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Impact Response

A look at how Mosby Building Arts is adjusting to the new normal 

May 27, 2020
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Mark McClanahan, president of Mosby Building Arts

Mark McClanahan, president of Mosby Building Arts

The COVID-19 outbreak has lead to unprecedented times for the remodeling industry. The responses from individual business owners have varied widely depending on region of the country, company size, personal philosophy, and leadership style. Here, we focus on a sort of “diary” from Mark McClanahan, president of Mosby Building Arts, a 73-year-old company based in St. Louis. It details how his company responded as the crisis was unfolding. 

Update: April 10, 2020

Mosby felt the pandemic’s effects by mid-March when weekly sales calls suddenly fell from about 50 to 25. The company had a solid backlog of sales to get through May and perhaps June. “But our leads were cut in half, and we certainly paid attention to that,” says McClanahan.

Mosby laid off about 10 people but kept the vast majority of its staff, now numbering 96.

With the future of the business unclear, McClanahan watched intently as Congress debated the CARES Act and finally passed it on March 27. Then McClanahan and his leadership team moved fast. 

Mosby submitted its application for a CARES small business loan on April 3—the earliest possible date—and its loan documents on April 10. The very next day, Mosby received $1.3 million, the equivalent of 2.5 times its one-month payroll and benefits expenses. The two-year loan, which has a 1% interest rate, can be forgiven if Mosby uses it as stipulated (75% for payroll and the remainder for expenses such as rent and utilities). 

“It was a big relief,” McClanahan says. “It gave us a little more breathing room.”

What’s unclear is how the government will calculate the forgivable amount. “I don’t know exactly what we need to be doing to get as much of the loan forgiven as possible,” McClanahan says. “So we’re a little nervous about that part.”

One thing that helped Mosby’s application, McClanahan believes, is a piece of advice he heard from an expert online: Work with an authorized SBA lender. Fortunately for Mosby, its longtime bank had that authorization. McClanahan says he’s heard from many peers in similar situations that they struggled to submit their application or even to find a bank to help them. “We were fortunate,” he says.

Update: April 15, 2020

As the Covid-19 pandemic roiled the remodeling industry, Mosby Building Arts had about 20 clients back out of projects, citing two main concerns: their safety and the economy. Mosby, which typically has 80 to 90 projects in the pipeline and delivers over 350 projects over the course of the year, responded swiftly to both concerns.

To address clients’ financial worries, Mosby did something it’s never done in its 73-year history: It began offering discounts and financing. Customers can get 15 percent off some of Mosby’s smaller lines, or they can finance their projects with no interest or payments for 18 months. “We’ve never promoted discounts and financing like that,” says McClanahan.

Mosby Building Arts has contunued to buck the economic trend. The company planned to have $1.2 million in sales in april but instead sold $1.6 million—16% higher than april of last year.

To assuage customers’ safety concerns, Mosby sent them a letter hand-signed by McClanahan that outlined the extensive safety measures it was taking. Those included adhering to the CDC’s guidelines, having all 40 office employees work from home, practicing social distancing on all job sites, providing all field workers with hand sanitizer as well as cleaning supplies to sanitize any areas they touch inside anyone’s home, requiring workers not to shake hands and to wash their own hands frequently, and cordoning off any work areas inside clients’ houses with plastic sheets. 

“We had a client going through cancer treatment and another who’d had a stroke a week earlier, and they expressed gratitude that we’d taken these measures,” McClanahan says. And they both felt confident enough to allow Mosby into their homes.

Update: April 29, 2020

Things turned around pretty quickly for Mosby Building Arts. In the last two weeks of April, leads shot back up to over 50 per week. “Our leads are actually stronger now than they were prior to the shutdown of the local economy,” says McClanahan.

He attributes that turnaround to a few factors. For one, Mosby’s nine salespeople wrote and called all their past clients and offered them at-cost remodeling work, which generated almost 60 leads. Mosby also offered a new discount and financing program through the end of May: either 15% off some lines or no interest and no payment for 18 months on exterior, small remodeling and semi-custom kitchen and bath projects, excluding the design-build projects that make up 75% of Mosby’s business. 

In addition, Mosby launched a new TV, radio and direct-mail marketing campaign under the slogan “Your Family, Your Home, Your Life.” And it published a special edition of its own architectural and remodeling magazine, Design 360, which reaches 10,000 homes.

But McClanahan thinks there’s another potential factor behind the company’s surge in customer interest—one that has less to do with creative marketing and more to do with the fact that so many people are now living and working in their houses, all the time. 

“People are stuck at home, and they’re looking at their homes and wanting work done,” he says. “Our messaging approach is, Is your home helping you through this? If not, there are things we can do to help.”

Update May 6, 2020

Mosby Building Arts has continued to buck the economic trend. The company planned to have $1.2 million in sales in April but instead sold $1.6 million—16 percent higher than April of last year. 

But Mosby president Mark McClanahan suspects his company won’t be able to outrun the economy forever. Its strong sales are “a bit of an anomaly,” he says. “I still expect to feel some pain. With significant unemployment numbers, I think the economy will catch up with us.”

McClanahan and his leadership team had that in mind last week when they held three virtual meetings to identify their overall goal—staging the company for success out of the crisis—and to determine the ways to make that goal a reality. 

Those ways, or what McClanahan calls defining objectives, include stress-testing the company’s projected profit and loss based on various potential scenarios. So if business over the next few months falls by 10, 25 or 50 percent, Mosby knows the changes it will need to make in each case—whether those changes affect overhead, personnel, investments or capital purchases. “So instead of reacting, we’re proactive about what we have to do,” McClanahan says.

Another defining objective involves virtual training and sales. To prepare for a possible future in which more homeowners prefer to meet virtually, Mosby has to put the right technology in place now to streamline the process of conducting business digitally. And that will require training and testing. It will all be done with one question in mind, McClanahan says: “Do we stand out as superior or inferior in this space? We prefer to be the former and not the latter.” 

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