Surviving Tough Times: Strategies for Residential Contractors in Today's Economy

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Plenty of households are still interested in renovating and/or having work done on their houses, but thanks to current economic conditions, fewer people are willing to actually pay contracting companies to do these renovations. The best way for contractors to cope is to change by knowing how to adapt their business planning. For example, many homeowners may choose to have their homes renovated rather than buying a new home, and contractors can attract business by targeting their advertising to those kinds of potential customers. And, of course, maintaining a professional demeanor�courtesy, licensing, fair pricing�is always advantageous.

Whether the economy is headed toward a recession or in one, as some experts claim, there's no question that the market for contractors of almost all sizes and types has tightened significantly. For many that means tough times. Smart contractors who employ a little knowledge, a few tips, and some patience can survive, and even shine, in the current market.

For those contractors focused in the residential section, one of the first things to realize is that in today’s real estate market, more homeowners are turning to remodeling, addition, and/or repair work in lieu of selling and purchasing a new house. Add in the spring season — prime time for home repairs — and it also becomes the season for finding and hiring good contractors.

Whether a homeowner is planning an addition for a growing family, getting new windows, or simply making some indoor repairs, finding competent and reliable contractors is the first step to a successful home improvement project. Taking a few smart steps will help make sure you are at the top of the list to call.

1. Spread the Word.

Homeowners will choose a contractor through personal recommendations when possible. So while this may not be the time to cut any ongoing formal advertising or public relations programs, it is the time to use personal means to spread your message.

Think about attending and presenting timely information at homeowners’ association meetings in areas where you work. Some municipalities’ building or inspection departments offer open meetings to review guidelines for remodeling and additions.

You may find it advantageous to introduce yourself to real estate and mortgage professionals as an expert who will visit properties with them (and/or their clients) to assess renovation, inspection, and other options.

Finally, don’t forget to touch base with past clients and make sure they are still happy with the work you did. If so, don’t be afraid to ask them for referrals. Most people are happy to do so if they know you have time available and know the types of projects you prefer.

2. Be Prepared.

When you receive a call from a prospect, understand that the person is likely doing some prequalification legwork to see if you can handle the job. Be prepared with well-thought-out responses to common questions. Consider putting together a short FAQ (frequently asked questions) sheet to provide to the homeowner.

3. Stress Variety.

If you are a ''jack-of-all-trades'' and have varied experience, realize that is a good thing — and help the homeowner understand that. Many homeowners will not understand that even a simple-sounding job can require a multitude of skills. For instance, some bathroom remodeling may start with demolition and removal of the material, then continue with obtaining permits, new framing, plumbing, electrical work, surface preparation, finishing, trim, and painting. Explain what tasks you personally can do, stressing the breadth of experience you bring to the project.

4. Check Out Your Referrals.

Prospective clients will request the names and phone numbers of a few satisfied customers. Before that time prepare a list of appropriate references for different types of jobs, and then call them to see if they would be willing to be referrals for you. Taking this preemptive step will help build good relationships with your clients, remind them of your prior work, and send the message that you are taking on new work.

5. Prepare Bids Carefully.

While it may be tempting to bid low to get a job, be careful. You want to make sure you earn a fair profit and can cover all costs — and avoid becoming the next victim of recession. Also realize that smart homeowners know that the lowest bid is not always the best bid. Be honest, and help them understand that for most projects, until underway, it is impossible to predict exact needs. Remind them that you also cannot predict if or when they will change their minds on various parts of a project.

Pricing too low — especially when your bid is significantly lower than others’ — can send a message of inexperience or desperation. The latter is not necessarily a problem, but it pays to be cautious. Remember that people know that if a price seems too good to believe, it probably is.

6. Who’s in the House?

Many homeowners are uncomfortable with many subcontractors coming in and out of their homes — and many don’t realize this will be the case until the job is underway. If you can handle all, or most, of the work on a job yourself, make sure you explain that — and the advantages — to the prospect. If you will work with subcontractors, make it a point to let your prospect know that you will supervise the work and will have thoroughly qualified the subcontractors.

7. Get a License.

Now is a good time to obtain, or update, appropriate insurance and licenses and check to make sure any subcontractors on which you normally rely have done so too.

8. Maintain Professionalism.

  • Provide details. Don’t just provide broad estimates. Prospective clients will be wary of contractors who don’t want to specify the details of jobs.

  • Inform. Explain your work and your experience, but refrain from doing too much of a sales job on a prospect.

  • Be responsive and timely. How a contractor handles an initial inquiry is indicative of what will likely happen later on.

  • Maintain your appearance. A contractor who is working on a job may appear as though he or she is indeed working and can send the right message. But try to present a relatively clean and neat appearance with prospects; if an individual is sloppy, the client may sense that the work will be sloppy too.

An individual’s home is often his or her most valuable financial asset. Today, perhaps more than at other times, homeowners want to treat their houses with care and exercise care in hiring contractors to work on them. Paying attention to the details that matter in the homeowner’s choice of contractors will pay off.

About the Author

Dean Bennett is president of Dean Bennett Design and Construction Inc., a design/build firm based in Castle Rock, CO. Specializing in custom residential design and construction, the firm’s projects include remodeling, interior and exterior additions, conversions, basement finishes, landscaping and fencing, and custom finish carpentry.

Dean Bennett Design and Construction offers concept-to-completion design, including working drawings, blueprints, securing of permits, and inspection coordination. Working with a business model of a single principal on site throughout the project, from architectural design through final construction, Bennett effectively integrates design and construction while eliminating the need to hire separate general contractors, subcontractors, and architects.

Bennett has worked with a national client base, including many clients for whom he has worked for multiple years, since 1996. He holds Master of Architecture and Bachelor of Environmental Design degrees from the University of Colorado. Bennett is also an accomplished fly fisherman, golfer, skier, and snowboarder and enjoys swimming, running, cycling, cooking, and photography.

He can be reached at 303-513-2065 or
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