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Targeting the Middle Market (Remodeler Of The Year 2003)

Author & Date: Kimberly Sweet, 12/03
Publication: Professional Remodeler
Article Link

The company featured is trying to build out a national brand through franchise agreements. The model of structuring and documenting every process from marketing to punch list of projects to accounting is crucial for the success of a franchise. These same tactics can also be used very effectively to build any business more profitably and to make it more self-sustaining where the owner can enjoy more time off without the worries of "Are my customers being treated right?"

Having been part of a franchise group before I can honestly say that I would never do it again but during that time I learned a lot about operations and that has helped me in every aspect of business. If you are looking to grow your company I recommend looking into how franchises operate whether it's how Kinko's opens a new branch or how McDonalds searches for a new market. Some key things to take away from the article:

Gross Margins: They are operating typically at 40%+ which is good for ANY business. A lot of this comes from fact that these are smaller projects but also comes from the structured processes and the 5% typically spent on marketing. Even after deducting the marketing costs you are still left with 35% margins which leaves a lot of room for profitable growth. It should always be your goal to work on higher margin work rather than higher volume. Higher volume feels good for the ego but higher profit margins feel better for the retirement program.

Training Programs: All franchises put into place some sort of training programs. You can easily do this in your own business regardless of the size. You probably already have most of the processes down. Developing these into training programs including operations manuals, audio programs or actual classes will improve your performance.

Learn more by reviewing our Construction Company Development (CCD) program.

There is a book I recently read called the E-Myth Contractor which also did a great job of explaining the trap that most contractors find themselves in and how to get out of it.

Posted by David on April 16, 2005 03:26 PM|Permalink

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