Qualified Remodeler Magazine

JAN 2014

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.

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Page 30 of 44

PROFITS: Market Forecast | By Rob Heselbarth Photo: Donatelli Builders REMODELING to GROW by double digits in 2014 The remodeling market is in a strong position after experiencing double-digit growth in 2013. Double-digit growth is expected for 2014, too, and remodelers are ready to grow in smart, controlled ways R emodelers are expecting a good 2014. In fact, 78 percent of those who responded to Qualified Remodeler's annual online market forecast survey reported having either an excellent or good outlook on the year ahead. This is an improvement over the 61 percent who felt this way one year ago. The sentiment supports the double-digit growth predicted for 2014 by the Joint Center for Housing Studies' Remodeling Futures Program at Harvard University. Harvard's Leading Indicator of Remodeling Activity, however, calls for a slowdown in growth toward the middle of 2014, but to levels that will remain healthy. In late October 2013, the National Association of Home Builders' Remodeling Market 30 January 2014 QR Index — which measures remodeler confidence — stood at 5, the highest rating since 2004. Expectations of growth come with fears and doubts, however. Remodelers responding to our survey rank the biggest threats to growth in 2014 as follows: the economy in general; consumers' fears; the availability of skilled labor; government regulation; and material prices. Growth might not be guaranteed, but if past performance is an indicator of future activity, remodelers can expect a profitable year. Survey respondents tell us that profit margins are at healthy levels. The bulk of remodelers (45 percent) report margins between 16 and 50 percent. Only 11 percent of remodelers report margins of 5 percent or less. "Around here homeowners retain the mind-set that they ForResidentialPros.com What was your company's average % net profit margin in 2013? 0 Margins of more than 75% 0 Margins of 51-75% 20 Margins of 26-50% 25 Margins of 16-25% 19 Margins of 11-15% 24 Margins of 6-10% 11 Margins of 0-5% can get a job done for any price they want, just by telling remodelers they have to come down to the lowest bid," says Stephen Gidley, GMB, CAPS, CGP, CGB, CGR, CPRC, CR, president and CEO of Stephen C. Gidley Inc., Darien, Conn. "The only way to combat this mind-set is honestly and openly. For example, I take

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