Landis: 7 Reasons Against Starting a Small Projects Division
authors Christopher K. Landis | September 15, 2021
At some point, most design/build firms or contractors have thought about adding a small jobs division. These companies often use “care” in the title of their small projects division. Generally, company management thinks since it’s already completing small projects for current and past clients as well as warranty work, this division would have a built-in market for miscellaneous repairs.
That is exactly what we thought when we started one in 2009 in response to the Great Recession. We pivoted to respond to the immediate needs of homeowners who had the cash to pay for the repairs during the economic downturn.
We promoted the division on our website and added a flyer to our direct mail campaign. Though there are some synergies to renovation, we found the small projects division to be a very different business and not a match for our company. We shut it down a few years later. Here are some considerations against this move.
No. 1 — It’s almost impossible to find the perfect person to lead this division.
The right lead person is key to the success of this division. However, it is very difficult to find someone who can: 1. Sell, 2. Estimate, 3. Perform quality work across multiple disciplines and 4. Handle scheduling, billing, ordering and administrative tasks.
This person also must be personable and communicative with clients. Someone with this set of skills likely runs or has run their own company. Is this type of person likely to give up being their own boss to work for a larger firm? If you hire someone to boost one of the lesser skills, such as a scheduler, that adds to your overhead and could lower your profitability. If you want to scale up, you’ll need not just one rare individual—you’ll need several.
No. 2 — It will be hard to find someone at your company to oversee this division.
You need someone in your firm to oversee the division – to create the structure and supervise and guide the division head. Most of the managers at your firm have enough on their plates with your renovation work and will not want to take this on.
No. 3 — Homeowners won’t pay the rate needed for a profitable division.
You’ll need to mark up the job at least 100 percent to cover the costs of travel, planning time and follow-up. You will likely need a dedicated van outfitted to hold a range of tools and materials. Even if you use technology to save travel by doing a virtual walk-through, there are times when you still won’t be prepared for a problem.
What happens if you run into an issue that requires more time? The carpenter will have to reschedule or return to complete the task. When you complete the work, the client must review the work and pay upon completion.
No. 4 — It’s difficult to define the work.
It is difficult to define a clear scope of work and manage client expectations. If you fix a leak and repair the drywall, will that include painting? If you’re charging by the day or half-day, and your carpenter completes the task in less time, will the client still want to pay the rate they agreed to? If they want a tile backsplash installed, who will select and purchase the tile and the grout? This can lead to unhappy clients. You could be undoing the trust you created with a renovation client.
No. 5 — A small projects division can dilute your brand.
Most contractors and remodelers strive for high-end, larger projects with affluent customers. If a customer works with your repair division, they may think you can only do small jobs. If someone buys a Toyota from you, they may not realize you sell the Lexus brand.
No. 6 — Your competition is the gig economy and apps.
The gig economy is getting into this field with apps like TaskRabbit and Thumbtack. Even Amazon has a home services division to install the products it sells. These craftspeople are likely vetted by the app company and have insurance, but they are freelance and independent contractors with very little to no oversight. You will not be able to compete with these apps on price or volume.
No. 7 — Expending the same amount of effort on your existing business could pay off bigger and faster.
If you have a successful business, you’re already busy. Why would you want to take on a new division? You should focus the talent at your company to the work that is the most profitable, and you can spend that time and energy growing and improving your existing business. QR
Christopher K. Landis, AIA, owns Landis Construction in Washington, D.C. He brings 30 years of remodeling design, construction and management experience to this series of columns for the magazine. You can reach him at email@example.com.