With more home owners choosing to stay in their homes longer rather than move to new ones and take a loss in a down market, savvy remodelers are growing their businesses by convincing them to make their homes more comfortable and liveable — and more appealing when they do eventually decide to sell, according to Mark Richardson, of Case Design/Remodeling, Inc. in Bethesda, Md.

Richardson discussed this marketing approach during the March 23 webinar, “The Future of Remodeling: How to Grow Your Business,” sponsored by Professional Remodeler magazine.

“Remodeling has grown into a more than $300 billion industry,” he said, while noting that, within the housing industry, remodeling is now 70% of the market and new construction, 30%. Just five years ago, he said, the reverse was true.

Existing market conditions — interest rates at historic lows, at least for the time being, and high homeownership rates — are fueling the surge in remodeling.

In addition, he said, more home owners, wary of the volatility and vagaries of the stock market, are deciding to invest in their homes in order to realize a more reliable and stable return when the housing market recovers.

“The more home owners there are in the market versus renters, the more business opportunities exist for remodelers,” Richardson said.

But convincing home owners to remodel, even with so many conditions favorable to the industry, will not be easy, he said. Home owners still are reluctant and cautious about remodeling their homes because of the general economic conditions.

Among those who are willing, many are stressed about what projects they should tackle, so much so that they’vr paralyzed with indecision, Richardson said. These potential clients present opportunities for professional remodelers who can guide them though the remodeling process.

To do that, Richardson suggested that remodelers follow several “themes” that can help them grow their businesses. They include:

The Future Ain’t What It Used to Be

The remodeling industry and remodeling companies will be operate differently than they have in the past, he said, primarily because they will need to adapt to customers’ new, more immediate expectations and because a changing workforce will bring new skill sets that can better accommodate these demands.

“It is critical for remodelers to begin looking at time differently,” Richardson said. “Clients expect a quicker response.” To meet their expectations, he advised remodelers to return their clients’ calls within hours and to submit proposals within a day or two of discussing the remodeling job with them.

Richardson said remodelers should also adjust their businesses by focusing on shorter planning cycles. Three- and five-year business plans are no longer realistic, he said. Instead, remodelers should develop one-month, six-month and one-year plans — and examine them weekly.

He said remodeling companies have to expand their staffs to include young people and women who will bring additional skills needed to compete in the new market. The more technically literate younger people will add skills to bolster the home automation and technology solutions customers are increasingly demanding, and woman will, in general, bring stronger sales and organizational skills to a company.

Change, or Become Irrelevant

Remodelers need to rely on more than their remodeling skills to remain relevant and connect with clients. They also will have to become therapists and financial planners — and learn a whole new way to sell their services.

Clients want to buy, not be sold, Richardson said. “Focus on having the right skill set to help them buy, not just the sales skills to close.” 

Because of economic and industry uncertainty, Richardson urged remodelers to develop a balanced business portfolio that provides fallback positions for when a market segment falters, and that is geared to meeting a wider variety of customer needs.

If demand for one business product or service — for example, large-scale remodeling projects — dips, he said, remodelers with balanced portfolios can better ride out the downturn by providing handyman or other smaller-scale services until the business cycle and demand for larger projects improves.

All this change will not occur by itself, Richardson stressed, and it will take training to keep up. Remodelers should continue to invest in training, even in difficult times. Training is an investment, not an expense, and remodelers who are serious about training should expect a return on their investment, he said.

There’s a New Sheriff in Town

The government is more heavily involved in the remodeling business than it has been in the past, Richardson said, noting the new lead-paint, health-care and employment regulations, as well as new tax incentives that have been instituted during the past several years that directly affect remodeling.

He suggested that remodelers learn as much about these new regulations and incentives as possible.

Life Made Simple

Technology and the Internet have added new dimensions — and opportunities —  by expanding the market to include new products and services and by increasing the ability to provide clients with purchasing knowledge and convenience. 

To take advantage of these opportunities:

• Simplify the complex. Make it easy for clients to decide and buy. As an example, Richardson said Kohler  has taken its hundreds of thousands of products and organized them in a simple brochure that guides consumers through the decision-making process.
  
  Instead of having complex and fancy brochures or websites, remodelers should concentrate more on making the information easy to find, understand and support purchases, he said.
  
  
• Go green, but make it convenient. Prospective clients like the idea of incorporating energy-efficient features into their homes. But if adding green features is complicated, inconvenient or too costly, they won’t buy.
  
  “Make it a simple decision for them by educating them on the benefits as well as the process,” Richardson said.
  
  
• Become more of a specialist, rather than a generalist. Richardson said there is currently a need for more specialization in remodeling. Remodelers who specialize in green remodeling, aging-in-place or other niches can help set their business apart from competitors who offer more general services.

But Richardson also reminded remodelers not to let technology take the place of client interaction. Remodelers still must meet and plan with their clients face-to-face.

“People buy from people,” he said.

A Spreadsheet, Not a Hammer

Good business owners have a strong knowledge and understanding of financials, human resources issues, work flows and marketing plans, which, when operating a remodeling business and keeping it solvent, ultimately is more important than just “sticks and bricks” knowledge, Richardson said.

“Good business acumen will result in 80% of a company’s success. Nine out of 10 of remodelers will be out of business in 10 years because of their lack of business acumen,” he said.

Leadership skills are just as important, Richardson said, referencing a 2010 USA Today survey indicating that 30% of employees hope to leave their company for a new job once the economy and job market improve.

“Remodelers and business owners who have strong leadership skills will be more successful in keeping that percentage lower, in my opinion,” Richardson said. “Create an air of team building, not just of home building.”

The Emperor Has No Clothes

Richardson warned webinar attendees that they will have to keep up with technology — and showcase their changes on the web — or lose out to the competition. Remodelers must stay ahead of their prospective clients by embracing and controlling their online image, especially how it’s projected on their website, he said.

“Using up-to-date technology will show off the professionalism of your company to your clients,” Richardson said.

Love Thy Neighbor as Thyself

Remodeling companies can no longer operate as individual entities. Instead, he said, they now have to regard and treat their vendors as “strategic allies” and their suppliers as part of the team rather than merely as a source for products.

Even more compelling, Richardson said remodelers should view their competitors as allies, as well, because their activity can help measure current market conditions. He urged attendees to connect with top remodelers in their area through their local home builders association — and with manufacturers — to share best practices and project knowledge.

“Times have changed, and remodelers and their business and customer service practices have to change with it,” Richardson said.

Learn How to Run a Successful Remodeling Company

“The Paper Trail: Systems and Forms for a Well-Run Remodeling Company,” available through NAHB BuilderBooks, shows how to use proven management systems to run a successful remodeling company.

The publication includes a CD containing 160 essential forms and documents — culled from successful remodelers across the country — that you can customize to suit your business needs.

To view or purchase this publication online, click here, or call 800-223-2665.

'How to Find a Professional Remodeler' Brochures Available at BuilderBooks.com

"How to Find a Professional Remodeler," available at NAHB BuilderBooks, promotes the professionalism of your remodeling business by offering a wealth of valuable advice to customers on the process of selecting a remodeler. 

The newly updated brochure highlights the before and after photos of the most frequently remolded rooms in the house.

To view or purchase this publication online, click here, or call 800-223-2665.