BACKLOG: How to handle this wonderful curse

A few days ago, a client called with a problem.  He’s trying to balance how much he can sell (wanting to sell as much as possible) with the amount his production team can produce.

His primary question was, “When do I tell the prospect about my six-month backlog and still gain them as a client?”

As we chatted, it was clear that we had to address two things.

The Sales Question

Everyone wants to take advantage of the strong remodeling market. I get it. Sales are coming in and you want as much as your company can handle. Great. . . just do it the right way.

The wrong thing to do is load up sales, leaving your clients with false impressions about start dates and then expect your production team to somehow work some magic to hit that schedule!

Instead, learn how to sell so that the client wants to wait for you. Tweak your sales process so that it will guide the prospect to a decision quickly; hopefully, one that includes your company. But if not, at least you can move onto someone else that is willing to wait for you.

However, no matter how well you set expectations, at some point, you’ll realize that your backlog is too long because prospects will begin to drop off.

Then, you’ll need to make some decisions on how to produce your work more quickly to maintain a strong, yet reasonable backlog.

The Production Question

Before you worry about how to produce more work, ask yourself, “Do I want to grow?” If your answer is yes, then it’s time to add capacity. There are several ways to do this so grab your management team to decide on the best route. Below are two ways that you can increase the rate of production and capture more of the work flowing in.

1. Add more staff

If this is the solution, how and where will you find them?  How will you train them before you unleash them on your clients?  Determine how long is a reasonable amount of time to get them on board, and decide how much work can you expect out of them while they are getting acclimated?

2. Change your system

As companies grow in volume the old way of doing things does not typically work as well. Inevitably, the production department needs to change.

The first change that occurs (usually) involves shifting to a hybrid Project Manager/Lead Carpenter model.

By hiring a project manager, and having them run some of the projects “from the truck” (no tools on), with labor done by trades, you can increase your volume with only one hire, not several new lead carpenters.  This works well, particularly as job size grows. Meanwhile, the lead carpenters you already have continue to serve in that capacity on their own projects.

The second change a production department goes through is to have multiple project managers that run all the jobs, with each job having a lead carpenter.

The difference is that the lead carpenter is primarily responsible for the work on site, and not for other things like checking on special orders or overall management.

The reason this works well for growth is that it’s typically easier to find carpenters that can run the work, but can’t manage a job (like full lead carpenters can).

A third change in structure could be to move to a true project manager model, where trades do all the work and are managed by project managers. This system allows expansion and contraction as needed a little more easily.

Of course, I’ve seen many variations on these models, and all are being used successfully throughout the US and Canada.

So, my answer to the client’s question?  Work on both ends of this sticky situation, find the solution that works for you, and enjoy the ride!

Are You Monitoring Your “Overhead Inventory?”

Overhead in stockSavvy remodelers monitor ongoing design contracts for a clue to future work. But monitoring backlog—a sure thing—is also crucial. Backlog is simply work under contract but not yet done.

It may be the as-yet-not-produced fraction of a job in construction or it may be a job you haven’t started yet. Don’t count a job as backlog unless and until it is under construction contract.Continue reading

Pass the Baton and Delight Your Clients While You’re At It!

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Being the savvy business people that we are, we all know that our money is made in the planning stage of a remodeling project, not in the production. By this I mean, that the more organized and complete our planning process, the more quickly we complete high quality projects for delighted clients–and the more profits we keep.

In today’s tough economic climate however, it’s more common than ever for business owners to slash preparation time in half so that the job can start quickly. However, when enough time isn’t dedicated to planning, mistakes happen, orders aren’t complete, and the client can experience a deep sense of frustration instead of the delight that we all want.

I know that planning time means additional costs and no homeowner is beating down our doors to pay more, but I also know that the companies that are going to stay strong are those that are delivering top quality client experiences — those that I referred to before.

Remodelers Advantage business coach, Paul Winans, earned his stripes as the owner of a remodeling company for many years. Through the school of hard-knocks, he learned how to delight his customers and build a strong, highly profitable business because of it.

One of the processes he used to set expectations, keep clients informed, and avoid misunderstandings was the Pass The Baton process. This isn’t a process that he went into unprepared. Instead, he planned this meeting carefully. He was a true believer in the idea that planning is essential to profits.

Listen into a recent teleseminar as Paul explains how to use this essential process to set your company apart from the competition.