For those of you that have known me for a while, you might remember my participation several years ago in the Remodelers Guild. As a partner in the Guild, we were attempting to show remodeling contractors how to make their company a saleable asset. To make a long story short – we failed.

1. 1. Crooks: Homeowners are afraid they will hire a crook.

Almost every homeowner begins the remodeling process with baggage. If you watch television, read the newspaper, or listen to the radio, you will inevitably read or hear stories about unscrupulous building contractors. In these stories, some unsuspecting homeowner was taken advantage of and it cost them thousands of dollars. Homeowners don’t trust building contractors. They are afraid they will hire a crook, or, they fear that someone working with the contractor will get into their home and “rip them off.”

Do you know where most of your business comes from? For most contractors, it comes from past clients. I have spoken to contractors who generate over 75% of new business comes from past client referrals. If this sounds familiar, I want you to think about putting more attention on these past clients.

Competitive bidding is not good for business. Besides the time spent doing an estimate for a job you may not get, there is an additional element that most homeowners are not aware of. The following quote helps explain this:

Business has to be getting better. In many cases, it’s may be too good. I still hear stories of remodelers having work lined up months in advance.

Many remodeling companies have experienced a great deal of growth in the last few years. Due to a economy strengthening, most companies have experienced an increase in job size, sales volume, and number of employees.

Homeowners work with people they like and trust. The remodeling industry is built on this simple fact. For remodeling projects that last over several months, we are not only in their home for that amount of time, but we become privy to many home and family dynamics, and in some ways become part of the extended family while the project is going on. If you have been onsite for a longer project, you understand this simple fact very clearly.

The economic downturn is ebbing into its 5th year, and while business is picking up, we need to understand and acknowledge that it has created a new economic order. Homeowners are taking a different approach to investing in their home. They are more cautious, and they have reason to be:

Believe it or note, a housing shortage is looming. That’s not common knowledge, but it’s coming. Consider the following:

In July 2008, the U.S. Census Bureau released some incredible population projections. Take a look at these numbers:

1. Projected increase of 135 million people (a 44% increase) in the U.S. by 2050 (to give you perspective, that’s equivalent to the entire populations of Mexico and Canada moving to the United States)
2. The Census Bureau estimates this population boom will require 52 million new housing units
3. This amounts to over 1.25 million new housing structures that must be built each year in America just to keep up with the increase in population.

With the nature of the remodel business, and customers demanding more for their home improvement dollars, it makes sense to duplicate what successful remodelers are doing working with existing customers and architects. I recently spoke to Dennis Allen, the principal partner of Allen Associates, a custom home building and remodeling company in Santa Barbara, CA.