2. Lessons From The Big Fish How Large Volume Remodelers Found Their Edge Moderator: Victoria Downing Remodelers Advantage Inc. with Dan Weidmann, CR, CAPS Weidmann & Associates, Inc. and Ciro Giammona, CR Harrell Remodeling, Inc.

4. Introduction Dan Weidmann, CR, CAPS President of Weidmann & Associates, Inc. Co-owner w brother/founder, Bill Education – BS, Aero and Astro Engineering, Purdue University – JD, University of Florida College of Law Prior Work Experience – Project Manager, US Air Force – Commercial Litigation

5. Presentation Outline Industry Background Company Background Lessons Learned – Getting Out of a Slump – Achieving Profitable Growth – Maintaining Quality and Service

6. Industry Background Residential Remodeling – $215 Billion Industry in US US Census Bureau News, May 12, 2006 – 73% Professional/27% DIY Harvard JCHS, 2005 – 800,000+ Remodeling Companies Census Tabulation by Harvard JCHS, 2001 – 600,000+ Sole Practitioners Census Tabulation by Harvard JCHS, 2001 – Top 500 in Nation if revenue > $1.6M Qualified Remodeler Top 500 List, 2007 – Top 15 in Atlanta if revenue > $1.9M Atlanta Business Chronicle Top 15 List, October 26, 2007

7. Company Background Weidmann – In business since 1989 – $50M+ in completed projects to date – Perform 25 - 30 projects a year – Individual projects as large as $1.4M – 2007 $6.95M in Revenue 18 Employees $230,000 Average Job Size Largest full service remodeling company in Atlanta Professional Remodeler Magazine, Market Leaders Report, June 2008

8. Company Background The Goal (1995) – 10/10/10

9. Company Background The Results (2007)

10. What Happened ? Years 1-5 Organizational structure supported growth Systems supported growth Economy supported growth Company Profitable Every Year Years 6 -10 Organizational structure stifled growth Owner burn-out Recession provided an excuse Company Still Profitable Every Year

11. Getting Out of the Slump Formally established our core values – Three staff members gone within six months – Defined company direction and ideal client Modified the organization to support higher volume – Owner out of sales – Added a purchasing department – Replaced admin assistant w/ accountant Hired a sales consultant – Assisted in hiring of professional sales force – Helped tweak sales process

12. Getting Out of the Slump (Cont’d) Changed our focus – Reallocated marketing budget to focus on past clients (referrals) – Stopped doing competitive bids – Transitioned from traditional design build to collaborative design build – Targeted our ideal client not our ideal project – Started having fun again!

13. Maintaining Profitable Growth Staff for current revenue not forecast (unsold) revenue Track trends religiously Leads  Development Agmt  Sales  Revenue React Quickly – Take action to reverse negative trends – Cut back on fixed expense – Reduce staff

14. Tracking the Trends Leads

15. Tracking the Trends Development Agreements

16. Tracking the Trends Sales (#)

17. Tracking the Trends Sales ($)

18. Maintaining Quality and Service Formally established core values Established policies and procedures Owner retains responsibility Track performance religiously – Regular communication with client – Client access to Owner – Owner quality control – Exit Interviews – Third party surveys (GuildQuality)

19. Final Thought: Growth presents risks, but without proper planning, so does the work we do...

21. Growth and Volume at Harrell Remodeling Ciro Giammona, CR, CGB General Manager Harrell Remodeling, Inc. Mountain View, CA

22. Are you a Bonsai? (A “Practice”)

23. What is “large volume” to you? $2 Million? $5 Million? $8 Million? $12 Million?

24. The “Sweet Spot” Volume level that produces maximum profitability as a percentage of revenue Maximize “throughput”

25. “Bad” Throughput

26. Harrell Remodeling Growth

27. Pro’s and Con’s of Growth Pro’s – Possibility (not guarantee) of more owner income – New opportunities for promotion of staff – Opportunity of less reliance on the owner – Departments – strength by specialization – Legacy

28. Pro’s and Con’s of Growth Con’s – New communications systems are needed – Culture will change – Infrastructure and facilities need to change – Departments can create “us and them”

29. You have to know where you are… to get where you want to go What do you do best, and most profitably – Your ideal project type Know who your client is – Learn how to get more of them – Avoid “over-qualifying”

30. Market to where you want to be Know your marketing budget for your current size Scale the budget to the size you want to be Put your money into what brings the greatest return in terms of good leads

31. Build your culture and team Don’t clone yourself when hiring Build your teams with a variety of skill-sets Invest in education to prepare the next generation of leaders Learn to delegate effectively Be willing to “let go” Share failures and celebrate successes

32. Departments (Functional groups) Marketing Sales Production Administration

34. Poised for Growth Harrell Remodeling, Inc. 2008 Ready for $9.5 Million volume Full Staff Meeting Quarterly Who Else Needs to Know? Lead Carpenters Meeting Monthly Full Production Meeting Monthly HRI Managers Meeting Weekly Sales Team Meeting Weekly Accounting/ Admin Meeting Weekly

35. Strategies for Growth Build a sales team Invest in sales training Subcontract more (if leads/backlog are strong) Subcontract less (if leads/backlog are not strong) Bring some design in-house (and charge for it!) Bring more product in house Join an industry peer group to strengthen systems

36. Growing An Established Business HRI Mission Statement: * To provide the finest full-service design/build residential remodeling in our area. We strive to be HRI clients’ “contractor for life.” * To maintain a safe, secure, challenging and growth-oriented environment for our employees.

37. To Grow or Not to Grow. The Decision is Yours! Q & A

38. Thank you for coming! Please complete your evaluation! We and SEBC welcomes the feedback. Also, visit RemodelersAdvantage.com for more information on growing your company.