Remodeling Market Memo

Qualified Remodeler readers are well acquainted with our feisty, well-reasoned and unabashedly opinionated “On Your Business” columnist Mike Weiss, CGR, CAPS, GMB. Well, a recent Weiss column regarding the need to join an association (NAHB Remodelers or NARI) as the best way to any improve remodeling business, led to a spate of letters and e-mails from readers.

One reader, a well-regarded remodeler in the central Michigan area wrote back to tell the reason why he won’t join the local association — several members on the board of the association, he said, were known slow-pay, no-pay type of operators within the business community.  He even accused some of them — with their deadbeat ways – of directly contributing to the recent demise of a local supplier.

I have changed the names to so as to not cast aspersions on the good guys, but his allegations and Weiss response follow in this post.  It is thought-provoking reading. Weiss argues that there are bad apples everywhere, even in the HBAs and local NARI chapters, but that does not dimish the overall good that is done by the associations.

Mr. Weiss,

I am sending this email to get some understanding about the reasoning behind your push for builders and trade contractors to become involved in their local HBA’s.

First, let me introduce myself. The primary focus of both of my businesses is residential remodeling. Customer service is the most important part of my business. The integrity that I hold to a higher standard is shown in the relationships that I have with customers, suppliers, subcontractors, and other trade professionals. I have been in business for 19 years. And in a tough economy, I am scheduled out at least six months.

Recently, a friend of mine who was also a window supplier for my building company went out of business as of Dec. 31, 2007. The reason for this is the morals and ethics that some of the builders in the Xxxxx, Mich. area possess. Three years ago, a lumber yard in (our area) went bankrupt because of these same builders.

What, may you ask, does this have to do with the HBA? Good question. I am glad you ask.

Recently, when my friend told me that he was closing because certain builders did not believe in paying their bills, he told me that he had talked to the director of the (local) HBA and he asked her what he could do considering that most of the dead beats belong to the (local) HBA. She told him to write a letter detailing who and how much and she would forward the letter to the HBA board. His concern with the whole letter issue is that two of the dead beats are board members. The former owner of the lumber yard had written a letter to the HBA board and received no response for obvious reasons. So far Mike, what I have seen of the HBA operation,  at least in Xxxxx, Michigan is that if you can pay the membership dues they will tell the whole world that you are honest, trustworthy,  knowledgeable, and that your morals and ethics are of the highest standards.

Now, I can tell you that if you stacked up all of these so called qualities that are accepted and promoted by these HBA’s those things would compare to the pile my dog leaves on my lawn every day. The sad truth of this is not how many businesses will fail for trying to be honest and fair, but how many people (i.e., the general public) will get screwed by so called honest, knowledgeable, and trustworthy contractors. I thought the HBA’s of America are supposed to be a source for potential customers to find contractors that won’t rip them off.

 

Sincerely,

 Michigan Remodeling Company Owner

Weiss’ response:

Sir,Yours is certainly not an easy letter to address other than to say I would have reacted the same way.  I took a tour of both HBA websites and they indeed boast of ethics, professionalism and more.  I know that much of Michigan is under enormous pressure economically and that there are business failures where no one is at fault.To take the purist’s side, during times such as these, it’s prudent to watch those bad customers closely when it comes to receivables or to put them on a COD basis with old debt being chipped away at.  Sometimes suppliers keep on selling because they think they need the business, equating the sale with cash flow.  I’m not making any excuses for the credit bums because every community has them much as we have clients occasionally who are the same.I’ve had suppliers of mine bitch about someone not paying their bills and my retort has always been the same - if you keep selling to them when they don’t pay on time, you are indirectly charging me for some of their delinquency.  I have actually threatened them with losing my business if I find the bad ones are getting the same price I do when they don’t pay as agreed and I do.If we as industry practitioners don’t band together for our best representation even though we have some (too many) bad actors we are left defenseless against anti-builder/remodeler legislation and regulations.  I agree it’s hypocritical to admit members whose background is questionable and I would like to think my local has very, very few but one is too many. There’s no excuse for what has happened and if the bad actors stay in business, it’s at the expense of those suppliers who keep going back for more bitter medicine.  This may sound goofy but in my local, those associate members who are active and participate in local governance have less deadbeat builders for customers because they know who they are and just either get paid or pull the plug on them.Every prudent business plan should provide some allowance for bad accounts, we all have them.  You’re still in business because of your ethics and reputation sure, but my guess is also that along with reading the trade publications you are a pretty good shepherd of your receivables, you don’t take jobs that you know are shaky without a much tighter tolerance - that’s not being a hard ass it’s being a pro.HBA’s and the NAHB are not perfect - but without them, there would be no good way to draw attention to the bad apples as you have tried to do.I know this discussion hasn’t helped much if at all - I wish I had the solution for the problem but of course I don’t; if there is one.  The closest thing to the fix is to do what you have done and to draw attention to it and to keep on doing it.  The last line of your letter is true but only so because of the demand and enforcement of the members - it is not a staff function.  The answer may be to run for the board or back someone who will raise the issue until it is addressed.  That takes time but it works.Thanks for writing - thoughtful letters like yours are what I care very much about and I am complimented that you have taken the time to read my column - I hope you will continue to and write about your concerns and issues.Sincerely,

Mike