Adapting to the New Economy
By David Lupberger – RemodelForce.com
The economy has shifted. We can only guess if and when it will return to its former robust self. Most remodelers with project-driven business models are struggling because homes are not going up in value and the real estate market is stagnant. With stagnant home values, homeowners are much more cautious. Simply, they are not calling about projects they had once planned to do.
In the last 4 years, we have gone from a marketplace where there was more demand than supply (sales came easily), to an economy where there is more supply than demand. Remodeling contractors are competing with home builders who now call themselves Remodelers, along with desperate contractors willing to work for wages just to pay their bills.
It’s a tough market, and complaining about it doesn’t accomplish much. Complaining about this marketplace is like complaining that you are over-weight, but not exercising more and eating less. This is the present marketplace. It is what it is. What’s the answer? When there is a dramatic shift in the market like this, you must amend and add to your business model.
Mark Richardson and the Case Institute of Remodeling have created an online program entitled “Positioning for the Future”. In the 9-part video series, he makes the case that you must take an offensive stance in guiding your company in these uncertain times. Here are 3 key points:
- You must control your destiny and not let the environment control you
- You must embrace change as part of your business culture
- You must position your product offering(s) to meet diverse economic conditions
We all know the construction industry has changed dramatically. Proactive remodeling contractors are responding. They are finding new ways to grow their businesses by offering services that homeowners need and want. Consider the following:
- Homeowners still own their homes
- All of these homes have ongoing service and repair issues
- If homeowners plan to stay in their homes for the next five to 10 years, what improvements make financial sense?
- Can you help them with that assessment?
What can you do? Adopt a proactive customer management strategy and help them manage their largest asset. Change your business model from a project-driven model to a relationship-driven service model. Work with homeowners to jointly develop a three to five year plan for their homes, and provide your clients with an annual home check-up. Start with a whole-house inventory, highlighting any needed service, repair, or replacement items. Expand your company offerings, and provide a continuum of additional home-related services. Create cooperative relationships with your trade contractors, and build your network to assist homeowners with finding the professional help they for any every home-related concern. By initiating calls with past customers, move clients from a reactive business relationship (they call, we come) into a proactive plan (we call, we come) that identifies work as far out as five years. Create an ongoing, collaborative dialogue with your client
Just Come Do It Clients
You may have several past clients now who call you for any home-related concern they have. This relationship is so strong that “just come do it” clients don’t worry about pricing. Build a stable of “just come and do it” clients and permeate that “just come do it” mentality into a much larger portion of your client base. This is the business model for the new economy. Stop looking for your next project. Proactively manage your client relationships, and the business will follow.
There are many tools available to assist you with this shift. If you want to view the 9-part mini-series of Positioning for the Future.
If you would like to receive a sample home inventory form and understand more about the annual home check-up, contact me at firstname.lastname@example.org, and I will send the sample home inventory to you at no cost. To better assist you with estimating a wider variety of projects, consider a professional estimating program database containing over 15,000 total items. Hometech Publishing will give QR readers a 14-day ‘free-look” at their HomeTech Advantage Estimating Software. To find out more, go to HometechPublishing.com.
It’s a tough market, but there is opportunity. Respond to the challenge. Adapt to this new economy. The customers are waiting.
Please email me with your impressions.