There have been many silver linings for the residential construction industry throughout the pandemic. Families relegated to their houses were driven to reconsider the value these shelters bring to daily life. These same families also identified areas where they needed to improve their living situations. Low interest rates have led to accessible financing, and families moving for more space and land have increased comparative property values throughout many suburbs.
All of this good stuff is manna for today’s remodeling industry. But just one year ago we were in crisis mode. At that time, few prospects were willing to plop down a big deposit on an addition project, not knowing if they were going to have a job the following month, or even week. The wise remodeling companies, though, after managing the day-to-day uncertainty as best they could knew they would be in the forefront of every homeowner’s mind who yearned to improve the spaces they were confined to. We work in the space of a basic human need… shelter, and there will always be value in the work we do. Indeed, as the year has played out, most remodelers are now facing a surge of leads, as demand for our essential services is, perhaps, as high as it’s ever been.
However, today we are facing a completely different crisis: We don’t lack for sales (quite the opposite), but instead face a production crisis of increasing lead times, and rising material prices. For companies whose primary service is providing the labor to put these materials in place this is a significant challenge. But for those companies who consider themselves experts in the field of planning and organizing a project, there is a huge opportunity.
Most remodelers, present company included, have struggled at some point with building a solid construction backlog. With your company running on construction work-in-place, you are at the mercy of factors outside of your control now more than ever. So, now is an opportunity to focus on the value you provide that you can control. This is selling your value as an expert advisor in the field of home improvement and charging real money for it.
We are residential construction industry professionals and not commodity traders. Prices are going up and lead-times are extending; this will eventually balance out, but right now is the perfect time to offer valuable services for clients to begin planning their project. This can be through architectural and interior design, financial offerings, budgeting, pre-construction planning, or any other item that is critical before starting construction on every project.
Leveraging this value is most obvious for design-build companies. There is always a clear front-end design and planning phase, but make sure you are charging enough to be profitable, this should be equal to, if not more profitable than you require on the construction end. If you are one of those companies that uses design as a loss-leader or a credit line item in construction, stop. Sell this as the valuable service that it is, make it profitable, and put a backlog of projects on the shelf, ready to build according to the schedule that works for your company to be healthy, and for your clients to be satisfied.Read More