flexiblefullpage
interstitial1
Currently Reading

Managing Business Risk to Embrace Risk

Advertisement
billboard
Business

Managing Business Risk to Embrace Risk

As remodelers, our product is risk. Yet within our businesses, we fear risk. Just like with your projects, if you plan accordingly, your risk comes with reward


By Duane Johns June 10, 2024
risk reward
Photo: stock.adobe.com

What’s hiding behind the drywall? Is it structurally sound? How much will it really cost? 

There's a risk behind these questions we commonly face as remodelers. But we’re up for the challenge, do our homework, and plan accordingly. The best remodelers manage risk in order to correctly embrace it. That’s our product. 

On the actual business side, risk looks different. Risk is necessary for growth, yet our risk tolerance is often low and we face the risk vs reward conundrum. 

Risk is everywhere in business ownership, but several factors ensure you reap the reward from these risks.

 

Risk: Hiring 

Remodelers and entrepreneurs are a bit like superheroes: When things are calm, you look like an average citizen. But when things go off the rails, you put on your cape and do it all to save the day. But the problem is that you can’t do it all yourself, but delegating may feel risky. 

In a quest to scale your business from a one-person show to a full-fledged remodeling business, you'll inevitably have to delegate. If delegating scares you, manage the risk by remembering that knowledge is power. 

Don't let fear paralyze you. Instead, arm yourself with information to ensure this person is the correct fit. Curate the correct interview questions, consider inviting them in for a job shadow day to evaluate their skills in action, and develop a list of values you uphold as a company to judge a potential employee against.

And embrace a culture of learning and collaboration. Set the tone for your culture and vision, and identifying the right hire will be easier.

Related Reading: 3 Reasons You Struggle with HiringThe Best Formation: Hiring Best Practices4 Keys to Home Improvement Hiring
 

 

Risk: Growing

I would challenge you that growing too slowly can be just as risky as not growing. Missed opportunities are a hidden cost. It’s your highest and best use as a business owner to identify or create new opportunities for your business and your team members. 

Developing the right systems, processes, organizational structure, and long-term planning are critical to help you identify and assess risk—especially with growth.

A great tool for this is EOS (the Entrepreneurial Operating System) Think of it as a trusty utility belt, equipped with everything you need to tackle risk head-on. From strategic planning to accountability charts, EOS will help you and your team make better decisions.

Related Reading: Avoiding Growing Pains in Your BusinessKeys to Growing Profitably as a RemodelerUnderstanding the Owner’s Role in a Growing Remodeling Company
 

 

Risk: Clients

We often underestimate how risky it is to engage with the wrong clients. To manage this risk, you need to ensure that your clients are the right fit for your business and vice versa using a thorough qualification process. 

Don't be afraid to ask the tough questions and part ways with a client early on if you are not in alignment regarding, values, expectations, budget, and so on. Taking on projects with the wrong clients can be debilitating to your team culture and can be a financial disaster. This is a risk you don’t want to take on.

Related Reading: 5 Client Red Flags to Watch; 4 Qualifying Questions For When Clients Come Calling

 

Risk: Pricing Incorrectly

You must be a good steward of your clients' money. Say it louder for the folks in the back! You need to set up your business, and each and every project budget, for financial success. “I can’t charge that much in my market” is one of the riskiest things you can say.

This is a business and it must be profitable to succeed. You must know your numbers or get someone on your team who does to ensure you are charging enough, have manageable overhead, and a healthy profit for your individual business. Numbers don’t lie. 

Related Reading: Estimating Three Ways; Remodeling Pricing: From Opaque to Clear; Know Your Numbers

 

Risk: Running an Unprotected Business

And finally, a word of caution: don't take your construction agreements for granted, don't skip out on hiring legal counsel, and don't skimp on insurance. These are not just suggestions; they're critical components to running a thriving remodeling business that can properly assess and manage risk.

You may try to avoid risk altogether but it may be better to embrace it, understand it, and manage it. There are times when we need to take risks and times when we need to avoid them. 
 

Tags


written by

Duane Johns

Duane Johns has been dedicated to elevating professionalism in the construction industry for over 25 years. He entered the construction industry working on oceanfront estates in The Hamptons on Long Island, New York. After honing his skills and being involved in all aspects of high-end custom construction, he moved to Charlotte, North Carolina in 1996 and started a general contracting business with Roger Ketchum. He is currently the co-host of the Builder Nuggets podcast, co-owner of Alair Homes Charlotte, and Regional Developer for Alair Homes.


Add new comment

Plain text

  • No HTML tags allowed.
  • Web page addresses and email addresses turn into links automatically.
  • Lines and paragraphs break automatically.
leaderboard2

Related Stories

What the Most Successful Remodelers are Doing Right Now

Industry advisor Mark Richardson shares the answers to his three most asked questions: What's the remodeling market like? What are other remodelers doing? How do I measure up?

Becoming an Employee-Owned Design-Build Company

One remodeler’s cancer diagnosis changed the way he approached succession planning

10 Remodeling Sales Techniques for 2024

Mark Richardson explains the benefits of visual selling, strategic questioning, intentional messaging, and more on this episode of Remodeling Mastery

3 Ways to Start and Operate a Successful Handyman Division

So, you want to start a small projects division? Three successful remodelers lay out their winning approaches and hard-learned lessons

6 Tips for Software Adoption in a Remodeling Company

A design-build owner shares how he successfully implemented new softwares into his processes

6 Results-Proven Marketing and Sales Tips for Contractors

The Pinnacle Experience’s keynote speaker, author of "They Ask, You Answer" offers results-driven tips contractors can start today for improved leads

Forty Under 40 Remodeling Trendsetters

The new ideas embraced by our Forty Under 40 winners are examples of forward-thinking leadership in remodeling

 

How to Create a World-Class Remodeling Team

Great remodeling companies position themselves for the future with the right players

How to Increase Your Odds of Closing Remodeling Sales

Use these tips to hone your sales process and grow close ratio

Everyone Should Have a Number: KPIs for Your Design Build Team

Measuring key performance indicators guides your team to success while creating accountability and ownership

Advertisement
boombox2
Advertisement
halfpage2
Advertisement
native1

More in Category




Advertisement
native2
Advertisement
halfpage1
Advertisement
leaderboard1