While it may not be by choice, custom builders are being forced to look for remodeling work. These opportunities generally leverage their basic technical skill sets and knowledge. However, appreciating the differences in business models is critical to success.
In an informal poll of hundreds of custom builders during the 2010 Pro Expo tour, nearly two-thirds are primarily doing remodeling today while referring to themselves as builders. Some look at their remodeling activity as a temporary bridge while others are resolved to keep remodeling as their new business focus. Some were even a little embarrassed to admit that they were doing a high percentage of remodeling. A common denominator among this group, however, was a sense of puzzlement and frustration about how to profitably do remodeling. Most of these custom builders turned remodelers were extremely thirsty for answers.
Remodeling is as different to new construction as fine dining is to fast food. While both of these are businesses focused on eating a meal, the rules of the game are different. In fast food, you expect speed and are frustrated if a Big Mac takes 10 minutes or more. In fine dining, you get annoyed when the waiter rushes you to order or grabs your plate before you are 100-percent finished. While I’m not implying remodeling is like fine dining, I’m saying the rules of the game (or dialect) between home remodeling and new construction are different. Like in sports, you must know the rules not only to play, but also to become masterful and win.
Here are a few differences in the language of remodeling vs. traditional custom home building:
1. Remodeling is sort of like having a suit tailored while the client is still inside it. Like the image implies, the client is an integral part of not only the decision process, but also the construction experiences. Controlling the client and their experience is the difference between success and failure in a remodeling project.
2. You are judged by the client experience more than the sticks and bricks. Over the years I have gotten many raving fan letters from clients that are so happy because our carpenter shoveled the snow so they could get to work or were touched by a worker sharing their lunch with the family dog. Rarely do these letters ever speak to the energy efficiency of the windows or the details of the crown molding. Your team’s top priority in remodeling should be the client experience and not the project. When they arrive each day they should seek out a conversation with the homeowner, and avoid immediately strapping on their tools.
3. Remodeling projects take twice as long and cost twice as much as new construction. When you add in a remodeling client’s daily involvement in the construction process and then layer in the context of working within an existing home, how you build the project differs greatly. Your team members need to be especially house-broken (I am not trying to be disparaging, just using a metaphor that you might happen to understand). Your team members must also see it as a “home” first and a “project site” second.
While there may be a learning curve with this new dialect, you will find remodeling much more stable than new construction. You will see much higher margins. And once you complete project No. 1 for a delighted client, project No. 2 may only be months away.
Mark Richardson is co-chairman of Case Design Remodeling Inc. and the Case Institute of Remodeling. He a member of the NAHB Remodeling Hall of Fame and an Affiliate at Harvard University’s Joint Center for Housing Studies. Richardson is the author of the best-selling book, How Fit is Your Business , and a forthcoming book, Business Themes to Live By, to be published this fall. He can be reached at firstname.lastname@example.org.