This is a good question especially considering the tarnished image of the remodeling industry. Nationally, remodeling companies are known for causing significant cost overruns, major delays in production, delivering poor quality, and on the extreme, behaving unethically and criminally. In fact, the Better Business Bureau receives more complaints about remodeling companies then any other consumer industry. Moreover, the home remodeling industry is one of the most fractured in the country with just under 800,000 companies, of which, only 100,000 of the companies have a payroll. To help you, let’s boil the remodeling contractor down to four types of companies.
Single-Person Contractor
These companies do not employ any staff, and the owner acts as sales person, bookkeeper, project manager, and carpenter. All business is generated by word of mouth. This type of company works well for those on a very limited budget and are patient in dealing with long production times and self-service shopping. The potential downsides to the single-person contractor include project delays, communication gaps, and costs overruns due to lack of experience or processes to manage job costs. There are many, many single-person contractors. They are not easy to find, but it seems someone always knows someone who knows one.
Small Contractor
The small contractor employs a few office personnel, and typically subcontract most carpentry and specialty trades. The owner again typically fills one or two working roles like sales person, designer, and/or project manager. Most of their business comes from word of mouth, but some utilize traditional marketing. The small contractor is well suited for homeowners who are seeking a little higher level of operation. The cost of a small contractor will be higher than the single contractor because there is overhead to cover. This is not a bad thing. Paying for a business to stay in business is actually in the best interest of the homeowner especially when it comes to warranty situations. The potential downsides to the small contractor include lack of experience to handle every aspect of the home, cost overruns due to insufficient process during the planning stage, occasional project start delays if the company takes on too much work, and risk of going out of business.
Name Brand Company
The name brand company will have a larger staff to handle the different aspects of running the business. Some may employ professionals like architects and designers. The owner is typically in a leadership role. Most business comes from traditional advertising, referrals, and repeat business. The name brand company works well for homeowners wanting less risk and controlled costs with an added level of customer service, quality, and speed. Name brand companies are known to be expensive. This common misconception occurs when price is the only comparison. Name brand companies have processes in place to uncover and include all costs involved before starting the project. Whereas, the other company typically misses a lot. The downsides to working with a name brand company include a higher price presented up-front and potential internal miscommunications due to the number of people involved in the project.
Boutique Contractor
The boutique contractor is also a small organization. The owner is typically a designer or an architect, and he or she may have an assistant or two to help run the company. The boutique contractor’s work comes mainly from word of mouth. The production is bid-based, where multiple subcontractors bid to perform the work for the boutique contractor. These companies work well for those who have significant budgets and want a “star” designer on their project. The quality of work is often top-notch. The downsides to boutique contractors include high costs, long-production times sometimes caused by stops and starts required by the designer, and communication break down between competing entities, designer vs. subcontractor.
So, how do you choose? First, start with what criteria you want including your budget, risk tolerance, and schedule needs. Then, do research by looking at the BBB and online reviews. Visit the contractors’ websites and read about the companies. Make sure to ask around, friends and family are a great source for referrals. Finally, set up some appointments. See how they respond. If they respond slow, this might be a sign of how they respond during production. Finally, ask for references to interview about their experiences.