2010 Professional Remodeler Market Leaders

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While 2008 was a tough year, 2009 proved to evenworse for the top companies in the industry as the 2010 Professional Remodeler Market Leaders list shows continued pain for the country’s largest remodelers.
The annual Market Leaders list, which identifies the largest remodelers in 20 top remodeling markets, was compiled through a combination of research by Professional Remodeler staff and information provided by the listed companies.

Click here to download the full list

No matter how you measure it, 2009 was a rough year
The median volume for the companies on this year’s list was just over $4.2 million – a drop of more than 25 percent from last year’s $5.7 million and a decline of nearly 40 percent from the 2007 peak of $6.7 million. The average job size plunged to $23,811 – barely a third of last year’s $67,559. While a handful of companies saw increased business in 2009, many remodelers on the list experienced drops in business of 20, 30 or even more than 40 percent.
One of those few companies to increase business (albeit slightly) was SilverLining Interiors, the No. 1 company in the New York market. The Manhattan company had installed revenue of $42.2 million, up from $41.8 million in 2008. Company President Joshua Wiener says he is projecting about a 10 percent decline for this year.
The challenge in this market has been protecting margins in the face of low-bid competition, even with the upper-income clients for which SilverLining typically works.
“What I experienced was, even with clients that were doing quite well, they were still feeling like they had the upper hand in negotiations,” Wiener says. “They knew we were hungry and they were pushing our percentages down.”
Galaxie Construction (No. 5 in Chicago) also generated increased revenues in 2009 and 2010, but it came at the cost of gross profits for the Lincolnwood, Ill.-based full service remodeler. Galaxie grew from $8 million in 2008 to $8.4 million in 2009 and is projecting $13.3 million this year.
“People are very price conscious, and we’ve had to make cuts,” says Galaxie President Bruce Pinsler. “We’ve seen a drop of a couple percent in our gross profit. Coming into 2011 that will be our biggest challenge – to get salesmen to fight for that 2 percent that we’ve lost.”
SilverLining has trimmed about 5 percent off of its fees since the beginning of 2008 – about 1 percent at a time, but only on the largest jobs in order to maintain profits.
“My goal was to take smaller fees on the larger projects, whereas on the small jobs I chose to keep them consistent, and if I didn’t get them, I didn’t get them,” Wiener says. “I avoided that pitfall of falling into a lot of smaller jobs.”
On the other hand, Landis Construction in Washington, D.C., (No. 3 in the market) has embraced small projects with a separate division. The division has generated $400,000 in business in the last year.
“It’s one of the few things that’s been moderately successful,” says principal Chris Landis. “These people will potentially be customers down the road for larger projects.”
The division tackles projects anywhere from a few hundred dollars to $25,000. The smaller projects do present challenges in tracking the smaller projects and making sure they are priced correctly, Landis says. Overall, the company has seen average project size drop to about $150,000 from more than $200,000 a few years ago.
“A lot of people, it’s all about price,” Landis says. “A few years ago, if somebody came to you with a $100,000 budget, it was pretty easy to go to $125,000. Now that’s usually a line in the sand you can’t cross.”
One company that was well positioned to take advantage of that shift to smaller projects is Gardena, Calif.-based One Week Bath, No. 3 in the Los Angeles market. Matt Plaskoff, the CEO and founder of the 10-year-old One Week Bath, also has run Plaskoff Construction, a high-end custom remodeler and builder for 22 years.
“People are not as keen on investing huge sums of money on their residences that they’re not going to get back,” he says. “They want to do things that are going to return on their investment.”
While the average job size is down sharply in the high-end business, One Week Bath has actually experienced an increase in job size this year, as those clients that would have opted for a custom bathroom in the past are instead choosing to go with a smaller project.
“Those people that were spending $60,000 to redo their master bathroom or $30,000 to redo their guest bath are stepping down a notch,” Plaskoff says. “They’re still doing their bathroom, but are being a little more frugal.”
Wiener found that new frugality was hurting SilverLining’s sales with many clients, who were turned off by some of his more lavish projects. After he presented his work, the clients would opt for another remodeler, thinking their projects were just too small. He’s now carefully targeting the electronic portfolio he presents to potential clients.
“People get turned off in this marketplace by the fact that we’ve done massive projects,” he says. “Our experience and knowledge don’t actually operate as a positive. I’m proud of the work we’ve done, so that was a big shift for me.”

Marketing for growth
It’s counterintuitive, but too many companies in every industry see marketing as the first thing to cut when sales drop. This year’s Market Leaders, though, continue to invest. The average Market Leader spent 4 percent of their budget on marketing in 2009, about four times the industry average, according to our annual Business Results Study.
Pinsler credits Galaxie’s growth in revenues to a major investment in marketing beginning in 2009. The company’s $13.3 million projected installed volume for this year would be an increase of more than 60 percent since 2008. The company shifted from telemarketing to traditional marketing three years ago.
“When the economy started tanking, instead of pulling off the pedal, I kept at it,” he says. “Most of my competitors went into hibernation, so I gained huge market share over the last two years.”
Galaxie – which offers everything from window replacement to additions – advertises almost daily in the three major Chicago-area newspapers, and last fall started a large television campaign on several local stations. The company has also partnered with the Stanley Cup champion Chicago Blackhawks to brand itself as the hockey team’s “Official Remodeler.”
It’s a significant investment – the company spends 20 percent of its budget on marketing – but leads have tripled this year, Pinsler says.
“The biggest difference with our lead generation is that when we were telemarketing we were lucky to sit 40 percent of our leads,” he says. “Right now we’re sitting 90 percent of our leads.”
The key to a successful program is patience, Pinsler says, pointing out that although he started his increased program last year it didn’t really pay off until this year.
SilverLining has also made a big investment in marketing by hiring someone to focus on marketing and business development for the first time in the company’s 23 years. In the past Wiener had handled all the sales and admittedly limited marketing himself.
“I felt that we needed to be touching more sources of work more often,” he says. “It’s a competitive market place and we needed to increase our outreach.”
The company is using traditional methods like postcards and newsletters, but is also reaching out to designers and other professionals through a series of educational seminars hosted at its office. Topics include technology, green remodeling and color trends, put on by some of SilverLining’s trade contractors and vendors.
“They have time, they’re slow, we’re slow, so why don’t we learn something?” Wiener says.
SilverLining has also expanded its service department, using that as an opportunity to reach out to past clients.
“We’re going back and doing some stuff gratis,” Wiener says. “It keeps craftsmen busy and generated more work because we were back in their lives.”
That’s part of an increased focus on marketing quality that Wiener hopes will help overcome the low-price competitors out there, as well as clients’ unrealistic expectations.
“If their portfolio loses 40 percent, they hope everything else is 40 percent less,” he says. “Well, labor and materials don’t come down by 40 percent. If the client really believes they can get that, they end up getting craftsmen who have no real experience and are just desperate to be working.”
The company also emphasizes its quality by touring older projects with clients.
“I ask them, ‘Are my competitors willing to tour things that are five or six years old to see how they’ve held up?’” Wiener says. “It’s another way to emphasize how well we serve our clients.”

Click here to download the full list

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