Mark: Today on PowerTips Unscripted. We talked to Joe Smith, partner of Owings Brothers Contracting and Elders Park, Maryland. Adding a showroom can help cultivate your leads and control the client experience. It also allows you to sell products at better margins and not lose track of your clients, visiting other showrooms and vendors. Joe is here to discuss how to use a showroom to help you close deals and control your process.

Mark: And we’ll hear all about it in just a minute.

Victoria: I am Victoria Dowding and welcome to PowerTips Unscripted, where we talk about tips, techniques and techniques to help you build a strong, profitable remodeling company. And I’m here with my co-host, Mark Harari.

Mark: Good afternoon.

Victoria: You know, I love doing this podcast because you learn so much from so many interesting people, don’t you?

Mark: Yeah, we get it. First. You know, for anybody else. Yeah.

Victoria: So I’m I’m excited to talk about showrooms because I think of them as a huge expenditure. You know so I think we’re going to hear today. It’s showroom.

Mark: It’s it’s not an expense. It’s an investment. Yeah. And you and you get a return on your investment like any results.

Victoria: That’s right, that’s right. So I think we’re going to hear from that, person who is an expert on this investment, in the person of Joe Smith. Shall we dive in? Yeah.

Mark: Jump on in.

Victoria: All right. Joe Smith I’ve known him for a long time, so we’re delighted to have him here on our podcast. He has been in partnership with three brothers at Owings Brothers for the past 21 years, which includes multiple entities. The company does. They have an interior design company, two contracting divisions, and a plumbing and electrical division. He is a three time past president of the Maryland Building Industry Association, the MBA.

Victoria: the custom, excuse me, the Remodeling and Custom Homes Council. He’s a proud girl, dad. And a grandfather. Grandfather. How did you get to be a grandfather at your young age, Joe?

Joe: I’m actually a great grandfather now.

Victoria: Holy mackerel. Yeah.

Joe: Let’s just say, we all started useful or we started useful.

Victoria: Yes, apparently. Well, we’re delighted to have you so thank you. You’re a proponent of showrooms, obviously, right?

Joe: Yes. Yeah.

Victoria: So how long have you guys had a showroom?

Joe: So we started out in early Rock. We had a small office, 20 700ft² total, I believe it was. And during the downturn in oh three, I believe it was, we were kind of looking at what can we do to get out of this and sort of help change the narrative. Right. We were all kind of struggling. Our business was cut in half at that time.

Joe: And we were so we looked in insurance and we looked at some other things, but insurance fell apart, turned dirty to us or just not in our wheelhouse. So yes, we we said, well, we’re only doing kids as a bass maker. We need to do it differently. So we visited a couple two rooms and literally started with a conference room that was empty, literally probably 300ft² is what what we started with.

Joe: Okay. just said we test that we had one tablet line and, we didn’t have a designer. We outsourced that. So there were some challenges initially, and we had to learn how to be a retailer. So so I would say probably I would say probably with a 20, probably eight, nine year and now ten years now we’ve had it probably.

Victoria: So you are open like a retailer. So you’ve got set hours, you’re open. Somebody’s always in the showroom. It’s not by appointment only.

Joe: No, actually we look at that model. We we bought a new building a five years ago. And when we were looking, we were looking at a retail potential operation. But we needed warehouse for trucks. We learned a lot of valuable lessons, but the small showroom actually really helped us out, and we decided we wanted to be a destination out there.

Joe: Talking to some people I know nationally that have showrooms, we didn’t want the curve, the people in waiting for the pizza to come in because they had to man that we have to. So our model is by appointment only. Now we do get drop ins, but it’s probably two a month and we’re okay with that. we’d rather have an invite in event than we would.

Joe: That’s just our model, the other people to do it both ways successfully. So.

Victoria: Well, it seems like the model that you have, the making appointment is a lot easier because you don’t have to have man 100% of the time.

Joe: Right. Exactly. And what we what we’ve done when we first started it, we here we renovated kind of temporarily took our store from over there to here, sort of temporarily did it. And then we came up with a plan and then we got to sort of two phases that plan. And now we’re planning the third and hopefully final phase of the, plan.

Victoria: So how do you use this? Because it is a big investment, right?

Joe: It’s a significant investment. I mean, it depends. So if you start, you know, there’s two ways to look at it. You can do a studio version with just limited resources are limited and you can do well with that. But we have grown. We have a couple divisions here and we have internal designers. So we kind of have added to that as we’ve gotten here, where we have 70 500ft² total building and warehouse now.

Joe: And really what we was funny when we bought the building, we said, well, we can lease us out to some designers or architects or and now we’ve been using the whole space. So we changed a little bit and we’ve invested more than we. I can tell you more than we would like our clients a lot of changed orders.

Victoria: so, so you’ve got the showroom now? What kind of a building is it? Or what kind of a location is it?

Joe: So we’re not. We’re in an industrial park. Okay. but we’re on a road that actually has a great third, roof there from, like, people cut through the industrial part to miss the light. So we actually have a brand new sign going up literally next week. Oh, nice little backlit and has and we actually didn’t put our our company brand name on.

Joe: We put in, our home interior design side because we want to make it less feel less competitive to outside designers and contractors.

Victoria: That’s a good move I like that okay. So would you mind sharing if as much as you feel comfortable.

Mark: Before you go on to that, let’s I want to jump on that for a second. So is it a separate company?

Joe: Yes. It’s we we made that choice two years ago to, create a separate company. Because really what we’ve learned through the process here is, we want to make sure that we can sell more product, you know, when you have limited labor sources. We were trying to figure out what’s the best way to grow the company without adding more labor, because that, as you guys, I’m sure around the country, the number one challenge that we face.

Joe: So product is the way to do it right now that we’re better at it. Right? So we decided let’s sell more product. We built a more showroom to talk to some outside professional help about ROI on the space, so we can get into that later. But that’s that’s how we determine, okay, we want to we want to sell our product.

Joe: And so display a product really ultimately is how you do that. Right. People still like the online thing, but people still want to touch.

Victoria: I would think so.

Mark: There’s probably, a bunch of, there’s, there’s some benefits to separating a company out of that. Right. Well, over there, over your tactical purposes, reasons for buying the.

Joe: Two main reasons. One, to invite designers and other people to work with a company that is not only the brothers contract, and then they feel threatened by that. Or, you know, the designers notoriously are very territorial in that regard. And we wanted more. We wanted more control, which was another reason we did the show. We’re going to control the process.

Joe: But the other reason we did home interior by design when we sell furniture now, so blind, so when people come in and they can buy a product and then we, we just did a custom home. We just sold them all the furniture for the home.

Victoria: So nice. Yeah.

Joe: So we’re not a furniture company. We’re not a blind company, but we’re an interior design company, and we’ve actually segregated the building so that the logo and signage on that is now Home interiors by design. And we’re just a little contracting company in the offices.

Victoria: Okay. All right. That makes a lot of sense.

Joe: So we have a 20 500 square foot main showroom. And then we have a selection center and a conference room and a conference room with designs. And we can have our people in there, but also, board meetings outside of us. We can invite other groups to come in and use the space just to use it to see it, even if they’re not in the business, but people with meetings and those so that’s really what we’re starting to work on now.

Joe: So we just finished it about four months ago. So.

Victoria: Oh wow. So really brand.

Joe: New. Oh it’s brand new. Yeah.

Victoria: So would you give us a rough idea of how large the company is? I mean, I guess it would be the Owens Brothers contracting company mainly. And then a rough idea of what how.

Joe: You people from a people perspective or.

Victoria: Revenue mainly of.

Joe: My own, let’s call it the two contracting companies own brothers, own some services there. we’d probably average between 8 and $10 million a year in that regard. And then the plumbing, electrical divisions, probably close to a billion. So only three years old. And and that’s really mostly the service us. And then we have the home interior design, which is, you know, under five right now.

Joe: But we hope that to significantly grow over the next couple years.

Victoria: Now, how long has it been that you’ve had your own team of designers and our interior designers different than the Owings brothers contracting designers now?

Joe: We use the there are there on our payroll, but they get paid commission for when they sell products through voluntary by design, like wallpaper or whatever else we do. Right? We have closets and storage. So that’s another thing, you know. So and to get back to market, hey, Mark, one of the other categories that you just reminded me is like, but so I have a friend in the business who sells all his product from the one side, and then he can’t.

Joe: They contract separately with the, contracting side. So we may move to that model at some point. We we we’re not there yet, but some things we do like closets and some cabinets and things we do that. So we’re paying a fee to the design company. They sell the product, and then we can also change the way we get, revenue that way because we’re only allowed one third.

Joe: But if you think that if you’re paying for product separately, we can get 100% of that, and then, you know, another deposit for the other companies.

Mark: And as far as the the building, you you said 70 500ft², does one of the company’s own it or is this leased.

Joe: That’s a separate leasing company. We set up a separate company we have we have a leasing company for our vehicles and products. We have another company for, you know, the building itself.

Victoria: So that’s kind of interesting. That could be another podcast show.

Joe: Well, yeah, there’s six of them now, six companies. So, you know, it’s a lot of accounting piece right now. And and really the the benefit of that is a couple things that one I like to call has another partner. And so it’s a way to do that. And then the other idea is really split on liability and and those kind of things.

Joe: So that if something happens we can separate liability.

Victoria: you know, that’s a good idea.

Joe: And maybe moving to tax, you know, reducing taxes sometimes because what the inherited is product side. So although that hasn’t come to fruition after looking at my taxes this year.

Victoria: So so you’ve got the showroom. It’s by appointment only. You’ve got teams of designers. People make appointments. They come in to see the designers kick it off that way. Are you using the showroom enough to make it worth the investment?

Joe: I would say not enough. Yeah, but that’s in our. But we haven’t fully, seen our plan come to fruition. We. I think by the end of this year, we’re hoping to have an event every other month this year, and then every month next year. We’re going to eventually put in a full working kitchen for,

Victoria: Demonstrations and stuff. Yeah, okay.

Joe: And, hot chefs night. And although that’s the bay, that’s the last phase.

Victoria: Nice.

Joe: So we just had to take a break and let the dust settle all the spending. I mean, our selection started in literally just a room where the people go in and pick every single thing out they can possibly. And we have computers and big TVs and all that and furniture displayed so they can. It just makes it a very sort of, what’s the word, inclusive experience.

Joe: Yeah. So we’re they’re not running around talking to other, people.

Mark: One stop shop.

Joe: That’s a good. Yeah, yeah.

Victoria: So tell us a little like.

Joe: You know, people’s time is very valuable now, and they actually appreciate that. The other thing it kind of does is when we walk them through a newly renovated offices building, we have a hallway they have to walk through that shows all of our walks. Literally. It’s a hallway links the two buildings that we built. Then they have to walk through there.

Joe: Right? It doesn’t say we’re going to be the least expensive guy in town, you know? Right. Pre-qualified. So some degree.

Victoria: That’s a great idea. So tell me a little bit about the kinds of events you do. I mean, obviously you said you’d offer your your, conference room to other organizations. What are some of the other things you do and have you said, you know, goals and sales goals around those events?

Joe: So that’s a great question. Victoria. We we just had our first one three weeks ago. It was a designer and, architect for continuing education credits. So we had someone from South zero and I said, Sub-Zero, you probably know any data.

Victoria: Yep. Sure do.

Joe: You came in to the great partner of ours and did a thing presentation. So we had literally had 5 or 6 architecture and design. That’s how. All right. For this space. Yes. And we have usually do like a door prize for everybody. And we do like light lunch or something. And then our next one is in May, or we’re waiting for our sign for our home and, interior designers and,

Victoria: Great.

Joe: And then realtors is the other one where we’re going to talk to them about the real pricing today, what pricing is so we can help them with their clients homes, and then we’ll have, like that’ll be a cocktail hour I think.

Victoria: So that’s interesting. So you’re not doing it for homeowners really at all yet you’re going.

Joe: Are we going to do that. We’re going to do a kitchen and bath seminar. We used to do those at our little teeny showroom and those turn into long term clients. So I just had a lead last week from the 2015 event that we did at that showroom. You know, they remember you and they said, we’ve been following you on Instagram and.

Victoria: Oh, great.

Joe: You know, that’s a way better lead than a Google lead going into, you know. So those are our next one. So we’ll have probably 2 to 3 of those minimally a year and maybe one on like March living. So we’re we’re working on those topics now.

Victoria: Now I know that there are some remodelers out there, some remodeling companies out there that offer interior design services, but they do not have a showroom. Could you have been as efficient as successful if you didn’t have the showroom, do you think?

Joe: Yeah, some people call it a concierge service. That’s a lot earlier. Right. So they they go around and they bring them around. And so so some of our competitors do that. I think they do that successfully. So I think it’s just you have to choose your path for us. We’re we’re sticking our stake in the ground and saying we want to be a destination.

Joe: We want to be a premier. And we we’re show high end stuff. And so times people can afford a we can do everything. And and the other thing we’re doing, you just reminded me before, we’re doing this good better best thing now we’re we’re going to have clients come here instead of us. They’re there for the kitchen and bath, simple ones that don’t involve moving walls.

Joe: And so that we can be more efficient with our time. They’re going to bring us pictures in a dimension. And then our goal is to sign them up and design right then and there in our in our office without going out to the house.

Victoria: Nice that that would be very time efficient. I would think.

Joe: Ideal people in the business would do that. And our closing rate explodes upward.

Victoria: Well, really? Yeah. Okay.

Joe: So going write a check, write the right check or something. And now they’re committed. That’s right. You know our closing ratio. All those people are 85%. You know when once they sign it up.

Victoria: Right. Right. So it’s the old monkey’s paw right.

Joe: Yeah. So I know people that are successful. Otherwise we just turned the we did a fair amount of homework. We had lower some learning pain. I’m not going to say there wasn’t some pain involved. you know, when you’re a retailer, it’s different. Your taxes. I do have responsibility that you didn’t have otherwise.

Victoria: So. Okay, so one of the things I’ve heard about showrooms is that you have to refresh them significantly every five years or so, probably max.

Joe: That’s about right.

Victoria: So if if you were going to be advising someone who was interested in a nice showroom, a destination like yours, what sort of a budget range would you tell them to set aside?

Joe: It depends on the specs, right? So ours is fairly significant. But I have friends that at 7000 square foot, you know. So ours is let’s call it three 3500 maybe total. All in as far as showroom space. I would say, you know, depending on how really exotic you want to make it, you’re going to spend six figures, you know, it could be 100, it could be 300.

Joe: You know, it just depends on what you have to do. The space to make it your space. Right. Your vision. And the biggest advice I would give, which we learned because, you know, we’re all play interior designers here. You know, we have two interior designers on staff and we have a, interior, which is how we got our second interior designer through internships.

Victoria: great.

Joe: So we love that model. And we’re taking them to awards centers to help them buy. And as they get to see, so, I would say that it’s really just depends on your vision. But ROI return on investment per square inch is a really important number because we all want to do makers cool stuff because we like it.

Joe: We think it looks cool, but really, how do you sell out of the space? So really I would advise and consulting with some outside, company because it’s really what that that’s expensive real estate. Yeah. When you look at it. So what’s the best way to do that? When we do our third day we’re really digging into that part.

Victoria: Really.

Joe: Of the process.

Victoria: Now as you developed it and designed your space with what you have now, what are a couple of lessons that you learned?

Joe: there’s not enough time for that. I would say our first lesson was really draw it. You know, we did our own design process. We did go over and over again, let everybody copy, let everybody comment on it in the showroom, not just the designers. But then we actually asked a few homeowners that a really good pass client to give us some input.

Joe: And then we actually went to an outside source. We didn’t end up going with them, but their information was valuable as far as what to do. But I would say some of the pain was, you know, you think we’re in the business. We did. We didn’t follow all the code. Right. You know, so well this cool wall hung toilet.

Joe: Well, I didn’t mean in here in. Oh geez. I think that, you know, so we had to rip that out, you know, you wouldn’t you would think a contracting company would know, but commercial different than residential. You know, they made us do more Ada than we ever thought. Even we retained our architect. And then they, you know, for Ada, we have two on the first floor.

Joe: Well, and they said, well, we have somebody with a walker. We I’m like, well I’m not going to make them walk up the stairs, you know, I mean, you know, so you just start dealing with the county was probably our that’s probably it was our biggest challenge, honestly.

Victoria: Was there any any other things that jump out at you that you would have done differently now with what you know.

Joe: we when we went through this last design, we did make it so that the space could be separately huge. So we kind of all of our data tables and our phone sets and everything. So if we got into a downturn, we could separate the space. We didn’t initially think of that. But now or have a meeting and we have a lockout.

Joe: Our offices so that people can use the space at night work. We’re not here.

Victoria: Yes, yes. Okay.

Joe: We didn’t think that all the way through, but that kind of evolved honestly, as we were going along and learning, how can we best utilize this very expensive space?

Mark: you know, Joe, you touched on it. Revenue per square foot is a huge metric in retail. That’s like the the holy grail. Yeah. Bible of how it works on this show. It’s, our big metric is amount of information per second. So what we’re going to do is we’re going to jump into the lightning round. How’s that sound?

Joe: Okay. do whatever you want to do.

Mark: Okay. And now here’s a reminder. And it’s lightning round.

Mark: Eye. Six questions and 60s. Here we go. What is your favorite business book and why?

Joe: Raving fans. because we make all our employees read that because it’s about the client experience. And in our business, I think that’s the number one. referral.

Mark: If you weren’t a remodeler, what do you think you’d be doing?

Joe: You know, I thought about that. I think I think I’d want to raise the bar for most male, that can work on right.

Mark: What do you not very good at.

Joe: Putting me on spreadsheets all day, and I’m not. That’s not too. I’m not built for that.

Mark: What’s the weirdest thing I’d find in your refrigerator?

Joe: You know, kale, but I rarely eat it. Just try to do smoothies.

Mark: Would you rather be a clown who distracts the bull or the cowboy that rides it?

Joe: Cowboy.

Mark: And name a movie you’ve seen more than ten times, not ten.

Joe: But I can say Top Gun. Was that probably the top one I’ve seen the most?

Victoria: It’s a good choice, is there? Yes. That’s awesome. Joe, I’m glad we finally got you on. Thanks for being so patient with us as we had to go through all the rescheduling. What’s very interesting, and I think that people are going to love it because I just, I think there’s a lot of people who would like to have showrooms, but they just weren’t sure if it was going to carry it.

Joe: You know, we might have 2770, 500, right? Yeah. That’s a pretty scary you know, I did go up a little. Yeah. But it’s spread across multiple companies. Right. And that’s the other benefit of the multiple company, thing. Some of the overhead is spread across you know.

Victoria: So.

Joe: When people say you’re big, we’re not really big. Home depot is big, but their prices are good, right? So we just we just use our resources across multiple companies that we kind of use that against people that are saying, well, you guys are big.

Victoria: Right? How many employees are there there now? 40.

Joe: I think it’s 42 between the three. Okay.

Victoria: All right. Very interesting.

Joe: Two man.

Victoria: too many. Yeah. Well, this has been great. Now, before I let you go, though, I would love for you to share your five words of wisdom with our listening audience and tell us why they resonate with you.

Joe: get out of a comfort zone. I used to have a post-it over my door when I first started my first company. I read something. I’m not a big reader, but I read things that interest me. And that was really I felt like I really it’s too easy to get comfortable, especially when you’re reviewing employees or sharing numbers of of clients.

Joe: So that’s really always resonated with me.

Victoria: All right. And, you know, I could sort of feel that when you’re talking about being the cowboy. Oh yeah.

Joe: There you go. Right. It’s really not a great, soul searcher like I don’t I’m not a great I’m always I’m the guy looking at the butterfly moving. And so that’s probably.

Victoria: That’s great. Well, this has been really good. Thank you so much for sharing with us. We,

Joe: Have a real, lovely something you guys can use, I appreciate it.

Victoria: Oh, very much.

Joe: Thank you.

Mark: Thanks to.

Victoria: You know, you’d have to have, some guts to build out a showroom that might cost you 300 grand, not really knowing how it’s going to deliver.

Mark: That. That’s. That’s scary. I can’t even imagine. You know, you just. You got to get your. I mean, it all starts with the plan. As long as you can see how it’s going to work out and see that we’re going to get a return on this, I think it’ll smooth it over. You can’t just look at. And what’s the how do you eat an elephant?

Mark: One bite at a time. Yeah, right. You can’t look at the entirety of it. Right. You gotta break it down.

Victoria: And one of the other things he was talking about was the different insurances and things you need if you’re a retail establishment.

Mark: Yeah, it’s. Yeah.

Victoria: I wouldn’t know any of that.

Mark: That’s a total different beast. Yeah. yeah. I mean, I do know about that. it’s that’s like your big magic. That’s the, the big rock is is dollars per square foot and how much you bring it in.

Victoria: But you know, so let’s say you’re not getting what you hoped you’d get. And so now you got to figure out ways to make more money forever. You know, for the entire area, you know, space, the investment, just the, again, a whole nother world. I can see why you said bring in some consultants that know this stuff.

Mark: Yeah.

Victoria: For sure. I’m sure there are tricks to retail layouts, certain things.

Mark: It’s there’s a whole. That’s a whole nother world. Yeah. That we never really delve into. Right. Because we don’t need to. But yeah. Yeah, I’m sure there’s an entire industry of consultants dedicated to that.

Victoria: But the one thing I did like, where it’s five words of wisdom to get out of your comfort zone and maybe not be so afraid, trust that it’ll happen, do your due diligence, consult with people, read up, study the science, and then pull the trigger.

Mark: Yeah, yeah.

Victoria: Yeah. So it good. Very interesting.

Mark: Very good stuff. Yep. But we want to thank Joe for trying and trying again. You guys out there I don’t know but we had to reschedule three times for many reasons. And so it was great to finally get this one on the books, but we want to thank Joe for for sharing all this with us. And we want to thank you for listening week in and week out, I’m Mark Harari.

Victoria: And I’m Victoria Downing. See you next time.