As Large Jobs Vanish, Small Jobs More the Norm
Big jobs become fewer, and smaller. Small jobs are always there. Can you do them and make money?
“I know a lot of people don’t like to go out and spend an hour installing a toilet-paper holder,” Darryl Rose says. “I love it.”
He should. Get Dwell, the business that Rose started out of his suburban Chicago home five years ago, has grown to employ five full-time carpenters. Unlike a carpenter working for a full-service remodeling company, who might be on the same job for months, the staff of Get Dwell typically have no idea what they’re doing tomorrow. It could be mending a fence and replacing attic insulation trashed by squirrels. It might involve re-hanging a squeaky door. For instance, Rose received an e-mail from one client with a list of projects that includes weather-stripping the front door, leveling a cabinet in the basement, repairing a window, and re-doing a kitchen countertop. “I forgot the name of the guy who came out last time,” the e-mail reads. “But would like to use him again. What is your lead time for the work?”
Money in the Door
Remodeling companies could learn a few things from Get Dwell. Most full-service remodelers are regularly asked to do small jobs by homeowners who assume that the remodeler is equipped to take on any task having to do with construction or the home. But many remodelers would prefer not to get involved with the kinds of jobs in which Get Dwell specializes. “The more complex the project, the better we are at it,” says Dennis Gehman, owner of Gehman Custom Remodeling, in Harleysville, Pa.
The slow period that Gehman went through last year forced him to lay off a half-dozen employees. But lately Gehman has been able to find the large projects that have always been his company’s bread and butter. That makes Gehman Custom Remodeling an exception. For most remodelers, the new normal of recessionary economics is that big projects either went away or got smaller. And it’s the really small jobs — maintenance and repair — that will keep crews busy and cash flowing. “The name of the game is getting money in the door,” says Donna Bade Shirey, owner of Shirey Contracting and Shirey Handyman Service, in Bellevue, Wash. “Small jobs get contractors through slow times.”
This year the handyman division, which Shirey launched six years ago, provided almost half of the company’s volume. But small jobs, she says, are a different business. “Small jobs are like an auto body shop,” Shirey says. “You get paid today for what you did today.”
Small and Smaller
Small jobs may be more difficult to manage, but that’s where the home improvement market is trended lately. At the end of 2007, the “Maintenance and Repairs” portion of the remodeling market, as tracked by the U.S. Census Bureau, was going up, the “Additions and Alternations” portion headed in the opposite direction as housing sales faltered, equity diminished, foreclosures rose, and credit tightened. “People will spend 15% to 20% more on a home improvement project if they’re paying with Other People’s Money,” says Steve Klitsch, general manager of Creative Concepts Remodeling, in Germantown, Md. As credit has contracted, so has the average job size at most remodeling companies. That has particularly hurt companies structured to do a few large projects a year. Yet, in spite of reduced volume, some of those companies view small jobs as outside their business model and risky. “We haven’t done any truly small projects — which I define as $5,000 or less — for years,” says Mark Pennington, secretary/treasurer of Gardner Fox, a design/build company in the Philadelphia suburbs. “We’re just not set up to. There are so many barriers to that work from a price standpoint.”
Gardner Fox has found jobs, but they’re smaller jobs. That is, the family room addition that might have been priced at $200,000 in boom times now comes in at $160,000 — same square footage but “value engineered” to cost less. “Clients want us to help them come up with cost-effective ways to meet their needs,” Pennington says. And the company, founded by two architects, is more than willing to provide small-job services to past clients on demand. Such services feed the ongoing goodwill that makes the company the logical place to go for a homeowners’ next remodel.
For an operation such as Dutchess Building Specialists, in Poughkeepsie, N.Y., smaller means two things: making large projects affordable, and finding ways to efficiently perform maintenance and repair jobs. When it comes to projects such as bath remodels, “we’re being flexible,” operations manager Bob Lutz explains, “which helps lower costs.” DBS is also seeking ways to expand the separate handyman division created two years ago strictly for existing clients. Moving into 2010, management would like handyman to generate $600,000 and to service more than just existing clients. Handyman business has doubled in a year, Lutz says, and the process is “evolving” as DBS managers figure out how to create a streamlined system to profitably service jobs that might involve no more than sending a technician to a client’s house to change out a lockset.
Time Equals Money
Small jobs are one thing; maintenance and repair another. How to make money at it? For companies such as Get Dwell, the key to profitability involves:
- Well organized staging, where all tools and supplies are in the truck before the carpenter or technician knocks on the client’s door.
- The ability to move quickly because small jobs are often more urgent, meaning you need to get started within the week or, sometimes, immediately.
- A contract, spelling out scope of work and labor and materials charges, including an estimate of how long the work will take.
- A process for collecting at the end of the job, preferably by the technician performing the work.
- A system to generate leads. That could be your website, newsletters, direct mail, home shows, or flyers. Even if existing clients are your bread and butter, the size of the jobs dictates the need for many of them to create the volume you need to have a fully equipped truck and dedicated technician.
Most of this won’t be easy for companies used to larger projects. But what if there are too few big jobs?
“I think right now we will do anything anybody calls us for,” says Alan Hanbury. In the last three years, the House of Hanbury Builders, in Newington, Conn., has done one addition. Prior to that, the company built three or four a year. “In our market, home builders are building additions and full basement remodels,” Hanbury says. Not so long ago, “they would’ve given our name to the client.” Today, the company’s work is likely to consist of replacing windows, weatherizing houses, and doing minor kitchen and bath remodels. A recent phone call found Hanbury finishing up a $16,000 porch enclosure. The homeowner had seen House of Hanbury Builders working in the neighborhood and had asked if the remodeler would change a soil boot. The porch enclosure followed two weeks later. “In busier times, I would’ve said no, we can’t do it,” Hanbury says. He makes such jobs profitable by charging 5% to 8% additional margin and by careful staging to avoid the mishaps that make for delays. Minor delays don’t matter in a remodel. In handyman work, they can cost you whatever money you might have made, and then some. “Five hundred things could go wrong,” Hanbury says. Which is why not only should the carpenter or technician be fully equipped and ready to go, but homeowners must be made aware of their responsibilities, too. The wrong light fixture on a two-month project is no big deal, Hanbury says. “I just go do something else.” On a one-day job, it’s a killer.
In the Service Business
What’s a handyman job as opposed to a small job? Shirey used to define “handyman” as anything less than $50,000. Today it’s whatever doesn’t need to be designed. “I have cut down coffee tables, moved furniture for people,” Hanbury says. “Stuff they were in a bind for, and that they know they’re going to be charged for. We’re in the service business.”
At Dutchess Building Specialists, handyman jobs get treated as remodels when the scope of work justifies doing so. On small jobs, DBS dispatches a technician. For clients with a list of small maintenance tasks — in the $3,000 to $10,000 range — an estimator will come out first. To address the smaller (as opposed to small) jobs market, DBS has put together a program it calls Budget Bath, which offers a basic bath template with options, starting at $16,000.
Lutz says that DBS charges time and materials for handyman jobs, fixed price for remodels. “We let [the homeowner] know there’s a certain charge per hour and that that includes time spent evaluating needs, and lumberyard visits,” he says. That charge per hour began as $70, increased to $75 and, DBS management has determined, will need to be $80 per hour if the company expands into servicing customers who are not past clients.
Get Dwell charges clients a flat $75 per hour, with no markup on materials. Shirey Handyman Service started out with a four-hour minimum, and reduced that to two hours. Get Dwell will send a carpenter to the house for an hour.
All that work for so little volume? That’s what has kept most remodeling companies out of maintenance and repair. Those who dabble in it do so because small jobs contain the possibility of becoming large jobs down the road. Those companies proficient at it have both the people on staff to do the work and the process — pricing, administration, and marketing — to make money on the work they do. Creative Concepts Remodeling, for instance, will suggest that clients divide a long list of handyman jobs in two so that they prioritize, Klitsch says. “If there are 15 items, we suggest they have us take care of the first nine, then come back in 60 days and do items 10 through 15.”
Repeat and referral business is the name of the game, Rose says. The one-hour job to install a toilet-paper hanger “gives us a chance to get a new client. And we know they’ll call us back with a broken door or an attic that needs insulation.”