40 Perspectives on the Decade Ahead

by bkrigbaum@solagroup.com

There are signs that remodeling is recovering, although some remodelers would disagree that a full recovery is underway just yet. Most remodelers tend to agree, however, that the market has changed significantly and those changes will likely not reverse any time soon.

A new generation has entered the marketplace, some say, and cost-consciousness has come to the forefront. Value and quality still count for some customers, other remodelers counter.

Qualified Remodeler queried readers about what has changed and what hasn’t. The results presented here paint a picture of remodelers adapting to change — as they have always done. Interestingly some basics haven’t changed; tried-and-true methods and strategies are still favored in many cases, but other methods seem to have fallen by the wayside, their effectiveness diminished by changing lifestyles and economic realities.

Following are some of the things remodelers say they are doing to cope with today’s changing market reality:

  1. The market is changing. Gen X and Y will be the new buyers especially as multigenerational homes become the norm again. Gen Y buys on relationship, and Gen X on best deal. We plan on making our marketing softer and more relationship based than in years past where we just showed the “wow” factor. It needs to be a different type of wow.
  2. We are marketing ourselves as the low risk provider of complete kitchens and baths. We are a well established business and we work with well established vendors to provide predictable results.
  3. We feel the size of projects will be smaller in the near future. We are trying to reposition our production staff to handle these smaller projects.
  4. We are offering full service and including financing to customers.
  5. We are offering prepackaged services and concentrating on the value we bring to the table, while balancing it with a reasonable (not low cost) price.
  6. I agree that the market group has changed. There are more maintenance items being requested, with smaller profit margins. We will continue to provide a wide range of services and tackle small jobs with a smile.
  7. We reduced the size of our business by 75 percent, giving us greater control over the outcome of projects. As a result, each project is very personal and provides referrals.
  8. Downsizing. We think with the new lead paint requirements and some of the hidden laws in the healthcare bill, we are going to have to absorb more costs because the market is too competitive.
  9. Our goal for the next two years is to improve communications internally and externally. We’ve recently invested in a new system to help improve our back-end processes and improve profitability and communications.
  10. Adjust our sales procedure to involve the customer and provide more of a touch-and-feel experience.
  11. More attention to scheduling, ordering and overall tighter process control.
  12. The market hasn’t changed. Homeowners need to make improvements to their homes, and companies that sell value will always make money. Those who low ball and compete on price get short margins and can’t afford to service the customer, giving all of us who feed our families in the remodeling industry a bad name.
  13. We are trying to maintain a design/build image to increase perceived value. We are using local events to increase visibility and letting some of our other print advertising go.
  14. We created a general manager position so that the owner could spend 80 percent of his time selling and 20 percent in oversight and strategic planning. This allows us to see more leads in their homes and land more jobs. We find we need to see more people to get the same number of jobs. Also, we are exhibiting at new venues other than home shows, such as the state fair, community events, and charity events we sponsor.
  15. We are trying to reach prospective contractors and owners by accessing permit information.
  16. We are changing our business model to stop contracting the actual projects and only provide project management for owner/builders.
  17. We are packaging three standard kitchens: $45,000 pull and replace; $65,000 major changes nonstructural; and $85,000 structural changes.
  18. We are continuing to call past customers for referrals to new customers.
  19. I don’t think it has changed, we are marketing to the same people as always.
  20. Business is still word-of-mouth. We haven’t done anything with advertising, but we plan to. Plus, we’re working on updating our Web site.
  21. Be diverse and flexible.
  22. Stay lean, continue to process change and be more mindful of consumer trends.
  23. We are trying to improve efficiencies through better trained and diversified team members. We are trying to identify where our markets are going and where they will be one to two years from now.
  24. My remodeling market has not changed when it comes to my clients’ needs. However, their ability and willingness to pay fair and reasonable costs have declined. As a result, I find them shopping price and practically ignoring all other factors. Many are just putting their needs on indefinite hold. As for wants (vs. needs), this too has decreased in my particular niche market. Upgrades are nearly off the table. On the bright side, I’m now getting callbacks to fix someone else’s oversights and mistakes from presumed lost clients.
  25. We are focusing on our strengths, becoming the expert in our market area by advertising as a specialist and not just a general architectural practice
  26. Offering in-house financing, making sure our Web site is up to date, and social
    networking are among our strategies.
  27. Remodeling has changed for good. The Baby Boomers are no longer our primary source of business, and the Gen Xers have a completely different approach and process to purchasing. We have cut margins to the bone, reduced staffing and combed through all systems to remove the fat. Additionally we are much more flexible as to job sizing, homeowner participation and open book negotiated pricing than ever in our 22 year history.
  28. I have structured my new business to aging in place.
  29. I am working my existing customers more, using Angie’s list, and trying Google map in the areas in which I would prefer to do business.
  30. We are narrowing our service offerings.
  31. We stress that we know what we are doing. There are too many fly-by-nighters working the area.
  32. We’re learning to deal with more, smaller projects, and we’re working on lean methodologies (they’re working). We’re building a tighter set of procedures to make us more efficient.
  33. Web site investment and optimization, reviving old customer base, encouraging smaller jobs, increasing professionalism, and faster returns times on proposals are some of the things we are doing.
  34. We have lowered our margins and are taking on a higher volume of smaller projects. The majority of our projects are being managed in the lead carpenter style.
  35. We plan to reinvest in the company and the image to keep
    it strong.
  36. More people now, more than ever, are looking at the bottom line and are buying the low bid. Our overhead expenses remain the same whether we are working the guys 40 hours a week, or 25. We are tightening up the slippage, making fewer assumptions when we estimate a job without tight specs and hope to differentiate ourselves by our longevity in the market and our attention to details.
  37. We’ve increased our advertising and are pursuing more partnerships with other trades. We emphasize the monetary value of keeping homes and facilities current.
  38. We are focusing on what we do: bathrooms, kitchens, additions and lower levels. We are not sacrificing our quality in any way. We use and have great craftsman that may cost us more but are worth it. We also use the recommended materials as well as the proper accessories to ensure we meet warranty requirements. We are selling jobs to people who want quality and are willing to pay a little more for long-term security.
  39. Lead seems to be the hot topic of today, but we’re unsure of how the younger homeowners are going to react to increased cost of remodeling older homes. We completed the EPA lead training and are studying various energy efficiency features which might be included in a remodel.
  40. We’ve extended our area a little by
    advertising in local “quality” magazines and have hired more employees to speed up our installation process. Sales are there; we just have to get them done.

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