Many homeowners who received remodeling bids a year ago are finding that the same project today would cost thousands less.

Take for example Michael Perkocha and Tina Stott from Oakland, who just purchased a bungalow for $630,000. Last year they were getting quotes in the $250,000 range and decided to postpone remodeling because they couldn’t afford it. This January they got quotes ranging from $102,000 to $170,000 and ended up going with a contractor whose bid was $129,000. That’s a $121,000 savings!

Such deep discounts allowed them to upgrade their flooring from laminate to oak and upgrade their countertops from Formica to granite. They’re also able to add crown moldings and energy efficient windows.

Besides saving a huge chunk of money, the work is almost complete at three months, opposed to the six months they had figured on, and they’re under budget. These are huge marketing points for contractors: big savings, ahead of schedule, and under budget.

At the beginning of the year, Jack Schocker decided it was time to remodel his vacation condo in Sarasota Florida. He got estimates for replacing a couple cabinets in the kitchen that were damaged by water from the condo next door. After talking with one of the contractors he realized that for less than $30,000, he could completely redo the kitchen and remodel two bathrooms. He and his wife were going to redo everything anyway in a few years down the road. So, even though they hadn’t planned on a total redo so soon, with prices so low they decided to take advantage of the times and do the big remodel.

The word is getting around and making homeowners think, labor costs are down by 10 to 20 percent, prices for materials like lumber, steel, and copper are down, contractors are readily available, and the job gets done faster…hmm, maybe remodeling now would be a smart investment.

Homeowners who are remodeling this year are able to spend less, get a higher level of quality, and enjoy their new remodel much more quickly, and this is what contractors need to get across to homeowners. If you’re bidding a small job like Jack Schoker’s replacement cabinets in Sarasota, it pays off to mention that you can completely redo their kitchen at XYZ dollars.

Resource:

http://www.nytimes.com/2009/04/23/garden/23renovation.html?pagewanted=3&_r=4&emc=eta1

The concept is simple. Past clients are a familiar resource whom you’ve worked for in the past. Their repeat business or recommendation to a new client has a certain, predisposed measure of validity that is just not possible with strangers. Now, in 2003 when the original survey was taken, times were very different. The housing boom was coming into its own and contractors had more freedom to pick and choose projects.

Those times may have come and gone but the fundamentals of remodeling and lead generation remain, even though it may be contractors calling past clients to check in rather than the other way around. Yet despite the fact that homeowners are in the driver’s seat, you are still more likely to generate quality leads from past clients because both homeowners and contractors tend to trust the word of a friend or known client than a phone book or random ring of the phone.

Another interesting trend that came out of the 2003 survey and remains relevant today is the need for personal interaction. Most contractors surveyed stated that they put “gut reaction” and face-to-face conversation on a higher pedestal than any number on a lead sheet. The lead sheet may itself lead to the interview, but it would always be the interview that took precedent.

Again, now that the tables are turned and it is often the contractor doing the hunting, the same rules apply. Better leads come from past clients and should be prioritized. Homeowners running through the phone book or search engine are essentially window shopping. That is not to say that every lead isn’t important — there is a contractor for every job regardless of lead origin — but the odds are much better when familiarity is involved, not to mention contact onsite.

The point of all this being that keeping in touch with past clients is an excellent idea. The remodeling season is soon forthcoming, the stimulus package is pouring plenty of money into weatherizing and home repair, and every quality lead starts with the mention of your name…now may be a good time to make sure past clients remember it.

The National Association of the Remodeling Industry (NARI) has, as its Core Purpose: “to advance and promote the remodeling industry’s professionalism, product, and vital public purpose.” NARI’s member contractors “have the opportunity to enrich their knowledge with cutting edge educational opportunities and certifications. They have unlimited use of the NARI logo, which is promoted nationwide in a number of consumer media outlets. They are easy for consumers to find on the NARI website, and they have access to leads through the NARI website.” NARI also provides marketing advice, information about building permits, and events focusing on various topics of vital interest to professionals in the remodeling industry.

The National Association of Home Builders (NAHB) considers itself to be “the premier resource for industry information, education, research, and technical expertise.” One of the organization’s primary benefits for members is called Powerful Advocacy, and is described thus: “Currently ranked #11 on Fortune Magazine’s ‘Power 25’ Advocates, NAHB has the grassroots strength of over 235,000 members to defeat excessive regulations and defend affordable housing initiatives on Capitol Hill, in your state, and in the communities where you do business. That puts money and time back in your pocket! Plus, NAHB members are kept informed with prompt regulatory and legislative alerts.” Other benefits include news updates, networking opportunities, and educational programs.

The National Kitchen and Bath Association (NKBA) is dedicated to “enhance member success and excellence, promote professionalism and ethical business practices, and provide leadership and direction for the kitchen and bath industry worldwide.” This organization has over 40,000 members and hosts the world’s largest trade show for the kitchen and bath industries. Focus areas of NKBA include specialty segments for Builders/Remodelers, Cabinet Shops, Dealers, Decorative Plumbing and Hardware, Designer, Distributor, Fabricator, Installer, Manufacturer, Manufacturer’s Representative, and Multi-Branch Retailer/Home Centers.

The American Institute of Architects (AIA) offers government advocacy, awards, conferences, and education. Members will also find examples of contracts for their use, and information on keeping up to date with technology. The AIA features an array of streaming videos and podcasts on design, leadership, and best practices. There is a blog and news feeds for members to subscribe to. As its goal, the AIA claims to serve as “the voice of the architecture profession and the resource for our members in service to society.” It has over 83,000 members and features subgroups devoted to topics including professional knowledge and design, both nationally and internationally.

All of these organizations have local chapters and members are able to benefit from the overarching functions and professional contributions of the associations at the national level while taking advantage of opportunities for local participation and networking. Each trade association’s website is worth exploring, in order to determine which one would best serve you and your company in meeting and expanding your own goals for success.

NARI announced this past week that they are launching a new podcast program called NARI Radio. The site will offer a variety of business topics; everything from green remodeling to business fitness to sales strategies. The podcasts are free to view, and because everyone is busy these days, will only last about 10-12 minutes apiece. NARI is tapping the knowledge of three industry experts, Ron Cowgill, Mike Holmes, and John Gordon to host the programs.

NARI is an invaluable resource for homeowners and contractors alike. It was established 25 years ago and now has 58 chapters nationwide. Its mission “is to advance and promote the remodeling industry’s professionalism, product, and vital public purpose.”

NARI offers certification to show homeowners that your company adheres to their high ethical and professional standards. In addition to receiving a NARI certification, it helps to have the assistance of a referral resource such as CalFinder. These agencies help alleviate many of the fears and misconceptions homeowners have of contractors. You can learn more about becoming a member of NARI on their site. You don’t have to be a member to access their new educational resources. You can access their new radio feature by clicking the NARI Radio tab and then downloading the podcast.

Well, you have two options right now. You can either sit there and wait out the storm and possibly go under as many of your competitors are, or take advantage of a slower time to revamp your business.

I spoke with a few construction companies recently. Operating in California, they are struggling with the new laws that require all plans to be inspected by an architect. One family company decided to send one of the younger brothers to college to become an architect. Another company is using this time to branch out and to explore new avenues. They invested in heavy equipment and training for some crew members so that they can now offer excavation services. One older construction owner made the decision to take this opportunity to scale back his operation and pursue a lifelong dream to build custom furniture and cabinetry. He enrolled in the appropriate classes to learn the trade, and is now happily remodeling his shop to accommodate his new direction.

The point is, don’t just sit there. Use this slower pace to do the things that you’ve been too busy to address in years past. As a friend who was dying from cancer said of his enthusiastic outlook, “surround yourself with those you love and always have something to look forward to.” This economic storm will end, and a bright future will emerge. Those who will survive and prosper will be the companies that take the appropriate action now.

The key is to keep realistic expectations and stay on budget. This way, even if you open a second business in a location that’s hard hit, you can look ahead toward promising future prospects. Think about it. If you can succeed in these conditions, you’ll be in a great position once business picks up.

There are several reasons why starting up in a struggling economy is easier than doing so when the economy is booming. Here’s food for thought.

It’s a Good Time to Build Relationships

High-quality trade contractors are looking for work. You can build relationships now with the best and the brightest, who might have been harder to find before. In fact, having quality employees throughout your business structure is critical to both your second business succeeding and your first remaining secure. A good question to ask is whether you have enough trained, qualified employees to keep both businesses running. After all, you can’t be in both places at once.

One way to staff the new business is to hire from within. This will guarantee that your employees stay within your company’s framework. Acquiring an existing company is another option, and you’ll likely have the option of hiring previous employees to come on board. Some owners would rather buy an existing business because it comes with the benefits of an existing clientele and showroom.

You’ve Maximized Growth Possibilities at Your First Location

If a company wants to grow, expansion is sometimes necessary. Now that your company is meeting goals in one market, it can expand by supplying goods or services to another.

Perhaps you want your first business to work across a larger geographical region. One obstacle to succeeding across a long reach is that people like doing business with local companies. A new business will help you meet that demand.

Before you Pack, Do Your Research

As you look into potential areas for expansion, don’t forget to do your homework. Does demand exist for what you do, and at the price you want? Look into real estate values in the area, the age of homes, and the type of construction that thrives there. For instance, a high-end construction company may look to move in an area where homes are priced in the $1 million range. Also, how much does your competition charge in this market? Will you be competitive? All of these factors will play a large role in a successful expansion. Money is obviously the common denominator, so make sure you have enough. Your second business should have the capacity to run on its own, without relying on the first location to pay for it.