The Business of Remodeling: 5 Ways to Get It Right

Here’s a sobering truth: One-in-five businesses will fail in their first year of operation, according to the U.S. Bureau of Labor Statistics. Roughly 50% will fail in their first five years, and almost two-thirds will be out of business within 10 years.

How can you stay in it for the long haul? These five strategies can help guide your business so you grow stronger over time, whether you’re new to remodeling or a seasoned pro. 

1: Know Your Numbers

 In many small businesses, owners know the trade but not necessarily the numbers. The measure of success is not how much you have in the bank, it’s how much you get to keep.

Know your numbers and know them cold. If you don’t know what your costs are, then how do you know what to charge? If you don’t understand your work in process (WIP) report, then how do you keep track of cash flow? If you don’t know how much money is coming in, going out, or available relative to the cost of the projects in progress, how can you succeed? You alone are responsible here, and falling short is the surest path to failure.

And lean into tech. It won’t solve every problem, but it’s an important part of running an effective business. We use QuickBooks, but there are many good options. 

2: See it Through

Always—and I mean always—do what you say you’re going to do. Don’t write checks your butt can’t cash. If you tell your employees you’re going to do something, then do it. Same thing with your contractors, trade partners, and customers.

Be honest and transparent, but don’t try to be everything to everybody. If your niche is kitchens and baths, then be the best at that before you add to your plate.

3: Surround Yourself with Great People

When you hire, look for people who are better at doing the work than you are. My first hire was a project manager who could help me with production and give me time to focus on estimating and selling. And hire carefully. Have multiple conversations with a candidate and have them meet the entire team. Hire for character knowing that you can train for process. 

4: Communicate Clearly 

Most of the time when something goes wrong, it’s due to poor communication. Communicate regularly, from the sale through to the end of the project. And be specific in your contracts and with your change orders—and make sure they are signed. 

Also, I strongly recommend you use project management software. 

5: Continuously Improve

If you’re not pushing to get better, then you may be in trouble.

I took our entire team to the NAHB International Builders’ Show, and while it was a significant investment it was a worthwhile one because investing in my team is an investment in our future. It’s already paying off with ideas we’re using to improve every aspect of our operations—from the business side to the construction side. 

Make it Happen

A big challenge is executing these principles with intention and discipline. The first step is improving the weakest aspects of your operation and relying on the strengths of trusted team members to help address shortcomings. And seek ideas and support from fellow professionals. As chairman of the NAHB Remodelers Council, I have confidence in recommending NAHB as a truly excellent resource. 

As you continue your business journey, I look forward to seeing your progress—five or 10 years down the road.