[18] March 18, 2011
www.redmond-reporter.com
from advertising alone, the contractor may not be providing adequate customer service. Conversely, if relying completely on customer referrals, the circle of influence could dry up. Similar to an investment portfolio, a contractor’s lead sources should be quite diverse. • Solvency is the company’s ability to sustain itself through careful planning, scheduling and job cost analysis. Debt liability and backlog are indicators to how “healthy” a company is. Needing a down payment today to pay suppliers for a prior job is a very risky business practice. Instead, ensure your payment schedule is tied to the forecasted expenses for your project. To reduce your risk, ensure your contractor is licensed and bonded, and allow your attorney to review the contract language. • Profitability is a function of sales price, minus cost of goods sold, minus operating overhead. It differs from solvency in that each customer’s job should be accounted for independently from any others. It’s good to know that your contractor will be profitable on your job to ensure they are able Michael Tenhulzen
HOME IMPROVEMENT CORNER
O
ne good thing about an economic recession is how consumers decide which businesses succeed, which ones struggle, and which ones fail. Although our human response to failing companies is a deep-felt sympathy, we also recognize survival of the fittest as one of the laws of nature. When it comes to home improvement, there are a variety of factors that determine which businesses are destined to succeed and which are likely to fail. Risk is typically measured in terms of potential for financial reward. When assessing your risk of remodeling, however, an expanded range of metrics should be considered. This article addresses some of the internal metrics renovation experts live and die by. They include lead sources, solvency, profitability, and customer satisfaction rating. • Lead sources include all the ways prospective customers make contact. This metric is indicative of how “visible” a company is. Happy customers love to refer their contractor to their friends. If a significant percentage of leads come
to warrant and service the product. Furthermore, that they are consistently profitable on all of their projects. This indicates good execution of their process, and supports solvency. Note that in a competitive market, contractors will attempt to “under bid” the scope of work just to get the job. In this case, the only way to become profitable is to up-charge the customer through the course of design or construction. To reduce your risk of “budget creep”, query your contractor about the accuracy of their budgeting relative to the past several projects, and ask to speak with those customers about their experience. • Customer satisfaction rating is difficult to assess, unless performed by a third party. “Happy” customers are generally pleased to write a recommendation, whereas unhappy customers feel compelled to write a warning to others. If you are skeptical about the written recommendations provided by the contractor, I suggest searching online resources for posted reviews. Michael Tenhulzen is president of Tenhulzen Remodeling in Redmond. For more information, call (425) 885-9871 or visit www.tenhulzen.com.
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into Extraordinary” Tenhulzen Tailors Homes to Suit Your Unique Lifestyle
Use our expert remodeling advice to provide you with efficient and creative solutions designed to a budget. tenhulzen_reporter_809_path.indd 1
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Analyzing the risk of home improvement
O $675,000 Ma Satur pen H rch day ou 17110 NE 126th PL 19 th & S se Redmond & 2 und 0 th ay 1-4 PM
Rick- Smith-Managing Broker JOHN L. SCOTT REAL ESTATE
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Top 1-2% of John L Scott Agents 2004-2010 Most properties SOLD in 2010 JLS Redmond
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Your guide to Real Estate and home buying & selling
REDMOND
REAL ESTATE
New on Market - Stop by and take a look!
ENGLISH HILL! Outdoor entertaining at it’s best! Fabulous backyard with lighting, huge deck wired for music, fire pit, dramatic water feature, arbor covered patio & perennials galore! Jewel of home tastefully updated on a park-like landscaped 1.24 acre cul-de-sac lot! 4 BR & 2.75 BA plus family room & additional room ideal for guests, bonus or exercise room! Stunning remodeled kitchen with granite counters, maple cabinets, stainless steel appliances, Subzero fridge, planning desk, skylight & more! All the baths have been remodeled! Wired for generator, air conditioned, sprinkler system, 3 car garage! Sought after Lake WA Schools. Minutes to Microsoft, shopping, parks & wineries!
Amy Maggio
Voted best Redmond agent 2009 by Redmond Reporter readers 2008 Nationally recognized as 1 of 50 “Realtors on the Rise”
Certified Residential Specialist (CRS)
425-830-0067 ricksmith@johnlscott.com www.eastsidehomesforyou.com
MANAGING BROKER, RELOCATION SPECIALIST
Windermere Real Estate/S.C.A., Inc.-Redmond
Windermere Redmond cordially invites you to attend a Silent Auction fund-raiser to raise money for the Windermere Foundation. The Windermere Foundation was created by Windermere Real Estate to support assistance programs for low-income and homeless families in each of our communities. The calls for help have increased greatly over the last couple years. A portion of every real estate transaction at Windermere Real Estate goes to support the Windermere Foundation. While we know there are many worthy causes to consider, there is nothing more important than providing safe housing for families in our community. Working together, we can make a difference. We invite you to join us on March 24th from 5:00pm to 8:00pm for wine, appetizers, and a silent auction at Windermere Redmond - 16261 Redmond Way, Redmond.
425-466-6965
AmyMaggioHomes.com • amymaggio@windermere.com
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