The Remodeling Industry 2.0


The remodeling industry is going through a market-driven revision. Not unlike software, when something isn’t working, you need to change the code. So many things have changed in the last two years:

  • Declining real estate values
  • The availability of financing (which is tied to declining real estate values)
  • Deepening concerns about employment and the economic future of the country
  • Homeowner uncertainly regarding expensive projects

Business as we have known it may never be the same. If you’re waiting for the rebound, stop waiting. It could be years before a real economic rebound takes place. We’ve dug ourselves into a deep hole, and it will take time to dig back out. There is business to be had, but we need to be more creative about finding it.

Four scenarios

What does the Remodeling Industry 2.0 look like? I have four scenarios to share. Take ideas or direction from each. Each one has value.

Don Van Cura of Don Van Cura Construction in Chicago went low-tech. That means that he takes every call that comes to his office. It doesn’t matter how small the project is or whether he even does that type of work. He wants to speak with every homeowner that calls his office. When someone tells him they don’t like doing small projects, Don’s response is that almost every job he does starts as a small project. As they talk and get to know each other, the size of the project grows. His secret: never say “no.”

Tom Thompson of Finished Basement Company in Colorado emphasizes diversification. He recommends selling in a specialized field but finding products in that field to stay diversified. Also, just doing the work isn’t enough. Help your homeowner clients with ideas and demonstrate how a design can enrich their living space. Show them how to make their plan happen. Bring all the elements together for the customer so they can make a decision to move ahead. He concluded by saying that real profits are made by creating a system of goods and services which create high perceived retail values.

Dennis Allen of Allen Associates in Santa Barbara, Calif., went even further. Dennis opened a Building Care and Repair division in his company. With the average cost of a home in the United States at $274,500 as reported by the National Association of Home Builders (NAHB) in 2009, homeowners have a very expensive asset to maintain, and they need help doing so. Most homeowners are not skilled or experienced with this upkeep, and by following up with every past customer and providing them with a home maintenance and repair schedule, Dennis stays in touch with past clients and stays in a relationship with them. You may not want to do small projects, but as Don Van Cura and Dennis have discovered, small projects lead to bigger projects.

Energy retrofits. The current administration believes that with the economy in the tank, unemployed people can be put to work weatherizing homes and installing energy-efficiency upgrades. President Obama has proposed a Recovery through Retrofit program — also known as Cash for Caulkers — intended to refurbish 130 million American homes. Whether or not money is committed to this program, the basis for the program is sound. Homeowners all over the country need to upgrade the energy efficiency of their homes. Working with an energy auditor, and implementing recommendations from a home energy audit are a good investment for any older home. It’s also a good source of additional work. Potential homeowner benefits include:

  • Greater comfort
  • Lower energy bills
  • Improved energy efficiency
  • Improved durability = Lower maintenance

There is a common thread that runs through each of the ideas above. All are focused on good customer service, but they go further. Successful remodelers are innovators, and in this marketplace, we need innovation. As Tom Thompson said, “part of staying in front of the competition these days is bringing all of the elements together for the customer so they can make a decision to move ahead.”

How are you staying ahead of the competition? Are you innovating? There is opportunity in this marketplace, but business as usual won’t cut it. The remodeling market will survive. Not every remodeler will survive with it.

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