The nuts and bolts (literally) of launching a Homeowner Referral Network (HRN) business and raising a family!
That’s how much I made my first year operating my Homeowner Referral Network (HRN) business. I worked about 15-25 hours each week in the early morning, when my daughter napped, in the evenings after dinner and on weekends.
My goal in the beginning was to bring in a few hundred dollars each month to help make ends meet but word about my business spread and soon I went from one or two job referrals each week to ten!
And, as homeowners began to know and trust me and my business, they started to request contractors for larger jobs. For example, my first job referral was for an exterminator, a $30 commission. That same homeowner called me a few months later looking for a contractor to build cabinets in her playroom, an $800 commission.
That’s what it’s like to build a business. It’s not overnight riches or instantaneous success. In fact, if someone promises you that you’ll make six figures in your first year, you should run the other way!
Solid businesses (like houses;) are built on a strong foundation with good materials, patience and some hard work. That’s how my Homeowner Referral Network (HRN) business was built and that’s why it’s still standing 18 years later!
When today’s homeowners envision a kitchen remodel, many imagine working alongside hunky remodelers who transform their space in less than a month, with only small glitches along the way that are quickly resolved.
While remodelers are grateful for the business these shows generate, they could do without the unrealistic expectations they create. “Homeowners need to understand that this is not a TV series where we’re doing this in 26 days. It’s a major process. Everything takes more than one day, and it take multiple meetings to get it right,” says Mark Brick, president and owner of B&E General Contractors in Glendale, Wis.
Brick and other remodelers agree the most successful kitchen remodels require consistent conversations with clients throughout the process. To get that conversation started, here are eight questions to help ensure homeowners understand the reality of a kitchen remodel—and that you want to work with them:
1. What’s your financing? In the last year, banks have become less willing to approve home equity loans, one of the most popular financing methods, says Sarah Henry, general manager and owner of Seattle-based Gaspar’s Construction, a 2014 member of Remodeling’s Big 50. Henry says many homeowners assume they are approved before they even have an appraisal. That can hold up a job, or even put the kibosh on it. “We’ve had two projects fall through this year because homeowners couldn’t get the money they needed.” She says this is also a good time to talk about payment schedules—and make clear when the project is deemed completed.
2. What’s your budget? Not every kitchen remodel is worth your time. This question will help you determine if that’s the case. A good place to start is asking them to pick out appliances, says Brick, who’s also past local and national president of the National Association of the Remodeling Industry. If the homeowners are looking at high-end appliances, that could be a $75,000 to $100,000 kitchen, Brick says. If they are going for the basics, he knows it’s a low-budget job. No matter what the budget, don’t forget to remind clients of the need for contingency funds for change orders and the like. Henry likes to build in 30% for all possible costs.
3. What’s your availability? The most successful kitchen remodels involve the homeowner. This means they’re available for at least weekly face-to-face meetings, coupled with regular check-ins, not just email, Henry says. “Homeowners don’t realize the amount of time they’re going to need to spend on a remodel,” she says.
Even the logistics of letting people into and out of the house—crews from as many as 15 different subcontractors—can be an unexpected time commitment. “In many cases the homeowner has no idea what’s going to happen,” says John Petrie, owner and designer at Mother Hubbard’s Custom Cabinetry in Mechanicsburg, Pa. “They know they’re getting a new kitchen, but they may not know that guys are going to be knocking on their door at 7:30 in the morning.”
4. What’s your expected timeline? Most kitchen remodels take a minimum of four months, depending on a number of factors. Along with time for demolition and rebuilding, time must be factored in for permits and inspections. Henry says permitting alone can take 12 to 16 weeks in some jurisdictions. When it comes to pulling those permits, Petrie says remodelers should clarify who is responsible—the remodeler or the homeowner—and which ones will be needed.
Inspections take time as well, and they can lead to additional time and cost. Henry says inspectors have been known to require time-intensive and costly upgrades that aren’t even related to the kitchen or the work being done.
|Homeowners are usually not prepared for the full scope of a kitchen remodel. Adequately preparing them before the process gets underway helps the project run smoothly.
5. Was your home built before 1978? This key question will help you determine whether lead paint or asbestos is involved . If the answer is yes, you’ll need to test the area in question and determine whether it meets the threshold for federal guidelines. Dealing with lead or asbestos will increase the cost and duration of the project significantly, says Petrie, who is also president of the National Kitchen and Bath Association.
6. Do you plan to put in sweat equity? This is a popular way to hold down costs. But often clients don’t fully understand what they’re taking on. They’ll do an incomplete demolition, leaving in sinks, not pulling out all the nails, or not having the site cleaned up, Petrie says. “It’s a conversation about what’s expected if you really do the demo,” he says. With painting, clients are allowed to do the work before cabinets go in, but they need to understand touch up will be required unless they wait until after installation, he adds.
7. Are you prepared for renovation? Many homeowners haven’t thought through the disruption of a kitchen remodel. They will have to box up everything in the kitchen and store it elsewhere, and the whole space will be unusable, Petrie says.
Once the demolition and reconstruction begins, the amount of dust and debris can be overwhelming. In addition, chemicals, glues, and other potential irritants can cause allergic reactions, warns Henry. On the logistics side, homeowners need to think about where they will store bulky items like cabinets and appliances, Petrie adds.
Finally, depending on state and local laws, homeowners may receive scary looking certified letters from subcontractors, which reserve the right to put a lien on the home if payment isn’t received, Henry says.
8. Are you prepared for “surprise” costs? Anytime walls and floors get opened up, there’s a risk for unexpected expense, especially in a kitchen, which is connected to so many other parts of the home: electrical, plumbing, and load-bearing walls, to name a few.
“We can put an allowance in there up to a point, but that’s what it is, up to a point,” Brick says. Henry says additional costs also come from the “while you’re there,” requests from homeowners to do additional work. She says they’re happy to do this work, but clients need to understand that it will increase costs.—Gary Thill
More from Remodeling
I’m pleased to announce an entirely new market niche for the Homeowner Referral Network (HRN) business…Aging-In-Place Referrals!
The senior market is the fastest growing sector of our economy and there are more than 100 million Baby Boomers and their parents who will need home modifications and/or repairs in the upcoming years. The HRN business is positioned with a unique business model to serve this growing need!
I personally identified this market niche after 15+ years of serving aging homeowners in my community who need to maintain and/or modify their homes and–on a more personal level–as I struggled to help take care of my elderly parents in their home several thousand miles away. Seniors, more than any other market segment, need to be sure that they can trust the contractors they hire and finding a contractor referred through an HRN is the best way to ensure their safety.
To launch this new phase of the HRN business, I’ve spent the past several months rewriting the HRN Manual to included valuable information on how to assess the needs of seniors, aging in place contractor licensing designations, strategic Aging-In-Place marketing campaigns, ads and more!
And, we’re launching a brand new website www.aginginplacereferrals.com to help aging-in-place contractors and senior homeowners find local HRN owners operating across the country.
Aging-In-Place Referrals adds an entirely new profit center for HRN owners while providing a valuable service in the community!
Be one of the first to launch an Aging-In-Place Referral Network and capitalize on this up and coming trend in the home improvement market!
Without a doubt, the question I’m inevitably asked the most when discussing my contractor referral business is:
“Oh….are you like that company Angie’s List I see on TV?“
And it always makes me laugh. The truth is, I started Home Remedies®, my Homeowner Referral Network (HRN®), years BEFORE Angie’s List every hit the marketplace and, while our two businesses may appear similar at first glance, we’re very, very different.
First and foremost, the contractors I represent can’t pay to be referred. Angie’s List accepts advertising from contractors which immediately comprimises their reviews.
Second, while my HRN® business serves as a reliable referral source for local homeowners, I also act as an outsourced sales and marketing force for reputable contractors and therefore represent their best interests. One of the biggest complaints from contractors about Angie’s List is that they have very little recourse when a homeowner writes a bad review.
And third, my revenue model is success based. I get paid when the contractor gets paid which means it’s in everyone’s best interests, to find the right contractor and get the job done to the homeowner’s satisfaction.
Over the years, I’ve heard from hundreds of contractors nationwide who are wholeheartedly disatisfied and frustrated by Angie’s List which is why the following article didn’t come as any surprise.
Read on and form your own opinion. As a homeowner, would you trust an online review or would you prefer a referral from a local, trusted, unbiased source?
Should Remodelers Try to Kill Angie’s List by Boycotting It?
Reduced ratings, increased criticism have left the ratings/referral service vulnerable
To Our Readers:
When one reader saw our story on the latest earnings report fromAngie’s List and how the company recorded $33 million in losses last year, he wrote me to say this:
“Maybe you should remind your readers that if we all just ignore Angie, she will go away. She can’t survive without our money. It might give the truth a better chance.”
Do you agree? Should remodelers try to help kill Angie’s List by starving it of the advertisements and listings from service providers that it depends on for a big share of its revenue? Would that really administer the killing blow? Or does Angie’s List deserve to live because it, more often than not, helps establish who the good remodelers are—the ones who most deserve to be in business?
The stock market already is down on Angie’s List, having cut its share price by more than 10% from its peak. Analysts are downgrading their ratings of the company—though none are recommending outright selling of the stock—and critics are questioning Angie’s List’s business model. Thus, Angie’s List is having troubles above and beyond remodelers’ complaints. But a boycott theoretically would add to the string.
So, REMODELING wants to know: Would you actively boycott Angie’s List? Write your opinions in the section below so we can get a better sense of what you think. We’ve also posted the same question to our Facebook page and on LinkedIn, so you can deliver your views there as well. Fire away