Avoiding Growing Pains in Your Business

The Pinnacle Experience 2023, hosted by Pro Remodeler, featured speakers, panels, roundtables, and more on a variety of topics pertinent to your business today. One of those topics was "Avoiding Growing Pains," featuring four successful remodelers who not only grew their companies, but did it smart.

Below is a snippet of the conversation between Jay Cipriani of Cipriani Remodeling Solutions, Michael Valente of Renovation Sells, Mark McClanahan of Mosby Building Arts, and Greg Harth of Harth Builders.

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What does business growth mean to each of you—is it revenue? Profit?

Jay Cipriani: I'm cautious about growing revenue. Sometimes, some folks will say if you're, if you're not growing, you're dying, but you can also die by growing. So you have to be very careful in your growth, you have to make sure that you have scalable processes in place to be able to handle that additional growth.

I think the biggest thing that we've come to understand with growth, and me specifically, is you have to understand how to give up some control.

Michael Valente: It’s multifaceted. Top line, gross revenue, gross profit margin, net profit—how do you grow all that? Maybe you grow as the bigger jobs? When I started 15 years ago, we were just doing small bathrooms, and then we ended up doing large guts. That's growth. I also think that growth individually as a leader is all part of the whole growth, from top line to the employees.

What have you seen when it comes to growing too fast? What’s the right amount of growth?

Jay Cipriani: You can certainly grow too fast. And I think a nice figure is 10 to 25% growth a year. You're stressing out the entire company when you grow too fast. You're going 100 miles an hour holding on for dear life, so you want to grow into control. You want to have your processes in place and you want to make sure that your homeowners are having a great experience. 

Sometimes when you grow too fast, you make too many mistakes or costly mistakes. The customers so you're not fulfilling the promises you made to the homeowner. And at the end of the day, you're looking at the profit and it's like why are we doing this if we’re making very little or no profit. 

Michael Valente: I think the right amount of growth is different for everybody. I think the biggest thing that we've come to understand with growth, and me specifically, is you have to understand how to give up some control.

I always use the phrase, “I take my hands off the wheel and let other people drive.” And that's really hard, especially for entrepreneurs and owners. But the minute you let people take control for you and steer the ship, it may not go the way you want it directly, it'll go off course for a little bit, but they end up coming back to the center and almost driving better than you can. 

So to meet growth, it's about giving up control. For sustainable growth, 10% obviously is what a lot of people kind of shoot for. We've had close to 100% growth, I think part of that is getting a good team in place. And then for us, you know, if you're gonna grow at that pace, you better be funded properly.

You have to grow out of a personality-driven company to a process-driven company.

Mark McClanahan: It depends on your company. And you know, for Mosby, I think on average, it's been about 10% per year. I think it's interesting though, if you look at our trajectory, it goes up 20%, flat, 22%, flat, and 22%, flat, sometimes it's the way it goes. 

The other thing I'd like to say, just to add to some barriers, was a long time ago, I heard that you have to grow out of a personality-driven company to a process-driven company. What that means is a smaller company, a lot of people wear a lot of hats, that's the personality journal company. But as you grow, you're going to have to build in processes, so that the people who are used to doing a lot of things, you limit their work and become more specialized. That's how you can really get scalable growth.

Greg Harth: Fifteen percent seems to be the right number for us, to the point where we wrote it on our mission statement—and 15% with net profitability. And we share that with our clients.

If you don't grow, I mean, inflation happens, right? We all realized that recently. And I'm not even sure if 15% is the right number right now. Although hopefully, we're starting to stabilize again. We find it really hard to put a budget together if we don't grow the top line and the bottom line at the same time. And so it gets a little challenging and, you need that 15% just to pay your people more.

What is a piece of advice you’d offer to a business owner?

Michael Valente: Something that's been really important to me is mentorship and aligning myself with people who have been there before me. I'm an active member of an organization called Vistage, which is CEOs that run a variety of different companies. And that education, to me, has been invaluable. And it doesn't have to be just strictly in the remodeling business. Running a business is not industry specific, and I've had so many great mentors along the way that have taught me.

When you're in entrepreneurship, it's a lonely business because you have no door to knock on above you. Who are you going to call? So having and aligning yourself with other people who have been there that can Shepherd you, who can teach you. And the final remark is entrepreneurs are usually pretty open, they want to help you because they know what it's like to be there. So reach out, most entrepreneurs and people running businesses are happy to help you because they understand what it feels like to be in your shoes.

Entrepreneurs are usually pretty open, they want to help you because they know what it's like to be there. So reach out.

Greg Harth: We often mentor small trade partners and teach them how to market properly, although we don't want to raise their prices too fast. But I want to see them successful as well. So it's kind of a mantra for us. From my perspective, I think it's scary at the top being the decision maker. And one thing I would suggest is lean into failure, lean into the possibility of failure. If you read tons of books, almost all of them say when we fail, we learn. And if you're not failing, you're not doing the right thing as a leader, meaning that you're not trying hard enough. We can keep reminding ourselves to try new things.

Jay Cipriani: I think, with growth, you have to watch the morale of your team and your trade partners so that you don't stress them out with growth. Giving sales folks too many leads, giving production too much work to produce, overtaxing your trade partners. And again, it all leads back to a great experience for your homeowners that you're delivering the promises that you've made in those sales calls, so just keep an eye on the stress of your team.

Mark McClanahan: I think my biggest key to success and growth is to surround yourself with really, really great people. I find that the more I have great people around me working at my company, the better off that we are. And the other advice is if you have somebody who's not behaving that way, just get them off your bus as soon as possible and get the right people on your bus.