As Christmas rounds the corner and the New Year beckons, I would like to be among many to wish everyone a happy and prosperous New Year.
2009 has been a remarkable year in the home improvement industry. While the press and naysayers will continue to report "newsworthy" items such as job losses we at Dave Yoho Associates tend to focus on the flattening of the downward economic trend and the many companies within our industry that posted their best years ever.
2010 is shaping up to be a monumental year within the industry and we are excited to be a part of it. We look forward to interacting with you next year - and - as always we appreciate your business!
Now I am going to continue to summarize Hobson Hogan's presentation on whether you should consider being acquired or whether you should acquire another company from Day 1 of the Summit. If you have not read part 1 please do so first.
Let's pick it up with your selling/liquidity options:
Majority/controlling interest sale: To competitor or investment firm/private buyer
Internal sales/transfers to next generation of management: Multi-year S-Corporation/LLC sale programs, management buyouts
ESOP (Employee Stock Ownership Plan)
Selling significant minority stakes with eventual control sale: Can solve difficult situations where buy-sell agreement undervalues firm, gives owner a ready buyer in cases of illness or death, transaction(s) completed at a discount
Next he discussed the key points to consider before making a corporate acquisition:
All starts with strong business plan and big dose of humility
Be honest about risks – most are related to executive hubris not quantitative failures of the CFO
Plan early and implement slowly
Maintain a strong balance sheet
Manage assumed liabilities
Manage risk as well as return
Keep your hand in project selection/pricing
Manage personal guarantees
Just because you can borrow money does not mean you should
Acquisitions should enhance or implement new strategy
Acquisitions for acquisition sake will only distract management from its most important activities
Acquisitions should support your marketing plan, enhance strengths, mitigate weaknesses, reduce threats
Before you jump into the acquisition plan you need to work on the business plan - and this entails:
SWOT analysis
Market strategies
Product/service strategies
Operational plans
Management succession plans
Financial projections
Operating budget
Projected earnings
Cash flow and CAPEX budget
In the next posting I will finish the summary of Hobson Hogan's presentation.
One of our long-time employees told me a story this afternoon that shocked me - although it probably shouldn't have.
He is a Chinese food fanatic and probably eats it at least three times a week. He is also intensely loyal and when he finds a product or service that he enjoys he sticks with it.
He has been frequenting the same Chinese restaurant for almost 15 years. He loves the food and most importantly the large portions that are incredibly inexpensive.
The other day he went in to get one of their usual lunch specials and the following conversation took place:
Customer: I ordered the lunch special Employee: Here you go Customer: (hands employee $7.30) Employee: The egg roll does not come with the special anymore. $8.30 Customer: Well, you did not inform me of that over the phone. I only have $8.00
At this point the employee reached into the box, took out the egg roll, put it on the counter and proceeded to hand him the box.
Now I must say that if this had happened to me I would have had some choice words for her, but he happens to be more mild mannered than I am. So he simply proceeded to walk out of the restaurant and go down the street to eat elsewhere. He has been eating at the new restaurant for a week now and it turns out that he likes the food there even more than at the original place.
What the employee failed to realize was that she was not in the business of serving food, but serving customers.
Now at this point you might see where I am going with this and are saying to yourself, "That example doesn't apply to my business. They don't teach their employees customer service like I do." My response would be, "Just because you teach them to satisfy your customer base does not mean they are doing it effectively."
Think about how asinine this example is. Let's estimate how much money that our employee spent over the course of the 15 years he frequented this restaurant:
Average price ($7) x No. of Times Eaten per Year: (165) x No. of Years (15) = $17,325
This means that our employee's Customer Lifetime Value was $17,325 and this was thrown away over a measly eggroll!
No matter how strong your hiring practices are and how well trained your employees are, there are always situations similar to this that arise. Ask yourself, do your employees care about your customers? Do they care about your business? And make sure to take precautionary steps to avoid these damaging incidents by involving yourself in every facet of the business.
Day 1 of the Summit continued with Hobson Hogan who is a member of FMI’s investment banking practice. He specializes in building products manufacturers and distributors, as well as other construction industry firms, focusing on mergers and acquisitions, ownership transfer issues and strategy development. He has an extensive background in finance, strategic planning, consulting and engineering. His experience provides him with an understanding of difficult organizational, operational and strategic issues facing the building and construction industry.
Due to the nature of the economy the topic of whether you should acquire another company or be acquired is highly relevant and a summary of what Mr. Hogan covered included:
Can your company be sold? If, so do you have competent management and are they a potential buyer?
The decision to sell is typically driven by outside forces: Health and/or personal issues, desire to retire, desire to focus on another business or poor financial performance.
Everyone is a seller at some point: You may not be alive to see it, but it will happen. The question is where are you in your personal journey – closer to the beginning or end.
Evaluate the opportunity to buy: At attractive valuations
Acquisitions should fit within overall strategic plan: Is it strategically driven or ego driven? Are you properly capitalized?
Strategy should drive acquisitions and your overall personal balance sheet should drive whether you are a seller
Investment in your company should be seen as part of personal balance sheet: Are you properly diversified? Is your risk appropriate for your age? Can you live off the proceeds of a sale? Are you truly ready to retire and pursue other interests?
Take a rational view of the business as part of your portfolio: Do not ignore the personal impact a sale would have on your finances, lifestyle and standing in the community.
Your business is likely one of the more risky investments you have
As you move closer to retirement you should ensure that you remove risk from your balance sheet: The unexpected can happen and typically does.
Valuations are down significantly: Not likely to return to where they were in the near future. PV of selling in 5 years is $33.7MM or simply put, for the risk of operating your business you would be indifferent between getting $91 MM in 5 years vs. $33.7 MM today.
Recovery is likely to be slow
Taxes are rising
Waiting for a better pricing environment may not yield the results you think: If you sold today and invested in a basket of less risky assets growing at 8%, you have $80.8MM in 5 years – around $10MM less than selling in 5 years, but at a much lower risk threshold.
In the next posting I will review the second part of Mr. Hogan's presentation.
Day 1 of the Summit continued as Brian Smith discussed the most common reasons that lead to the failure of sales training within most organizations. These included:
Training the wrong person
Typical training is not the right type of training
No in-place field training or supervision
No lead controls in-place
Examine your own sales training and if you are not getting the results that you should be, it is likely a result of one or more of these factors being askew.
My son David took on the next topic at the summit which covered the primary problems that exist when companies attempt to implement a canvassing program. These include:
Failure to control the herd: Your canvassers need to be given strict guidelines for their dress, behavior and actions as part of the canvassing team. You expect your salespeople to conform to specific standards, why should your canvassers be any different?
Failure to control the process: There is a proven system that produces greater results than anything else that can be implemented. However, juststating that this is how you are going to cavass is not enough.You need to have a strong manager in place who is willing and able to enforce these rules.
Failure to measure properly: Your goal should be for your canvass leads to perform equal to your leads from other sources, and maintain a 12% marketing cost.
Failure to train: Do you have a canvassing manager? If so, is he devoting enough time to training your personnel to adhere to the guidelines? If not, your sales manager needs to be the one responsible for this task.
Failure to coach: Great managers are also great coaches. They see what is working and what isn't and make the necessary changes while constantly motivating their personnel to achieve maximum performance.
Failure to compensate properly: Like it or not, your canvassers have to be compensated requisite with their responsibilities - - and canvassing is not an easy job. Remember - your canvassers are an extension of your sales force and should be treated as such.
Failure to organize: The successful canvassing program has steps of implementation, you cannot expect to foster immediate results overnight.
For more information on canvassing, look at our free articles.
Next posting, I will review Brian Smith's presentation on "Why Most Sales Training Ultimately Fails".
The next presenter at the Summit was Jim Cory, the editor of Replacement Contractor, a Hanley Wood publication for roofing, siding and window contractors. He currently contributes to both Remodeling and Replacement Contractor magazine as well as their respective web sites and he also organizes the Replacement Contractor Executive Conference, an annual event focusing on sales and marketing in the home improvement industry.
His presentation focused on the Cost vs. Value survey that Remodeling Magazine puts out on an annual basis.
Some of the key points of his presentation included:
While the decline is not as sharp as in 2008, the overall trend for home improvement projects is sloping downward
On average replacement projects led to a 71.8% recovery in costs, versus 63% for Remodeling and other similar investments
Siding (fiber-cement, vinyl) and window replacements (wood, vinyl) contribute 6 of the top ten replacement projects for the year 2009
The decline in sunroom value continues to steepen - - at the moment roughly half of the cost is being recovered on average, down almost 25% from 4 years ago
The next topic that I will summarize from the Summit was David Alan Yoho's presentation on the fallacies involved in most Canvassing projects.
While these pictures should have been posted a long time ago - - its certainly better late than never right?
Our goal for the next program is to have a professional photographer come and take some shots so that the pictures are much clearer. Nevertheless, we hope you can get an idea of how a Dave Yoho Associates program is run if you have never attended one before.
We cannot wait for the next one in the Spring - - stay tuned!
Continuing on with the summary from the Home Improvement Economic Summit in Indianapolis, Paul Toub reviewed the amended Toxic Substances Control Act (TSCA) and its impact on the remodeling industry.
Some of the highlights from his presentation included:
The April 2008 amendment to the Act and the impact that it has had on the industry
A sample of an old Lead Safe Work Practices pamphlet versus the new one highlighting the differences of what is required
Examples of penalties which have occurred over the last year to companies that did not conform to these standards (violations ranging up to $37,500 per day)
The types of work that are covered under the act
The possible exclusions under the act (which should not be relied upon)
A revision to the act which will occur in April of 2010, making the guidelines much more stringent for remodelers. The only exclusions will be for newer construction homes and lead-free certified job-sites. While at the moment there is a provision in place for owners to "opt-out", The Sierra Club is pressuring the EPA to eliminate this option.
The EPA-certification process and how to become a certified renovator
The primary take away from this segment was that there is a huge degree of uncertainty in regards to how these laws will be interpreted in 2010 so you should do everything in your power to err on the side of caution.
Keep in mind that you can contact us at (703) 591-2490 with any questions - - and if you have not already ordered it, we are offering the recording from our first summit on our website.
Day 1 of the Summit continued with a breakdown of some of the cautions and concerns that the home improvement industry is currently facing.
Brian Smith began with an overview of the issues and concerns which included:
Traditional advertising sources are producing less leads per dollar invested
Changes in lead sources require modification of the sales model
Effective marketers reduce costs by implementing more creative lead distribution and instituting revised sales models
Increased marketing costs are a major contribution to lower profitability
A key ingredient in a successful home improvement marketing/sales plan is: The quality and quantity of leads generated measured against the quality and quantity of the salespeople who are issued the leads which were generated
The cost of a lead is increased (or reduced) by the efficiency and sales ability of the person to whom it is issued
He then proceeded to demonstrate the efficiency of a sales organization in this economy who made some slight changes to increase revenue by over $2 million while decreasing marketing costs by over 4% (for more information on this case study e-mail brad@daveyoho.com).
David Alan Yoho then touched on the conditions in the marketplace that are having a direct impact on the failure of some companies including:
Failure to understand the customer’s decision making process
Misunderstanding between coaching and training
Hiring the wrong people
Confusing management and leadership
Improper compensation
In the next posting the Lead Paint Regulations presentation will be reviewed.
Over the next few weeks I am going to be giving a brief summary of the content from the Home Improvement Economic Summit for those who were not able to attend.
Keep in mind that you can contact us at (703) 591-2490 with any questions - - and if you have not already ordered it, we are offering the recording from our first summit on our website.
Day 1 of the Summit began with my presentation on the state of the industry. Some of the topics of discussion included:
The common errors made by most home improvement companies
How the industry recovered after the last major economic setback in 1982
Relevant case studies from our clients, including a company that utilizes 50 lead sources, and another that is on pace to achieve a 42% increase in net revenue
The primary goal of this part of the summit was to reinforce the point that there are numerous success stories out there and what they have in common is that they all follow a sales system, but in regards to marketing they think outside of the box.
The next posting will cover the industry cautions and concerns for the year 2010.
The Home Improvement Economic Summit is less than two weeks away and we have had many requests from both attendees and those wishing to attend to publish the agenda for the program online.
Unfortunately we cannot accommodate this request as the schedule of events will frequently change (even up to the day before the program). What we can do however is provide a list of the topics we will be covering as well as some of the panelists who will participate on October 27th and 28th.
The topics we will cover include:
The state of the home improvement industry heading into 2010
Trends and projections relating to the economy
Legal issues that have arisen in the past year (and those that are on the horizon)
The Lead Paint Act
The fallacies relating to most canvassing programs
An updated sales training program
Whether to acquire another company (or be acquired?)
S.F.I. programs
Business diversification
Marketing at shows and events
Internet marketing strategies
Some of the presenters include:
Rick Strachan, Executive Director of Hanley Wood Magazine which consists of 12 business publications and is one of the top 10 media firms in the U.S.
D.S. Berenson, Partner of Johanson Berenson LLP who was honored in the 2005 Forbes magazine, "Special Tribute to America's Best Lawyers"
Murray Gross, CEO and Chairman of the Board of U.S. Home Systems, a publicly traded company that is the largest manufacturer of cabinet refacing in the United States
George Faerber, Co-owner of Faerber's Bee Windows a 26 year old home improvement company and Owner of a brand new venture called Bring Me My Leads.
Dr. Robert Genetski, one of the nation's premier interest rate forecasters and investment advisors
Please listen to the complimentary mp3 from this April's summit and if you have any further questions let us know.
Also don't forget to support our business partner Hanley-Wood by attending The Remodeling Show!
After many revisions and a lot of back and forth between myself and our webmaster, our new site is finally live!
One of the primary focuses of the site is to provide access to as much free information as possible to our clients and customers and as you navigate through the website I think you will see this.
However, the website is still a work in progress and we need your suggestions.
Please e-mail me at brad@daveyoho.com or comment on this blog with your feedback.
We appreciate your interaction with Dave Yoho Associates!
As many of you within the industry are already well aware, the stiff lead paint regulations have had a tremendous impact on the way that businesses our run.
While we at Dave Yoho Associates certainly are outraged by the negligent practices that have caused illnesses and deaths as a result of lead paint infractions, it is our view that the government is taking extreme precautions that are making it difficult for "the99% of home improvement contractors who run their business by the letter of the law".
Now, there are rumblings of stronger regulations and fiercer penalties being proposed by Congress.
At our next Home Improvement Economic Summit renowned industry legal expert D.S. Berenson will present pertinent issues that you as an owner of a successful home improvement company need to be aware of as we move towards 2010.
Also, one of our business partners, Kachina Contractor Solutions, is on top of all the latest developments that our occurring and we advise you to contact them should you have any further questions.
We have posted videos on many other topics including:
Selling skills
How to hire salespeople
Why replacing your windows is of vital concern
Other motivational speeches by Dave
I encourage you to view all of our videos - and - regardless of your background you will find useful and powerful ideas that you will take away from each.
The easiest way to view our videos is to go to our channel on YouTube and subscribe, so that every time a new video is posted you will be notified.
Also, if you have any requests for other videos you would like us to post, please send me an e-mail at brad@daveyoho.com - or - simply comment on this blog posting.
Recently I was asked to participate in a local documentary produced by the Hunter Mill Defense League entitled, "Danger Between the Lines".
It tells the story of one of the most active areas during the Civil War conflict (the Hunter Mill corridor).
The Hunter Mill corridor represented a gateway to southern Virginia, which was the capital of the confederacy and was connected by railway to the nation's capital, Washington DC.
The documentary was produced to educate the public and particularly those in the school systems about valuable Civil War data, some of which is not commonly known.
Because of its proximity to Washington DC, the area became a hotbed of controversy and split loyalties which often came to a boiling point with aggressive and antagonistic behavior. The Civil war lasted 4 years and took 620,000 lives and eventually created the circumstance which took the life of our 16th president, Abraham Lincoln.
I am extremely proud to have been a part of this documentary and ask all my friends and colleagues who are interested to view it for yourself on Sunday September 6th at 3:00 PM EST on WETA - - or - - you can view it on Cox (726), Comcast (220), FIOS (526), Direct TV (26), and RCN (613).
The next Home Improvement Economic Summit is only 2 months away and we are beginning to formulate the itinerary which will include the panelists and topics being covered.
The program is being held in conjunction with the Remodeling Show and a ticket to the Summit will include complimentary access into the exhibitor area at the convention center.
Do you have any pertinent issues facing your business that you would like to see us cover?
Would you like to participate in the event as a panelist? Is so, what is your primary area of expertise?
Please contact me directly at (703) 591-2490 or dave@daveyoho.com.
In the interim, feel free to listen to this complimentary mp3 from the keynote address of this Spring's summit.
Prospect capture forms have gotten to be the norm on websites for years now. The "hook" frequently goes something like this: "Sign up today for our free newsletter, e-book, or demo CD" and the prospect is thus induced to enter in their contact information in order to ascertain the "free" materials.
This is an excellent way to build an e-mail or mailing list for future use in your campaigns.
However, what I don't see a lot of websites doing is incorporating the capture form into their home page. For example, what you will typically see is something like the following: "Click here to sign up for our free newsletter!"
Why would you make the prospect take an extra step in signing up for your product/service? Furthermore, why would you want to take him off of your home page?
A better example of a capture form is one where the prospect can simply see the offer as soon as they come on to the company website and enter in their information immediately.
Also, don't forget to place this form "above the fold" on your website. What this means is that it is visible as soon as the website appears on the screen, and no scrolling down is required to view it.
If you follow these steps I can guarantee that your conversion rate will increase dramatically and the goal of building your list will be achieved at a much faster rate.
On July 20, 2009 my professional speaker peers at the National Speakers Association Annual Convention in Phoenix honored me when they bestowed upon me the coveted “Master of Influence” award. There have only been a very limited number of people who have been graced with this award. Past recipients are Deepak Chopra, Art Linkletter, Jack Kemp and Dr. Ken Blanchard. This award is presented annually to only one individual who has significantly influenced people around the world through his or her exceptional speaking ability and whose distinguished speaking career has brought honor and recognition to the speaking profession.
It was, at the same time, both a humbling and an exhilarating experience as this award was presented. It is one thing to stand before an audience for a client and deliver a message that will impact their lives in a positive way. It is quite another to stand before your peers, each of whom knows what it takes to prepare and present a program that will move an audience. To be honored with such an award let’s you know that the years of preparation, rehearsing, days away from your family and friends, shaking countless hands and coping with the rigors of travel have not gone unnoticed.
The president of the National Speakers Association, Sam Silverstein, who presented the award, had this to say, “Beyond his many accomplishments, I ask you to observe his unusual level of energy, his choice of words and his speech pattern. I believe you will discern why he is the recipient of this award.”
You can experience a four-minute sample of the energy, word choices and speech pattern Mr. Silverstein spoke of by clicking on this link excerpted from another presentation I made before an audience of thousands: http://www.youtube.com/watch?v=H7jyOf-a7_4
I hope you enjoy this short clip and will share it with as many friends and colleagues as you can. Children and young people will especially benefit from these four minutes. Melvin Rosenblatt, Chairman of MidSouth Building Supply stated, “The 4 minute video should be played in every auditorium in the US.”
It is the desire of the National Speakers Association that this message gets transmitted in some fashion to those who are enduring challenges in their business or personal life. This is a message of hope and is an antidote for the abundant negativity and pessimism displayed by the news media.
Modern technology makes it possible for this message to be relayed without cost or obligation to those you know who will enjoy the uplifting video clip. There is even a message to the hearing impaired (watch my right hand as the conclusion of my remarks).
A long time clients/associates responded by saying, “I am astounded by his superb communication skills, academic achievements, sound judgment, analytical ability and endless energy.” Peter Bulger, former CEO, U.S. Home Systems, Inc.
Thanks for taking the time to view this video clip.
At seminars this statement attracts flak like a magnet held over iron filings. Salespeople and their managers protest; they evoke their love of selling. Then I ask pointed questions and request that participants raise their hands.
I ask, Have you ever . . .
• Had an appointment where the prospect was an hour late? • Had a lead where the prospects didn’t show at all? • Been allotted half the time you anticipated to make your presentation? • Been promised an order and didn’t get it? • Lost an order to lower prices? • Had the contract turned down by the bank/finance company? • Had a contract canceled by your customer? • Been required to work (solicit) around an installation? • Made a call in temperatures over 95 or under 30 degrees, or when it was raining or snowing?
Then I ask, How many of you like or enjoy these tasks or circumstances?
None of these are fun, yet they constitute a major portion of sales responsibility. Why would salespeople enjoy that part of the role? They don’t.
Getting an order, receiving kudos for performance, getting paid sizable commissions, or winning a sales contest are the enjoyable parts of selling, yet they represent a relatively small part of a salesperson’s time and activity. Once a manager recognizes the indisputable truth that most salespeople do not like to perform these tasks, there is a greater possibility of creating advanced training and motivational techniques.
Disciplined salespeople achieve the greatest earnings because they recognize that calling on prospects, staying organized, having appointments or orders canceled, facing the possibility of rejection, and overcoming objections are simply steps in the process that leads to sale success.
In this changing economy, what changes have you made in training your salespeople and/or stimulating their thinking and understanding of the sales role?
You’ve got a lead in your hand. An appointment has been set and confirmed by your office. You’re an experienced salesperson. You know your product and you’ve been trained how to present it. If this is a successful sales call, you stand to earn a sizable commission. You believe you’re in the right frame of mind and you hope the customer is also.
But wait. This morning when you arose, you tuned into the local news. They explained how the economy was erratic, the stock market lost some points, unemployment hit a new high and the big box stores weren’t making the amount of money they projected earlier this year. However, you fluffed that off, had breakfast, met with those in your office and discussed last evening’s sales call and the reasons why prospects aren’t buying now.
Before your sales call, you pick up the local newspaper. You receive the same implants that you heard on television: stories of rapes, murders, assaults, robberies, state and local budget problems, potential tax increases and more.
You have been infected. Like it or not, unless you know how to counter this information, it may well affect your ability to sell the lead tonight – why, you ask?
Because whether the information is true or not, it is negative. Psychological studies show that as little as five or ten minutes of negative input can affect your central nervous system for up to twenty hours – reducing your energy and depleting your positivity.
Stay centered. The majority of homeowners are not facing foreclosure or unemployment. The majority of people want to keep their houses in good shape. Concentrate on the sales system. Ask for the order one more time. If they’re not buying, ask “why?” one more time. Don’t buy into the media negativity. Remind yourself, when people retrench, the majority of their spendable income still goes to their homes – and – stop reading the front page of the newspaper, spend less time on television news and spend more time with positivity.
The Prescription. Listen to and read about successful issues. Examine the positives in your life and in your business. Start giving your time to others and work harder on the continuing development of your professionalism.
Some years ago I made a speech to over 4,000 people entitled Yes You Can (Thriving in a Changing Economy). Now, this and other inexpensive recordings are being made available to bring the powerful forces of positive thinking into your life and your business today.
The American Clean Energy and Security Act passed through congress without much fanfare over the weekend. After all with Michael Jackson's passing, it was difficult to find any news coverage devoted to another topic.
However, the ramifications of this act if it passes in the Senate will be felt throughout both the home improvement industry and the United States as a whole.
The 1300+ page act passed by a scant 7 votes, and while the stated goal is to: "Cut down on carbon emissions and create 1.7 million jobs in the clean energy industry" - - the true purpose of the act is to standardize energy and emissions laws across the U.S. In effect, the government would have control over these regulations instead of them varying from state to state.
What the act does not present (at least directly) is that this will force homeowners to change the way that they both maintain and sell their homes. A "national standard" similar to the one that currently exists in California will require homeowners to replace outdated windows and other energy-related home products even if they are still in good standing.
As a representative of the home improvement industry, I am excited about the positive impact that this may have on many businesses. However, like most of you I am also a homeowner and I see a problem with the government trying to regulate the maintenance of our homes to this degree.
While there are many homes that are in need of energy efficient products, a large majority of the populous lives in homes that are not that old, and have windows which while they are relatively new, will not meet the requirements under this new act. So if they cannot afford to replace these windows before they put the house on the market, this act puts them in very bad situation.
Furthermore, the cap and trade act will likely lead to a sharp increase in the cost per household.
I encourage home improvement businesses throughout the industry to monitor this act closely, because the ramifications on your company could be tremendous if this is passed.
Regardless, for homeowners and businesses alike this complimentary e-book on replacement windows will be a huge asset moving forward.
While it is still relatively early we would like to hear your suggestions for topics you would like us to discuss. You may either submit a comment on this blog or you can e-mail your suggestions to admin@daveyoho.com.
Also, don't forget to check out the complimentary mp3 of the last Economic Summit. You would hate to miss out on a wealth of information from one of the most knowledgeable industry figures: Rick Strachan Executive Director at Hanley Wood as he gives his keynote address.
According to a recent article from the ARA – while foreclosures are at record rates the vast majority of homeowners are still current with their mortgages. Between the low interest rates and the fact that most of these homeowners are opting to remain in their current houses, it is providing more opportunities for home improvement and remodeling businesses.
There are several very distinct advantages for people to have various home improvements and remodeling projects done and upgrading one or more bathrooms are high on the list. Among the advantages are:
*People want to improve the value of their property during these recessionary times.
*People want to enjoy the benefits of a more luxurious living environment.
*People can recoup as much as 75% of a bathroom remodeling project’s costs when they resell their home as indicated in Remodeling Magazine’s 2008-2009 Cost vs. Value Report.
*People can realize savings in energy and resources consumption through upgraded “green” materials including ceramic tile, water-conserving fixtures and energy-efficient lighting
*People find that investing in baths and fixtures that create a spa-like environment provide a more relaxing experience in their own home, reducing stress and saving them the time and expenses of visits to spas and massage therapists. According to Steven Deland of Acryline Bath Systems, “Demand remains strong for tub experiences that really underscore hat feeling of spa like relaxation in the home bath.”
The U.S. has continually experienced cycles of economic upturn and downturn since World War II. On average, despite these cycles most homeowners have realized a doubling of their home value about every 11 years. Deland says, “Investing in your home is still one of the most sensible ways to spend your money and improve your life.”
There are always opportunities in every adversity. A solid plan, flexibility and innovation are important cornerstones of not only surviving, but also thriving during these challenging economic times.
When we go into a client’s operation one of the things that we frequently hear is that they are doing their best to follow up with prospects who have expressed an interested in their business. Yet despite this, we have yet to interact with a client who has the time or resources to follow up with all interested parties on a consistent basis.
Sure, many do it better than others, but the fact remains that everyone would like to improve their prospect conversion rate.
So how do you accomplish this task?
What we have found is that the majority of our clients and customers do an excellent job following up with prospects and customers via phone calls and person-to-person contact and these both remain the most effective methods of interaction. However, the reality is that many homeowners are very inaccessible in today’s society and this is why e-mail communication can be so effective if it is done correctly.
Now before you stop and say that:
a) You have tried this before and it was not very effective b) E-mail is treated as spam from most homeowners
I would like to ask you to rethink your opinion.
First of all, while these two points might be inherently true, the fact remains that most e-mail communication is composed in an ineffective manner. There are services or individuals that can be hired at extremely low rates (particularly in today’s economy) to write effective copy for you. Let other people handle the tasks that you do not specialize in.
Second, what are you doing to build your database? Are you attempting to double opt-in all of your prospects/customers? Do you realize how dramatically this will reduce your e-mail bounce rate?
Once these two tasks are accomplished then you need to consider investing in a software service that can automate your follow-up process. There are inexpensive services out there that can accomplish the task of multiple phone sales representatives simply by continuously following up with homeowners.
Why does it work so well? Because it keeps your company in the forefront of the prospect/customer’s mind. Studies show that it takes an average of 5 contacts before an individual processes the information that you are presenting them with.
The culture of our society is changing and it is vital that you do everything you can to stay in front of your potential customer.
Q. Will the Energy Star stickers on the windows (or other products) have to be submitted by the customer for their tax credit?
A. It is a good idea to have the customer keep the sticker off a window or the package of their product to substantiate their claim.
Q. How do I give credible information to the customer which eliminates my installation costs without jeopardizing my contract?
A. Construct a formula that is realistic and yet protects you. Give this to the customer as a receipt when they pay. Be sure your formula is fair, practical, and consistent.
There is a lot more information and the answers to more questions in the recorded proceedings of the first Home Improvement Economic Summit recorded in April 2009. The entire summit is available on 11 CDs plus an additional CD Rom with the Summit manual and 220 PowerPoint slides. For more information send an e-mail to admin@daveyoho.com or call our office at (703) 591-2490.
That’s all for this time. I’ll have more useful information in the next posting.
Let’s pick up where we left off in the last posting with some more questions and answers about the Energy Tax Credits.
Q. How do we present the tax credit to prospects?
A. It is best to have it as a page in your presentation book together with a copy of the certification they will receive. Prospects can be advised to search the websites listed in the last posting for the same purpose.
Q. Is there a special form that customers will have to submit with their tax return?
A. Currently, IRS Form 5696
Q. Suppose our product, i.e. bath refitting, coating, cabinet refacing, etc. doesn’t qualify as an energy saving product?
A. Start offering energy audits. You can use the H.E.L.P. package we’ve developed for this purpose. H.E.L.P. (Home Energy Loss Prevention) is a copyrighted package enabling those who sell windows with CDs, graphs, charts, support forms, energy audit folders and formulas to present this. Request information on H.E.L.P. with an e-mail to admin@daveyoho.com.
Q. Then what do we do?
A. Most bathrooms have a window. On the other side of the ceiling may be an attic (insulation). You can offer these products as a bonus or discount to help the energy crisis.
Q. Does the job then qualify for $1,500 tax credit?
A. Only the portion that relates to the energy credit that you installed.
Remember, you used energy conservation to get the lead and you have made them energy conscious.
Absorb these ideas and consider how you can implement them into your lead acquisition and sales appointment program.
We’ll answer some more questions in the next posting.
We discussed the excellent marketing potential the new Energy Tax Credits in the massive government stimulus package provide for us in the last posting. There is $6 billion available for home improvement manufacturers and retailers. In order for you to benefit from this opportunity, you need to be well informed and capable of showing the homeowner how they can gain the maximum benefit from this tax credit. So, in the next few postings, we’re going to ask the questions and answer them for you. So, let’s get started . . .
Q: What are the qualifications?
A:Qualified home improvement products installed between January 1, 2009 and December 31, 2010 on homeowner occupied residences.
Q: How much is the tax credit?
A: Homeowners can claim a tax credit of up to $1,500 representing 30% of the purchase price (not including installation costs).
Q: How do we know the product we’re selling qualifies?
A: Get certification from your supplier. You will need this if you’re challenged.
Q: Do we have to leave a copy of the certification with a customer?
A: It is advisable, although not required to send this in with their claim when they report their taxes. They should be reminded to keep a copy for that purpose.
Q: Which products qualify?
A: All products must meet a standard specified within the Act. Windows, doors, skylights, insulation, roofing, certain types of HVAC equipment and solar products.
Q: Where can we get more information on qualified products?
These next two Q’s and A’s are very important to understand and remember so the prospective buyer fully understands how they get their benefit.
Q: What is a tax credit?
A: Homeowners don’t receive the tax credit when they buy the Home Improvement project. They claim the credit on their federal income tax form at the end of the year – 2009 or 2010. The credit then increases the tax refund they receive or decreases the amount they owe.
Q: What is the difference between Tax Credits vs. Tax Deductions?
A: In general, a tax credit is more valuable then a tax deduction. A tax credit reduces the tax you pay, dollar-for-dollar. Tax deductions – (home mortgages or charitable giving) – lower the taxable income. If you are in the 35-percent tax bracket, the income tax you pay is reduced by 35 percent of the amount of the tax credit.
Let’s wrap it up here for this blog post. I’ll have more Q’s & A’s in the next posting
You are probably aware that there is an energy tax credit incentive for home owners built in to the government’s massive Stimulus Bill. Let’s recap this tax credit incentive and examine how this can be a massive opportunity for home improvement retailers.
First, it’s important to understand that this is a tax credit not a tax deduction. There is an important distinction here. A tax deduction means you deduct the prescribed amount from your taxable income before determining your tax liability. A tax credit means you reduce the tax liability you owe by the amount of the tax credit. Thus, if you have a $10,000 tax liability and a $1,000 tax credit, you only owe the IRS $9,000.00. This has huge implications for home improvement retailers.
Another important aspect of this tax credit is that it increases the cap from 10% to 30% for certain home improvement expenditures (energy conservation products.)
Here is a summary of the American Recovery & Reinvestment Act of 2009. The more significant incentives provided under the new law include:
Residential Energy Property Credit – Increased to 30%
The new law increased the Code Sec. 25C residential energy property tax credits from 10 percent to 30 percent, raises the maximum cap to a $1,500 aggregate amount for 2009 and 2010 installations, eliminates the $500 lifetime cap and makes several other modifications. The changes are effective for eligible property placed in service after December 31, 2008 and before January 1, 2011.
Note: Higher energy costs should accelerate the “pay-back” period for qualifying home improvements. The credit was in effect in prior years through 2007, but Congress allowed it to lapse for 2008. Pre-2008 credits are not counted toward the new $1,500 maximum.
Note: Improvements eligible for the Code Sec. 25C credit include insulation materials, exterior windows including skylights, exterior doors, central air conditions, natural gas, propane or oil water heaters or furnaces, hot water boilers, electric heat pump water heaters, certain metal roofs, stoves and advanced mail air circulating fans.
For more detail on these tax credits check out this Energy Star link
Residential Energy Efficient Property Credit
The new law removes the individual dollar caps under the Code Sec. 25D residential energy efficient property credit for solar hot water property, geothermal heat pumps and wind energy property. However, the new law places a $500 credit cap on qualified fuel cell expenditures.
Next time, we’ll answer some of the important questions about this terrific marketing opportunity.
A renowned philosopher once opined that, “in times of great change, it is the learners who have the greatest potential for success, for the learned find themselves equipped to deal only with a world that no longer exists.”
Join me, as we and others, not unlike Don Quixote, buckle on our armor and prepare to battle windmills. While we face the necessity of economic change, the windmills of doom and gloom keep turning. And as we respond to the call for ingenuity, creativity and change, while tightening our belts, the windmills, who create our laws and control the financial security of many with whom we do business, grind on . . . and on.
But, unlike Don Quixote, we have battled these forces before and won. We, the entrepreneurs, are the backbone of this $325 billion industry. We are ready to strive forward till we see the bright and shining El Dorado, which is our future.
In 2007, while researching for a book I authored entitled Why. . . Buy Replacement Windows? I found that there were 22 million windows manufactured for new home construction. During the same period, there were 33 million windows manufactured for replacement installations. The majority of these replacement windows were custom manufactured – to size – and delivered within two to three weeks from the time they were measured by a window expert and purchased by the homeowner.
In most cases, within four to six weeks from the time they were sold, they were installed in the home with little or no disruption to those living in the home – and – the windows replaced were removed and disposed of without damaging the environment.
The largest percentages of these windows enabled homeowners to live with less maintenance and contributed to energy loss reduction with great savings to those homeowners. Plus, the homeowners realized a healthier lifestyle.
This is, but one example. I could cite similar studies for insulation, roofing, heating/air conditioning, siding, gutters, cabinet re-facing, bath refitting and more.
Our industry took great products that might still be on a drawing board and created ways to get viable information to homeowners through creative marketing. We researched tools and equipment to complete the installation. We offered services that ranged from financing – to cost vs. value surveys – to customer service development. All of this, arguably, lifted this fragmented industry to become a cornerstone of the American economy.
A portion of our $325 billion total is comprised of D.I.Y. – do-it-yourself projects. Yet, the actions of promoting and advertising by retailers is what created consumer awareness, which, in turn, stimulated the D.I.Y. market and still does today. And, if you marvel at the growth of the “turnstile” end of the business through companies like Lowes, Home Depot and similar, you can thank the home improvement product and service retailers. They first took great products door-to-door to develop consumer interest and the appeal for so many of the products featured in the “turnstile” home improvement store of today.
Yes! We face economic challenges in our business and personal life. Yes! Our country is enmeshed in a crisis of transition and adjustment. And, yes, we are challenged by the lack of cooperative research and understanding by the political pundits as well as those we have elected. Irrespective of the political party, we have expectations that they will be practical, pragmatic lawmakers who see beyond personal opinions and purposes – to perceive the needs of ALL their constituency.
We ask lawmakers, the press, the public and others to give credence and understanding to our challenges in the home improvement industry and to recognize that we are a $325 billion dollar industry. We are fragmented at best, entrepreneurial in our composition, employers of millions and the progenitor of products and services that were created to enhance the value of homes and continue to effectuate the American Dream.
We drive the market with creative advertising, install the products with unbelievable efficiency and, usually, with little disturbance to the committed lifestyle of the owners.
Our efforts give employment to those in factories, shipping companies, toolmakers, insurance companies AND to many industries, some of whom have little understanding of who we are or what we do. Our efforts have led to improve the real estate values of homes and increased assessments and created taxes for the communities in which we operate. And, by the way, those we employ pay taxes as do we and our companies.
By the very title employed to describe us – entrepreneurs – we acknowledge our role in the business structure – for in truth – entrepreneurs have the power to turn around this economy. We have shouldered our responsibility in the past. We will do so again.
As you read in my last posting, I was commenting at the 2009 Home Improvement Economic Summit earlier this month, on those who denigrate, are critical naysayers and prophets of doom – usually the media.
I reminded those in attendance about a former, wordy Vice-President – I’m sure you remember Spiro Agnew. As you’ll recall, he eventually came into great disfavor and resigned from the second highest office in our country. Mr. Agnew labeled these purveyors of negativity I was speaking of, the Nattering Nabobs of Negativity. It really has a nice ring to it, doesn’t it?
No matter the ultimate downfall of Spiro Agnew, by our history, we understand that that the validity of any statement has little to do with the integrity of the person who made it. Facts still outweigh opinions and negativity is the enemy of your success potential.
Today we are excessively exposed to many nattering nabobs of negativity. They are in the person of our customers, employees, families and friends, the press and our leaders – many, who fall prey to this malaise and proceed to state their opinions as facts.
Why? I believe it’s because it is human – to believe and to want to believe that the newspaper, the radio and the television convey fact – and not to believe what you see and hear – which might demean you as ignorant.
Did you ever wonder why radio, newspaper and, particularly, television are each referred to as a medium. I believe it is a medium because it is rare that we see or hear news that is well done.
To prove my point, try this experiment for the next 21 days. Start telling your employees, associates, customers or clients – in fact, almost everyone you come in contact with:
That you – now know that in the U.S. we employ 92% of our employable workforce and that no country with a population of over 300 million has ever accomplished this.
Tell them that when our country is considered at full employment that the unemployment rate is normally at 4 to 4.5%.
Tell them that 90% of the mortgages in this country are paid on time.
Remind them that the highest percentages of mortgage defaults are in 2 states and a good percentage of foreclosures are on 2nd homes and vacations properties.
Remind them that in 1982 the unemployment rate in the U.S. was 10.7% and mortgages carried an interest rate of 15-20%.
Let them know that despite the demise of real estate values, most homeowners enjoy ownership and will continue to care for, maintain and improve their most valuable possession and the lifestyle it provides.
Portions of this last particular statement are supported by the Joint Center for Housing Studies at Harvard University.
Think about these statements and then consider if you want to buy into the, so called, facts we are hammered with from those nattering nabobs of negativity.
That’s right! The 2009 Home Improvement Economic Summit Conference is now part of the history books of our industry. On April 1st and 2nd, about 100 industry leaders representing the manufacturers, retail sellers, installers, trade media and providers of ancillary services to our industry, gathered at the Westfields Conference Center in Chantilly, VA. Additionally, we had industry experts who specialize in this industry in attendance and as speakers. They included an economist, a corporate lawyer, a CPA, a retail financing specialist, an energy specialist, an advertising specialist and Internet marketing specialists. This was a singularly powerful information event.
In future postings of this blog, you’ll read pieces of some of the massive body of information. But, to start off, here is a short piece from my opening remarks as I challenged those in attendance to participate with an open mind and be ready to consider new ideas during these critical times.
Abraham Maslow, a noted behaviorist who developed the theory known as “the hierarchy of needs,” also studied the concept of accepting new information. He concluded that you and I are at the top of our game when we reach that level when we are aware of – most – or almost all available knowledge in our chosen field. Maslow called this achievement our conscious competency. This is a time when you really know – and you know that you know – that you know. We’ve all been there.
Yet, Maslow dashes our hopes when he concludes that at this point in your learned process, you also measure any new information against that which you already know, thus, judging what is new – and most frequently settling for – what you already know.
Do not let it be denigrated or neutralized by the critical nay-sayers or the prophets of doom who permeate our sight and sound each day.
Some of these are in your own organizations or your circle of friends – while others are in the media – they, who by sight and sound, present themselves as expert prognosticatorsin a format where opinions are projected as facts.
The entire Summit Conference was recorded by Oakhill Press and is being produced into an eleven CD package with nearly 12 hours of vital information for anyone in the home improvement industry. There will also be a twelfth CD that will contain all of the PowerPoint presentations, some supplemental material and a special one hour bonus audio program. You can go to our Web site at www.daveyoho.com or call our office at (703) 591-2490 for more details.
The Home Improvement Economic Summit is upon us. April 1st and 2nd are rapidly approaching when the movers and shakers from the Home Improvement Industry will be gathering in Chantilly, VA at the Westfields Conference Center to discuss the current state and the future of this major economic force in our global economy.
This is no insignificant gathering of colleagues for the purpose of socializing and swapping war stories. The Home Improvement Industry annually represents an amount of revenue equal to nearly 50% of the amount of money the U.S. Congress recently authorized under the “Economic Stimulus Plan.
According to a recent release by the joint center of studies at Harvard University, The Remodeling Market in Transition – 2009, this giant industry has stimulated the market for home ownership, and created millions of jobs for manufacturers and those who install and service the products manufactured. The home improvement industry uses more building products then the new construction industry.
The US government and the media have taken scant notice of the issues and concerns of this great industry and therefore its future will be determined by the pioneers, innovators and creative marketers who have brought new products and ideas to the largest homeowner base in the world.
Highlighting the Economic Summit will be the presentation of the information contained in the Harvard Studies, regarding the remodeling industry.
Speakers at the Summit include:
Dr. Robert Geneski, internationally known economist, www.classicprinciples.com will lead the discussion on the economic issues which face the US with projections for the balance of 2009.
D.S. Berenson, senior managing partner of Johanson Berenson, www.johansonberenson.com will chair two panels introducing information regarding new tax laws, opportunities in the “green market” and new forthcoming legislation on the control of independent contractor status.
Additional panels on a wide range of economic issues will be chaired by industry leaders. Some of the topics include:
Energy Tax Credits and Marketing Them
Retail Financing in a Changing Market
Growing You Business in a Changing Economy
Internet Marketing
Diversity in a Changing Marketplace
I will act as the host of the Summit. It is my position that retail financing is a ‘must’ for those who labor in this industry at the behest of homeowners who require the ability to make sensible loans which enable them to keep their property maintained and energy efficient. Further, I believe that the ability to market products is severely impaired by the abundant negativity replete with doom and gloom expressed by congressional leaders and a sorely misguided media.
Those attending the Summit represent the most successful dealers, installers and manufacturers, all with an eye to strengthening the industry through creative and innovative new approaches to assist their customers in maintaining and improving the investment in their homes and increasing energy efficiency as part of a global initiative.
The Summit is being recorded by Oakhill Press and the proceedings will be available in CD format. Watch for complete details on this blog. And, stay tuned to the blog for a lot of great information and ideas to help improve your business and the economy as we release them.
“Insanity is doing the same thing repeatedly and expecting a different outcome” – Albert Einstein
In 1982 the unemployment rate was over 10%. Residential mortgages were loaded at 15-20% interest. Auto loans were – 14.8% – and – almost 30% of the automobiles and appliances sold in the United States were produced in Japan or Korea.
The media said it was the worst economy since the Great Depression. Home improvers claimed customers “were reluctant to buy until the economy changed.”
Companies who survived (and many thrived) effectuated change and stimulated prospects with themes such as “don’t move – improve” – or – “You auto buy now” (auto industry). Home improvers created outbound tele-marketing centers. They retrained their salespeople with more effective sales methods to convince home owners to buy now.
Check the record – replacement window sales soared. Double and triple pane units sold at a premium. It was the halcyon days of vinyl siding. Sunrooms had their biggest period of growth. Kitchen cabinet refacing became the option for kitchen remodeling.
Companies cut back on media advertising and yellow pages. In exchange, direct and marriage mail created abundant leads. Sears increased their SFI representation and fostered the (then) largest SFI program ($250 million annual sales) via a company called AMRE. Call centers properly developed without offensive call techniques became the low-cost lead form.
The critics and the nay-sayers lampooned the efforts of the more aggressive sales organization.Tele-marketing became the basis of joke and ridicule – so, what happened?
By grit and sustained effort, many companies sold more, found new ways to get low-cost leads, hired salespeople who did not come from the industry and trained them to be world-beaters.
It’s your choice. If the economy won’t change, it’s time for you to change. In the last month, Home Depot’s sales remained flat versus last year. Lowe’s had increases of about 1%. If this is sad news in the world of retailing, there’s a message. Consumers will spend less and maybe – just maybe – are reserving their spendable dollars for their most important investment – their home. Change ---- if it is to do, it’s up to you.
Thank you for checking out the inaugural posting of this new blog created specifically for YOU, the Home Improvement Professional. Read on and learn how this blog is going to assist you and your business not only to survive, but to thrive during these challenging times.
This blog is your way to keep up to date on important issues, concepts and information that can impact your business. There is no need to belabor the fact that we’re going through an unprecedented economic event. The event has been called a crisis, a recession and some economists are even referring to it as a depression. Well, those are all just words. Another word that is just as relevantto you during this economic event is opportunity. As Napoleon Hill stated, “Every adversity, every failure, every heartache carries with it the seed of an equal or greater benefit.
So, through this blog you can expect to read powerful ideas and concepts you can put to work in your business. You’ll learn about events, seminars, conventions, shows and training programs that will increase your effectiveness and that of your people. There will be quick tips and techniques that we’ve used successfully at Dave Yoho Associates as well as proven ideas and tips from other business leaders both from within and outside our industry. You’ll read excerpts from interviews with successful home improvement business owners, sales managers, salespeople and other industry professionals. Our legal beagle, D.S. Berenson, will keep you on top of the law.
There may be days when several entries will be posted here. There may be a few days that pass without any new postings. But, rest assured, you will learn from the leaders - and - the movers and shakers in this great industry. We solicit your contributions, too. You’ll be able to make comments on what you read in the postings. You will find a place below each blog posting to leave a comment – please do so. We can’t encourage you strongly enough to participate. Your experiences, opinions and thoughts are important to everyone reading this blog.
You may also have some important information that is valuable enough to be a posting in itself, Don’t hesitate to contact our blog editor at admin@daveyoho.com and we’ll evaluate it and post your information as a guest contributor.
Finally, you will soon receive a notice about the new podcast we’ll launch in the very near future. The podcast will be available on a weekly basis and, once again, it will be targeted directly to you and your business in the home improvement industry. You’ll hear from me and many others including our blog contributors and other industry leaders. You’ll even be able to hear the actual recorded interviews with the people we excerpt and feature in blog postings.
What is the value of one great idea? You’re getting on the idea and information express track. You can count on current, up to the minute, cutting edge information that will not only help you weather this economic event, but reveal the opportunities to grow your business at a time when many around you will fall by the wayside. These information tools will benefit you most if you read the blog and listen to the podcasts regularly. When you APPLY them in your business, you’ll avoid many pitfalls and experience amazing growth while other businesses around you are floundering. I can’t emphasize, enough, the value of subscribing to this blog and to the podcast for FREE, so you have it delivered directly to your computers as soon as the latest postings and podcast episodes are released. We’re doing our part to help you grow your business. We can throw the ball to you. YOU have to catch it or you’ll miss the value!
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