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Remodeling Business Misconceptions

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Construction Practices

Remodeling Business Misconceptions

Nine incorrect principles often held by less successful company owners

September 19, 2017
This article first appeared in the September 2017 issue of Pro Remodeler.

As I look at some of the most successful people in the remodeling industry today, as well as some of the least, I see many factors that separate these extremes. One thing I’ve noticed is that the least successful often have more misconceptions about the remodeling business. They have passion and conviction for ideas that are just not correct. The following are some of the misconceptions I see embraced by less successful remodelers. As you reflect on these, try to see what your beliefs are and how you might measure up.

1. Bigger is better.

A bigger company is not necessarily more profitable, better with clients, or able to retain employees. There are many remodeling companies that are half the size of others in their community, yet are making twice as much money with less stress. I believe in growth, but you need to define healthy growth for your business, not just getting bigger.

2. More leads is good.

Having the right number of leads from the right type of clients is good. Too many leads can be a curse that corrupts your process and your brand.

3. 25 to 35 percent growth is good.

Growth is important, but growing too fast can be a formula for disaster. There are very few businesses that can handle 25 percent growth. The ability to change the infrastructure is difficult for most company owners. In normalized times (which we are in) I believe 10 to 20 percent growth is aggressive but realistic.

4. Low gross profit is production’s fault.

If you have a strong production team with effective processes, I find that 80 percent of the time slippage in GP is a product of how the project was sold (sorry, sales folks). Was it sold to the right client? Was the right expectation set up front?

5. Bigger remodelers are your biggest competitors.

Even the largest remod-eler only has a small fraction of market share (less than 1 percent in most markets). You don’t need to look at them as a threat. You biggest competition is the client; their fears, miscon-ceptions, and lack of knowledge. If you sharpen your skills as a therapist, marriage counselor, and financial adviser, you will win more jobs.

6. Profit is an indication of a healthy business.

Profit is just one of 10 criteria of a healthy business. There are many other factors including the team, the processes, the product, and understanding the numbers. 

7. Having a big backlog is good.

For most remodeling businesses, the right backlog may be two to four months. Imagine if you are Andersen Windows and you can’t make another window because of a six-month backlog? That would be a disaster. Excessive backlog creates more client issues (changes, miscommunication, etc.) and affects your marketing efforts and close rates. 

8. Every client can make you money. 

I heard a speaker about 20 years ago who said that 18 percent of homeowners will not allow you to make a profit. It’s true. You need to do business with the right clients and work on the right types of projects. 

9. If you are successful, you don’t need to change.

If a business isn’t changing, it will become irrelevant. This is especially true today, with the changes in demographics, technology, and overall market delivery. Change is not an option; it needs to be understood and regularly discussed. The speed at which things are changing is especially concerning, and you need to adjust quickly.

This list of misconceptions is by no means compre-hensive, but it’s food for thought. If you can hold the right principles, you’ll be more likely to see sustainable success.

written by

Mark Richardson


Mark Richardson, CR, is an author, columnist, and business growth strategist. He authored the best-selling book, How Fit Is Your Business? as well as his latest book, Fit to Grow. He can be reached at mrichardson@mgrichardson.com or 301.275.0208.

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