Market Leaders 2005

MARKET: LOS ANGELES

Custom Design & Construction, Los Angeles

Management: Bill Simone, CGR, CAPS, president; Randy Ricciotti, CGR, CAPS, vice president

Years in business: 19

Staff model: 5 full-time, 1 part-time

Business model: Full-service residential remodeling, kitchen and bath, interior design

Average job size 2004: $250,000

Annual volume 2004: $3.7 million

"The Southern California remodeling market is booming. We serve west Los Angeles, South Bay and the San Fernando Valley. Our demographics typically consist of middle-to-high income, single-family homeowners.

"Typical middle-income profile: a two-income family with annual incomes totaling $65,000 to $100,000; owning a 2,500-square-foot home valued from $300,000 to $650,000.

"Typical high-income profile: one or two professional incomes totaling above $150,000; owning a 4,500-square-foot home valued from $750,000 to multimillions.

"Most middle-income families and a small percentage of high-income families take advantage of our ability to carry the project financing."

Results: "Our systems and procedures have raised the bar on our clients' expectations. Our own internal expectations are higher as well on many fronts, such as client satisfaction, employee performance and company profitability. We continuously push new and innovative procedure development."

What worked: "Custom Design & Construction believes in the theory of Kaizen; that is, small incremental improvements over a period of time will lead to a great, overall improvement of the company. We therefore suggest to others that, for starters, they pick something simple to be improved, such as how incoming calls are handled. Then develop and implement a system for improvement. Finally, monitor these changes and their success. Then move on to the next — and slightly more involved — project."

MARKET: CAPE COD

The House Company

Hyannis, Mass.

Owner: Jeffrey Goldstein

Years in business: 21

Staff model: 7 full-time

Business model: Full-service residential remodeling, kitchen and bath, handyman services

Average job size 2004: $170,000

Annual volume 2004: $1.6 million

"Cape Cod is a relatively small place and everyone talks to one another, so a reputation for service goes far. Our clients typically fall into two categories: retired couples and summer homeowners. As a result, we do a lot of work for people who are out of town most of the time. They need someone they can trust from hundreds of miles away.

"We've developed a systematic approach to service that we can repeat with every customer. It is based on the belief that you treat clients like family. We work the same way with tradespeople, mainly through an established program that involves a lot of open, honest communication."

Results: "The payoff is that they become part of our sales team and help build our reputation."

What worked: "Customer service begins from the very first contact. We establish schedules and goals, and every one of our clients has a 'private room' on our Web site, complete with project-process photos. That way, they can visually communicate with us and tie into the project at all times.

"At the end of each project, we present the owners with a 'Homeowners' Handbook' that details all the phases of their project through photographs, a list of product selections, model numbers, paint-color choices, and the names and phone numbers for any trades people who have worked with us. We also send them survey letters 90, 180 and 360 days after project completion to remind them of our one-year warranty and urge them to call with any concerns.

"Each week at our production meetings, we identify tradespeople who have gone above and beyond, as well as those who have dropped the ball. We make sure they all know the good and the bad. At the end of each project, we send out 'report cards' to all the tradespeople who worked with us on a project, letting them know how they did on the job. We also send them a blank card, so they can grade us on the project."

MARKET: FORT COLLINS

ABD (Associates in Building & Design, Ltd.) Fort Collins, Colo.

Owners: Bob D. Peterson, CGR, CAPS; Rita L. Peterson, ASID, CAPS

Years in business: 15

Staff model: 15 full-time

Business model: Full-service residential remodeling, interior design, handyman services, custom homes

Average job size 2004: $40,000

Annual volume 2004: $2.7 million

"We feel strongly that people notice who is active in the community. One of our favorite nonprofit organizations is Wingshadow Inc. We donated more than $15,000 — in addition to in-kind interior-design services — for the conversion of a nursing home into Wingshadow's facility. The latter consists of three wings: temporary housing for homeless youth; a high school for the nontraditional student; and a day care for those students with babies, toddlers and preschoolers.

"We also donate design and construction services to various churches, as well as designs and drawings for the local Ramps for Wheelchairs program. ABD designed and built a Children's Dream Playhouse and donated it to the Hearts and Horses organization to be raffled for fund raising. Hearts and Horses aids disabled and disadvantaged children with time on horses for therapy."

Results: "We don't believe we have ever completed a project involving community service that has not resulted in new business. We believe people equate giving to the community to a strong commitment to being here for a long time; stability; and being very trustworthy as owners and as a company."

What worked: "It's not hard to find opportunities, but it's sometimes difficult to find the time, and it does cost money in the form of time and effort up front. We look at it as a form of marketing. The number and quality of our leads have improved over the years, in part because of our community involvement.

"You must enter into it without any preconceived notions that volunteering will automatically grow your business. The true reason for participating is giving. If you believe that, the return will follow because of the sincere giving attitude being expressed to the public."

MARKET: SUBURBAN DC/VIRGINIA

Commonwealth Home Remodelers Inc.

Vienna, Va.

Owners: Kelvin Pierce & Susan Pierce

Years in business: 19

Staff model: 16 full-time, 1 part-time

Business model: Full-service residential remodeling, kitchen and bath, custom homes, handyman services

Average job size 2004: $141,000

Annual volume 2004: $2.9 million

"Because our market is saturated with hundreds, if not thousands, of remodeling companies — ranging from one-truck operators to fully professional firms — we need to brand ourselves as one of the best. The market is full of the typical contractor horror stories, and the discerning client is careful in her selection. We want to work for the type of client that appreciates what we have to offer, such as full-time on-site project management and design by a licensed architect. To deliver on these expectations, we need professional systems and procedures in place and the discipline to follow those procedures. That's the only way to deliver a consistently high level of service."

Results: "The impact is felt in several areas, including rising client satisfaction, as well as increasing employee longevity. The latter stems from our people's recognition of our commitment to the client: They are proud to be part of our organization.

"Another positive impact is our following among subcontractors who want to work for us because the quality of our package and systems makes their jobs easier and more enjoyable. The bottom-line result has been to reduce job slippage to the 1 to 2 percent range, which was a big improvement for us."

What worked: "The best way to get started is to develop checklists and procedures for everything from developing and handing off the design to project management. We place a lot of emphasis on internal communication as well as communication with the client, such as weekly walkthroughs and a very thorough pre-construction conference with the client before construction starts.

"In 2003, we hired a technical writer to document all our systems — sales, design, estimating, production, etc. — to create an official operations manual. We use this manual for training and as a way to set standards of employee accountability. Every time something new comes up or slips through the cracks, we add it to the checklists."

MARKET: PENNSYLVANIA/NEW JERSEY

HomeTech Renovations Inc.

Landsdale, Pa.

Owner: David R. Cerami, CKBR

Years in business: 21

Staff model: 8 full-time, 2 part-time

Business model: Kitchen and bath

Average job size 2004: $12,710

Annual volume 2004: $1.6 million

"No strategic plan is truly excellent. We all hope that we make more good decisions than bad ones to keep our companies moving forward. Excellence is when we achieve our business vision, which in turn should support a happy personal lifestyle. The balance between work, family and volunteerism is ultimately achieved when a great business works."

Results: "We have been highly successful in attracting and retaining employees at all levels. I am proud to say that one of our design consultants has been with us 17 years. Our office staff has been together for six years, and our production employees have an average tenure of seven years. Maintaining a committed staff — along with ongoing education opportunities — is vital to keeping everyone focused on success.

"Our customers appreciate our displayed commitment through our well-trained staff, as well as the satisfaction guarantee of their individual projects. Customers assume they will get what they want when hiring a professional, and we give them even more through our new project referral manuals that are presented at the end of every project.

"We recently purchased two buildings and completely remodeled one of them to be a fully integrated and modern office, showroom, and wood shop, as well as a general warehouse — complete with its own receiving area. Our new facility makes a statement to employees and customers that we are committed to our profession and that we are here to stay for many more years to come."

What worked: "Firms can achieve strategic planning leadership by first making a commitment to their profession by joining NARI, NAHB, NKBA or other professional associations. The next step is to decide what they want the business model to look like. Do they want a small two- or three-man operation, or do they want to grow into something more?"

MARKET: PEORIA

DreamMaker Bath & Kitchen

Peoria, Ill.

Owner: Chuck Gabbert

Years in business: 27

Staff model: 8 full-time, 2 part-time

Business model: Full-service residential and commercial remodeling, kitchen and bath franchise, exterior remodeling

Average job size 2004: $21,000

Annual volume 2004: $1.2 million

"I learn so much about my business and what to do to make it grow by talking to other people in the industry. At DreamMaker, we have a 'next-level visit,' during which owners of various DreamMaker franchises visit a location; review the operations; provide feedback and suggestions; and identify opportunities that when you're in the situation, you may not see. That outside perspective is priceless — it's what you need to grow your business."

Results: "We have better sales, and we've completely streamlined our operations. For example, the outside team helped identify that we weren't making the most of the project manager, so we eliminated the role and made people who worked the job accountable for its delivery. Communication is streamlined, and the employees like that they have more of a say in the project."

What worked: "Even if you're not in a franchise situation, my advice is to learn all you can. Go to trade shows, join your local associations and create a network of advisors. We get so busy doing the job that sometimes we never look at where we're going. You need honest and educated feedback to move you forward.

"Also, educate your employees. We send our people to seminars and expect them to share with others back here. We strive to stay atop the market and up-to-date on all the new styles and ideas, so we can relay them to our customers. It gives us a great edge."

MARKET: BOSTON SUBURBS

Mitchell Construction

Medfield, Mass.

Owner: Thomas Mitchell

Years in business: 18

Staff model: 10 full-time, 1 part-time

Business model: Full-service residential remodeling, custom homes, kitchen and bath, exterior remodeling

Average job size 2004: $200,000

Annual volume 2004: $2.3 million

"Client service isn't something we do; it is who we are. We are real people serving real people with a genuine desire for their satisfaction. People know if you are giving them a sales pitch versus telling them how it is."

Results: "We frequently win jobs just because of our service. People hire who they trust. Our attention to all of our clients' needs — not just construction — builds trust and ensures a predictable outcome. Not only does the business do better when we live within our values, but personally we all feel better and sleep better knowing we are treating our clients with dignity and respect."

What worked: "Some of the things Mitchell Construction does to earn the satisfaction of our clients include:

• providing a well-managed process;
• hosting a Web site with 'My Project,' a password-protected feature that allows clients to manage their projects and communicate with their project team;
• creating an appreciation program to thank our clients and let them know our relationship with them is important.

"We also continue to work on improving the services we provide. For example, in the past year, we hired a full-time interior designer to provide design services to our clients.

"How do we know our clients are satisfied? We ask them frequently in satisfaction surveys. I believe we must get our whole team to buy into our approach: success through customer care. Then, as we hire, we need to hire those whose customer-care values closely align with ours. Finally I believe a strong culture and core values are essential to consistency."

MARKET: SARASOTA

Rampart Homes Inc.

Sarasota, Fla.

Owner: John R. King, CGR

Years in business: 16

Staff model: 6 full-time, 2 part-time

Business model: Full-service residential remodeling, custom homes

Average job size 2004: $228,000

Annual volume 2004: $2.3 million

"The customer has a specific expectation of how the project should turn out, but more than likely he or she does not know the path of progress. The remodeler has an expectation of how the project will unfold, but without constant education of, as well as communication with, the customer, those two sets of expectations may not align.

"If we promise to have a customer's project completed by a specific date, it is up to us to fulfill that obligation. Every market needs professionals doing what they say they can do. Differentiate yourself from the competition: Fulfill your promises."

Results: "By managing the expectations of the customer, our business has nearly tripled over the past three years. We identify new customers through an in-depth referral network of past customers, area business leaders and other builders. We do not advertise at all."

What worked: "Fully educating the customer on the particulars of the project, such as the technical and structural aspects of the construction; communicating regularly about how the job is going; having the customer fully commit to product selections prior to beginning the project; meeting point-of-progress completion dates; and maintaining the financial integrity of the project (staying on budget) — all of these lead to managing the customer's expectations.

"The objective is to work only within the confines of our ability to visit the job sites regularly. This allows for better customer service, more frequent visitations, a more manageable team of trade partners, and quicker response time when challenges arise."

MARKET: SUBURBAN DC/VIRGINIA

Sun Design Remodeling Specialists Inc., Burke, Va.

Owners: Craig Durosko, Bob Gallagher

Years in business: 17

Staff model: 32 full-time

Business model: Full-service residential remodeling, kitchen and bath, exterior remodeling

Average job size 2004: $67,000

Annual volume 2004: $4.2 million

"Performance management is essential, because the clients we serve are very busy. It's important to have a culture where all employees are empowered to make decisions about the projects they're working on. The last thing our clients want to hear is, 'Let me talk to my boss about that, and I'll get back to you.'"

Results: "I have a self-sustained company that doesn't depend on my being involved day in and day out. It's composed of employees who are all focused and driving in the same direction to best serve customers.

"Empowered employees create better experiences with the client. That leads to better work experiences for themselves. We have employees who have been here more than 10 years. [In 2004], we're ahead in sales about 25 percent, and I attribute that to our employees and their client relationships.

"Last year, we used an outside consultant for 'getting all the right people on the bus.' As a result, we hired a director of administration, a director of communications and another top salesperson. Based on those hires, we are in the process of revising our internal procedures and expanding our image. We are also on target for our actually produced, in-house design work, which is the highest gross profit we've ever achieved."

What worked: "I advise people to have a long-term perspective on the business and establish definite goals. It's so easy to be on the job day to day and forget the overall picture. It's important to sit down and create a vision for your company. I knew I wanted a firm with empowered employees. We set that as the overall goal and shaped our performance around achieving it. We're an open-book business. Everyone here knows our goals and what we need to do to achieve them. Knowledgeable, empowered employees represent the best way to build the business."

MARKET: SF BAY

Alward Construction Co. Inc.

Berkeley, Calif.

Owner: Keith R. Alward

Years in business: 25

Staff model: 27 full-time, 4 part-time

Business model: Full-service residential remodeling, custom homes, cabinet shop and custom millwork

Average job size 2004: $75,000

Annual volume 2004: $5.4 million

"Building is about cooperation and forming strong relationships. It's about how we listen to each other, help and teach one another, and recognize the possibilities inherent in another point of view. Employees are the strength of this company. They represent Alward Construction to our clients."

Results: "We have an extremely high satisfaction rate. More than 90 percent of the firm's annual work is the result of customer referrals, architect referrals, or second jobs for existing clients. At any time, at least half of our jobs are with past customers. Over a fifth of our total client population has asked us to do more than one job for them.

"I work with people with whom I have good relationships — employees, clients, vendors and subcontractors. And our profitability allows us to serve the needs of our clients and provide good benefits to employees, while having the reserves necessary for growth. We recently opened an office in Redwood City to provide service to Palo Alto and the surrounding areas."

What worked: "I'm extremely trustful — employees have complete autonomy on their projects. The field team runs all projects, and the home office is strictly a resource to help the field. Managing information and expectations is a lot of what construction is about. Who better to do that than the person in the field?

"We do a lot of different types of jobs, so people can gain a wide education, and all our lead people are encouraged to serve as mentors to others. Find a good seminar, and we'll pay for it. And we encourage our people to attend local seminars on lead detection, waterproofing and other relevant topics. It usually takes about 10 years for someone to move from apprentice to project manager. At that point, they can handle the complex homes we work on, which can range from $500,000 to $1 million."

Strategic Planning

MARKET: SUBURBAN PHILADELPHIA

Creative Contracting Inc.

North Wales, Penn.

Owner: Bob DuBree

Years in business: 17

Staff model: 10 full-time, 1 part-time

Business model: Full-service residential remodeling, kitchen and bath, interior design, exterior remodeling, handyman services

Average job size 2004: $75,000

Annual volume 2004: $2 million

"In 2003, we performed a marketing study and created a branding report to develop a new image, logo and tag line: The Difference is in the Design. And we invested time working on the business through personal development to help build a strong, independent team."

Results: "At the core of Creative Contracting is our commitment to customer satisfaction. Our team of highly skilled craftspeople and superior project managers are ready to ensure the job will be done on time, within budget, and with quality workmanship throughout. We've received many awards doing just that."

What worked: "We created a tactical plan to achieve our brand promise, including developing the vision, setting long-term goals, and developing key strategies that really make a difference in the business. The strategies included focusing on design/build, operational excellence and geographic expansion. We also developed and implemented a new integrated sales, design and estimation process and a new metrics program."