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It’s Not Always Easy Being a Remodeler, Experts Say
Three professional remodelers at various stages in their careers revealed significantly different approaches to guiding their businesses to success during an open “town hall” discussion based on questions from the audience at the Oct. 10-12 Remodeling Show in Las Vegas.
Just named the winner of the inaugural Fred Case Remodeling Entrepreneur of the Year, John Abrams, founder and president of South Mountain Company, credited his success to his company’s unusual approach to both its customers and its employees.
Working exclusively on Martha’s Vineyard, Mass., 16 of South Mountain’s 32 employees have an ownership stake in the company, and the rest are on track to eventually reach that milestone in their careers, Abrams said.
“Sharing ownership changed everything for our company,” he said, a decision that the 30-year-old firm made 21 years ago. Anyone with five years experience or more “can buy in for the price of a good used car,” he said, from which point on they accumulate equity based on profits.
Even with that incentive, however, he conceded that good employees these days can be hard to find, especially in a locality where the median price of a home is $750,000. “We have to provide affordable housing to get people,” he said.
The population of the island off Cape Cod is now 20% Brazilian, he said, and the immigrants have elevated the local work ethic. “My subs rely on them 100%,” he said.
When it comes to marketing, South Mountain has been ringing up an annual sales volume of $7.5 to $8 million relying entirely on referrals from its previous clients, who literally open the doors of their homes to prospective clients.
The key box in the company’s office holds 120 keys to prior jobs, Abrams said, “and we take people to the houses as a design tool.” The occupants are used to the process because they participated in it themselves when they were considering having work done, and they can expect to receive flowers from Abrams for allowing strangers to visit their homes.
Not Charging Enough
At the other end of the spectrum and still building a foundation for his business, Dylan Wadlington, of Wadlington Remodeling in Pine Grove Mills, Pa., said he has only subs working for him but has started feeling “a little too spread out” and would like to make his first hire in the field. He motivates his production workers by letting them know the leads that are on his plate. “I let them know we have work coming,” he said.
For the first seven years he was in the business, Wadlington said, he relied on the help of his friends, but now he is making introductions at places like the lumber counter, face to face, hoping to land employees without any advertising.
Wadlington indicated a natural proclivity for building green and noted that such approaches to his work as recycling and using non-toxic paint don’t increase his overhead and actually help bring him customers. “People get excited by the responsible use of materials,” he said.
Dylan reported that he has been “growing wildly” for four years, with sales volume plateauing at $600,000 this year — up from $528,000 last year. For his business, pricing jobs based on time and the cost of materials has provided the “meat and potatoes,” he said, and he has changed to bidding only recently.
Dylan conceded that he hasn’t been marking his jobs up nearly enough, but he won’t go below a typical markup to sell a project. “I stick with my price,” he said. “I won’t lower the price to get the job, because that job’s not worth having and I don’t charge enough in the first place.”
The next step for his company, he said, is to begin marketing and try to become more profitable by charging more, knowing his number and, when he doesn’t know something, start reading until he figures it out.
Growing Pains
Closer in the experience range to Wadlington than Abrams, Karen Zieba, of Zieba Builders, in Long Beach, Calif., has reached a yearly sales volume of $1.5 million working in three coastal communities. She said that her company started feeling “growing pains” when it surged from $1.2 million to $1.8 million in one year, and lost $140,000 in the process.
“We didn’t pace ourselves, or prepare for growth,” Zieba said. To remedy the situation, “we scaled back,” she said, “turned down more work, invested in training and tried to get our markups higher.”
Before growing, it’s a good idea “to figure out where you are weak first,” she said. “Growth will magnify the weaknesses. Clean those up first, then position yourself in the market.”
Zieba said that she also has relied on cost-plus pricing to get her business going, charging $1,000 a week for general management job costs, a guaranteed labor rate and a 27% markup on top of that. “But with cost-plus you won’t make any more than that, and we didn’t get as many referrals.”
Zeiba said she markets through customer referrals, a simple letter to the neighborhood and by networking through community service efforts such as helping out in the school classroom and helping to build a public park.
Unlike the typical remodeler, Zeiba said that she does use customer financing on some jobs, although there are certain financing options that she will not recommend. She uses bankers with whom she has established relationships and she steers owners to the right financing.
And unlike Wadlington, Zeiba said she finds green remodeling a hard sell. “Consumers have been reading a lot of lifestyle magazines touting green products” that tend to be more expensive than their traditional counterparts. In working with them, her job, she said, is to set reasonable expectations and “let the consumer make an informed choice.”
To ensure that she doesn’t go over budget, Zeiba said that she tracks costs through the project. “You will know the first week it happens,” she said. “Clients don’t want to spend too much money. You explain that if you spend this much money on something, you will be over budget. You then have to offer them alternatives.”
The discussion was moderated by Tom Swartz, J.J. Swartz Co., which has two locations in Illinois.
 New Master-Level Designation for Remodelers Available Soon
Starting in February, Certified Graduate Remodelers (CGR) can attain further recognition for their commitment to educational excellence and longevity in the remodeling industry by earning the Graduate Master Remodeler (GMR) designation — the master level of the current CGR designation.
For more information, visit www.nahb.org/GMRinfo or e-mail GMRinfo@nahb.com.
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