Replacement Contractor: Few companies have shown strong growth in the last three years. What's the situation at Atlantic Remodeling?
Bert Lebhar: Our budget this year has us growing over 57% top line and over 100% bottom line. We're tracking on pace so far for the first quarter.
RC: Last week you announced the opening of your fifth regional location, in Frederick, Md. You're operating in markets with a lot of strong home improvement companies. What do you feel gives you the competitive edge, or at least the self-confidence to keep expanding?
BL: My partner and I both started as canvassers in 1992, when we were 20. We've always understood that the nuts and bolts is going out and getting a lead and selling a lead. No matter what's going on around us, we teach people who work for us to get a lead and sell a lead, without considering the market, the economy, or the competition.
RC: Is your mission still to become the No. 1 specialty remodeling company in the Mid-Atlantic?
BL: That mission has changed a little bit. We want to become the largest East Coast remodeling company, and, of course, to do it without sacrificing quality. We plan to open 15 offices from Connecticut to Florida in the next seven years. That would put us in a volume range of $40 million to $60 million. We're thinking we'll be around $50 million.
RC: Can you do it and still provide excellent customer service?
BL: I am not sacrificing quality for quantity. We're going to try to grow and get 90% satisfaction rates.
RC: Who does your installs?
BL: A few years ago I absorbed my roofing crews into the company. So on roofing we do everything ourselves. In windows we use the same installers we've used for years and years. But they're employees of Mid South Building Supply.
RC: Has that made a difference on the roof?
BL: There are pros and cons. It's more expensive [with employee installers]. There's more red tape. You've got to dot more i's and cross more t's. But by the same token, there is more control and a better product. And a better journey along the way to that product — and some security.
Heard on the Radio
RC: You started advertising exactly when most other companies were pulling out of it. Why?
BL: In business you're supposed to buy low and sell high. In 2009 the cost of advertising was 20% to 30% of what it had been the year before. Which made it the perfect time to advertise. You had the same number of people listening to the radio. And we had the money. Last year we generated more than $1 million from our radio ads. That's 12.5% of our volume.
RC: You've used your radio advertising to build brand as well as to generate leads. What makes your commercial spots stand out?
BL: We came up with something called the "Red Cent Guarantee." Customers don't have to pay us one red cent until they're completely happy with their job. And with a guarantee like that, why trust anyone else? Especially when you hear about contractors not finishing jobs, disappearing after they take the deposit, or going out of business.
RC: You have an effective radio ad that talks about Old Roof Syndrome. How did you come up with that?
BL: I told a close friend who lives in Atlanta that we were going to start commercially advertising. When you advertise, you just start paying a lot more attention to the other commercials. So when we were stuck in traffic, he and I would randomly call each other and just start making up off-the-wall commercials. We were really just goofing around. That one clicked and I bounced it off some people in my circle.
Happy Customers Are Key
RC: Have you ever had a client refuse to pay, claiming they weren't 100% satisfied?
BL: No. At Atlantic Remodeling, no one — not salespeople, not installers — gets paid until the job is paid and paid in full. That way everybody works toward making sure the customer says he or she is happy. We do a walk-around at the end of the job, and if the customer is unhappy about something, we don't ask for the money. Our installers are not allowed to leave until the walk-around happens. If there's anything that needs to get done, they take care of it right then and there. If something is damaged or we have to order a part, we don't ask for the money until the part comes in and we go out and fix it. We find out what's wrong and we take care of it immediately.
RC: You do pre-construction meetings? When did you start doing that and why?
BL: That might be a fancier term than it needs to be. When a home improvement sale is made, the deal is signed at, say, 9 p.m., and you're in the home for two or three hours and the homeowner forgot half of what the salesperson said or maybe wasn't listening to all of it anyway. We found that a big area of homeowner unhappiness is when they expect something they don't get. So we set up a meeting in the daytime, with the installer, the salesperson, and the homeowner. We go through the work order, reviewing what's supposed to be done. It takes about 20 minutes.
RC: Some companies want salespeople to play a more active role in servicing customers. Typically, this approach meets with resistance. What has your experience been at Atlantic Remodeling?
BL: My company is not a democracy. Not a lot of stuff is subject to discussion. I have been doing this since I started the company 12 years ago. Twelve years ago my partner knocked on doors and I sold the job. I went to installs and pre-construction meetings. That that's part of the salesperson's job description gets communicated in the first interview.
RC: You hired a chief financial officer a year ago. Is that the first time that Atlantic Remodeling has had a CFO?
BL: Yes. I hired a CFO because I have proven to myself and anyone in an advisory capacity that I am not capable of effectively managing our money. I had people on my advisory board saying, "Hire a CFO." My banker suggested that I hire a CFO. Then I became friends with a CFO. He educated me on the benefits of hiring one. I felt those benefits from the first week he was here.
RC: How did it make a difference?
BL: It's taken a huge weight off my shoulders. And gives me so much more time. Having a CFO allows me to do what I like to do and what I am good at. So I'm not sitting there staring at accounting books and spreadsheets. I never liked that, and you tend to avoid doing what you don't like doing.
RC: Not a lot of home improvement companies have been able to operate multiple branches successfully over time. What do you feel will make you successful in pursuing growth by adding branch locations? How will you manage them?
BL: I worked for a company that went to seven offices, and then they retreated. I understand why they made the mistakes they made. On the other hand, I'm a fan of what Power [Remodeling Group] has done, which is to hire good people and keep them by paying them well. There are a lot of companies out there that don't pay their people or don't pay them well. I am willing to sacrifice money today for a bigger and better tomorrow.
—Jim Cory, editor, REPLACEMENT CONTRACTOR