Also, new recommended Hourly Labor Rates (HLRs) have been posted. Click here to view them!

All subscribers should have received a notification email from RemodelMAX. Some of the pricing trends that RemodelMAX chose to highlight are as follows:

Most Building Materials Subject to Minor Price Corrections

• Dimensional lumber prices increased 4%.
• Fiberglass shingle prices down 2%. Plywood pricing up 2%.
• Fiberglass insulation decreased 2%.
• Wood stud pricing stayed constant.

Here are some other relevant articles:

Not for the Fainthearted

By Patrick O’Toole
Qualified Remodeler
November 2009

The list of motivations for striking out onto one’s own and starting a remodeling business is long, but here is a good start. There is a desire to make more money. There is a strong desire to not let your ideas make someone else rich. There is a desire to chart one’s own course in life, not to be controlled by a course or business path that other people choose. There is a strong sense that you have hit upon a unique value proposition, perhaps a niche in the market that is underserved. These, among other motivations, lead many to start a remodeling business.

Onetime Qualified Remodeler columnist Michael Gerber famously called this moment an entrepreneurial seizure. The humor and the dark underbelly of Gerber’s phrase “entrepreneurial seizure” is that starting a business is not usually based on sound reasoning or even business sense. It represents a leap of faith that you will hit the ground running and never stop. This industry is filled with great carpenters who dropped their tool belts to market and sell jobs, to price them and build them. The hard reality of being in business means having to spend time doing things you may not enjoy or even be good at.

This leap-of-faith is often rooted in an overestimation of one’s own abilities. A lot of very talented designers and trim carpenters create businesses that are craft based. Among many of these, there is a sense that the excellence of their core skills will carry the business forward, and money will follow naturally. This does happen for a lucky few who are well connected to a network of paying customers. But today’s remodeling market is not as frothy on the demand side anymore. And the scope of jobs has shifted dramatically. More people are looking for house doctors and fewer are looking for a modern-day Michelangelo.

Successfully running a business requires a combination of skills that is not often found in one person. In 2010, the remodelers who will thrive will be the ones who see the challenges of the road ahead clearly and prepare to address those challenges ahead of time. Sales and marketing will be the No. 1 challenge for most remodeling firms. Take a day or two days this fall/winter to put a plan together that you feel will work. Then seek out expert opinions to tweak that plan. Lead costs are growing. You need to be sure that your plan is an efficient one.

Challenge No. 2 is really a group of challenges posed by a changing regulatory environment that have been in the offing for many years. How prepared are you to perform lead clearance testing on homes built before 1978 where children are present? Do you have a plan for communicating with your customers about lead-based paint given the April 10th implementation of the new lead-based paint rule? Have you identified a place to get the training you need? The new year will also bring with it new options and requirements with regard to providing health insurance to your employees. Some of you, who do not now offer it, may be required to do so. Is there someone on your team who is prepared to handle the issue of health insurance? Do you have a good insurance professional that you can rely on?

The new year will bring an improving market for remodeling activity, but it will also bring with it a set of challenges that will test your full range of business capabilities. Unfortunately, the fun and rewarding part of the business creating great solutions for customers will not be your sole focus for 2010. The one indispensible trait for successful remodelers will be overall business resourcefulness. The winners will listen to others. They will cast a wide net for business ideas and for people to help them navigate this challenging business environment.
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Indicator Points to Cyclical Bottom for Remodeling, Start of Recovery in 2010

The Joint Center for Housing Studies
October 15, 2009

CAMBRIDGE, MA - The declines in owner spending on home improvements will moderate through the end of 2009 and first half of 2010 according to the Leading Indicator of Remodeling Activity (LIRA), released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The indicator suggests the remodeling industry is turning a corner. Annual spending levels should start to rise in the beginning of next year causing year over year declines to shrink to 8.9 percent by the second quarter of 2010.

“Remodeling spending by homeowners shows early signs of stabilization,” says Nicolas P. Retsinas, director of the Joint Center for Housing Studies. “While the housing recovery has been erratic, a strengthening economy could produce spending increases on home improvement projects by the second quarter of next year.”

Some positive signs for the industry are emerging. “Favorable financing costs - for those households with access to credit - and a pickup in homes sales are producing more opportunities for home improvement projects,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies. Several factors, however, still impede remodeling growth. “A generally weak housing market with unstable prices, near record levels of foreclosures, and other distressed sales are discouraging households from undertaking nonessential remodeling projects.”
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Radical discounting is business suicide
Remodelers won’t survive long slashing prices

By Wendy A. Jordan, Contributing Editor
Professional Remodeler
October 1, 2009

Can remodeling contractors survive a strategy of radical discounting?

- Kitchen and bath designer, California

The short answer is no. If you slash prices deeply to generate business, you may see success in the short-term, winning contracts from bargain-hunting homeowners. In the long run, though, you are setting yourself up for failure.

Radical discounting is a topic that stirs strong emotions among established remodelers. I contacted several around the country, and they said it is business suicide for all but extremely large companies, and eventually those giants, too. As design/build remodeler Iris Harrell of Harrell Remodeling in Mountain View, Calif., put it, the only way to survive radical discounting is to stop doing it. Now.

Say you cut prices by 20 percent or more, which is one general definition of radical discounting. You’ve fried your profit and probably a good share of your overhead coverage. Even if the low prices draw new business, your company has only so much sales and production capacity. You’ll never be able to make up the lost revenue through increased volume.

Radical discounting carries another danger as well. It devalues your company. And once you start down that road, it’s hard to turn back. Jesse Morado is a remodeling pro who now runs a residential remodeling consulting firm, Renovation Coach, in Atlanta. He warns that repositioning yourself as a low-price company moves you into the market niche of bottom-dollar companies. It’s a whole different world where buyers fixate on price negotiation and don’t think about the workmanship, customer service and reliability. You will have to cut corners to save money perhaps reducing the number of workers on the job, providing less frequent production oversight, scheduling fewer dumpster pickups, doing less painstaking site protection, and so on. All this raises the risk that you will make more errors, fall behind, disappoint your clients and sow the seeds of negative PR. That’s a deadly price to pay.

Moderate price reduction is a different matter. Many remodelers are tightening their operations to lower their estimates a few percentage points. The difference is that they are calculating the price cuts around careful cost cutting that protects the quality of their remodeling product and safeguards their profit margin.

Morado says that by doing a line-by-line analysis of projects completed in the last year you may be able to identify a 25 percent savings without altering your margin. Look at the schedule: Is there waste? Can you shave off some labor hours? Could you save money, without hurting quality and control, by subbing out some aspects of production? And so on.

Over the past five years, Dave Bryan has systematically cut costs within Blackdog Builders in Salem, N.H. Today it costs $1 million less to run the $5 million-volume operation.

At Atlanta’s Small Carpenters at Large, Danny Feig-Sandoval is doing a company-wide cost analysis now. He’s looking not only for savings within the company; he’s asking suppliers and subcontractors to pass along savings. He’s also shopping other high-quality trades, which he figures may uncover better prices and keep him more attuned to competitive rates.

Belt-tightening may enable you to reduce your bids somewhat, but they are likely to be higher than the prices quoted by low-ball companies. So be it. You also can offer multiple options, including modest, economical designs, along with more full-bodied plans. For example, says Harrell, you could base estimates on grade A or good-quality-but-less-expensive grade B cabinets, depending on the homeowners’ priorities and budget.

• Drywall costs have slipped lower during the 3rd quarter hitting all time lows.
• Roofing costs have declined after the stabilization of oil costs.
• Plywood costs have risen as much as 20% in some areas.
• Dimensional lumber cost have incresed 10-15% during the 3rd quarter.
• Fiberglass insulation costs have returned to early 2009 costs after sharp mid-year increases.

Here are some other relevant articles:

Remodeling Market Down, But Remodelers Expect Recovery

By Jonathan Sweet, Senior Editor
August 1, 2009
Professional Remodeler

Two-thirds of remodelers say their market is worse than it was a year ago, but at the same time they’re seeing some relief on the horizon, according to the latest Professional Remodeler survey.

Sixty-seven percent of remodelers said their local market conditions have gotten worse over the last 12 months, compared with 19 percent who said the market was unchanged and 14 percent who have seen an improvement. And that’s coming off of 2008, when 50 percent of remodelers had a decrease in revenue from 2007, according to our annual Business results Survey. (Visit www.HousingZone.com/bizresults for more information.)

Remodelers tend to be an optimistic lot, though, and most are expecting things to get better next year, with 57 percent predicting an improvement in the market and only 11 percent saying things will worsen in 2010.

The lone exception to this optimism is the Midwest. Only 46 percent of remodelers there are expecting a better 2010, and 20 percent say the downturn will continue over the next year. It’s the only region of the country where more than 10 percent expect the market to worsen.

Although 67 percent of remodelers say the market is worse now than a year ago, only 11 percent expect it to continue to worsen over the next 12 months. Fifty-nine percent of remodelers in the Northeast and West and 66 percent of Southern remodelers think conditions will improve over the next year.

The results are not that surprising when considering the local economic conditions. The Midwest has a 10.2 percent unemployment rate, tied with the West for the highest in the country, and the Midwest has seen the biggest increase in unemployment over the last year, according to the U.S. Bureau of Labor Statistics. The region also includes several states hit hard by the recession, including Michigan, with it’s national-high 15 percent unemployment rate, and three other states with unemployment of more than 10 percent (Illinois, Indiana and Ohio).

Consumer confidence is key

The biggest factor in improving the remodeling market will be increasing confidence, remodelers say.

We asked remodelers to rank several factors on the importance in driving a recovery in their local market. Consumer confidence topped the list, with nearly 90 percent of remodelers ranking it in the top three. Coming in second was “Consumers’ inclination to spend rather than save,” followed by availability of financing, increased housing values, higher employment and fewer foreclosures. Not surprisingly, these are all factors that drive consumer confidence.

We also separately asked remodelers what was needed to turn their market around, allowing them to provide any answer. More than a third listed some variation of consumer confidence. The only other answer that was close was the more than 10 percent who responded with some sort of complaint about the government.

Smaller jobs, fewer leads drive downturn

Anecdotally, it’s not hard to understand why so many companies are struggling this year. Take fewer leads, a lower close rate and smaller job sizes, then toss in increased competition in many markets and you’ve got a recipe for disaster.

The numbers back the stories. Most remodelers are seeing significant drops in average job size. Nearly half of remodelers reported a “substantial” drop in average price tags from a year ago, and 77 percent saw at least some decrease. Only 11 percent of firms had an increase in average job size over the last year.

Leads are down for 72 percent of companies, compared with the 15 percent of companies that are getting more leads. And once they get those leads, remodelers are finding it harder to close the deal, with 64 percent saying their close ratio has dropped over the last 12 months (although 13 percent did report higher close ratios).

Many remodelers are also seeing more competition. More than 40 percent of companies reported an increase in competitors. The recession also seems to be knocking some companies out of the market, though, as 36 percent of firms said the number of their competitors has decreased.

Of those companies that are facing increased competition, 68 percent are dealing with new home builders; 57 percent, former trade contractors; and 53 percent, former employees of new construction and remodeling firms. Ten percent said they are seeing increased competition from other sources, such as unemployed DIYers and college students.

What will it take to change your market?

378 remodelers with 2008 revenues of more than $500,000 completed the survey online. Data were collected June 8 to June 27, and participants were chosen from a random sample of subscribers to Professional Remodeler magazine and eNewsletters.

We asked remodelers, “What’s the most important thing that needs to happen to turn your market around?” Here’s a sampling of their write-in responses:

“Get the government out of our business.”

“The media and Wall Street need to instill consumer confidence to American people. There is way too much doom and gloom out there, and people are very nervous.”

“The national economy must stabilize and turn around and start growing.”

“Consumers need to feel good about their current and immediate future financial condition and employment outlook. Until confidence improves, even those with the cash aren’t going to spend on anything but the necessities.”

“The government needs to have leaders who do what is good for the country instead of political gain.”

“Our market is not bad.”

“[We] need to have more large companies to employ more people.”

“The builders need to go back to building houses. They don’t know how to manage remodeling clients and therefore price their jobs way too low.”

“Consumer confidence seems to be the key. People appear to be interested in renovations; however, they are waiting to see if more bad news awaits us. Most of our work is done through discretionary spending. On a political note, I think it would help if the minority in Congress would try to work with the majority and vice versa, showing a united approach to the problems.”

“No turnaround [necessary]; it has never been that bad.”

“Everyone should get busy doing and stop waiting for others, i.e. the government, to do it for them!”

“The financial sector has to improve a lot. People have to get their investments back closer to what they have lost in order to start spending on their homes.”

“Unemployment needs to stop increasing, and home values need to stabilize. Also, home builders, tradespeople and unemployed professionals need to stop ‘trying their hand’ at remodeling.”‘

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Survival of the Fittest, Revisited

Survival is more than just hanging on. It requires a team effort, a return to sound business fundamentals, and an ability to respond to a changing market.

By Mark Richardson
September 2009
Remodeling Magazine

Since last year’s “perfect storm” of banking crisis, stock market crash, and housing foreclosures, I have traveled across the country speaking to thousands in the remodeling industry about “The Remodeling Outlook,” which looks both at the fundamental demographic of our industry and at changes that have taken place over the last few years.

Everywhere I go, I get questions that reflect the pain remodelers are feeling as well as their thirst for certainty. Many ask, “When will the market improve?” “How do I get the phone to ring?” “Will my business survive?”

A few years ago, the word “survival” was not in most remodelers’ business vocabulary. Most had experienced double-digit growth for so many years that they lost sight of the ingredients needed for a business to be healthy.

These basic ingredients are the same today as they were when I wrote about them more than a year ago, but this time the perspective is that of someone who has seen the scars and bruises that many have suffered in the past year.

Mindset

All businesses today need the right mindset. Given what we have experienced over the past 12 months, this mindset needs to begin with the notion that survival will be a team effort, not something carried on the back of the owner or leader. Business owners who are working their way through this muck are not acting shepherds leading sheep, but instead have made survival a team priority.

Another critical element of right mindset is maintaining a positive attitude. In times like these, a negative attitude is like a cancer that will eat away at a business. Work ethic is also essential. The status quo isn’t enough anymore, and success may require working longer hours and some weekends.

Finally, the right mindset depends on being more creative and flexible and less dogmatic. Processes and systems are important, but don’t let them be a ball and chain that pulls the business under.

Basic Business Fitness

To survive this economic hurricane, businesses need to not only bail water when the boat is sinking but steer the boat to calmer waters. Many businesses today are so focused on getting through the week and meeting payroll that they are getting further and further off-course. Their goal is short-term survival, but without a vision for medium- and long-term health.

Finding a balance can be difficult, but as with your personal health, if you don’t invest some energy into staying fit, you will move further away from being in shape. Take time out for a business fitness check up, and then invest 10% of your week into those areas that need attention.

Change

Although change is critical to survival, most businesses are reluctant to change and must be dragged into it against their will. This is a sorry state of affairs, because, as a friend of mine once said, “If businesses are not changing, they will become irrelevant.” Wow, who wants to become irrelevant?

In the remodeling business, change begins with understanding how your client has changed, how marketing strategies need to adjust, and how fundamental business priorities and structure are being transformed. The common denominator among the businesses I have touched during the last year is that they think they are changing, but they are not changing enough.

Change also needs to be managed. The faster and more dramatically you change, the more difficult it will be to get everyone onboard. That means you need a plan not just for the change itself, but for how you will communicate the change and handle the fallout it creates.

Survival requires looking for specific solutions in the context of your clients, your market, your product, and your team. With the right approach, you can do more than just survive in this market you can thrive.

Mark Richardson, co-chairman of Case Design/Remodel, recently accepted a one-year appointment to Affiliate in Housing Studies at Harvard’s Joint Center for Housing Studies.

We believe in the CarbonFund motto “Reduce What You Can, Offset What You Can’t”, so we hope this action further demonstrates our commitment to social and environmental responsibility.

Read about this new partnership on the CarbonFund Blog!

• Dimensional lumber continued to slip lower by 5% or more during the past quarter.
• Drywall stayed low and stable.
• Fiberglass shingles continued to climb at a steady rate with some areas up by 15% over the past 3 months.
• Plywood costs remained stable in many areas but also increased up to 5% in some areas.
• Brick costs decreased in most areas.
• Fiberglass insulation costs dropped across the country, in some areas as much as 20% during past 3 months.
• Wood stud costs stayed fairly stable, dropping by 5% or less in a few areas.

Here are some other relevant articles:

The Perfect Time to Grow Market Share

Bruce Case Explains Why Remodelers Need to Grab Market Share Now

Bruce Case, Contributing Editor
June 1, 2009
Professional Remodeler
Contributing Editor

If your sales have shrunk by 50 percent in the last 6 months, are you a bad business person? It depends. How many remodeling projects are being done in your service area within that niche?

Have the total available opportunities for remodeling also shrunk by 50 percent?

This is called market share, and it really matters. Market share is determined by dividing the number of your company’s projects by the total number of projects done by all homeowners in your target market, i.e. kitchens and bathrooms for upper-middle-class households. Market share tells you what percentage of the total market you have captured.

It seems sort of philosophical to bring all this up now when we are all fighting for the same jobs, dancing with the temptations to lower margins and trying to hold on to our team members. We should be beating the streets, trying to get every nickel we can and not worrying about data crunching or statistical analysis, right?

But now is precisely the right time to bring this up. Now is the time to gain market share on our competitors so we can help pay the bills in the short term. Competitors have cut back on their marketing budgets, our team members are more eager to participate in their communities (think home shows, parades, seminars, etc.) and we need to be as competitive as possible.

In the mid-term and long-term, market share will rocket our business to new heights. In the short-term, there is less demand for remodeling. Regardless of how much market share we garner we are still shrinking. In the long term when the economy bounces back, any increases in market share we gain now will multiply our revenue exponentially as the pool of remodeling demand grows.

Cash and corporate energy is tight. So if you buy into this concept of market share, what can you do about it? Here’s a sampling of our initiatives:

1. We spend some of our marketing budget on branding. These efforts, which typically are spent on more traditional forms of marketing (radio, print advertising, etc.), are not expected to generate direct leads. With these we want to build our brand; we want to plant the seeds that grow into future market share.

2. We spend some of our marketing budget on lead generation. These efforts have evolved as traditional marketing avenues have proven ineffective for lead generation. Today, our efforts include home shows, community events, open houses, seminars and, of course, past clients and referrals.

3. We want to hear how we are doing in the eyes of our customers and potential customers. We have surveyed past clients for many years. Three to four years ago we stepped up these efforts by investing in a third-party surveying firm to gather the feedback of our past clients and give it back to us in easily understood and indexed forms. About three months ago, we started surveying leads as well clients who have not proceeded. It is not to try to change their minds; it is because we are committed to gaining market share. We want to know if we left a good impression even through they did not proceed with Case.

4. A focus on market share means a focus on clients, not on projects. Our handyman services give us the ability to get our foot in the door with a prospective client, show our worth and earn that client for life. Our breadth of services (handyman, kitchens, baths, remodeling, design/build) gives us the ability to capture the majority of remodeling dollars spent by that client, assuming we exemplify excellence each step of the way.

We are constantly fighting for market share. With more market share, we have more of a base of clients. With more clients we are more stable. With stability comes more income potential short-, medium- and long-term for our entire Case team. All that means our business is truly a business; it has a brand, and it is valuable because of the awareness customers have about it.

Give your input and continue the dialogue on Bruce’s blog at www.housingzone.com/brucecase.

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Bruce Case is president of Case Design/Remodeling and COO of Case’s national franchise organization, Case Handyman & Remodeling. He can be reached at bcase@casedesign.com.

© 2009, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

13 Ways to Get Referrals that Reward

More than ever, successfully tapping past client bases is the key to remodelers’ success

By Jonathan Sweet, Senior Editor
May 1, 2009
Professional Remodeler

With a sputtering economy and crashing home prices, it’s not an easy time to find new remodeling clients. But it is a good time to take a back-to-basics approach to marketing and work on mining your most lucrative lead source: past clients. This isn’t exactly a cutting edge idea, but it’s something many remodelers got lazy about over the last few years as business boomed. If you’ve done a good job, past clients offer a wealth of advantages over new clients.

“No. 1 is instant credibility,” says Dale Nichols, president of Artisan Remodeling in Granite Bay, Calif. “People know exactly what we’re capable of doing.” It’s also much less expensive to land new business from old clients than it is to grab new ones, Nichols says.

At the same time, it’s easier for a remodeler to work with a client she knows because you know all their idiosyncrasies, says Patty McDaniel, president of Boardwalk Builders in Rehoboth Beach, Del. “We’re familiar with the house, we’re familiar with the client,” she says. “We know what it’s going to take to make them happy and we can be more comfortable putting a number together.”

The most important part of getting referrals is doing a good job in the first place, but even after that, it’s important to reach out to those clients to make sure you stay top-of-mind. Here’s how several remodelers across the country are reaching past clients and rewarding them for their repeat and referral business.

1. Reward Testimonials

Black Diamond Builders e-mailed all of its past clients asking them for testimonials. Anyone who responded got their name entered into a drawing for a dinner for two at a local restaurant. It offered several benefits for the Lake Forest, Calif.-based firm, according to owner J. M. Steele. Besides giving Black Diamond fodder for its marketing efforts, it also makes sure the company is on the minds of past clients for referral or repeat business. Giving them a chance to relive their successful remodel brings them positive vibes and memories, Steele says.

2. Stretch That Referral Reward

Lots of companies give out gift cards to thank past customers for referrals, but Thompson Remodeling in Grand Rapids, Mich., wants to make that reward last a little longer. Instead of giving out a $50 or $100 gift card for an expensive dinner somewhere, Thompson spends that money on cards for the local coffee shop. That way, says President Ben Thompson, the client will get multiple uses out of the card and think of Thompson every time they use it.

3. Make Them Part of the Team

Like many remodelers, Larry Murr tries to keep in touch with his past clients through things such as Christmas cards and periodic letters. What makes the approach Murr uses for his company, Lawrence Murr Inc., so striking is how honest and open he is with his clients about his company, the market and the current business environment.

Consider the most recent letter from the Jacksonville, Fla., design/build firm: “First of all we are still in business, but business has been very slow,” he writes. He goes on to discuss decisions in the company to reduce salaries and cut staff as the company adjusts to the market. He also talks about the challenge the company is facing from new, low-price competition. Murr has received a positive response to the letter, with many clients calling about jobs and saying they were glad to hear he was still in business. Clients were reassured that the company was taking steps to survive the downturn, Murr says.

But it’s not all negative. Murr also uses the letter as an opportunity to keep clients informed about his recent CGP designation from NAHB and the opportunities afforded by the new energy tax credits.

4. Work on the Honey-Do List

Every homeowner has little projects that need doing, so Synergy Builders decided to capitalize on that by offering handyman services in exchange for referrals. Any referral that leads to an appointment is rewarded with two hours worth of labor. Once the homeowner has accumulated at least half-a-day they can redeem that for work on their home.

The West Chicago, Ill., design/build firm sends out mailings promoting the program to not only past clients but also to any other homeowner the firm has had contact with over the last few years even those who didn’t hire them. The program not only drives referrals, but often also leads to additional business from the referring clients who may need more work done, says CEO John Habermeier.

5. Send Them Sailing

East Meadow, N.Y., remodeler Alure Home Improvements has a PartnerPoints program that allows clients to earn points toward a Caribbean vacation. Homeowners earn a point for every dollar they spend on remodeling, plus a point for every dollar referred customers spend on their first project with the company.

Clients can also earn additional points by attending events at Alure. With 200,000 points, they get a free trip, this year to Puerto Vallarta, Mexico. So far, the company has already sent 58 couples on vacation. Points never expire, so clients can earn their trip over time even with smaller projects.

6. Don’t Let Them Forget Your Face

Gehman Custom Remodeling uses a variety of methods to get face time with its past clients. The Harleysville, Pa., company calls past clients on the anniversary of their project to arrange a walk-through to make sure there are no warranty issues during the five-year warranty period. Gehman staff also ask if they can take after-photos of the project as another way to spend some time with the homeowners. Those photos are then used to produce photo CDs and albums that the homeowners can share with their friends and co-workers. Hand delivery of the albums also gives him more face time with the clients, says President Dennis Gehman.

These visits result in at least some small additional work for the clients about 25 percent of the time, Gehman says. It also reinforces the idea of the company as one that cares and keeps them in the clients’ thoughts when people ask for referrals.

7. Publish a Coffee-Table Book

Quality Design & Construction in Raleigh, N.C., is publishing a high-quality, hardcover, before-and-after photo book of its past projects. The book will also include articles on tips and trends in remodeling. The full-service remodeling company is going to send out copies to previous clients whose projects appear in the book so they can display them in their homes and hopefully show them off to potential future clients.

The firm is also going to try to drive more vendor referrals as well by customizing versions of the book, says Vice President Peggy Mackowski. For example, the local plumbing supplier will get a version with fancy fixtures on the cover. That way, when customers are visiting these suppliers, they’ll get a chance to see the work Quality Design & Construction does, Mackowski says.

8. Go Digital

Myers Constructs in Philadelphia is taking full advantage of modern communication to keep in touch with its past clients. Myers is using LinkedIn and Twitter to keep in touch with past clients and asks them to pass the firm’s information to their friends on the social networking sites, says COO Diane Menke.

The company sends monthly e-newsletters, each focused on a single topic to keep it short and sweet. Besides that, employees send occasional “hello” e-mails to check on clients, ask how their pets or kids are doing and generally keep in touch. They also send messages anytime there is press about the firm. It’s all about contacting past clients regularly, Menke says.

9. Cold, Hard Cash

It may be simple, but you can’t argue with the value of money. Atlanta Design & Build has a Referral Rewards program that gives clients up to $300 when they refer a project. Rewards are given out on a sliding scale of $100 for projects less than $20,000; $200 for projects $20,000 to $75,000; and $300 for the largest projects.

The Marietta, Ga., company is also reaching out to past clients, sending them letters telling them that now is a great time to remodel because suppliers and vendors have reduced costs in the face of declining demand.

10. Let Them Brag

Cipriani Remodeling Solutions recently launched a contest for the best “Before and After” project that encourages past clients to send their friends and families to the company’s Web site.

The Woodbury, N.J., company sent out e-mails to each client that contain their before and after photos and asked them to forward those e-mails to everyone they know. Anyone who gets the forwarded e-mail can follow a link in the message that takes them back to the Cipriani Web site to vote for the project as the best “Before and After.” The top vote-getter will get $1,000 from Cipriani and Cipriani is exposed to potentially hundreds of new customers. It’s an extension of a program the company has been doing for years, putting together polished “Before and After” e-mails for all of its clients that they encourage them to share with their friends and families.

11. Keep ‘Em Charged Up

Everybody knows that you’re supposed to change the batteries in your smoke detectors when you change your clocks for daylight-saving time. Renaissance Remodeling wants to make sure its clients don’t forget that and don’t forget the company, so twice a year the Boise, Idaho, firm sends out batteries along with an update of what the company is doing.

Prior to starting this three years ago, the company had only completed a handful of projects for past clients, says Principal Chad Vincent. Now, the company gets calls and e-mails from past clients every time the batteries go out and repeat and referral business has drastically increased.

12. Open House

Advanced Kitchens in Atlanta has staged open houses at past clients’ homes where the company invites neighbors to come see the completed work. This gives the company an opportunity to explain how they work and the clients a chance to talk about their positive experience. In honor of St. Patrick’s Day, the company also invited past clients to find the hidden pot of gold on its Web site. That helped increase site traffic as clients searched across multiple pages on the site. Everyone who found it was entered into a drawing for a glass vessel bowl.

Those actions, along with newsletters and other outreach efforts, have helped the company draw 75 percent of its business from repeats so far in 2009, says President Ed Cholfin.

13. Party Time

Talmadge Construction owners Jeff and Adele Talmadge throw a barbecue every summer at their home for their clients, trade contractors and employees. It’s a chance to reward everyone for their business and good work during the year and for the clients to get back in touch with project managers they have bonded with during their remodel, says Adele Talmadge. The clients like to brag to each other about their project; how much they loved working with the company’s architects and field staff, and how well it went, she says.

ROOFING PRICES CONTINUE TO RISE AND LUMBER PRICES CONTINUE TO FALL

• Roofing prices continue to rise having increased by 5-10% in most areas.
• Gypsum wallboard prices remain low and stable.
• Dimensional lumber prices have declined by 5-10% nationally.
• Plywood prices have stabilized falling only 5% during the past quarter.

Surviving the Downturn

Case Design/Remodeling is changing strategies to survive the current market

Jonathan Sweet, Senior Editor
February 1, 2009
Professional Remodeler

Companies big and small are facing unprecedented challenges in 2009. Professional Remodeler talked to Mark Richardson author, frequent industry speaker and president of Case Design/Remodeling, one of the largest remodeling firms in the country. To read the complete interview, go to www.ProRemodeler.com. Some highlights:

You’re expecting a drop in business in 2009. How is the economy affecting your business going into this year?

The best way I can describe the environment this year is that it’s tough. It’s an environment in terms of marketing, in terms of sales, that is tough. Tough does not mean bad. Tough means tough.

What are you doing to deal with this new reality?

We very much have had to adjust our course. We went into the beginning of our fiscal year, which started in October, expecting a 7 or 8 percent growth for the year. After the perfect storm of October … the bottom fell out and we just had to go ahead and come up with a Plan B.

That [plan] looked at every aspect of our financial model, including sales and revenue on the production side and all the way through with overhead expenses. We had to scale the company back to act like we were roughly 10 percent, 15 percent smaller. We had budgeted for projects and initiatives for the future that we had to just say, well, let’s wait until the storm passes before we make those investments. Then we had to just trim the fat, trim things that don’t necessarily affect people on a day-to-day basis to come up with a plan that was essentially much more sensible. Moving forward I’m hoping that we don’t have to go much deeper.

Have you made any changes to your marketing?

In the past, direct marketing would work. Now we’re doing a lot more indirect marketing, meaning seminars. We’re doing a lot more networking groups. We’re focused more heavily on smaller-scale projects. We’re pushing people more to the Web now than in the past. We’re changing some of our messaging to focus more on low risk and trying to reduce fear more so than “follow the fantasy.”

Any changes in the day-to-day operations of the company?

We’ve actually scaled up our handyman group even more and our groups that do larger scale projects we’ve sort of pushed them back a little bit. We’re presenting more lower cost options to folks.

What are some of the unique challenges Case has as a larger company?

It’s sort of a double-edged sword. If you’re a small company, you can be very light of foot. It’s almost like a boat. If you’re a speedboat you can turn on a dime. If you’re a freighter, it might take you two or three miles to make a turn.

The good news if you’re a small boat is you can turn on a dime. The bad news is that the guy driving the boat is the also the guy filling the gas and cleaning the boat. You don’t have the luxury of being focused or specialized on a certain thing.

Given the fact that it’s tough out there, you can’t be operating in the same way as when it’s easy. Got to be putting your ear to the ground and listening to the market and putting the right amount of time into other elements of the business. You have to be more focused on monitoring the numbers, on watching the cash flow. All of those factors are really important.

What are some of the key indicators you track?

We certainly watch the inquiries, the leads coming in. We watch the close rate of the sales. We watch the gross profits on the projects. We watch the lead time, the time between sale and beginning of the construction. That’s a variable that we watch. We watch the percentage of completion numbers as we project out because it affects profitability quite a bit. We watch certainly the overhead, the 75 individual line items in overhead. We track that on a regular basis. It’s like what’s most important, your blood pressure or your cholesterol level? They’re all important and you’ve got to watch all of them so they’re in concert with each other.

We’ve talked a lot about the economy. Any other major challenges you see coming?
The economy affects consumer confidence. 2008 was unprecedented. We’re talking about stock market issues that go back to the ’20s. Are there other issues that will affect us moving forward? Sure, but if the economy’s better the phone will be ringing and marketing will be easier. If the economy’s better, consumer confidence is going to be there. If the economy’s better, homes will appreciate and people will feel better about the investments they’re making.

One of the great things about a market like this is that if you need to hire great people, you shouldn’t have a problem. If you need to negotiate with your subs, you shouldn’t have a problem. If you need to get suppliers or manufacturers to stand up and salute and get you something right away you shouldn’t have a problem.

What are some of the words of advice you’re sharing with other remodelers as you speak around the country?

A theme that I’ve been out talking about is it’s survival of the fittest. Three themes within that are really critical.

First you’ve got to have the right mindset. Henry Ford said, “If you believe you can or can’t, you’re right,” and I really, really live and breathe that notion. I cannot tolerate a mindset or an attitude with people who believe they can’t achieve it. The mindset also includes work ethic. You’ve got to work harder than ever. We’re meeting more clients on weekends than ever. That’s a different mindset, that that’s OK.

The second is that the fundamental business needs to be fit. (Richardson’s book, “How Fit is your Business”) is all about being fit and it draws the parallel between personal health and fitness and financial health and business.

It’s no different than if you want to climb Mount Everest you’ve got to be in great shape. I don’t whether or not I’m overstating the environment being Mount Everest, but what I am saying is that it’s tough out there. You and your business have got to be fit.

Third is you’ve got to change. There’s many out there that are fit and have the right mindset, but they’re just stubborn and they won’t change and I think they’ll crash and burn and fail as a result.

When are you expecting a turnaround to start?

I had a management meeting today and that was one of the questions I asked them. When do you see the curve start to curve up, that we can start to predict sales a little bit better. Not necessarily good, but when do you see it curve up. The overall feeling of the group was that they expect to see the curve going up sometime April to June-ish. Sometime in that time frame. They could very much see it slipping, slipping for the next few months, then start to see the curve going up.

When do we see it being good again? I think we’re looking at probably a year later.

The rationale for the spring is historically spring we see an uptick. We believe with the new president in place, there will be a more positive spirit of hope in there. We believe Americans are impatient and they’ll say enough already, we’ve got to do stuff.

There are lots of rational reasons why we think spring/summer should be some positive uptick on the curve. The overall feeling is that we probably won’t really see what we’d call sunny day conditions until probably 2010.

What are some of the things that need to happen before we’ll see a turnaround?

I’d like to think that we see some uptick in the stock market. I’d like to think that would be something out there that would cause some positive feeling. I’d like to think that the new president getting in place. Whether it’s real or Memorex, at least it’s a feeling of hope. It’d be nice if Obama was doing something or announced he was doing something. Part of it’s getting him in place and part of it’s doing something.

Consumer confidence is probably the biggest indicator of home remodeling. All the things that affect consumer confidence will affect remodeling. I think watching unemployment and the job situation is a factor as well.

Click here to see the original article in Professional Remodeler

Here are some of the issues addressed:

• Alternate work order text overlap - If extensive text was entered as the description for an alternate the text could overlap with the alternate dollar amount. This has now been resolved.
• Material column stuck - When the material column is excluded (un-checked) the data would still appear in the “View Table” documents. This has now been resolved.
• Part adjuster data reset - For some parts created by duplicated content the Part Adjuster would allow information to be edited but then forget about the changes upon closing. This has now been resolved.
• “Export to QuickBooks” issue - Some users experienced an error message when exporting data to QuickBooks. This has now been resolved.
• Default Markup Range - The Project Manager allows for markup ranges below 0% and above 100%, but the allowable default range was stuck between 0-100. This has been resolved.
• Image Gallery & component items - The Image Gallery was ignoring items contained within components. This has been resolved.
• Default Skin Settings - The program was not set to automatically detect the user’s screen resolution and choose the best skin. This has been resolved.
• Other - Some additional minor alterations.