April 18, 2011
Nation's Building News

The Official Online Newspaper of NAHB

Small Builders and Remodelers
Remodelers Follow Different Paths to Recapture Business and Emerge From Downturn

The many remodelers who were forced to re-evaluate their business operations during the housing downturn have chosen divergent paths to survive the lean times.

Some have chosen to broaden their portfolios and take on a wider range of projects, including handyman types of jobs. Others have decided to narrow their focus and specialize in a niche area of remodeling — such as green or energy efficiency remodeling, aging-in-place, kitchens or outdoor living areas.

Still others have decided to stick with what worked for them in the past.

There is no one-size-fits-all answer for remodelers trying to decide what business model will work best. 

Erik Anderson, vice president and owner of Anderson Moore Builders, Inc. (AMB) and DreamMaker Bath & Kitchen Remodeling in Winston-Salem, N.C., decided to specialize.

“Our original business model was more generalized,” he said. “In 2008, after the downturn, we chose to narrow our focus to kitchens and baths. We definitely made the right decision for us.”

As the company refocused its marketing and advertising efforts on kitchen and bath remodeling, DreamMaker took center stage over the flagship AMB, Anderson said, in appealing to clients seeking a kitchen or bath remodeler.

“I think it’s because people felt more comfortable with a company that focuses on exactly what they are looking to do with their home,” he said.

Another reason Anderson said he decided to specialize in kitchen and bath remodeling was because he “was tired of being a jack-of-all-trades and a master of none.”

Specialization has provided a safe path through the downturn, according to a recent Joint Center for Housing Studies of Harvard University report, “A New Decade of Growth for Remodeling.”

“Some specialty contracting firms — kitchen and bath remodelers, deck and patio builders, energy-retrofit experts and outdoor living contractors, among others — have survived one of the worst industry downturns in decades by streamlining their operations and becoming more focused and efficient,” the report said.

But Vince Butler, owner of Butler Bros Corp. based in Clifton, Va., found just the opposite to be true for his company.

“Becoming less specialized and expanding our business portfolio to include more project possibilities kept us from seeing even more of a loss during the downturn,” Butler said.

Before the downturn, his company specialized in kitchen and bath remodels. But the jobs dwindled as fewer home owners were willing to contract for higher-end remodels during the recession, so Butler was forced to find other ways to bolster his business.

“We were once doing bath remodels that ranged from $35,000 to $45,000, but now people are more conservative with their money and remodeling projects are dropping down to the $10,000 to $15,000 range,” he said.

He also reported a similar percentage drop in kitchen remodeling projects during the downturn. “By taking on other projects around the home, we were able to still keep selling when some of the kitchen and bath remodeling jobs started drying up,” Butler added.

The bottom line is that companies have to make business decisions based on the unique conditions in their market, and there are always exceptions.

Amazing Siding and Windows, with locations across the country, specializes in siding and windows. That’s what the company specialized in before the downturn and it hasn’t changed its business model.

“We were blessed with several positive things during the downturn that helped our business succeed,” said Bob Birner, vice president of the Houston-based company affiliate. “Houston was fairly insulated during the housing downturn.”

“America became heavily dependent on the energy sector, which was good for our local economy, and rising energy costs made energy-efficient upgrades more appealing to people, especially with the energy-efficient tax credits available the last two years,” he said.

With those factors in place, it made more sense for the company to stay the course as a specialty remodeler, Birner said, adding that business this year has increased almost 300% from the same time last year.

Birner said that specialty trades, at least in the Houston area, are seeing a quicker return to normal than the more general contractors as the industry begins to recover.

But, he has also seen general remodeling firms succeed by reaching out to their existing client base to offer handyman services that were not offered before — which are services more people can afford in a recession.

“Everyone’s situation is different and remodelers should make decisions for their business based on their individual experiences and markets, and be confident and comfortable with their business decisions regardless of what they choose to do,” Birner 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.





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