Making the Grade

In my mind, October is the perfect time to settle into the books, nose to the grindstone, and get down to serious work. That goes for remodelers, too.

September 30, 2003


Kim Sweet

The Western calendar indicates Jan. 1 as the beginning of the year. Different cultures say otherwise. So do those of us who loved school and always associate fall with new beginnings and a sense of enormous possibility. In my mind, October is the perfect time to settle into the books, nose to the grindstone, and get down to serious work. That goes for remodelers, too.

Schoolteachers, in my experience, typically employ one of two grading methods. In one, they assign each letter grade to a score range that never moves. A class of 20 students could achieve 20 A's or 20 F's. In the other, teachers distribute letter grades across a bell-shaped curve of scores. Every class would include at least one A and at least one F, with the majority of students receiving C's.

Both systems have advantages and disadvantages in the business world as well as the classroom. For example, any remodeling firm with a gross margin of 40% or above could receive an A, 33-39% a B, 27-32% a C, 21-26% a D, and 20% or below an F. Many remodelers argue for just such high standards. I don't disagree. Excellence in and of itself should always be a goal.

The bell curve, however, takes the competition into account. If most firms in your market aren't making much of a gross margin, you can get an A pretty easily. That can be faint praise; you could get an A and still go out of business. On the other hand, if most of your competitors are converting a high percentage of customers into referral business, you'd better think of a new way to stand out from the pack just to keep the business you already have.

Many people grade a remodeling firm: customers, employees, suppliers, subcontractors, prospects, bosses, banks. A high-performance firm must get A's across the board regardless of the grading system and the grader. It's hard to do that when you don't know what the standards are.

Professional Remodeler wants to help set those standards by giving the industry some good data to go by. In June 2001, we published the numbers from our first remodeling business results survey. This month's cover story focuses on the results of our second such survey. With the help of Steve Maltzman and Mike Benshoof of Steve Maltzman & Associates - leading financial consultants in the remodeling industry - the Reed Research Group tweaked the survey to improve it, dropping some questions and adding others.

We're developing a clear picture of the bell curve, determining where industry averages lie and drilling down to find out how they differ by region, job size, type of work and all those other variables that alter the equation.

Of course, few of us want to be average or to work for an average company. Our second list of the 101 Best Companies to Work For in the Residential Construction Industry, also featured in this issue, comes from an entirely different survey, one that questioned employees about trust, fairness, communication and the other elements that make up a great work environment. Last year, we focused mostly on the strategies that went into creating these intangibles.

This year, at our readers' request, we've published concrete benefits data, too. Human resources benchmarking information is just as valuable as the financial kind if you want to attract top talent in what continues to be a tough market for skilled labor. And the companies with top employees are usually the ones with top profits.

Read this issue with pen and paper in hand. Take notes. Compare your results with those of remodelers across the country. Then give yourself a grade - you know everyone else is.

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