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SMALL BUSINESS
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By Robert Burke |
The BusinessRemod Inc., a remodeling and construction company with five employees. The company serves the fast-growing Fredericksburg area on small- to medium-sized residential improvements and additions. The PlayersCompany owner George "Buck" Rodgers
started the business 11 years ago. |
| The
Problem Rodgers landed a
huge project. While that was good news, it also
carried a financial risk. Rodgers had to figure
out a different way of pricing the project, and
he had to come up with a plan to maintain his
smaller, bread-and-butter jobs. |
 artwork by Chris OBrion |
The Background Rogers has a reputation for doing good work, allowing him to attract new customers without having to advertise. He relies instead on word-of-mouth referrals. People sometimes wait several months to get his services. "I do a lot of things based on handshakes [and] what I think is fair," he says. Most jobs have been fairly small, such as a bathroom or kitchen renovation or a small addition. |
But in 1997, he was offered his biggest job ever -- a 3,000-square-foot addition to a house in a historic Fredericksburg neighborhood, along with a complete renovation of the original 2,400 square feet. Rodgers wanted the work but realized he couldn't bid the project in the usual fashion -- with an estimate and a handshake. Old houses often have hidden problems that don't appear until workers start tearing out walls. On a project this size, Rodgers' small company couldn't afford unexpected costs after the bid was set. The Solution Rodgers abandoned his standard practice of bidding a project. Instead, he works for a set fee for specific work within a particular time period. If the customer wants to add another bathroom or move a wall, Rodgers is happy to do this for his set fee, provided it can be completed within the agreed-upon time. If these changes mean the project will take longer than expected, then Rodgers renegotiates his fee. With this arrangement, Rodgers and the client can make changes without worrying about delays and changes cutting into the homeowners' expectations or Rodgers' profits. After 11 months of construction, the owner's family was able to move in last summer. There are still a few final tasks -- such as completing the exterior painting -- that were held up in part by changes made by the owner. "It's better doing it this way, [because] they're going to get what they want. It just takes longer to do it." Working for a fee doesn't allow as high a profit margin as bidding, but Rodgers says it's the only way he can handle the work. "I imagine almost any project over $150,000 I would be very skeptical of touching without this type of arrangement," he says. Rodgers' work on the house helped him land an even bigger project, just a block away, on a four-story, 9,600-square-foot 1910 Georgian revival that had been gutted by fire. That house, originally valued at $600,000, will be worth more than $1 million when restoration and expansion is done next year. Even though he's busy now, Rodgers is wary of losing his share of the smaller jobs, so he continues to do some of them while the larger projects are under way. He sees the potential to get more large-scale remodeling jobs and plans to keep his company involved in both, if he can find enough qualified employees. "If I take myself out of circulation [for smaller projects] for this long, I'm dead," he says. Virginia Business collects tales of innovations from small businesses statewide. If you have a case study in problem-solving, e-mail eleitch@va-business.com.
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