The past few years have tested remodelers like none that I can recall in my career. In response, remodelers have had to rethink and pivot in order to protect profits and, for many, just to survive. Although some remodelers embraced the disruptions and even found ways to benefit from them, most were forced to react.
Those who survived have proven their ability to adjust. Here are four keys to more proactively rethink and improve your business. When properly implemented, they can improve your business in 2022 and beyond.
Predict Success, Measure Results
Rather than just conduct business all year and wait for your accountant to tell you what happened, predict what you want to happen in 2022. Then make sure it happens. When remodelers commit to a dollar amount of profit, they are far more likely to achieve it.
Create an annual budget that predicts not just volume and profit but also one that predicts costs. These include overhead expenses as well as your cost of goods sold (COGs) allocated among labor, materials and subcontractors. The benefit of forecasting is you then have numbers to track during the year. To monitor your progress correctly, you must track your financials the same way you predicted them.
If you are not already set up that way, find an expert to help you engineer your bookkeeping to track of things as they happen. This way you can verify things are “on plan,” and you will know where you are slipping to make adjustments to protect your goals, one of which should be to pay more in taxes simply because you earned more profit.
Target Your Marketing
Too many remodelers seem to spend money on marketing just so they can check the box. If you do not have a written marketing plan including measurable goals for your efforts, you fall into that category. This year I challenge you to write down what you want your marketing efforts and dollars to accomplish and to have a way to measure if they are happening. Rather than just target a volume of work, also strategically decide and target your desired customer and project types.
For example, you could target only kitchen and bath clients willing to pay a non-refundable design retainer. You could further strategically narrow your target customers by stipulating that any plans and specifications created will remain with your business until they sign the construction contract and provide a significant deposit at acceptance to pre-order and pre-stage the required materials.
This new way of doing business, explained in your marketing, can be beneficial for both your business as well as those you do business with because it will allow you to concentrate your available time and resources on only those committed to working with you. Concentrating on and serving only your targets will maximize profits and eliminate time wasted on prospects happy to take all your great design ideas to your competition.
Anticipate Your Future Staffing
It is common for remodelers to get overwhelmed with their business as it grows and challenges surface. This happens because most remodelers don’t anticipate how growth will affect their businesses, they just jump in blindly and let it happen. This lack of planning typically puts additional weight and most of the day-to-day managing on the owner’s shoulders.
This lack of planning causes stress for the owner and employees. Each day comes with new surprises and unanticipated fires to put out. Even if the owner is OK with a hectic business environment, most employees will not be. They will tolerate uncertainty and micromanagement only for a short time before leaving. To prevent this, assemble an organizational chart with all the related job descriptions needed to support and manage the growth and the burden of unexpected challenges.
This will help your employees know what is coming, what will be required and who is committed to the changes, growth and education needed to be ready before it happens. Such a strategy can also help retain employees if they can see a brighter and more profitable future for themselves. It can also help identify and push non-committed employees out of the way.
Develop Rapport with Your Staff
Developing real rapport with your employees might just be the magic bullet you need for retaining the great people in your business. Rapport is defined as a close and harmonious relationship in which people or groups understand each other’s feeling and ideas and communicate well. That one sentence says a lot and summarizes not only what you need to do to build rapport, but why you and your employees will benefit from getting there.
Great employees want to know what’s coming, the ability to express their concerns and ideas and, most important, they want to feel they are part of something much bigger than just themselves. If they really feel this way, and are also compensated well, most of them won’t risk switching to another business where such rapport might not exist.
And employees who have been in the industry and worked at several businesses will know how rare and rewarding such rapport really is. If you want to speed up the process of building such an atmosphere at your business, find a mentor who has already successfully done so during his or her business career.
2021 is history now. As the old adage goes, history will repeat itself if we don’t embrace learning from it. Use what you have learned and recognize your hard-earned accomplishments getting through it to motivate yourself and commit to purposely create the 2022 you want. By thinking this way, you can pre-write history and then cause it to happen that way. QR
Shawn McCadden is a speaker, business trainer, columnist and award-winning remodeler with more than 35 years of experience. He can be reached at shawnmccadden.com.