Qualified Remodeler Magazine

FEB 2015

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/469630

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Page 52 of 60

Of course one of the big dilemmas when deciding to expand is do you hire a person frst and then get the growth, or do you get the growth frst and then hire a person to accommodate growth? "Te answer is both," Harth says. "You need a robust pipeline. Te more important thing is to be budgeting for the person and the position. You need to write an estimate. By creating a bottom-up esti- mate, you realize if you sell, say, $1 million at a 1.6 percent markup, it could support certain overhead. "More often than not, these people are di- rect job costs," he continues. "So many com- panies hire positions as overhead, when in reality it should be charged to the job, such as a production manager. A production manager is part of every job you sell, which makes it a direct job cost. In that way it's no diferent than the 2x4s that are part of a job." Harth also attributes successful growth to industry involvement. Harth Builders has found success in joining NARI and a peer review group with Remodelers Advantage. DESPITE ITS success, Harth Builders is like most other remodelers in that as soon as they sign a job, they're concerned about where the next job will come from. "It's hard for us to say 'no' to work. You get focused on assigning a job, but you still need to produce that job. Te focus should be: You need to do what you do really well repeatedly. More work will come as a result of that. Don't grow too fast. Grow at a pace where you can bring people in and they can absorb your culture. If you grow too fast, then you become their culture. Te dynamic shifts. People need to be indoctrinated into what makes you successful as a company." | says. "All the systems change, and they change multiple times. A lot of the systems I wrote down from 11 years ago have been revised four or fve times. Almost every two years we need to see what's not working anymore and we change. We're constantly looking at the process and how we can do it better." HARTH BUILDERS set goals, and defned what was done well and where there was room for improvement. "We targeted a 15 percent growth rate, which is pretty healthy. We've seen companies grow a lot faster than that and their systems fail; everything breaks down." Harth has witnessed companies' workman- ship take a nose dive and the inability to meet schedules because of increased workloads. Harth asserts, "If you don't grow at all, you're actually shrinking. You have to plan for growth. Te question is 'how much?' " Harth Builders calculates its 15 percent growth goal based on the previous year's bud- get, not the previous year's produced volume. Harth explains, "Last year we budgeted for $2.85 million and produced $4.2 million. Tat doesn't mean I take $4.2 million for this coming year and add 15 percent. I go back and take $2.85 million and add 15 per- cent to it. Tat establishes our budget for the coming year." With revenue growth comes personnel growth. "As you grow, you can't do it all your- self and you will need to fnd somebody to take things of your plate. Dad was doing all of the sales, production and ofce management. He hired a bookkeeper to do bill paying, and I took over production responsibilities. We created job descriptions for each of us and wrote them down." alk through any aisle in a grocery store and you'll see shoppers perusing their lists to ensure they didn't miss putting any key ingredients in their cart. Many homes have at least one calendar on the wall with scheduled appointments and reminders. And nearly every purchase, whether it be electron- ics, appliances or even children's toys, comes with a comprehensive user manual. All of the aforementioned scenarios in- volve a process of sorts. Tose processes en- sure smooth fows and a job well done. Greg Harth, CR, CKBR, CAPS, joined his father in business at Harth Builders, Spring House, Pa., 11 years ago and since that time the com- pany has grown from $700,000 in revenue to $4.2 million. He attributes the remarkable, yet sustainable, growth with a clearly defned and written set of processes. "ONE OF the frst things we did when I joined was processes," Harth, who is the company's president, recalls. " We started writing down all of the things Dad was doing that came naturally. For example, when someone called in, he created a lead, so we wrote down all of the information he asked for when creating that lead. From there, we wrote the process- es all the way through a signed contract, to warranty and hopefully to repeat business. I did the same on the production side. It doesn't have to be complicated. Getting it on a piece of paper is the hardest step. Editing is easier from there." As important as it is to write down pro- cesses, equally important is to update them. "Getting out of less than a million to the $2 million zone is like no-man's land," Harth Sustainable growth By Laurie Banyay One of the keys to successful business expansion lies in defning, writing down and following a set of processes, and remembering to update them to ft your company's growing needs W PROFITS: NARI Recertification 52 February 2015 QR QualifiedRemodeler.com | ForResidentialPros.com QR has teamed up with NARI to create a convenient way to earn credits toward your recertification. After reading this issue's article, take the test for CEUs at ForResidentialPros.com/ narirecertification.

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