Qualified Remodeler helps independent remodeling firms to survive, become more professional and more profitable by providing must-have business information, namely best business practices, new product information and timely design ideas.
Issue link: http://qualifiedremodeler.epubxp.com/i/356825
F or those who consider Qualified Remodeler's Top 500 list a bench- mark for the remodel- ing industry's perfor- mance, it's safe to say remod- eling is back on solid footing. Total gross revenue reported by those on the 2014 Top 500 list is $8.25 billion, which is a jump of roughly 18 percent from the $6.76 billion reported in 2013. That's a healthy gain, and higher than the 10 to 12 percent growth experts anticipated for 2013. However, in 2012 remodelers on our list predicted their col- lective 2013 revenue would be $10.4 billion, but fell short at $8.25 billion. The number of remodeling jobs reported for the 2014 Top 500 list also jumped, but only by roughly 7 percent. Compared to the revenue increase of 18 per- cent, this means the average price tag of remodeling projects is going up, which is good to see compared to last year when price tags dropped. The growth in total revenue and number of remodeling jobs seen in this year's list indicates a healthy overall economy, but no doubt also is the result of the 2014 Top 500 remodelers' mar- keting efforts. This year's listees reported spending an average of 7.4 percent of their revenue on marketing, compared to 7.1 percent in 2012 and 6.9 percent in 2011. Remodeling firms on the Top 500 list are dedicated to their work and the regions they serve. Firms on this year's list have been in business for an average of 27 years and at the same loca- tion for an average of 24.6 years. ON REMODELERS' MINDS Numbers can be fun to analyze and discuss, but nothing beats hearing directly from the people who helped generate the num- bers. As in years past, Qualified Remodeler solicited comments from remodelers on this year's Top 500 list about the health of the remodeling market, as well as business practices. Following are some of the thoughts shared by remodelers on this year's Top 500 list: Q: N o w a f e w y e a r s removed from the recession, what permanent damage, if any, did it cause to the remodeling industry? A: Home values are low, meaning less or no equity for customers. Values are not back to the high levels we saw in the mid 2000s. This means that a large segment of our market does not have the ability to bor- row against the equity in their home to make improvements. I think this is going to take a while to correct itself. Andy Wells, Normandy Design Build Remodeling A: The damage that was caused is the public's percep- tion that times are tough and that they can remodel or build more cheaply than six to eight years ago. Unfortunately, the cost of materials never went down and always continues to rise. Additionally with the short- age of construction labor, as a result of the recession, labor also costs more now. So, unless the remodeler is willing to work for less — everything costs more than the public's perception. Michael Menn, Michael Menn Limited A: The one major issue that has been a direct reflection of the recession is the lack of finan- cial funding to the consumer for home improvement projects. The consumer with a high credit score still has the ability to get financing for home improve- ment projects, but the consum- er with a credit score between 600 to 660 is questionable due to the recession. The financial institutes are less likely to extend credit for marginal credit scores now more than ever. Corey Cover, American WeatherTechs A: I think that the remodel- ing industry was strengthened by [the recession] as it forced all companies to get smart about their business and flushed a lot of guys out of the market. Jim Fitlow, ReBath of Utah A: The biggest thing that came from the recession was the ability to get financing for our customers. Here at The Acri Company, we were fortunate to offer our customers our own in- house financing for their home improvement projects. That really helped us to get through the recession as well as we did. Prior to the recession there were many different avenues to get customer financing for their projects. Those all went away quickly, and those that didn't go away got extremely tight with their approvals. Today financing options are still not like they were prior to the recession. Mortgage lending via second mortgages is virtually nonexistent. There used to be a mortgage broker on every street corner; now there are very few. Those that are left can't do the things they used to be able to do, such as consolidation loans. As for the future, I don't envi- sion anything like it (financing) is ever coming back. So going forward, we all must learn to adapt and make due with the options that are available. Since the recession it has gotten bet- ter; however, nowhere near the levels prior to the recession. Tim Acri, The Acri Company Q: What's your business's greatest need? A: Even though we are so much better off than a few years ago, we still don't have as many Back on SOLID ground Revenue jumps and the number of jobs picks up as remodelers log serious growth 59% 41% Average age of customers Age 20-35 8% Age 35-50 38% Age 50-65 33% Age 65-plus 13% PROFITS: Top 500 | By Qualified Remodeler staff 24 August 2014 QR ForResidentialPros.com