Five Easy Ceases

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We’re well into the new year now, and most of us have seen our New Year’s resolutions dissolve. It’s not too late, though, to make changes to your company that can have almost immediate impact for very little investment. Four experienced remodelers off...

March 01, 2002

We’re well into the new year now, and most of us have seen our New Year’s resolutions dissolve. It’s not too late, though, to make changes to your company that can have almost immediate impact for very little investment. Four experienced remodelers offer their suggestions for quick - if not completely painless - hits with very high returns on investment. Each one involves eliminating some kind of negative thinking, attitude or behavior that can produce equally negative results:

1. Cease dropping prices. Mark Scott, CR, learned this lesson from an insulation subcontractor years ago. Scott was fuming about a job he had lost, and the contractor told him he probably made the most money on the jobs he didn’t get. That stopped him cold, of course.

"She told me I should never drop my price," recalls Scott, owner of Mark IV Builders in Cabin John, Md. "She was right. Any time you drop your price, it turns out to be the job from hell."

2. Cease passing up no-brainer marketing opportunities. LeRoy Ostlund, CGR and owner of Ostlund & Son Construction in Traverse City, Mich., reports that an exposition sponsored by the local home builders association resulted in six good leads for his company simply because he worked the Remodelors Council booth for several hours. By the time Ostlund talked to Professional Remodeler for this article a few days after the expo, he already had called on one of those leads, a homeowner who was ready to proceed as soon as they could agree on the numbers.

"Several remodelers took turns working our booth, and those who worked it the most got the most benefit," says Ostlund, who is president of his local Remodelors Council. "Anyone who didn’t take advantage of it really missed the boat."

3. Cease spreading yourself too thin geographically. John Hinton, chief financial officer of De Mattei Construction in San Jose, Calif., says his firm is successful in large part because it defined the geographic area it wants to serve and sticks to it. Furthermore, the company targets one specific neighborhood within that larger area and fo-cuses its marketing efforts there for a while.

"One of our key words is concentration," Hinton says. "We try to work on several jobs in one area at one time. We find out what the local publications are and advertise in them, and we use yard signs. The idea is to get people to say, ‘Well, if all these other people are using De Mattei, maybe we should give them a try, too.’"

4. Cease carrying employees who aren’t carrying their weight. While reading Straight from the Gut, the autobiography of former General Electric chairman and CEO Jack Welch, Scott was struck by Welch’s advice to highly compensate the top 20% of employees in a company and get rid of the bottom 10%.

"So we had our 15 employees rank each other’s performance," says Scott. "It was really hard for everyone, but we got rid of two people. One of them had been here for six years, and he actually thanked me for it. He said it had gotten him off his butt and made him get out there and do something."

5. Cease adjusting your business plan if the road gets bumpy. One of the biggest mistakes a remodeler can make is to divert dollars from one part of the budget to another, says Bob Earl, CGR, CR and president of Casa Linda Remodeling in San Antonio.

Diverting funds is tempting, especially if the money was tagged for marketing or advertising - often the first places business owners look when they need to cut back expenditures.

While borrowing from Peter to pay Paul might seem like a good way to solve an immediate crisis, it only postpones the problem: The jobs that would have been gained through that marketing won’t materialize if the marketing is cut, so business will still be slow in six months.

"You have to look at the long term, not just the short term," Earl stresses. "Put your business plan together and follow it."

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