For remodelers, the side effects of the pandemic as well as the government’s response to it, particularly mandates on businesses, have upended the status quo. Skilled-labor shortages and material-procurement challenges are causing havoc for remodelers and their clients.
My experience reminds me that the conditions now affecting the remodeling industry have always forced adjustments and pivots for business owners. Those who recognize what is happening and make the needed changes will not only survive, but many smart remodelers find ways to thrive by taking advantage of the changes.
Now Is an Opportunity
This is a perfect time to be a design-build remodeler. I say this because if you are a qualified remodeler practicing true design-build, your business should already have the systems, staff and experience needed to thrive. Those companies without any significant differentiation in their markets will again place blame elsewhere, struggle and then slowly adjust to what the market “is doing to them.”
To help those remodelers seeking to find new as well as profitable ways to adjust to the new realities, I encourage you to quickly adjust so you can become recognized as the leader in your market with your new way of doing business. Become the leader before the commodity contractors figure out what you’re doing and attempt to mimic you.
Design to a Budget, Plan as You Design
Research shows that remodeling consumers with a clear budget now realize they might not get all they’d hoped for in their projects. The research shows that higher costs of labor and materials has forced them to rethink their projects to not overspend. Again, design-build is perfect for this. In particular, if you work to identify manufacturers and materials still reliably available, you can offer clients options during the project-planning stage that can help maintain budgets and schedules on behalf of your business and your client.
Project planning is what it should be. Don’t just think design. Don’t wait until design is done to determine if and when you can build a project. As you design, you should also be planning how you will secure and manage the resources to get their projects done. The idea is to be ready for construction at the end of the project development process. I can’t stress enough how important this part of the process is toward protecting your margins as well as your design-build reputation.
Educate and Manage Expectations
In true design-build, you do not sell designs; you sell remodeling projects that require design and planning. Work only with committed clients, not prospects. As you work through the project-planning phase, take advantage of the interactions to make sure your clients have realistic expectations due to the current realities in the industry.
This is the time to help them see, regardless of what might get in the way that you are working in their best interests. Be sure they really hear and agree that even with all the upfront planning, there will be challenges. Stress that you will keep them informed about things, good and bad, because that is how you do business.
Recognize and agree with them that they may not want to hear their project will be delayed, or that they need to choose alternative products; but either way, when challenges arise, you will be there to guide them. If they can’t agree to these realities, I suggest you end it with them and find a different client.
Front-Load Your Payment Schedule
I’ve heard too many stories about contractors who offered fixed-price contracts and then lost money because materials cost way more than anticipated. I offer two ways to avoid this pitfall. First, don’t estimate projects using current costs. Work with your preferred vendors and subs, so you are estimating what the actual costs will be at the time of construction. Work things out with them, so you can get their commitment to the pricing they give you. This is easier to do during the project-planning stage.
Second, before you allow a prospect to become a design-build customer, be sure they commit to the requirement that their project will be built with their money, not yours. If they want you to guarantee a price today, you will likely need to commit to your vendors and subs tomorrow. To guarantee pricing, your vendors and subs will need money upfront.
Help your clients recognize the need to pay upfront, so you can pre-order and even secure the products and services needed to keep your promises about their project. If you pre-order and accept materials prior to construction, be sure you have a place to securely store them and be sure you charge accordingly for any handling and storage costs. If they don’t want to give you money upfront, I suggest you end it with them and find a different client.
Final Thoughts
Don’t just think of design-build as a service for your customers. Design-build should be thought of as a specific and strategic way of doing business. This is only a brief article. Be sure to use it as a guide but also recognize other factors to be considered. Here are just a few:
You will need to update your marketing to highlight your design-build process. There are legal agreements required to protect your business—agreements for your project-planning process, for committing to final construction and even for use with your vendors and subs.
There is a lot more to think about and consider. But if you are a design-build remodeler, you have put yourself in a proven process to choose how you do business and with whom you will do it. 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.