FOR CLIENTS ONLY Another way to grab the profits of small jobs is to use them as filler or to create a separate small-jobs division.
Encore Construction’s small-jobs division was begun two years ago, says owner Nikula, because “we were losing touch with clients by handing off smaller jobs to local handymen when we got busy.”
Now the company has a “property management” division to handle small jobs. They are initiated by a sales call, and the division manager (a former project lead) and three carpenters do the work. (These same carpenters are also used on warranty work for bigger jobs.) “These jobs are very profitable,” Nikula says. “We typically mark up between 50% and 70% depending on the size of the job.” By April of this year, this division took in $70,000 — double the original estimate for that time frame, Nikula says.
There is a catch: The division only does work for previous clients or referrals “to maintain full service so they keep coming back to us,” says Nikula, who saw that when he directed clients to handyman services or other remodelers, he lost them for future larger jobs.
Encore’s systems are in place regardless of job size; although smaller jobs require less paperwork — perhaps two pages of specs instead of 15 — and fewer steps. “The turnover meeting [handoff from sales to production] on smaller jobs is just the property management [division] and sales,” says Nikula, as opposed to the four meetings, each requiring the involvement of many people, that the company does for a large-job turnover.
Having the right systems makes small jobs more predictable and easier to manage. And the more you do them, the more you’ll understand the labor involved, which in turn will decrease slippage and increase profitability.
“There are a lot of 5-by-8 bathrooms,” says Paul Calafiore, owner of DreamMaker Bath and Kitchen, near Hartford, Conn. “Once you start doing a post-job analysis you can see how many hours the guys are putting in. You can fine tune it and dial the numbers right in and come within 1% or 2% slippage.”
Calafiore likes doing smaller jobs — mostly rip and replace —because they are simpler in terms of labor and material selections. He knows his market, and encourages remodeling packages for clients, which they like. “They’re busy and don’t want to run around [from store to store] to make choices.” And Calafiore believes the staging process is better because his employees are familiar with the products.
Whether you do small jobs as a single focus or as part of a varied job load should be a choice you make depending on your business model. “Ask yourself why you’re doing these jobs,” McCadden says. “Is it because you want to add a division? Complement what you already know? Use them as filler? As a marketing opportunity? … How is doing a small job going to benefit you in other ways?”
Regardless of what you consider to be a small job, a client thinks his or her job is big. It’s the only thing they’re focusing on. Doing the job professionally, with up-front planning and systems in place, will go a long way toward making that “small” job into a magnet for other work.