Remodeling business owners discover that casting off their sales manager hat, and bringing in someone for the job, can be a smart way to grow their business. The firms that have dared to put a hired hand in the position have discovered that the rewards can be great. The right manager can help increase revenue — by as much as 20% to 40%, according to Danita Bye, president of consulting firm Sales Growth Specialists, in Medina, Minn. — free up your time, and better match your company’s capabilities to clients’ needs.
The wrong manager, though, can drain your time, diminish profitability, and alienate potential customers and employees.
Finding the right person for the job is especially challenging for upscale remodelers. Job candidates aren’t likely to possess both management and industry experience. And, given the small size of most remodeling companies, you’ll likely have to find someone who can sell as well as manage sales, each of which requires different skills.
Extracting Yourself
Gary Belk, who owns Winans Construction, in Oakland, Calif., didn’t have much of a choice about whether to put a sales manager on the payroll. In August 2007, he bought the 30-year old design/build business from its founders, Nina and Paul Winans, who made running the company look easy.
What was automatic for the Winans, proved arduous to Belk.
“I couldn’t do the work of two, especially of such seasoned pros,” says Belk, who has a real estate background. Leads soon piled up on his desk and calls went unreturned. After just a week, he concluded that turning over the sales management function to someone else would be in the company’s best interests. Belk’s end goal was to sell the business to someone else, and he realized that he’d need to back out of some of the processes to make the business more attractive to a buyer.
Consultants such as Michael Gerber, author of The E-Myth series, have promoted the importance of working on your business rather than in your business if you want to create a valuable asset “that works without you rather than because of you.”
“One way [to do this] is to deploy procedures and systems so anyone could walk in and run the business,” Belk says. The Winans’ documentation of company procedures had helped convince him to buy the business in the first place. Each position had its own manual. Belk carved out duties from Paul Winans’ manual to create a discrete position for someone to oversee sales, marketing, and business development.
A friend of Belk’s recommended Amy Hutton, who was then selling replacement windows and exterior renovations, for the job. She impressed Belk when, during the job interview, she started negotiating for more responsibility. She wanted the designer/sales assistant and the estimator to report to her, so the people backing her up to deliver a project would be her responsibility.
On the job, Hutton exhibited another strength — the insight to recognize what didn’t need changing. “There was a good sales process in place, so we didn’t try to fix things that weren’t broken,” says Hutton, whose title at Winans Construction is director of project development.
She streamlined the lead-qualifying process from three steps to one and she goes on more calls than before. She has also attracted younger working clients by adding the option of holding weekly dial-in conferences rather than in-person meetings.
The number of leads coming in has stayed the same, but the company now converts more of those leads to design consultation agreements. And more than 93% of design agreements now turn into construction contracts. “We’re supposedly in a recession, yet revenue is up about 18% over last year,” Belk says. “At least some of that is due to what our sales manager has brought to the company.”
Handing Over the Reins
Belk had an advantage that many other company owners don’t: He didn’t have to relinquish tasks that he’d been performing for years.
Failure to delegate has sabotaged others who have tried to bring on sales managers but couldn’t give up the role themselves. “Few contractors are prepared to use other people to get results. Not because they can’t find people, but because they are fixated on getting the results themselves,” Gerber writes in The E-Myth Contractor: Why Most Contractors’ Businesses Don’t Work and What to Do About It.
Not Scott Mosby. He operates his design/build company, Mosby Building Arts, in Kirkwood, Mo., on the principle of strength management. He sees his role as identifying what comes easy to people, and then putting them in that position. This allowed him to recognize what was right under his nose: Former production manager Rich Layton started selling to keep his crews busy. He did such a good job that Mosby promoted him to sales manager and installed him in the corner office that was formerly his own.
“If I wasn’t an owner, employees would think I was fired and Rich was hired,” Mosby admits. “My interest in growing the business made me a bad sales manager, but it made me a great president.”
To augment Layton’s natural selling skills, Mosby brought in Joe Zanola, a consultant to the remodeling industry. Layton was a quick study and implemented several changes, including: • Adding an assessment tool to customize the sales approach to different personality types;
• Equipping salespeople with a printer, computer, and estimating program, so that they can present bids on the spot for a one-stop close;
• Instituting a consulting fee for first-time appointments.
Company metrics indicate that the changes are paying off. One-stop closes are up 60% since Layton switched positions in 2007. The rate of appointments that go to contract is up almost 70%. And this year’s revenue is on track to pass $10 million, up from $7.4 million the prior year.
“Rich truly believed that selling $1 million a month in sales could happen. I believed it less,” Mosby says. “If I’m not managing sales as successfully as we need, wouldn’t it be logical to give it to the guy who believes and is willing to make it different?”
Evolution, Not Revolution
Remodelers may hire sales managers for different reasons, but the ones who do so share some common ground: They create the position as part of an overall strategy and they allow time for the new position to produce results.
Jake Schloegel, president of Schloegel Design Remodel, in Kansas City, Mo., backed out of the job of sales manager as part of an overall shift to take more control over the company’s projects and to go after larger jobs. “We were redefining our market and the kind of jobs we did,” Schloegel says. As president and salesperson, he was already wearing too many hats.
A five-year veteran of Schloegel’s sales team, Debby Allmon, approached him. Like a good salesperson, she was motivated and liked to win, but she also possessed some key characteristics of a good manager. “She was organized, and she liked to plan,” Schloegel observes. So he gave her the job.
“We needed someone in charge of Jake,” Allmon says. “It is difficult to hold yourself accountable to your own systems.”
“As a salesman, I report to her,” Schloegel says. “As the CEO, she reports to me in her role as sales manager. This arrangement works because we both have our eyes on the same target.”
Time has also helped. Schloegel and Allmon made the transition so slowly that it was almost imperceptible. At first, they shared duties; then Allmon assumed reporting and recordkeeping tasks; next she took on training and making marketing decisions.
“The remodeling business has a long sales cycle. It can take a year to land projects, so you have to give a sales manager time to grow into the position,” Bye says. “You can’t bring someone in on 90-day probation.”
“It took a while to see changes,” Schloegel says. Since assuming the role in 2000, Allmon has doubled the team to six salespeople, plus two designers, an architect, and a draftsperson.
According to Schloegel, the sales growth has more than doubled: “We’ve gotten more than $2 for every dollar spent on expanding.”
The Right Compensation
Victoria Downing, president of business improvement and peer group organization Remodelers Advantage, cautions owners to spend time crafting the sales manager job description: “Make sure you can spell out their responsibilities and the means they will have to realize them. And develop a compensation program that will reward them for achieving the results you expect.”
Downing cites the example of one company that rewarded its sales manager for volume, but didn’t consider gross profit. He met his volume targets, but with less-profitable jobs.
The remodelers queried for this article all pay their sales managers a base salary plus commission on their own sales and on overall company sales. Allmon receives an 8% commission on the sales price if gross-profit targets are met; Layton gets 6% of the gross margin. Hutton has a more complex formula. Once sales hit a prescribed dollar amount (the break-even point), she gets a stepped commission tied to the gross profit above a certain target — it ranges from 10% of gross profit above the target for annual sales under $3.24 million to 26% of gross profit on sales of $4 million and up.
Base pay should depend on the individual hire, Bye cautions. Some business owners try to motivate managers by promising earnings of $200,000 a year, when the manager might be content with just the $80,000 base. You want to have a good handle on what motivates candidates, Bye points out. You also want someone who is willing to make sacrifices for teamwork and who can hold other people accountable. She recommends asking potential candidates to bring in the tools they used in prior positions to manage salespeople. “You should look closely at their sales processes, the pipeline, and the controls,” she says. “Just their willingness to bring these to an interview can be telling. The amount of work someone will do to get hired can indicate how much work they will do on the job.”
