Qualified Remodeler

Don’t Wait to Find Your Sweet Spot—Create It

Industry experts have forever been telling remodelers to find their sweet spot. Great advice? Maybe, maybe not. How are you supposed to find it? Should you do business for five years first, try every job type and size possible, so you can then compare results and find your sweet spot?

Suppose you wait the five years; do you have adequate metrics in place to track what was really happening in an accurate way during that time? You might want to see which job types have been the most profitable. But do you accurately do your job-costing with the ability to compare estimated costs to actual costs? OK, and if you estimate labor with an assumed labor-burden cost (assuming it is accurate), do you also job-cost the actual labor cost assuming those same burdens? Specific by each employee? I bet not.

Not one contractor client I have worked with since 1996 has been doing it, or could figure out how to do so, until they sought outside help. In fact, most didn’t even know, and were embarrassed to admit, that they were comparing apples to cumquats for years. One described it as feeling like a 2×4 across the side of his head.

If your current method of determining your sweet spot is limited to the most profitable jobs as the main characteristic, you might be missing out on other considerations that could benefit your business in many undiscovered ways. Unless you are already aware of other considerations you could use, how could you put them in place and measure to see if they make sense?

Ease of Estimating and Selling

Finding good salespeople who can sell remodeling is a big problem that will only get bigger as the demand for salespeople naturally increases. With the increase that is expected in remodeling spending in the next few years, finding a salesperson with construction as well as estimating expertise will be almost impossible. Especially finding someone who already knows how to use the existing, homegrown, estimating system you have in place and have been using at your business. But deciding to sell jobs that can be estimated using a simple template that already contains unit costs and is just waiting for quantities could help you create a sweet spot. Basic 40-square-foot bathrooms or modest galley kitchens could be examples fitting into this category. With the right approach, you can promise your prospects they, too, will have a completely unique bathroom or kitchen in their home, just like their neighbors down the street.

Add the right showroom setup with an adequate depth of products and price points, and now you can control all the products, speed up the selection process, and eliminate the middle man so you can keep all the margin to be earned for your business. In addition to being profitable, it can also be sold, pre-staged and managed with far less overhead than more complex project types. That kind of sweet spot could add lots of dollars to your bottom line.

Consider the Future

I believe professionals begin with the end in mind. When deciding your sweet spot, it is also wise to consider who will be selling, managing and producing these projects in the future. If you plan to keep your business small and self-perform most of these activities, then choose profitable job types you like to sell and manage. However, if your goal is to grow your business and step back at some point, should you sell what you like or want to do, or what your future employees will want and like to do every day? If you want to sell complex projects no one else in town can figure out because that is what gives you energy, will you ever be able to find someone who will be able to replace you in that role in the future? Rather than settle on a sweet spot that works for today, I think you should prioritize creating a sweet spot that sets you, your business and your employees up for a sweet future.  Creating a vision for that future, as well as  a path to get there, can also be a powerful way to attract and keep great employees, because great employees typically think ahead, too, both at work and in their personal lives.

What To Do Now

If what I have been sharing here makes sense, consider whether you want to—and can—figure out all this stuff on your own or if an outside expert is required. Knowing the characteristics to consider can help you proactively create that sweet spot, so you don’t have to wait to find it. The expense of time and lost profits while you search for your sweet spot will be far more expensive over the long-term than the short-term investment of working with a professional and proactively deciding so you can get started on it today. |QR

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