Only three weeks into the New Year, and I was saddened to see a social media post from a local CBS television station with news about a home improvement contractor who encountered financial difficulty and apparently went bankrupt, putting $200,000 in customer deposits in limbo.
I am sad to see this news, but I am not surprised. This post-COVID-19 era has been a very complicated business environment. Let me list some complications such as high demand for home improvements; a shortage of skilled labor; long timelines for product delivery due to supply chain problems; higher prices for materials; higher gas prices; general inflation; and long backlogs of work. Even for seasoned business owners, these factors are not easy to navigate profitably. Not for the faint of heart is another way to put it.
Throughout the last 12 months, it’s been important to raise prices to keep pace of seen and unseen costs to your businesses. Too many remodelers, most well intended, are missing all the ways of losing money. Taking on more jobs only makes the problem worse. There inevitably comes that moment in time when your cash runs out, and your suppliers stop extending credit. Creditors these days are keeping a wary eye on everybody.
The first article I wrote about the remodeling market, in 2003, was on the topic of consumer perceptions of integrity across various industries. Twenty years ago, remodeling and home improvement contractors came out only slightly ahead of used-cars sales organizations toward the bottom of the list. The message then is the same as it is today. From a reputation standpoint, this industry has a hill to climb. Too many fly-by-night people can enter this industry and quickly exit, leaving others clean up their messes. The problem in this current situation is that some well-intentioned individuals and their employees will get caught up in a major bankruptcy of a contractor.
If this sounds a bit preachy, I apologize. But there really is not an excuse for letting something like this happen. There is too much good information out there. There are too many business tools out there designed specifically to aid remodelers and home pros who fall behind on projects and start losing money.
A major failure like this one has big ripple effects. First, there are employees. They need to find jobs. Then there are the folks—many of them on fixed incomes—who may never see their deposits again. Television cameras will show up at their homes, and they won’t be shy about it. Eventually, local prosecutors get involved. It’s not pretty, of course. This type of thing happens in a lot of other industries. But the ripple effect that is especially insidious is the chilling effect it has on thousands of other contractors around the country the next time they go out to sell a job. If you set up shop as a home improvement or remodeling contractor, not only do you have an obligation to perform well for your employees and clients, but you have an obligation to never give the industry a black eye.
For those of you who’ve put in the hours it takes to manage through all of the many business complexities of 2022, the year ahead promises to be one filled with opportunity. The market may be slowing to more normal growth levels, but there is also some stability out there now. You have the power to make 2023 a profitable year. QR