For every myth that homeowners hold about remodelers, remodelers hold one or two about themselves. Here’s the truth behind three big ones.
True Value
The first major myth comes straight out of the motivational books: If you do good work, do what you love, and/or even think the right thoughts, the money will come.
Certainly, doing good work is a given for success in this industry. But you and I know that the client would rather pay $35,000 (or $25,000, or $10,000) than $50,000 for that well-crafted project. Don’t expect the client to be educated on the true value of your work. You have to be in charge of what you get paid.
Don’t get me wrong: I am a firm believer in loving what you do. However, that goal can be a trap. It can make you fear that if you charge what you should charge, you won’t be able to do what you love. Have you ever been tempted to lower your price in order to get an exciting project? Or maybe you’ve rationalized that it won’t make you much money, but it will give you great marketing fodder?
My advice: Be in business to make money while doing good work, and love at least 75% of what you do. Don’t put the cart before the horse — or expect that if you have a cart, a horse will appear.
Real Costs
The next myth is one that I have heard from my first moment working with remodelers, back in 1982. It is a scornful response to pleas, from myself and the great Walt Stoeppelwerth, to sell remodeling projects at a professional level markup — that is, a 50% to 67% markup, leading to a 33% to 40% gross profit. Over and over, Walt and I heard, “You can’t charge those crazy markups! Maybe they’ll work in someone else’s market, but not in mine!”
What’s the solution? Create an annual budget. Look at the real costs of running your business, add in a reasonable salary for yourself and a net profit, see what it costs you, and mark up your prices accordingly. I can almost guarantee that the numbers you get will be in line with the level we started teaching in the 1980s.
Talent Scouts
The third widespread myth is about your staff. Most remodelers hold the erroneous and harmful notion that your employees can be trained to become precisely what you want them to be. They are clay that you can knead and massage, or stem cells that you can grow into many types of cells.
For instance, Joe the estimator is a pretty good guy. Everyone likes him. Let’s turn him into our production manager.
Do you have a production manager job description? Have you spent some time considering what that position requires in terms of talent, temperament, and people skills? Have you scoured your market for a star?
And Mary, well, she’s been a great all-around receptionist office assistant, and now you need a bookkeeper, so there you go again.
Well, folks, people are not clay or stem cells. Everyone has unique talents, skills, and baggage. Jim Collins, author of Good to Great and Built to Last, talks of having the right people in the right seats on your bus. That bus is your business.
When you have a job opening, don’t necessarily try to invent the candidate using the folks you already have on board. Be like a professional scout; strive to find the very best talent that your team can afford for that key position.
There are many paths, but no shortcuts, to making money in this business. Articulate and believe in the value you bring to your clients. Build an incredible team. Then get behind the wheel of that bus and head for success.
