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New Home Builders Moving into Remodeling

March 24, 2008  |  from Markup and Profit Blog

In the last few days, I have had a number of new homebuilders call and ask about switching their business to remodeling. “Can we do it?”

If you know me, you know I am normally not in favor of new homebuilders trying to get into remodeling. They are two very different enterprises. New homes are a product, new homebuilders operate a “factory in a field”. Remodeling is a service business, relationships take center stage when you are working in someone’s home. Remodeling requires handholding.

But the reality is that we have wives/husbands to take care of, kids and grandkids to feed; the world isn’t all black and white. What can guys and gals do that have run into a declining market for new homes and need some work to keep the bills paid? If they are willing to make changes, what changes are necessary?

Here are some suggestions.

  • Read both Markup & Profit; A Contractor’s Guide and Profitable Sales, A Contractor’s Guide. If you have time, watch the 6-hour class (Markup & Profit Class, Sales Class).
    NHC and remodeling are as different as daylight and dark. These books will help you distinguish the differences, especially what you should charge for your work. You simply can’t use the same markup for remodeling that you have been using for NHC and the sales process is decidedly different.
  • Stay away from Cost Plus or T & M jobs (other than for service work under $2,500). Cost Plus and Time and Material jobs are a disaster waiting to happen, especially for companies new to remodeling, renovation or repair work.
  • You must increase, not decrease your advertising. Schmooze, get out and press the flesh. Hand out one new business card to someone you don’t know each day. Let folks know you are available to help them with remodeling, renovations or repairs on their homes.
  • If things are a bit slow, don’t keep employees on the payroll. We are in construction and we have down times. Employees know that and it is a risk one takes when you hire on in this business. If things are slow, send the employees home.
  • Apportion a certain amount of time each day to cleaning up all your tools and equipment. Contrary to what the media would have you believe, this housing downturn will end and it won’t be long before you will be up to your derriere in more work than you can handle. Be ready.
  • Watch the recording “It’s Not All Doom & Gloom In Construction, Part 1” that Dan Baumann and I made of our webinar on March 15. We will be doing Part 2 this coming Saturday, March 29, at 8 am Pacific (11 am Eastern, etc.) Register to attend, we’d love to have you join us. If you aren’t sure how a webinar works, watch this video Dan put together.

Last, but not least, if you are really down and need someone to talk to, give us a call or send us a note. I’m on my way to Providence, Rhode Island tomorrow for the JLC Live conference, but Devon can take a message and we will get back to you as soon as possible. We are always willing to help as best we can. Take care of yourself and your family, and stay focused on sales.

Filed: Organizational-Change