How and why to grow your small remodeling business;

Jun 9, 2022

One of the most difficult things to contend with in the running a small remodeling business is growth; and growth in imperative – or inevitable – if you’re going to survive as a business. The quote, “if you’re not growing your dying” is very fitting in the world of a small remodeler. There’s always a reason for revenue to drop; customers leave, market shifts, product availability, economic downturns, injury; all can easily happen and are mostly out of your control. It’s always best to have a focus on growth. Even 5 or 10 percent will keep you moving in the right direction and keep you from the pitfalls associated with remaining in the status quo.

Most small remodelers look at the calendar and realize, “if I don’t get a couple more jobs sold now, the materials aren’t going to get here in time and I’ll have a gap in my schedule”. That’s usually when the panic hits, you reluctantly have to get off the jobsite, and go make something happen… (which causes a gap in your schedule).

Here’s usually what happens;

You’ve worked hard for months, (remodeling is hard work). You’re behind on your quotes. You need to do some drawings for the next permit. You have four people to go see that actually want your services. You’re too tired to do any-of-the-above. You plan on taking a few days after you complete the next job and get caught up. You’re at a stage in your business where one of your guys is very good, but you can’t comfortably leave him on the jobsite alone for any extended period of time. So, you set up your two carpenters to take a few days and sort lumber, clean tools, and other busy work because you don’t want them to lose out on their full pay. Then, you typically end up losing about a week of productivity. This is just something you have to do every few months to keep things moving forward with your business.

Analysis of the financial impact of the above paragraph to a small remodeling company;

Yearly revenue of the business is $500,000.

Carpenters make $22 and $32 per hour.

Weekly payroll is $2160.

The company generates $10,416 per week in revenue.

Average profit margin on projects is 33%.

Weekly gross profit of your business is $3438.

Approximate lost profits resulting from four “gaps” per year – $13,750

Approximate direct labor cost of four “gaps” per year – $8640.

Total direct loss from four “gaps” per year – $22,390

Growth to the degree that will allow properly trained employees that can operate independently and with little supervision is absolutely imperative for a small remodeling company. Every profit/loss analysis must be viewed from the perspective of; labor hours on the jobsite. This is your only source of revenue, and your only benchmark for reviewing potential profitability. Keeping workers on the jobsite and efficient – day-in, day-out, and year-round – equals profitability.

Read More

The “Sales” process

The “Sales” process

The title; "Salesman" can have some oblique negative connotations. We all think of that...

Kitchens →

Bathrooms →

Home Remodeling →

Age Friendly →