ReNews -- Remodelors Council News - 05/12/2005 (Plain Text Version)
Don Novak CGR, CAPS, CKB, GMB
In this issue:
Little Consolidation in Remodeling Industry
Remodeling Firms Overview at Joint Center for Housing Panel at Harvard University
The remodeling industry has seen little consolidation according to the Joint Center for Housing at Harvard University. In 2004, the top 500 contractors provided 3.9% of all remodeling jobs compared with 3.7% in 2001, showing the continued fragmentation of the industry. These findings were presented in a panel discussion at Joint Center for Housing, highlighted by Remodelors™ Council members providing a big picture snapshot of the remodeling industry.
Over 800,000 people in the U.S. provide remodeling services, most as self employed contractors. Approximately 170,000 firms that provide remodeling services have payrolls, though only 62,000 of those firms are general remodeling contractors — the rest are specialty firms.
Panelist Mark Richardson, CEO of Case Design/Remodeling, pointed out the ease of entry in the remodeling industry, which is reflected in the large number of self employed contractors and the 60% fail rate within the first five years of work. Richardson also noted that while nine in 10 remodelers are honest and hardworking, all are not savvy in their business practices.
Panelist Bill Owens, CGR, CAPS and former chairman of the Remodelors Council, divided remodeling firms into three size categories: small ($500,000 or less in sales), medium ($500,000 to $2.5 million), and large ($2.5 million plus). He noted that over 80% of remodeling industry contractors and agencies have less than $500,000 in sales.
Owens, who provided an overview of small and medium-sized remodelers, mentioned that many in the industry purposely keep their sales below the $500,000 mark in order to stay “lean and mean,” easily managing volume and profits. Once a business exceeds $1.5 million in sales, strong business systems need to be in place to manage the volume or the business risks failure.
Fred Case, president of Case Design/Remodeling gave an overview of a large firm. Case is a Washington, D.C.-based remodeling business founded in 1961 and now has 280 staff. It does about $40 million in revenue per year. Case also has a Handyman Services franchise, with 68 franchise partners and $40 million in revenue.
Other panelists included Doug Dwyer, president of DreamMaker Kitchen & Bath and Seymour Turner of Airoom Architects & Builders.
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