What’s Your Remodel Contractor’s Business Model?
When you begin to seriously consider a remodel on your home, you might be tempted to pick up the phone and start calling contractors. As I’ve already written about, this is a bad idea. Instead, you’ll first want to think about what TYPE of remodeler will best suit your needs.
Ah, didn’t know we come in different flavors, did you? Well, we do. Think about this portion of the process like another major purchase – buying a car. Are you looking for performance, comfort or safety? Sleek and modern or throwback and nostalgic? Do you want speed or 50 mpg?
Generally, you will find three fairly distinctive levels of renovator, and each of these levels has its pros and cons. It’s easiest to picture the contractor hierarchy as a pyramid.
The Base of the Pyramid
This is Where most contractors start out (and many never leave), you have the guys that I refer to with great affection as “Joe Contractor”. These contractors, usually running their businesses from their truck, can range from very capable contractors running small one or two-man operations to the … let’s say, shadier side of the remodeling industry. It’s not such a bad place to be. These guys have few, if any, employees; low, if any, overhead; a small, tight circle of contacts and influence; contracts written on the back of a napkin; and a comfort zone about a mile wide. Joe Contractor doesn’t have a lot of risks but also doesn’t have a lot of opportunities to grow or provide a higher level of service either. Many consider these guys the gypsies of the remodeling industry – have truck, will travel.
Joe Contractor, because of his smaller operation can provide, if he chooses, a very personal and personable service. There’s not a lot of red tape in making decisions, and changes can be implemented quickly and seamlessly when needed, resulting in lower overall costs of the remodel project.
On the other hand, Joe may be hard to track down if he doesn’t want to be found. Due to lower profit margins, he can’t always afford to stand behind his work – he needs to move from job to job to pay the bills. He often doesn’t like changes, because changes always cost time and money. You may also notice that his smaller circle of acquaintances in the trades limits his resources and knowledge. Surfing, hunting, skiing, boating and other myriad hobbies can sometimes take priority over completing a remodel project.
The Body of the Pyramid
This is where you’ll find what I call the “Professional Contractor” – the remodeler running a business. This guy can type, do math in his head, motivate his crews and support staff, problem solve on the fly, properly manage and oversee multiple functions and job sites as needed, and, most importantly, acknowledge his limitations. He understands the core concepts of leadership, customer service, attention to detail and constant communication to alleviate misunderstanding.
At this level, you can still expect personal service, but with a professional execution. The Professional Contractor can implement changes rapidly and efficiently because of his greater ability to manage, and his larger pool of resources and contacts usually translates into better overall results. He has a reputation to uphold and is known in the community, which means he’s likely to stand behind his work and directly address client concerns and questions.
Yes, the Professional Contractor makes a profit, but by doing so he can afford to do more precise work and come back and fix any potential issues that may occur. You will usually experience shorter project start times and more efficient production schedules with this type of contractor.
The Tip of the Pyramid
Many in the remodeling industry refer to these companies as “The Machines”. These are the companies who are most easily recognizable by their plentiful TV and radio campaigns. They have figured out that magic formula for marketing on a huge scale and “burning and churning” through remodel jobs like a John Deere tractor through a cornfield and can, at any given time, have 20 – 30 projects going at one time.
The Machines can definitely turn out beautiful projects – there is no doubt – but, because of their higher overhead, they will usually have higher overall costs. They also have processes in place to help with their very hectic production schedules. Overall, clients dealing with The Machines may not experience an extremely personal experience as their huge production scheduling issues translate better to a “one size fits all” approach.
So, which type of remodeling contractor is best for your project?
That will depend on your budget, the specific needs of your project (i.e. is it a simple job that Joe Contractor can handle easily and cheaply or something more advanced that will require more than one guy), and the level of professionalism you prefer.
As a “Professional Contractor” myself who believes that truly custom remodel requires hands-on involvement and a vast knowledge base by the contractor, you would correctly assume that I have a strong bias toward the medium-sized business described above that can give you the personal care of the small guy and the professionalism and quality results of the big guy, all for a fair price. But I started off as a “Joe” and know some of the few “Machines” in our local remodel industry and wouldn’t hesitate to refer many of them. The decision, ultimately, is yours as to who might be the better fit.