Smart Staffing Regardless of how they got started, there is one constant among full-service remodelers who have successfully launched a single-line business or incorporated one into their company: They all have employees in key positions who are experienced in single-line remodeling.
Steve Taylor, owner of Taylor Made Construction, in Edgewood, Md., is reluctant to advise remodelers with no single-line background to jump into it now. However, if they are going to, it’s vital to “dedicate an individual with experience in in-home sales with a single-line product” to run it, he says. Taylor, who spun off his full-service company from a waterproofing business and now also has an Owens Corning franchise, adds that it’s important to compensate that person appropriately and give them the freedom to run the single-line side as they see fit.
In fact, most remodelers with successful single-line launches recommend keeping the two businesses almost completely separate. They don’t necessarily need to be officially different corporations, but you should consider making the name distinguishable from your full-line company. One benefit is the ability to cross-market among your divisions. “We have a pretty solid name in remodeling in San Diego,” Larson says, noting that Jacor’s business would often turn into leads for Lars Construction, and vice versa (Larson sold Jacor after four years in business). Since the two types of potential customers require different sales processes and different salespeople (more on this later), the companies would essentially drum up business for each other.
Waller points out that certain types of single-line businesses end up doing a large amount of work for other general contractors. Those companies — your competition — will be reluctant to hire you, for appearance’s sake, if you use the same name as your full-line company for your single line. “They won’t hire Waller Construction,” he says, “but they will hire Goff-Waller Roofing.”
Another reason to keep the divisions separate is so that you can have an accurate picture of how each is performing. “If we can’t measure each business on an individual basis, we don’t know how to keep score,” Ferro says, explaining why each of Alure’s divisions has its own P&L statement. If everything is rolled together, you’ll know what your overall numbers are, but you won’t be able to tell if one business is dragging the others down.
This is particularly crucial, because one side effect of launching a new business is that it tends to cannibalize the existing one. The company owner focuses more of his attention on getting the new company off the ground, key personnel shift from one division to the other, and leads get funneled to the young business to help it survive. You can counteract this — hiring good, experienced people to run the single-line company is one way — but you won’t know if you are succeeding unless you know how each company is performing apart from the others.
That said, certain overhead expenses can be shared. “There’s no reason to pay separate rent and electricity when you can do all your business in one place,” Grosso says. Most administrative personnel and costs can be shared as well; Alure has the same marketing staff across the board, and Taylor Made uses a management company for bookkeeping and other professional services for all of its divisions.
Keep Sales Separate When it comes to sales personnel, however, separation between full-line and single-line is essential because of the inherent differences in how the two types of projects are sold. “We put a hanger on someone’s door who isn’t even thinking about their basement,” Taylor says. “The next day, they’re calling to set an appointment, and the day after that, they’re buying a $30,000 basement.” He contrasts that with a full-line remodel, which might take 12 months or more to complete from the first contact. Selling a single-line product is generally done in one sitting, rather than over a series of appointments. “The [single-line] salesman has to be a stronger closer,” Grosso says. “Going back and forth doesn’t pay in an eight-window replacement job.”
Very few salespeople can switch between full-service and specialty projects, so it’s a smart idea to keep your salesforces separate. Additionally, because single-line salespeople do not play the same role as full-line sellers, you must manage them differently. “It takes a unique individual to work only on commission,” Taylor says, “and you have to compensate him for that.”
Compensation for the two types of salespeople will be markedly different —probably in both structure and amount — so to avoid internal conflict, it’s best to keep the two separate.