Home remodeling is a general term that describes the different renovation projects homeowners take on for their homes. The general definition of home remodeling is a project that changes the structure, style, or general appearance of a home, but this general definition covers a wide range of specific projects from room additions to kitchen renovations.

According to the Bureau of Labor Statistics, “In 2015, an estimated 168 million persons were employed in the United States.” This number makes up almost 75% of the total population whereas 3 out 10 Americans have participated in some sort of home improvement project, and nearly half have completed at least two large-scale projects. 

That means there are roughly 64 million households who have likely worked with a contractor for general home improvements at some point in their lives.

Homeowners who are planning on either general remodeling or specific projects like kitchen renovations will be working with home contractors. These contractors can range from one-man operations to large-scale general contracting companies that work with banks and other general contractors. 

The High Competition Between General Contracting Companies

Some of the most notable general contracting companies in the United States typically only take on jobs where they amass over $10 million which means small renovation projects often go unfulfilled due to high demand for home improvement services but also high competition between home remodel companies vying for high paying jobs.

The Bureau of Labor Statistics releases an employment outlook for general construction and home renovation projects each year. Since 2004, general construction has seen a steady decrease in the number of employed workers while home renovation projects have increased dramatically. 

This trend is due to general contractor companies turning their focus towards commercial construction while home improvement becomes more popular than ever, but also the fact that homeowners are looking to save money by taking on large-scale general contracting jobs themselves.

According to the Census Bureau, there were 124.2 million owner-occupied homes in 2015 meaning that if 64 million Americans take part in general remodeling then roughly 20% of all US-owned homes undergo some sort of general home improvement project making it a very profitable market.

However, general home improvement services are typically only profitable for general contractor companies large enough to handle the high demand. Smaller general contractors could make more money by specializing in specific remodeling jobs because general projects tend to be less profitable than general contracting.

Steady Growth of the General Renovation Industry

General renovation is an industry that benefits from growth in the economy since consumers have higher income levels, but general remodeling can also increase drastically during times of economic decline when families are looking for ways to save money. 

According to Census Bureau data, “the number of renters occupied units increased by 10 million between 2005 and 2015.” This means that roughly 15% of all homes are owned by renters who have no vested interest in making renovations so they defer this cost to general contractors.

The general home improvement market is worth billions of dollars each year which means there are ample opportunities for general contractors big and small, but general projects like general remodeling tend to be less profitable than specific jobs such as kitchen renovations. 

Homeowners who want to save money by doing general contracting jobs like general home remodeling themselves could find more success in the general home improvement market.

Improvements in the Housing Market

The housing market is improving, which means the home remodeling industry will also benefit. Homeowners are getting more confident in making long-term investments by choosing to remodel their homes instead of moving out. Now is the right time for general contractors to take advantage of this growing market.

There are two ways general contractors can go about it: general contracting and specialty contracting. A general contractor can handle both kitchen and bath renovations while a specialty home contractor could focus on only one or the other room. 

The general contractor should be able to do everything well to maximize profits because homeowners who want to renovate their homes will likely hire general contractors who offer services in all areas instead of hiring separate contractors for a renovation project.

As for specialties, general contractors should choose a specialty that they can offer to homeowners at a competitive price. For example, general contractors who sell bathroom fixtures and appliances can take advantage of the growing market by selling higher quantities at a lower cost because he gets them in large wholesale quantities. 

Specialty contractors must be aware of their competitors so they have an idea of how much to charge for services and how low they could get prices before losing money or hurting profits.

The general contractor’s office staff should also possess excellent customer service skills. The employees should be able to answer questions from potential clients with detailed answers that reflect positively on general contracting services being offered by the company.

According to industry experts, high-end home remodel will increase over this year. This means general contractors should hire more subcontractors who specialize in high-end renovations. It would also be beneficial to specialize or focus on renovation services that are either below the general market price or above the general market price. 

While this may take longer and costs higher, general contractors can earn larger profits due to lack of competition.

Why Marketing Strategy Matters for General Contractors

It is highly advised for general contractors to prepare marketing strategies because it will help increase the number of clients and revenue. Affiliations with home improvement shows and magazines should be considered as well as establishing a network with general contractors from other markets so they can promote each other’s services through referrals. 

If general contractors have time constraints, they could try outsourcing their marketing strategies so they can concentrate on construction projects instead of managing marketing campaigns.

The general contractor’s target market should be first-time home buyers and entry-level homeowners. This can be achieved through general contracting services that create maximum value for the price. For example, general contractors may offer installation of basic appliances at lower rates than other general contractors so they can attract more clients who usually buy homes built in the 1950s to 1980s.

General contractors must also become familiar with new laws and regulations that affect general contracting services such as employment law compliance because renovation projects pose health risks to workers if not done properly. 

General home remodel contractors should also learn about green building practices so they can provide general contracting services according to standards set by the North American Association of Environmental Professionals. 

By complying with standards, general contractors can receive certifications that increase general contracting services’ credibility.

Knowing the Correct Pricing and Strategy

When general contractors handle general contracting services, they must apply the right pricing strategy so they will not lose money in hopes of gaining more clients. General contractors should consider average income levels in their service area and market research to determine what other general contractors are charging for general contracting services. 

They should include profit margin into general contracting prices because it allows the general contractor’s company to earn profits even after completing renovation projects while making it affordable for homeowners who need general contracting services.

General contractors who achieve success by following these steps are getting better results from different marketing strategies including internet marketing, direct mail marketing, customer referrals, and media advertising. 

When the company follows best practices, general contractors could increase profits by two to three percent in general contracting services that are priced at the mid-range for general contractors.