Over the last few years, design-build has not been a priority for many homeowners. The design-build process is generally considered ideal for large, complex that require significant design and construction coordination. Because of this, these types of projects were largely delayed due to the pandemic. People prioritized their health and finances, and labor shortages and inventory supplies dwindled or were delayed months.
While remodelers are saying they’re still seeing fewer sales, they are seeing an increase in project size and quality as well as lower costs per lead.
“Business conditions are great, very similar to last year,” says Chris Stebnitz, president of Stebnitz Builders in Elkhorn, Wisconsin. The past two years the company made well over $5 million in sales and are on track in 2023 to hit $6 million. “One of the nice changes from last year, one of the biggest changes, is that we’re not seeing the long wait for materials that we did before. I mean, there were cabinets or windows that were five months out, and it’s down to five-to-eight weeks now, but we can handle that.”
Stebnitz’s sales team is comprised of three remodeling consultants and has been able to add staff as well over the last year. Stebnitz’s son, Sam, a fourth-generation team member, acts as brand manager, and all together has managed to keep sales up while underbudget. Stebnitz says the marketing budget is about 3 percent, which largely covers magazines and jobsite signs. “I think Sam put their average cost-per-lead at about $560, so it’s not too bad, and I would say that’s probably on par with what we’ve done in the past. While we have a lot of new clients coming in, we still have a large contingency of past clients and referrals that don’t require onboarding like that.” He adds that about 30 percent to 40 percent of their business is repeat or referral.
Besides making up a significant chunk of their business, Stebnitz says repeat and especially referrals are important, not just because they’re a free lead. “Typically, they’re taking the word of someone they know, and that person can share their experience of what they went through and the emotional part of things. That’s always the thing you can’t translate in an ad. But they can talk about that and share that, ‘This was great,’ and, ‘It was tough through this point.’ We always tell people there’s an emotional rollercoaster to a project. You’re going to get to a point where it’s ‘Holy smokes, this is getting along,’ but it comes back and ends on a high note.”
Though sales overall seem to be trending downward, Los Angeles-based president of Custom Design and Construction, Bill Simone, isn’t worried. “We’ve seen a bit of a shift since the lockdowns, in a good way. The projects have gotten larger, more complex and honestly, a lot more fun.”
The company, which was started out of a spare room in Simone’s first condo, now makes more than $3 million a year. Though Simone has no intentions of retiring any time soon, “Two long-term, very, very highly respected team members have now bought into the company. They’ve bought half of it and will probably, in a short period of time, buy the other half from me.”
Like Stebnitz, Simone faced product shortages and delays and is excited his clients are able to choose a wider variety of products and finishes. “The projects are significantly more complex than in the past. In the recent past, they were maybe a little more cookie-cutter, and now they’re a lot more highly designed. People have, I think, through the lockdown, really decided that if they’re going to [remodel], they really want to do it right, and they’re spending the money to do it too.”
In Southern California, where Simone is located, the ability to incorporate transitional indoor-outdoor spaces lends itself to more interesting designs with a distinct style. “It may just be our designers, but we’re seeing a lot of designs that are a little bit more beachy, a little more distinctly Southern California.”
Both Stebnitz and Simone note that even with fewer, though larger, projects in the pipeline, long waiting periods still happen. Usually, as in Stebnitz’s case, this is due to having enough work to keep them busy for a couple months out. Sometimes, however, it’s a little more bureaucratic.
“We’re still having problems in the building permit department. They are extremely slow—they got that way during lockdown. A simple pull and replace kitchen might take four months to get a permit. So, we’re trying to do whatever we can to push the building departments without stepping on anyone’s toes. But that’s been a big issue for us,” Simone says. He recalls a permit that took 17 months in the early days of the pandemic, when health officials weren’t certain COVID-19 was airborne, and concerns over contaminated materials such as a set of drawings were paramount.
He stresses communication with the clients is key. “We try to get our clients to be our spokespeople for us. And the way you get that is by communicating with them often. We communicate with our clients during the course of the day, every day. At the end of the day, they get a little update from us. I believe that the more you can talk to the folks, the more it takes away their stress.”
Stebnitz agrees and stresses the importance of communication from the first meeting, so there aren’t any surprises. He says their on-boarding process for new clients is three steps, where the client speaks or meets with three different members of the team over the course of the initial stages. Those members work together to determine if the client will be a good fit for their work. “Typically once they get to that point, they’ve heard the numbers twice, dates twice, the process multiple times. It shouldn’t be a surprise for either of us then at the end.”
When asked what advice he might give other design-build contractors, Custom Design and Construction’s Simone says, “Know your strengths and hire for your weaknesses.” QR
Links to Full Coverage of the 2023 TOP 500
- The 2023 TOP 500 Remodelers Ranking
- The Big Picture: A Record Year in ’22, Aiming for More in ’23
Remodeling Segment Analysis
- Full-Service: Slower, but Still Growing
- Home Improvement Pros: Back to Earth
- Design-Build: Building Trust
- Kitchen & Bath Remodeling: Market Moderation
- Insurance Restoration Contractors: Business Is Good