Editor’s Note: Money on the Table
authors Patrick O'Toole | May 19, 2021
Hard-learned experience has taught me to be wary of “good times” in the remodeling industry. Yes, these are the good times I am referring to. If your systems and people are rock solid, you can make a lot of money—not just cash flow, but real profit.
I suspect many of you share my sentiment: happy to see very strong demand but also deeply concerned about the inefficiencies that often follow. Many products are in short supply. Manufacturers are doing their best to ramp up, quickly sourcing additional inputs, adding shifts if they can find the workers, and then getting product out the door and into the doors of stocking dealers.
The same is true with distribution. Within a few short months, supply chains whipsawed from pandemic lows of purchases to new highs in demand from pros like you. These product and supply issues mean delays and higher prices. We see them now, and it’s likely to get worse before it gets better.
Good times are dangerous because the playing field is much more complicated and unpredictable than a balanced remodeling market driven by moderate or even slow demand. This is an environment where you have to both run fast but also play defense.
Here are two pitfalls you may face during these good times:
Pitfall No. 1: How do you maintain profit on jobs in an environment with quickly rising prices and increasing timelines?
Pitfall No. 2: Remembering the slower times, there’s a tendency to say “yes” more than is good for you.
Juggling too many jobs is a sure way to create unhappy clients. With everybody looking to hire a contractor, how do you aggressively pursue the profitable jobs you need while declining the ones you don’t want? After all, you’ve worked hard to become a go-to remodeler in your town.
Preserving and burnishing your reputation for professionalism in times like these requires tact—a polite “no” and a possible referral to another contractor or designer.
Good times also require superior project planning. By finishing your jobs on time and as near to budget as possible, you stand a chance at making good profits this year. This is the advice being frequently dispensed by seasoned remodelers and experts such as our columnist Shawn McCadden.
His article this month tackles the issue head on. His answer: If you have the ability to do it, sell a guaranteed time slot to conduct a remodel. Be precise on your calendar and only hold slots if folks are willing to pay a premium and make a large deposit.
Other pearls of wisdom from McCadden’s column? Make sure you’ve got contingencies in your contracts to allow for price increases along the way. In an environment of long timelines and price increases, not doing so is to ensure that your profit will drift downward with each passing week.
The issue you hold in your hands is filled with outstanding remodeling products. They are the 100 most requested products over the last 12 months by readers of this magazine and our related newsletters and online platforms.
These products are a reminder of the vibrancy and innovative nature of the remodeling industry. Use the list as a solution finder. Chances are these popular products in are in strong demand. Order them in advance and set expectations with clients as to when you will be able to install them.
It’s a great time to be a remodeler. But it’s also an important professional moment in your career—one that requires extreme focus and lots of energy. QR