This new year is bringing conflicting predictions for the remodeling industry. One report from Harvard University’s Joint Center for Housing Studies states owner spending on home updates in 2024 will decline through the third quarter of the year. Another article, presented by Alicia Huey, National Association of Home Builders 2023 Chairman, supports a solid remodeling market due to the demographic trend of the older population.
Is there a way to be certain of how business will go during the year? Not really. The question becomes, then, how can you protect your business from these unpredictable projections and avoid the stress in navigating the unknown?
If you are a kitchen and bath designer like me, you need to be in a position to have advance warning of a downturn so you can adjust quickly. Businesses large and small stay ahead of downturns by predicting end-of-year gross sales. However, this process, which is a sales skill, rarely gets implemented by a designer or even other industry sales reps.
One simple way to predict end-of-year gross sales is to make it a regular habit to track sales on a monthly basis. While it might seem difficult to determine monthly gross sales six to nine months out, it is actually easy to do. The goal is to calculate the monthly average to get the end-of-year total. Use last year’s gross sales as a benchmark to confirm if sales are on track to be the same for the new year.
IMPLEMENTING THE PROCESS
I have done sales tracking throughout my various sales jobs over these past 40 years and it has been accurate in determining if my sales were going up or down. Every month I total the sales to date. For example: let’s assume my total gross sales for the first quarter of this year is $250K. If I divide that by 3, I get a monthly average of $83,333. To get my total end-of-year gross sales, I multiply the monthly average by 12. I also include pending projects that I know will close that year. If the monthly averages keep going down, which changes the year-end total, I have a chance to react quickly to decide if I need to reduce my expenses, call up more leads, or change my sales activity or marketing strategy. Tracking my gross sales predicts my income with an added bonus of being less stressed.
In addition to monitoring monthly sales, I also monitor how many new inquiries I receive every month. Last January, I had zero new inquiries, and that surprised me because January has always been a robust month of activity ever since I started my business in 2012. I was not alarmed, though; my income for the year was solid because I had a lot of design projects booked. However, I was concerned about where the new business would come from since January was slow.
I was cautiously optimistic for 2024 until this past summer when I started asking others about their sales activity. Most were saying they were super busy, however that information isn’t necessarily accurate because it depends on where in the sales cycle of a remodel their revenue is generated. My sales cycle as a kitchen designer is like a pregnancy – it takes up to nine months. Money earned on one project is spread out over nine months and can carry over to the next year.
I realized that I had to make a correction in my business after I chatted with the manager of a stone distributor when attending an NKBA Chapter event this past summer. He stated that July was unusually slow and his only sales were from the high-end clients who seem to never be affected by any economic downturn. To confirm it wasn’t just his industry, I chatted with an appliance rep who stated that their third-quarter sales in 2023 were expected to be down from 2022.
I now had concrete evidence that it wasn’t just me and that I knew I had to make a change. By last fall I was ready to react to improve my income for 2024 because I monitor my sales on a monthly bases – and it never hurts to ask your colleagues and peers, “how is business?”
To meet the slowdown head on, I looked back at my marketing practices and noticed that I always garner solid leads from presenting at a local home show. My presentations cover topics ranging from: “How to avoid mistakes when remodeling” and “How much will it really cost to remodel?” The seminar usually attracts five to 10 people and I walk away with two or three design projects booked. So, the logical decision was to do more seminars.
Based on the success of the home show I knew that if I marketed my own seminar, I could have success bringing in new design projects. I worked with a marketing company and spent $4,000 to do an email campaign. They provided an email list of a zip code area of my choice and the emails were qualified buyers based on their income, home ownership, home value, etc. The zip code area I selected had 200,000 homes and we only marketed to 21,000 emails based on the buying criteria we selected.
Using my cell phone, I created a video of myself promoting the seminar and included that in the emails. I also promoted the seminar on Facebook, Instagram and LinkedIn. This in-person seminar was scheduled at a location within the zip code of the email recipients and I garnered 15 leads in one hour. If two leads turn into a design project then I’ve covered my expenses and made money. If I can turn all 15 leads into design projects and, with my average net income of $15,000 on a kitchen remodel, I will have a very successful 2024.
If I had not had a process to monitor my sales monthly to predict my end-of-year income, and also monitor lead inquiries, then I would not have been in the position to react quickly to change course and implement a new marketing strategy to bring in new business. I was able to be proactive to make a change and started 2024 with less stress.
Having a process is important, and in this column in the coming months I will expand upon how to implement simple processes to help your business succeed, save time and increase your income. This is a key part of the formula for success for anyone who designs and sells! ▪
Jan Neiges, CMKBD, has been part of the kitchen and bath industry for 25 years, starting her own design firm in 2012. An award-winning designer, she is a past Board Member for the National Kitchen & Bath Association (2019-2022) and past president of the NKBA Rocky Mountain Chapter. In addition to designing kitchens and baths, Neiges is a business coach for designers and acts as a mentor for design students. She can be reached at [email protected].