodeling does.
Being one of the first to pursue a new opportunity sometimes makes bumps in the road hard to avoid. For instance, Taylor and Owens Corning thought the waterproofing company's 2,500 annual leads would turn into a lot of basement finishing systems. Instead, Taylor found that once homeowners pay $6,000-$7,000 for waterproofing, they either can't afford to put more money into the basement or they just don't want to do it.
As a result, Taylor decided he needed a marketing strategy, so he spent several days visiting fellow franchisees and specialty remodelers in other markets. "There is nothing new under the sun," he says. "You just have to copy somebody who's really good at it - with their permission." Taylor tweaked other companies' plans for Taylor Made's market. For instance, the company contends with few gated communities, so it can do more brochure drops.
The growth of the basement finishing business has required Taylor to pull back on full-service remodeling, which dropped from a high of $1.3 million in 2001 to approximately $350,000 in 2003. "We're trying to do what we should do," he says, "which is say we're too busy rather than fall on our face." Once the basement market stabilizes, he intends to regrow his remodeling business.