HIP 200: New Ways to Grow

A booming market for home improvement favors innovators who meet labor, cost and demographic challenges head on.

authors Patrick O'Toole | November 15, 2017

SEE THE 2017 HIP 200 LIST.

For decades, little about the home improvement industry seemed to change. The fundamentals of the business—creating a stream of quality leads, recruiting and training an effective sales force, and building an efficient installation system—remained constant. And in a very broad sense, those fundamentals remain today, but increasingly change is afoot.

The internet has upended the chase for quality leads, surpassing canvassing, home shows, and radio and TV advertising, thereby creating vast opportunity and change. On the labor front, recruiting and training salespeople has always been a challenge, but today’s scarcity of tradespeople now compounds existing hiring and retaining problems. There are higher costs for materials. And lastly, owners face the challenge of selling to a new generation of clients—millennials—with purchasing preferences that are only now beginning to emerge.

But home improvement companies listed on this year’s HIP 200 are not complaining a bit. The once slow growing economy remains on an upward and increasing trajectory. Home prices are rising, driving up home equity. The housing stock is aging and in constant need of upgrades. Lastly, wages are growing. The result is a strong market for home improvements. Rob Levin, owner of DFW Airport, Texas-based Statewide Remodeling, No. 22 with $51 million in revenue on 3,877 jobs, sums it up this way:

“With the economy booming in both new construction and remodeling, the biggest challenge we face in the coming year is getting quality tradesmen to do installations. It puts a squeeze on the capacity of our installations, and extends the lead time for our jobs. This is one of the biggest complaints from homeowners today, which will be compounded next year with a slower delivery chain of materials combined with increased costs,” Levin explains. “But the economic environment is also giving us our biggest opportunity for increased revenue for next year. With home values increasing by double digits in most of our service area, people are staying in their homes and increasing their spending on home improvements. As we continue to refine our marketing in this digital age and the millennial generation begins to purchase homes, we see the evolution of our business and ways to present our product more directly to homeowners as our biggest opportunity.”

Hiring and Retaining

To attract millennial employees, Moty Ginsburg, CEO of Valley Village, California-based Treeium Inc., No. 31 on the list with $36.9 million in revenue on 953 jobs, has built a work environment and work culture more akin to a Silicon Valley tech startup than a home improvement company. And the results speak for themselves—the company is growing dramatically, and attracting talent has not been a problem, he notes.

In Santa Ana, California, Larry Green, the CEO of fast-growing System Pavers, No. 6 on the list with $102.8 in revenue on 5,278 jobs, is actively on the hunt for ways to sell and install more jobs with fewer people. “The fact of the matter is that young people today are simply not willing to take jobs in the trades the same way their parents once did,” Green says.

His company, which operates in major markets throughout the western region, is an outdoor living company. Their bread-and-butter installation is patio pavers. Green is exploring the use of a fleet of drones to better quote jobs remotely. He’s also exploring the use of capital intensive machinery to lay down and install the pavers. The technology exists today, he adds, and the company needs to explore those alternatives. Stay tuned.

Up and down the list, owners are universally embracing technology to create leads, set meetings and ultimately generate new clients. Many report the increased use of visualization tools to overcome objections more quickly within the sales environment. But perhaps the story of the year had nothing to do with technology and everything to do with a very exciting baseball team for most of the summer, the Cleveland Indians.

Universal Windows Direct, No. 12 on the list with $71.1 million in revenue on 10,294 jobs, paid an insurance company $70,000 to buy a policy that would enable them to offer free home improvements purchased during the month of July if the Indians won 15 games in a row at any point, starting Aug. 1.

The Indians bucked the long odds, winning 22 games in a row and making a slew of Universal Windows Direct clients happier to the tune of $1.2 million in refunds. The promotion was a huge win for Universal as they garnered local and national media coverage. CEO Bill Barr says lead flow subsequently surged while many of the happy clients used their refunds to purchase more home improvements. The success of the promotion reinforced that home improvement is best promoted at a very local level. It also demonstrated that despite all of the change in the home improvement business, there is always a place for flinty entrepreneurs who win by seizing unique, in-market opportunities. |QR

SEE THE 2017 HIP 200 LIST.

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