Table of Contents June 2008

VIEW POINT

FIRST WORD

• Judy, Judy, Judy

  Every magazine has a masthead. The term originally referred to a brass plate nailed to the mast of a ship that named its sponsors, and in a magazine it retains that sense of ownership by listing the names and titles of all of the individuals involved in producing each issue.

   

IN PERSON

• 

  Now More Than Ever

  This September, the Remodeling Show marks its 18th year with a return to the Baltimore Convention Center, located in the heart of the city's Inner Harbor district. The Show, owned and operated by our publisher, Hanley Wood, LLC, will welcome more than 10,000 home improvement professionals from across the country.

   

News + Notes

• Lead Paint Rule Effective In 2010

  On March 31, after years of research, proposals, debate, and revisions, the Environmental Protection Agency (EPA) issued its final rule on lead-safe work practices. The rule fulfills the EPA's obligation — laid out in the Residential Lead-Based Paint Hazard Reduction Act of 1992 — to “establish standards for performing lead-based paint activities that are reliable, effective, and safe.”

   

MARKET WATCH

• Local Forecast: Riding the Waves of Change

  When the housing industry began its slowdown, David Leff says that his remodeling business started attracting an “unexpected” client: “Homeowners who had planned to sell their [current] homes and purchase a home in which to live out the rest of their lives.” But, says the owner of Leff Construction, in Sebastopol, Calif., when the market tanked, “they were unable to sell and instead decided to stay and remodel.”

   
• 

  No Bad News Is Good News

  The latest release of the Remodeling Market Index (RMI) showed a slight increase in activity, but it likely isn't indicative of an imminent housing market recovery.

   

COMMENTARY

LINDA CASE

• Networked to the Nth

  Most remodelers are finding fewer and less urgent buyers, and smaller jobs. You can't begin to sell without a lead, and leads, too, are more rare and less qualified.

   

MARK RICHARDSON

• Do it Differently

  By now, most of you recognize that the residential remodeling market is not what is was a few years ago. I also think you know why. The more important issue is what you are doing about it.

   

SHAWN MCCADDEN

• The Two-Inch Heart Attack

  Working with a remodeler client recently, I thought his business looked pretty good until we got to the financials. QuickBooks reports revealed that he had lost more than $60,000 the previous year. He was stunned. Worse, he had already sold a significant amount of work for the current year using the old pricing strategy.

   

GUEST COLUMNIST

• Just Say No

  It can be the toughest choice to make in an overcast remodeling climate: when to say no to a project. Like many of our peers, we have seen a slight dip in sales due to the stagnant housing market, fluctuating interest rates, and a general “tightening of financial belts” by our clients. The six-month backlog of work we once took for granted is now more like six weeks. Fortunately, we've been able to keep our heads above water and keep our valuable staff. But we don't walk with the swagger that we once did — we can no longer turn our backs on the smaller or less-desirable projects.

   

YOUR BUSINESS

Ways + Means

• All Hands on Deck

  There are two major benefits to having employees deeply involved in company operations: They have fresh ideas that have been developed from their own experiences and this involvement can breed a sense of ownership and loyalty.

   

• By Law: Chattering Classes

  We often receive complaints from clients about negative Internet chat room comments that are false or misleading being posted by disgruntled consumers or ex-employees.

   
• 

  Time to Incorporate

  Ask a business owner why he or she restructured their business from a sole proprietorship to some other entity — C-corp, S-corp, LLC, ESOP — and the first answer is always: liability. In a sole proprietorship (even a partnership) you, the owner(s), are the business. If, for example, you shortcut building practices or use unlicensed trade partners and something goes wrong, it is you and your personal assets that the insurance companies will go after.

   

BOTTOM LINE

• Price Binder

  A common practice at Dream-Maker Bath & Kitchen franchises is to post pricing on three bath displays to show the elements of a basic, a midrange, and a high-end bath remodel.

   

• Five to Four

  When business slows and you need to cut expenses, one option is to reduce staffing hours. Instead of doing this by laying off employees, consider instituting a four-day workweek with standard eight-hour days. Reducing wages and FICA by 20% can be just the medicine to help get your company through tough times.

   

Sales & Marketing

• Peeves Don't Do This

  The competitive market underscores the importance of avoiding behaviors that frustrate homeowners.

   

• Rebound King

  Dramatic rebounds come rarely to remodelers these days, but a happy exception is the case of Mills Builders, of Sacramento, Calif. The eight-year-old design/build firm's new campaign of homeowner seminars has proven “wildly successful,” says Jonathan Mills, president. “We would be in dire trouble had we not begun this program late last summer.”

   

• Selling Surveys

  For high response rates on client surveys — and positive survey comments that can become glowing marketing testimonials — inform clients early on that they will be surveyed and that their response is important to you. Invite them to contact you any time with suggestions for improvement because you want their experience to be good. Remind them of the survey's value when you send it, and make it easy for them to complete and return it.

   

FIELD NOTES

• Special Orders

  If not managed well, special orders can be a production challenge and a timing disaster. Here's how to make them work for the company and the client alike.

   

• Brutally Honest Job Costing

  The price of just about everything is going up, from building materials to gas and food. But many remodelers' revenues are going down as jobs become scarcer and smaller.

   

• Tools' Final Rotation

  New and used tools and other construction materials are doing a brisk business on the online auction block, as struggling contractors — and others, including manufacturers and dealers — tap sites such as eBay and Ritchie Bros. Auctioneers to monetize little-used inventory.

   

BY DESIGN

• 

  Sketchpad: Landscape Values

  Few home remodeling projects would fail to be improved by better landscaping. This is an underappreciated aspect of construction that can quickly turn a good project into a great impression. The job really isn't done until that mess in the yard is cleaned up and the builder and the owner both look good.

   

Tech@Work

• Mobile Must-haves

  Armed with a cell phone and a good laptop or Tablet PC, remodelers can slash overhead and respond to clients more quickly than ever before. But what's the best mobile computer for a remodeler? Here are a few things to look for:

   
• 

  Tool Tracking

  It's no secret that for some remodelers, jobsite theft is a very real concern. Now, thanks to a partnership between DeWalt and Ford Motor Co., there's a way for remodelers to fight back.

   

GOOD FORM

• Focusing In

  Describing the impetus for her company's Pipeline Report, Debra Moore, owner of Custom Design/Build, in Ann Arbor, Mich., says, “What I wanted was something that provided a quick snapshot of our cash flow and upcoming jobs.”

   

FEATURES

• 

  Keep Up With the Joneses

  How to combat consumer complaints such as "He disappeared after I paid the bill."

   
• 

  Parallel Lives

  Remodelers, it turns out, haven't cornered the market on small-business stories characterized by humble beginnings, difficult odds, and the ultimately irresistible call to entrepreneurship. Here's a look at a few entrepreneurs who have suffered the ups and down and had to change their business to survive the forces of the market. Their experiences might jibe with yours, and their insights, we hope, will inspire new thinking that helps to sustain your company as well.

   

Reader Panel

• 

  It's Not Easy...

  These days, the remodeling industry is abuzz with talk of the "green" revolution.

   

SPECIAL SECTION

Outdoor Living

• 

  Synthetic Decking

  A lot has happened since four enterprising Mobil executives found a way to meld recycled grocery bags and wood flour to create the first wood-plastic composite decking. The development of what became Trex in 1996 marked the beginning of an industry that's giving wood decking a run for its money.

   
• 

  Playing With Fire

  While statistics from the Hearth, Patio and Barbecue Association show that gas grill owners outnumber charcoal grill owners almost 2 to 1, the debate over gas vs. charcoal grilling surely won't be resolved any time soon. In fact, as consumers continue to expand their outdoor living spaces, the quest for the ultimate outdoor kitchen is escalating.

   

BIG50

SOLUTIONS

• Web Extended Q+A: Deconstruction

  According to the National Association of Home Builders Research Center, residential demolition and remodeling account for over 50 million tons of debris going to landfills every year.

   

KITCHEN + BATH

Management

• Bath Trends Survey

  A recent survey conducted by Reliable Remodeler, a home improvement contractor matching service in Portland, Ore., found that homeowners are interested in remodeling their existing bathroom spaces, choosing to change and replace major features instead of adding a new bathroom.

   

• Driving Factors

  The 2008 Kitchen/Bath Industry Outlook (K/BIO), published by the National Kitchen & Bath Association, in Hackettstown, N.J., has identified 10 factors that will continue to drive K&B remodeling throughout the country this year and beyond.

   

SPEC BOOK

• Appliances

  Products from Sharp, Electrolux, GE, and Jenn-Air.

   

SUSTAINABILITY

• 

  High-Efficiency Toilets

  According to the Environmental Protection Agency's WaterSense program, each U.S. household could lower its annual water and sewer bill by as much as $170 by installing a high-efficiency toilet. Visit www.epa.gov/watersense for a list of WaterSense-approved toilets, or try other low-flow models listed here.

   

• Rebate Alert

  Crimson Design & Construction's monthly electronic newsletter is created by a consultant who last year included a story alerting homeowners to federal tax credits for energy-efficient home improvements.

   
• 

  Clean Sweep

  To break Thompson Remodeling employees of the habit of hoarding unused products, Ben Thompson decided to shrink the storage area in the Grand Rapids, Mich., firm's 24-by-30-foot garage warehouse. “Warehouse space is a bad habit. It allows you to hold on to inventory and accumulate clutter,” he says.

   

PRODUCTS

TRENDS

• Germ Warfare

  In addition to using antimicrobial-treated products, Sloan Valve Co. suggests that good design and use of products such as sensor-operated faucets helps reduce the number of touchpoints in areas where people can pick up germs.

   

• Microbe Massacre

  From flu pandemics to staph outbreaks to debates over antibacterial soaps, germs are making headlines. Years ago, far ahead of these recent news items, manufacturers noticed increased interest in antimicrobial building products.

   

IN FOCUS

• Skylights

   

• Room Enclosures

   

• Siding

  Among the “straight and narrow” of siding products, installers can actually find a wide range of materials to choose from. Products offering the look and feel of cedar remain popular, but detailed shake and board profiles and colors widen the scope of the siding. Materials themselves are changing too, and manufacturers are touting durability, workability, and energy efficiency, from resin-based materials to fiber-cement.

   

FIRST LOOK

• First Look

   

LAST WORD

Benchmark

• Tracking Job Costs

  Job costs — all of the expenses for materials, subcontractors, and labor — are the primary components of gross profit.