In a phone conversation not long ago, I asked the remodeler I was talking to how business was going. He said nothing spectacular was on the horizon, but that he'd just signed a couple of small jobs. I pressed for details, and he told me both were kitchen remodels in the $90,000 range. I didn't say so at the time, but my first thought was that something is out of whack when a job that costs about half the median price of a home in most major cities is characterized as "small."
Call me old fashioned, but I still think it's possible to make money doing the kinds of small jobs that got a lot of us started in this business. So does Ron Cowgill, owner of Damp;R Services Unlimited in Glenview, Ill. Forty percent of his annual $1.3 million volume comes from small projects, and he takes on as many as he can. A good portion of this work is under $1,000, but for Cowgill, anything that doesn't include design is classified as a small job.
"Small jobs lead to big jobs," says Cowgill. "We don't really do any marketing. The little jobs feed the big jobs, and the big ones feed the little ones."
Small jobs aren't a loss leader. Cowgill earns a hefty 50% margin on any project under $3,000 but works with a minimum charge of just $75.
Cowgill avoids time and material work and, after finding that carpenters tended to underprice and underbill for small jobs, he hired a dedicated salesperson who visits the site and prepares a quote. This is partly because Illinois law requires a written proposal for anything over $1,000, but Cowgill has a better reason: "Clients are more accepting of fixed price," he says, "whereas the high hourly rate meets resistance." Plus, the written proposal also ensures his crews have everything they need when they arrive at the jobsite.
Cycle time is critical. It usually takes Cowgill less than a week to get a price to a customer, and when he's caught up he can begin the work within a few days of signing. In busy times, start time may extend to two weeks.
Cowgill rarely collects payment on the spot, preferring to send a statement. "I like to make sure someone in the office is checking all invoices, so we don't miss anything," he explains. Because many customers add more work once his crew arrives, sending a bill also ensures that all change orders are included. Most of Cowgill's customers pay within 15 days.
Cowgill takes pride in taking on just about anything a homeowner asks his company to do. And if he can't do it, he recommends one of his subs. "We have people calling us to cut their grass," says Cowgill. "We don't do that. But they're calling us."
Experts' Corner
"Small is in the eye of the beholder. If a company's average meat-and-potatoes job is $30,000, then a small job might be $5,000. But if the average job is $70,000, a small job might be $10,000. ... We tell our clients to segment by job size. If a company is overworked, we look at how many small jobs they're doing. Because small jobs take more time to sell and manage, they can be problematic if there are lots of them." --Linda Case, Remodelers Advantage
"No job is too small, but you have to charge the proper overhead. For jobs under $5,000, we recommend you double your margin; under $1,000, triple it. You also have to be set up to do small jobs. It's important to treat it as a regular job instead of using it to fill free time. Lots of remodelers lose money on small jobs because they're running back and forth. But small jobs can really improve cash flow because the customer pays up front. And you have no competition." --Les Cunningham, Business Networks
