Get LEAN: Start by Finding Your Traffic Backups

I can’t tell you how many times I hear people decide that the best way to implement continuous process improvement is to meticulously document all of their processes — from end to end, in order, starting with the incoming lead and ending with the final punch list and payment. 

On the surface, it’s a logical approach that seems to make sense. And yet that approach is almost assuredly doomed.

Start Small

LEAN is a cultural shift. It’s about looking at the same systems and processes you’ve always used from a different perspective. It’s about using creativity, not more capital, to change the order, or the flow, or to eliminate an unnecessary step — all to make the process easier, better, faster and cheaper. And a successful LEAN initiative is almost always driven by some early, measurable wins that generates momentum, enthusiasm, and frees up time to improve other processes. 

When I get the chance to work with a company on process improvement, I like to start where the low-lying fruit. That means recognizing the processes most in need of improvement, starting with those and getting some early successes. 

Find the Bottlenecks

Picture your GPS showing where traffic is slow or stopped. Some routes are green, others are orange, and still others are red. If your job was to improve the overall flow of traffic, which roads would you want to fix first? I would want to find those with the greatest congestion that would most benefit from a road improvement, detour, or removing an obstacle. How about you?

So where is the traffic jam in your remodeling process? Is it design? Maybe it’s the sales-to-production handoff. Could it be finishing a job? Wherever the traffic is, that’s where you want to start the process. 

With a better flow, you’ll see substantial improvement, generate enthusiasm and momentum. And if it’s years before you get to improving our very best systems, so what?

Find Extra Days, Get One More Job per Year

We talk a lot about process improvement. How can we make our processes easier, better, faster and ultimately cheaper. And most of the remodeling companies I get to work with have given considerable thought to improving their processes. 

But once major changes are made, continuous improvement is much more about finding the small, incremental changes rather than huge leaps.  It’s time to look for those little steps along the way that make an immediate and dramatic impact. As a result, sometimes it might seem like the extra effort is simply not significant enough or not important to implement. 

But consider this … how much would it affect your bottom line next year if you could get just one extra job through production? Would it make a big impact? Would it be worth the effort? 

I’m here to suggest it would.

Let’s Run Some Numbers

Let’s run some hypothetical numbers, and use a simple example to illustrate this idea. Say you do 15 jobs per year, at an average of $100,000 in revenue per job. The average job takes about 90 days in production, and you generate a good 30 percent gross profit margin. 

This gives you $450,000 in gross profit on $1.5 million in sales. Your overhead runs about $350,000 and you net $100,000 per year. All in all, not bad. 

So, then add in e continuous improvement process —LEAN, in our case — with the objective of reducing the number of days for a job from 90 on average to 84. By streamlining processes, improving communication, avoiding delays and eliminating other waste in the job, you reduce each of the 15 projects by six days. Would it make a big difference? 

You’ve Got Extra Days

Well, if you could take those 90 production days and do just one more $100,000 per year job, you would generate approximately $30,000 in additional gross profit. But, keep in mind our overhead has already been covered. So, the increase in gross profit would also yield a $30,000 increase in net profit. Therefore, your net profit would increase by 30 percent and bring you very close to the 10 percent of revenue that we like to see companies generate.

Your actual numbers may be different, but the process is the same. Could you improve your workflow just enough to do one “extra” job per year? It might be time to find out what LEAN could do for you.

Need Help Finding Those Extra Days?
We Can Help!

Doug Howard leads our Business Consulting and Coaching division at Remodelers Advantage. He’s worked with both Members and Non-members over the past 2 years and has produced some amazing results for his clients. Click Here to learn more about our Consulting & Coaching Services.

Team Building Through Troubleshooting and Problem Solving

[Editor’s Note] If you saw think you may have already seen this post, you aren’t imagining things.. the heat hasn’t gotten to you. We posted this 2 weeks ago, minutes before we launched our new website, and then the post went “poof” and went into cyberspace, never to be seen (or linked to) again… We didn’t want to miss the opportunity to hear from Tim Faller, so enjoy!

You may have added workers in the field and in the office to keep up with the booming business of the past few years. Are they working as a team or as individuals? If they’re not all working together, it may be costing you money on jobs and in the office. It’s time to pull them together through troubleshooting and problem-solving.

Team members want to win, they just don’t have the information or opportunity to do so. Here are some ways to get folks working together, while solving problems that may be eating into your profits.

Identifying Problem Areas

Most business owners think they must be the person to make everything work and fix every problem that develops. Instead, gather your team to identify the areas of the company that need work. Be sure they have all the information they need. If you’re struggling to meet the budgets on jobs, for example, be sure they know it and how bad it is. Identify all the things the administrative folks need to fix, then look at the field issues.

Prioritize It

After you have a list of things to fix, let the team prioritize where to start. After they say the estimate needs to be fixed (Yes, I know how it will go!), agree to work on that, then nudge them to a field problem. Once the list is prioritized, get to work.

Brainstorming for Team Building

Have a meeting to brainstorm solutions. There are several very important aspects of brainstorming that you need to keep in mind.

All ideas are valid. Never say something like “that won’t work” or dismiss any idea. People will shut down. You want to create is a continuous stream of ideas — at some point the one that resonates with everyone will pop out.

If someone sits back, let them know you’ll call on them in a few minutes so they can prepare. Many people will hold back, so actually calling on them involves them. Great ideas will come out.

Be prepared to actually adopt something the group suggests. In my consulting, it’s amazing to me how many of the field staff will tell me that the owner asks but then ignores what they say.

Don’t leave the meeting until a next step is decided. After the brainstorming, get consensus on the next step. Designate a small group to select the best path to take. Within the group, decide the best idea to tackle and assign people to work out the details. The owner of the company shouldn’t say “Thank you for all this. I’ll get back to you.” Let the team help with the specific solution.

All this takes time, but most of your problem areas can’t be solved in one easy step. By getting the team involved they are more motivated and you get a better solutions that they will embrace. And they’ll draw together as they do it, creating the kind of cohesive team that will drive business forward.

[Podcast] Episode 51: Deploying the Elam Ending in Your Business

We’re getting esoteric today — applying a sports concept to business. Not too long ago, Mark read an article and shared it with Victoria about fixing something that’s broken in basketball — the intentional fouls at the end of the game to stop the clock.

Nick Elam is a Mensa member and basketball superfan, who was frustrated by the stop-and-start slog the end of close games as the team behind tried to get ahead by stopping the clock in the final minutes.

In his Elam Ending, the game clock is turned off at the first whistle with four minutes or fewer remaining. The teams then play to a target score equal to the leading team’s score plus seven points. The first team to meet or exceed the target score wins. It effectively stops the need to intentionally foul.

So what does all this have to do with the remodeling business? Fair question.

You may need to change your rules, you may need to change your strategy. When the rules that make your business work start hindering it, what do you do?

Look at the frustration points and think creatively to figure out whether your rules need to change. Maybe your change order process works perfectly until the final weeks of the job, and then it all goes sideways. Think about changing the rules of the game for those changing circumstances.

Let us know what rules or processes you’ve changed or amended through creative thinking. Let us know in the comments. No harm, no foul. See more about the Elam Ending in Sports Illustrated, and here’s a link to The Basketball Tournament’s wiki and how it has implemented it.

Click Here to Listen to Episode 51 >>
 
 

[LEAN Blog Post] Start Small, Get LEAN

We are excited to launch a blog dedicated specifically to the world of LEAN Process Improvement for remodeling companies. Doug Howard, Director of Consulting for Remodelers Advantage, will continue to bring you timely and critical information about this segment of our industry. Today’s PowerTip is a re-post from Doug’s most recent blog post.


 

One of the reasons I like LEAN for continuous process improvement is that it can be an effort that starts small, has early success, builds momentum and begins a much larger and longer cultural shift that impacts the entire organization. It can begin in one area, one department and even with one champion. To be successful in the long-term and for the entire organization, there must be the commitment of leadership, training across departments and integration of process improvement in to all parts of the company. But, we can start small.

So, where do we begin?

First, find a process that needs improvement. It should be one that is visible to others and measurable. It is beneficial if it involves more than one person. It does not need to one of the core or most complicated aspects of the work we do.

Let’s say we are interested in looking at our process for pre-qualifying a lead. This is certainly an important process and one that may involve several people. These are the steps we want to follow:

  1. Choose the process you are seeking to improve, in this case – Pre-Qualifying a Lead
  2. Define the beginning and the end of that particular process. For example, it begins when the phone rings or it begins when a lead is generated from the website
  3. Map the existing process (step-by-step) from end to end. For example, step 1: Person A answers the phone, step 2 Person A enters info into CRM, ongoing through the last step (lead is either disqualified or forward to salesperson)
  4. Next, determine the approximate time for each step and then total the number of steps and length of time for the “current state”
  5. Work with those involved in the process to discuss where in the process there are wastes: waiting, errors made that must be corrected, or others.
  6. Brainstorm a list of what could be changed, reordered or eliminated from the process to lessen waste, lessen time between steps, lessen the number of steps and the overall time it will take to complete the process.
  7. Implement those ideas for improvement that will have the biggest impact for the least cost, effort or risk
  8. Measure the new process to be sure it is an improvement
  9. Map the new process, it is now the new “current state” or the way we do things
  10. Choose the next process to improve

This is a basic example of a simple start to LEAN. There is much more to it, it is a long-term cultural shift and it takes a commitment of time and resource to do it successfully. But, we can start small, get some success and go from there.

To learn more about LEAN for Remodeling, visit our website: https://leanremodeling.com

To learn more about the LEAN For Remodelers Online Course starting on February 6, 2019, Click Here.

[Podcast] Episode 42: How and When To Hire a General Manager with Aaron Enfinger

As companies experience growth, there are tipping points where changes need to be made. One of those points is when you realize you need additional management for the organization. Many remodelers are considering adding a General Manager, but are unsure how it will work in practice.

The Cleary Company of Columbus, OH, reached this tipping point in the Development Department in the Fall of 2016. The company was changing rapidly, adding staff, and stressing the existing systems in place. Things were getting bogged down. Owner George Cleary promoted Aaron Enfinger from Production Manager to GM to step in the gap. He’s currently wearing both hats while searching for his successor as PM.

In this episode, Aaron talks to Victoria and Mark about his experiences in taking over his new role and what it’s meant for the company. While Aaron oversees the operations, George has more time for business development and long-term planning.

The decision to add an overlay of management was caused by three factors, says Aaron. The staff was stressed by the workload, they were having trouble getting projects through the different phases of the job, and steps were being skipped in previously reliable systems because of the rush to get jobs to production. He talks about what his job entails, and some of the challenges, including:

  • Keeping the owner in the mix
  • How to not overload a GM
  • Managing people outside of your own job experience, like designers or marketers
  • Creating new positions to help streamline processes
  • Why to hire from within (if you can)
  • Working with the owner (or CEO)
  • The benefits of a walking meeting
  • Small picture vs. big picture thinking
  • And more…

As promised in the podcast, here’s the link to Aaron’s appearance on The Tim Faller Show, where he outlined his approach to creating a master schedule to control the flow of jobs through the pipeline.

Click Here to Listen to Episode 42 >>

 

Extreme Makeover: Business Edition

As Mark and Victoria mentioned in this episode, the Extreme Makeover: Business Edition, Jan. 29-30, 2019, is filling up fast — and Super Early Bird Pricing ends this Friday, November 30th.
Click Here for More Information & Registration 

 

[Podcast] Episode 41: Using Virtual Reality to Grow Sales and Profits with Chris Katkish

Virtual reality creates immersive environments in real time. For remodelers, that means your clients could preview and even “walk-through” their projects to see if they like what they’re seeing. 

Guest Chris Katkish says VR can help remodelers streamline their sales and design process, trim the length of the sales cycle, and boost production efficiency by reducing change orders. All of which leads to more sales and more profit.

In this episode, Chris talks to Victoria and Mark about using VR technology to help clients confidently make decisions more quickly in the sales and design process.

Chris is the general manager of InSite Builders and Remodeling in Bethesda, MD. The three owners of InSite have partnered in a company called Limitless Virtual Reality, which enables CAD designs to be viewed in VR.

InSite uses VR as a visualization tool to get concepts across to homeowners. Even if you’re using 3D modeling, they’re still viewed in 2D, and seeing it on screen isn’t the same. VR immersion allows clients to experience the space and see what they’re buying before its built. Chris talks about the ways remodelers can use VR in their businesses, including:

  • When to bring VR into the sales process
  • Building in the charge for the VR design
  • How your 3D model becomes a VR environment
  • The equipment you’d need — and how much it may cost
  • Real-world examples of how VR speeds up client decisions
  • How to use it with Project Managers and Trade Partners
  • And more…

Victoria and Mark also spitball ways to use VR in your marketing. The pace of technology is fast — and VR is the newest tool on the scene. If you’ve got ideas or opinions on how VR may affect the remodeling business or your business, let us know in the comments below.

Click Here to Listen to Episode 41 >>

[Podcast] Episode 29: How to Build an Award-Winning Company with Jeremy Martin

Success in the remodeling industry is all by the book for Jeremy Martin. That goes for the 50 books he reads per year, and the systems and business processes he institutes and uses at his company. And most importantly, those two factors culminate in “The Book” — the three-ring binder filled with details and documentation that has powered his company’s growth.

Jeremy talked with Victoria and Mark for our live podcast in June — and if you missed it, take this opportunity to catch up. You’ll hear insights and tactics you can put to work for your own company immediately.

A principal with RisherMartin in Austin, TX, Jeremy founded the company with partner Chris Risher. Jeremy graduated from the University of Texas with an engineering degree and went to work at Fortune 500 giants like IBM and Intel. Jeremy combined his corporate experience with his love of building and launched his home building career in 2001. He’s an RA Roundtables member, was recognized as a “Rising Star” by NAHB, and was in the “40 under 40” lists for Professional Builder and Professional Remodeler. With Chris, he was named the 2016 Fred Case Remodeling Entrepreneur of the Year, and was a finalist for the RA Impact Award.

Jeremy’s time with huge companies gives him a different perspective on the remodeling business, and he’s applied the lessons learned at businesses with 60,000 employees to his now 10-person company. “You have to think big to get big,” he says. “But don’t expect that growth to be linear.”

Learn how RisherMartin finds their ideal clients, gets an average of $1 million per job, and how they hire, along with:

  • Setting intentional time on the calendar for big picture thinking
  • Troubleshooting the most treacherous part of the remodeling business
  • The secret to a healthy business partnership
  • How to strive for continuous improvement
  • Selling the fixed-price model
  • And more…

You’ll also get to hear Mark admit his man-crush, and find out what Victoria’s theme song would be. You can learn more about RisherMartin on the company’s website, which devotes a page to The Book — that’s how important it is to their success.

Click Here to Listen to Episode 29 >>

In today’s episode, Victoria mentions a slide that was available during the Live Episode back in June, for those of you who are interested in learning more about Roundtables… Below is a copy of that slide, click to see a larger version.

[Podcast] Episode 28: The Dos and Don’ts of Implementing Technology with Donny Wyatt

Technology is critical to boosting efficiency and ensuring scalability for remodelers and builders, but tech isn’t the answer to everything. It’s hard to know where to start, and what problems tech can solve for you. Too often, you purchase an expensive program, people don’t use it, and it gets shelved.

In this episode, Victoria and Mark talk the dos and don’ts of tech with Donny Wyatt, the founder and CEO of CoConstruct, a web-based project management system for custom builders and remodelers.

Back in 2005, Donny was a homeowner who had a typical, but frustrating, building experience, and used that inspiration to create a web-based system to help custom builders and remodelers serve their clients better. Today, CoConstruct has been named the No. 1 software of its type by SoftwareAdvice and Finances online. Donny leads a team of nearly 100 employees serving 5,000 customers across North America and beyond.

The biggest key to successfully implementing a software solution is to start small, advises Donny, and pick one or two key problems to solve. Then use your sales skills to get buy-in from your team, concentrating on one or two key players — a driver and a curmudgeon. Donny tells you how to do that, as well as:

  • Figuring out what problems you need to solve
  • How to get past the human speedbumps
  • The positive side effects of the right software
  • Why a tech problem may really be a leadership problem
  • Using tech to make your clients’ experiences outstanding
  • When to keep going through a puddle
  • And a whole lot more…

This is lively episode packed with information you can use today. You can learn more about CoConstruct with just a click.

Click Here to Listen to Episode 28 >>



 

Just like our remodeling industry audience, Rave Reviews are the lifeblood of any good podcast…

If you’re enjoying our PowerTips Unscripted podcast, please spread the word and post reviews on iTunes and Stitcher.

And as always, if you have a topic that you would like us to cover or know of an industry contact, author or thought-leader that you think others would like to hear from, let us know.

 

Reducing Slippage with Process Improvement

Here at Remodelers Advantage we set aside the month of June to focus on an issue that plagues most service-based businesses, but can be a critical metric in looking at the success of a remodeling firm. Last year we named June “Slippage Awareness Month” and this year you will see content submissions from our consulting, sales and production experts here at R/A. Enjoy!

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“Slippage” is the percentage of gross profit on a remodeling project that is lost between how the job is budgeted and how the job is completed.

As an industry, we work to continually find ways to get jobs done on-time, on-budget and at the level of profitability we seek, and yet for many, despite this effort, this remains an elusive goal.

As Paul Simon had us all singing in the late 70s, “You know the nearer your destination, the more you’re slip slidin’ away!”

LEAN is a method for continuous improvement that reviews processes from end-to-end, identifies WASTE in the process and engages those who are actually doing the work to find ways to eliminate that WASTE. This is done by separating all steps in a process into value-added and non-value-added in the eyes of the customer.

The result is a process that is easier, better, faster and cheaper. Customer satisfaction goes up. Employee frustration goes down. And, the cost of the job goes down, which therefore means less slippage.

The WASTES in LEAN that are continuously sought for elimination can be remembered with the acronym D-O-W-N-T-I-M-E. This stands for:

  • Defects
  • Overproduction
  • Waiting
  • Not Using Human Talent
  • Transportation
  • Inventory
  • Motion
  • Extra-Processing

LEAN consists of principles, practices and tools designed to give any company the ability to continuously improve their processes with strategies for workplace organization, workflow and culture.

So, let’s look at the job-site. When we have challenges scheduling trade, inspections or the delivery of materials, we create WAITING. When we make several extra trips to the lumber yard we create TRANSPORTATION.

When we miscommunicate in the “sales-to-production” hand-off, we can easily create DEFECTS. And when don’t properly capture the paperwork and pricing on change orders, we can create EXTRA PROCESSING.

Summary

Now, imagine having a company culture, workplace organization and workflow to continually look at your processes and eliminate waste. Many small changes in a process can have great impact on the overall process and that’s how LEAN can help you make sure that it’s not your gross profit margin that’s “slip, slidin’ away”!

[notification style=”success” font_size=”12px” closeable=”false”] If you would like to learn more about how LEAN Process Improvement can help your remodeling business, visit https://leanremodeling.com and take a look at the LEAN Masterclass we have coming up on July 10-11, here in Baltimore. [/notification]