We are seeing things stabilize verses the “free fall” many of us experienced over the last 6 months. Great news but I find it is still very challenging – if not more so – to find the right path for the company. It has stabilized in a relative sense but it is still a battle out there. Is it a time to take some calculated risks and try to gain market share, enter new markets, etc? Or is it better to play it safe and live to fight another day – after we get through this winter which is likely to be challenging given shorter backlogs and potential further diminishing of consumer confidence/demand? Any thoughts out there?

The downturn in new home building has driven many manufacturers, suppliers and subcontractors to focus their sales efforts on remodelers. Remodeling is a challenge in this environment but not nearly as tough as new home construction.

Selling to remodelers requires a different sales approach than selling to new home builders. Think of selling medicine to a hospital – with high volume, low margins, winning over 1 key decision maker, etc. – verses selling medicine to each individual doctor. To sell to each individual doctor – or to each remodeler – takes a grass roots, committed and consistent focus. The good news is that the pressure on margins created by the high volume purchases of new home builders is not as pervasive. The bad news is that selling to remodelers is a bit like hurding cats.

We buy from manufacturers, suppliers and subcontractors that:
1. Make it easy to spec, price, purchase and to obtain their products or services: We buy one or two items at a time, and we are on a tight timeline (in both the sales and production process) so we need it when we need it. Think through the holistic process for a remodeler – not just your one segment – to see if you are making it easy for the remodeler. You might have a great product, that is easy to price but if your suppliers aren’t getting it to the remodeler on time, the entire chain breaks down.
2. Relationships sell. I believe any sale is truly made on trust and relations. This is no different in selling to remodelers. A promotion from headquarters that is not bolstered by “boots on the ground” relations won’t work in today’s world. But how do you create relations with the myriad of remodelers spread in every corner of the country? Get involved in their issues (NARI, NAHB, etc.), sponsor events they love (fishing, hunting, events for their team, community, etc.), have a beer with them.

Remodeling can be very rewarding but it is not an easy entry business/quick sale for the manufacturers, suppliers or subcontractors trying to crack into it. The good news is that it can provide needed stability and risk mitigation to your revenue streams.

If/when you have to cutback your team, how do you know the best way to approach it? I have read articles and heard some remodelers suggest cutting back the hours of all their team members to save on payroll – forcing their field team to take 2 days off a month, cutting everyone to 32 hours per week, etc. On the other hand, this penalizes everyone on the team rather than the Owner laying off a couple of people so that the remaining team members can get a full weeks pay. Neither approach is fun, but if something has to give what do you think is the best solution?

Be sure to let your clients know about a federal home improvement tax credit available to them in 2009.

Beginning January 1, 2009 there are up to $500 in federal tax credits for homeowners making improvements to insulation, replacement windows, non-solar water heaters, and certain high efficiency heating and cooling equipment. For more details and forms needed go to http://www.energystar.gov/index.cfm?c=products.pr_tax_credits.