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.
Profit From Design
Mark Brick takes the design/build concept a step further by hiring architects.
Design/build remodelers strongly believe their approach ensures designs that focus on affordable constructability rather than unrealistic wish lists far beyond the budget. Mark Brick, CR, CGR, has taken that concept one step further by hiring salespeople who double as architect-designers, selling the project to customers and then designing it, too. By charging an hourly design fee -- and paying designers a salary plus a portion of that fee -- Brick has created a system that converts more leads into jobs, creates a new profit center, allows him to diversify with his existing staff and lets him offer customers the expertise of an architectural staff.
"There are so many uncertainties in pricing a job that paying a salesperson 7 to 10% of the sale could put you under awful quick," says Brick, president of B&E General Contractors in Thiensville, Wis."I prefer to pay people a decent base-salary guarantee and give them a commission on the design work they bring in."
The basics of the system are simple: B&E’s five architect-designers follow qualified leads. While scheduling the initial home visit, the qualifier explains that the company provides a free initial consultation but all design work is charged at $65 per hour. The salesperson who makes the presentation then coordinates the design work and receives a percentage of the hourly fee (usually about 50%). Salespeople also receive a base salary that increases over the years based on overall performance.
"This takes the design-build concept all the way from start to finish," Brick says. "It ensures that all details are considered, all of the customers’ needs are met in the designs, and the designs are buildable. It definitely helps me build long-term relationships and eases the customer's mind over who is in charge of their project." It also helps Brick plan growth. "Each person I hire essentially accounts for all the coordination on all of the jobs he does," Brick says, "so I can essentially do five times the work with five people [than I can do myself]."
The five architect-designers have master’s degrees in architecture but are not licensed architects. This combination offers the best of both worlds, Brick says, as it ensures they have the appropriate education and background but doesn’t require them to carry the personal liability that would arise if they were licensed.
"Too often in this business, the designers know how to draw, but they don’t know how to build," he says. "I want to ensure my people can draw, build and solve any problems that arise all the way through the project. With one person handling everything, that focuses the responsibility, and it gets the job done."
The designers are a diverse group and often include several students from the nearby University of Milwaukee Architectural School. Those especially strong with certain types of projects or designs receive most of the leads in those areas, although many designs wind up as collaborations among several employees. Two staffers are certified kitchen designers who focus on interior kitchen elements while the sales-designer designs the rest of the project.
The company offers a 1,100-square-foot design center that stocks a variety of kitchen and bath products, including laminates, cabinetry and fixtures. B&E also maintains a library of product catalogs and uses the Internet to find specific manufacturers’ products for clients.
Brick quarterbacks the group, overseeing designs, adding support during sales calls, and coordinating leads and designs if a backup occurs. And business has been strong recently. Sales have grown from $2.7 million in 1995 to an estimated $4.6 million this year.
The business’s design/build approach grew out of Brick’s desire to provide design services, which opened the door to more business. He initially farmed out the designs but then installed Soft Plan design software so he and his one designer at the time could do it themselves. It grew into design as a profit center while ensuring that salespeople aren’t selling projects that are out of line with the budget or too difficult to build. B&E brings in about $150,000 in revenue from design fees in a year.
Brick says his designs usually are the thin edge of the wedge that brings in the project, making the conversion rate from design fee to full project very high. "I find that once a customer commits to the design, they very seldom don’t go ahead with the job. They like what we present and are comfortable that we understand what they want and can give them that in the final construction."
Brick is sold on the format, but there are drawbacks. Finding designers who relish selling, or salespeople who can design, can be difficult. But Brick has not had problems. "It can take awhile to teach them the finer points of selling, but I stress that their job is to listen and learn what the client is asking for," he says. He accompanies salespeople during an initial training period and works with them on an ongoing basis to strengthen weaknesses in selling techniques.
Qualified candidates have not been hard to find. He recruits many from the nearby university. "Right out of school, they have a lot to learn," he says. "There’s very little time spent on residential design in their coursework, let alone on residential remodeling. But many of them enjoy the challenges of it and take to it quickly." On the plus side, he says, "The graduates are always very creative, and I don’t try to stop that."
Turnover can be a problem if designers view the position as a stop-off until they’re ready to apply for their architectural license, he says. "Some will want to move on, but I’ve got several designers who don’t want to go that route and are happy here. They see they can make a darn good living, upward of $50,000 from their salary and design fees, and that’s not bad for a residential designer."
The salary approach ensures that salespeople aren’t trying to boost volume and commissions at the expense of profitability, while the design fees give them an extra incentive to try to bring in designs. Splitting the design fee adds funds to upgrade equipment, pay overhead and remain profitable. "Too often, I hear of companies where the salespeople are making three or four times what the owner makes, and the subs aren’t being paid," Brick says. "This approach works well, at least for me. We’re all making money, and we have room for expansion."
Indeed, Bricks expects the company to continue to grow, and as it does, he will add new sales-designer-architects to handle the projects. "I’m continually looking at what we can net and how far we can grow before I need to add people," he says. "I’m not looking to turn the company into a monster, I just want to make a good living and have my people be successful." And it’s being done while growing the business by more than 70% in four years.
B&E General Contractors Inc.
The Designer's View