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Using contractors to do the job minimizes the paperwork required for managing employees, and firm bids enable costs to be determined in advance, Strong said. There is no overhead for carrying field labor, “and when times are slow, you do not have to create work for your field employees.”
It is easier to keep job schedules on track because when you are using your own employees, “if you have a problem on a job, you take somebody off another job to do that” and things start slipping, he said. “You have to have systems and structures in place to ensure this doesn’t happen” when working with contractors.
The contractors, for the most part, supply the materials they put in, and that helps reduce warranty and call-back costs. Tool and equipment budgets are also dramatically lowered, he noted.
“Every contractor gets a blueprint and the scope of work,” Strong said, and on the first day of the job the contractor is accompanied by the company’s project manager when they arrive at a client’s home.
Job Site Etiquette Strictly Enforced
The Strong Brothers carefully screen contractors and rules for job site etiquette are strictly enforced. “They can look like hell, drink like mad, talk like fools, if you let them,” Strong said, “but then again, so can employees.”
As for having enough good trade contractors from which to choose, “we’re blessed in Houston because we’re close to Mexico.” The company doesn’t have to resort to special incentives to attract the subcontractors it needs, and “we’ve had a low turnover” in those with which it does business.
Approaching his operations differently, Paul Winans, president of Winans Construction Co. in Oakland, CA, finds that using his own employees provides him with greater control over jobs and reinforces the craft background of his company and its philosophy that “the tool’s are where it’s at.”
“Trade contractors can be called to a different job, they don’t come to yours when they say they will,” and they can slip up on the schedule for any number of reasons — from the truck breaking down, to employees quitting, said Winans. “This is less likely to happen with a small, in-house workforce.”
Over his 25 years in business, Winans says he has gravitated toward using more subs for flooring, drywall and similar jobs, but he has 11 employees on his staff to carry out his design/build approach, including job management and skills such as carpentry.
Selling an Experience, Not a Product
“The remodeling contractor isn’t selling a product, they’re selling an experience, and we want to sell a consistent experience,” said Winans. “When we’re done with a project, our clients are apostles and they want to only call us for a project. They will say how well they were treated when the work was done, and they will never forget it.”
Jobs are typically in the $450,000-$900,000 range, so it doesn’t take too many of them for the company to reach its annual volume in excess of $2 million.
Job management is the primary function of the person on the site, he said, and they spend 2-1/2 to 3-1/2 hours a day focusing on that, depending on the size of the job. That person also schedules a weekly meeting with the client. Notes are taken, and processed, “because everyone remembers what they want to,” he said, and you need to write everything down.
“We train a ton,” Winans added, and Monday morning meetings are a must for every employee.
Winans makes sure that his employees understand his company’s culture thoroughly, that they buy into it and that they are mentors for each other in putting it into practice.
Winans’ employees act as entrepreneurs and they have the authority to handle any breakdown and work around them. When problems do arise, “there’s no such thing as an excuse,” he said. “There’s something that has occurred and it’s not going to happen again.”
Winans said he aims for a gross profit of 40%; Strong aims slightly lower, for 35%.
University of Housing Offers Courses and Designation Programs
The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here.
'PREP: Your First Step to CGR' Offered at IBS
PREP is your first step to becoming a Certified Graduate Remodelor™ (CGR). For more information on PREP offerings at the International Builders' Show in Las Vegas, Jan. 18 and 22, click here.
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