Backlogs may be one of the most confusing aspects of a remodeling business. This is especially true today with many companies having a record level of backlogs.
Years ago, when giving talk on “How fit is your business?” I would ask audiences, “How does it make you feel to have a backlog of projects that is six to 12 months?”
As you can imagine, most of the audience smiled at the idea. After all, it’s comforting not have to worry about finding the next client. Then I would ask, “Imagine if Andersen Windows could not produce another window for six to 12 months. How would they feel?” Then the audience would get it. Long backlogs might make you feel good, but it’s not necessarily good for most businesses in terms of on client experience and the strength of the brand.
I share this story to help you begin to think about things a little differently. There are many other examples in business and life that also illustrate my point. Imagine a restaurant with lines every day that wrap around the block, or a highway congested with too many cars.
The following are reasons that long backlogs are not good. I will then follow with thoughts why the right amount of backlog can be a great asset to your company.
- The investment that any healthy business puts into marketing and generating leads is ineffective when you can’t close deals and deliver in a timely manner.
- Designs / specifications change with the excessive waiting time. This creates disruptions and inefficiencies.
- Homeowners’ priorities and situations change which can effect their projects and your process.
- Communication is more difficult, and things are often forgotten.
- Project costs are more unpredictable and can require new estimates.
- Gross Profit can be eroded resulting in lower margins.
- Homeowners become frustrated and less tolerant.
A backlog can allow you to:
- Pick the clients you want to work with.
- Invest in more resources in technologies for the future.
- Spend more time improving the business and client experience rather than constantly hunting new prospects.
- Put additional resources into training, retaining, and developing your team.
- Gain confidence and grow the business to the next level.
- Spend more time working on the business rather than embroiled in day-to-day needs.
Like with anything in life, too much of a good thing might not be good. If you can understand how much backlog is right, and use this environment to create the right balance with the right process you will see more success.