Restoration Rewind Delta Development Group Monthly Newsletter
August 2016
We are commercial restoration specialists! The entire Delta Disaster Services network has officially been PREP certified. Dick Wagner, commercial restoration marketing specialist, delivered his 3-day PREP program to all of our offices last month. His program gave us the skills to get out and market for those large commercial losses that we all hope to get. Delta Development Group has taken the foundation of his program and molded to fit our style. One might say that we “Delta-ized� it. We will roll that out to all of the offices in the coming weeks. Combined with some great training and direction from Jason Kaber, every office can attack the commercial market with great force. Steve Fredine, DDS of Salt Lake South, also came up with the great idea to make the PREP logo into a sticker to put on the front door or window of the properties that sign up for our program. We will make those available for all as well. GREAT IDEA STEVE! Special thanks again to Dick Wagner for opening up the Delta Disaster Services franchise network to his knowledge and program. Look for your PREP program materials VERY SOON!
When the Insurance Industry Covets Our Rights Joanne Doroshow Center for Justice and Democracy at New York Law School
In 1995, a part-time actuary for the Alabama Insurance Department achieved what the insurance industry had been trying to accomplish in state legislatures nationwide for years. With the simple stroke of a pen, Alabama became the first state in the nation to approve “forced arbitration” clauses in insurance policies, abolishing policyholders’ rights go to court against insurance companies or insurance agents for payment of their claims - even if the agent stole the policyholder’s money. Incredibly, this was done behind the back of then Alabama Insurance Commissioner Mickey DeBellis, who did not find out about the practice for two years. He told the Multinational Monitor magazine in 1998 that when he finally saw the clause, “It was one of the worst I’d ever seen in my life. It took every right away from the policyholder. I blew my top.” Then, DeBellis immediately placed a moratorium on approval of mandatory binding arbitration clauses, but was quickly overruled by his boss, Governor [Fob] James. “I’m sure there was pressure put on him by insurance companies,” says DeBellis. Governor James instructed DeBellis to start approving these clauses, while issuing arbitration guidelines for insurers.
Instead, after 25 years with the Alabama insurance department, DeBellis resigned. “Everybody’s entitled to their day in court, and binding arbitration takes that day away from you,” says DeBellis. “I did not feel it was in the best interest of the consumers in this state.”
To say the least. In forced arbitration systems, access to the courthouse door is blocked and all disputes must be resolved privately and secretly by the arbitration company chosen by the insurer. Arbitrators are not required to have any legal training. They may
be biased. The discovery process, whereby parties obtain information from one another, is extremely limited. Arbitrators issue no written legal opinions, so no legal precedents or rules for future conduct can be established. And there is no right to appeal even though the arbitrator’s decision may be legally incorrect. The Alabama arbitration rule was challenged in court and the late actor Christopher Reeve, who had been paralyzed in a horse-riding accident, filed an amicus brief. He said, “One of the hardest things I have had to do since my disability is to deal with insurance companies. I found them to be callous and to try to set up any roadblocks they can to keep from paying legitimate claims. ... I am totally against binding, mandatory arbitration in insurance policies.”
The attorney for those challenging the rule, Jere Beasley, eventually dismissed his lawsuit because, as he told me, the Alabama insurance department stopped approving arbitration clauses. Consumer advocates breathed a sigh of relief. But now, two decades later, consumer groups are “sounding the alarms” once again. This time, the focus is Texas. The Texas Department of Insurance (TDI), which has long adhered to a policy of rejecting forced arbitration clauses in insurance policies, is thinking about changing its mind. Specifically, insurer Texas Farm Bureau has asked permission to stick forced arbitration clauses in homeowner’s policies, which homeowners must maintain as a condition of their mortgage. This particular proposal would include provisions that violate consumer protections found in other Texas laws and would impose a gag order on the arbitrator and both parties. Houston Chronicle business columnist, Chris Tomlinson, wrote, The biggest problem with the Farm Bureau’s proposal is secrecy. That means no precedentsetting cases. Every consumer must start from scratch, work independently and possibly achieve wildly varying results. Consumers are also severely limited in what information they can request from the company during arbitration.
According to Alex Winslow, whose consumer group Texas Watch has been the leading voice against this proposal, “What the Farm Bureau is asking ... is to take disputes about insurance claims out of court, and push them into private, secret, arbitration proceedings where the industry has rigged the rules of the game.... This is just the latest in a long line of efforts to make it harder for people to get what they’re owed under the terms of their policy.”
The other real danger, notes Tomlinson, is that “Texas could set a national precedent in the coming weeks that would damage the rights of homeowners across the country.” He writes, The Farm Bureau insists that its proposed clause is for its use only and will be optional. But if Mattax, who was appointed by Gov. Greg Abbott, approves the Farm Bureau’s clause, there is no reason why every home insurer in the state wouldn’t adopt it.... Once a precedent was set in Texas, the insurance companies would work to implement the clause in other states and in other lines of personal insurance, including auto.
This is why so many national consumer rights organizations have sent letters and comments to the TDI asking it to reject the Farm Bureau’s request. One letter, signed by 11 national groups, concluded, We understand that for many years, your agency has maintained a policy of rejecting form and endorsement changes that include pre-dispute binding arbitration. We encourage you to maintain that policy and reject this proposal in order to protect policyholders both in Texas and across our nation.
The right to trial by jury in civil cases is a fundamental right preserved in the 7th Amendment to the U.S. Constitution. Let’s hope TDI doesn’t give the insurance industry the power to obliterate it.
Mike Mastous had a good site meeting with Mac Urie of Southern Utah. Quite the array of awards Mac!
Delta Disaster Services of Southern Utah, our first Delta franchise, has quite an array of awards over its five years in business. Congratulations to Mac Urie and his team and all they have done to support and help build the Delta brand.
The Money Corner Everyone has heard the old cliché “Cash is King.” Here is a great explanation that fits a Delta Disaster Services business perfectly: “The phrase refers to the ability of a corporation or a business to have enough cash on hand to cover short-term operations, buy assets such as equipment and machinery, or acquire other facilities. More businesses fail for lack of cash flow than for lack of profit.” Here are some ideas and suggestions to help you preserve your cash: 1. NUMBER ONE PRIORITY: Preserve Cash to cover the costs as you grow. a. Open a Savings Account to “Save for a Rainy Day”. b. Have a Line of Credit from the bank to help cover costs as you grow. c. Use credit cards for material purchases. Fuel cards for gasoline purchases. (Try to pay the balance monthly.) d. Request payment terms from your suppliers! Always ask for 120 or 90 days on large items. And/or ask if you can pay half at 60 days and remainder at 120 days. 2. SUBCONTRACTORS: No Draws unless you absolutely have to. a. Negotiate to pay subs at 30 days instead of 10 days. b. Pay suppliers and vendors at 45 days when possible. c. Negotiate with larger subs (abatement, flooring) to pay them when you get paid. 3. RECEIVABLES: Concentrate on getting the cash in the door as quickly as possible. a. Draws on all program jobs over 25K. b. Draws on all non-program jobs. c. Collect all deductibles, up front (assuming the carrier allows) d. Hold weekly meetings with Owner, Manager, and Receivables people to discuss and strategize. Have the Mitigation Manager and Construction Manager involved when and where they can help. e. Have an escalation process and follow it. (Ten-day letters, liens, etc.)
f. Aggressively chase ALL mitigation – this is the fastest turn around on money and provides cash flow. g. Get a direction to pay and Limited Power of Attorney on all jobs you can. h. Be involved in the mortgage company process from the beginning. Take control! 4. PAYROLL AND EMPLOYEES: a. No employee advances. b. No commissions until job is fully closed and all money collected. c. Always try to keep enough money in the bank to make the next payroll! 5. WORK IN PROCESS AND PRODUCTION: d. Know which jobs to take, which ones to turn down and when to “Turn Yourself Off” e. Know your WIP at all times. Your WIP becomes your Payables in days or weeks. f. Know your Pending Work. What is not booked but is in the process of being estimated. Is this going to create a cash drain? g. Where is your WIP? When does it complete? When does it bill? When can you collect? Is there a mortgage company? 6. OVERALL FINANCE: ALWAYS TRY TO KEEP YOUR PAYABLES AT NO MORE THAN HALF OF YOUR RECEIVABLES! Watch the Ratio. a. Watch every that penny you spend. If it is not necessary, do not buy it. b. Keep a very close eye on all transactions c. Monitor your Estimates: These will become your WIP (Sales Orders) d. Your Sales Orders will complete and bill. Use the Financial Dashboard weekly. This is a great tool for tracking what is currently happening as well as what is predicted for the future. Happy Collecting!
Ah‌..the art of Branding.
At a recent restoration event, we were able to see how the competition rolls. You have to ask yourself, what type of impression does this leave a customer or referral source with when you pull up to a job site? A magnetic sign, on an unkept vehicle. Most people will assume that the quality and type of work that they perform is indicative of the presentation their vehicle. What does your presence say about the quality of work you provide a customer?
CASH IN THE DOOR! Based on June Royalties…
And once more! Delta Disaster Services of Southern Colorado brought in $300,000 in June! Great Job, Emmis, Rosey and the rest of their crew.
New Delta Disaster Services Website
Its official! We’ve launched our new website for Denver: https://deltadenver.com/ We’ve tested and reviewed our new site and are very pleased with the results. Now we’re collecting data on our SEO and PPC campaigns to build the value of the new site. We hope to adapt this consistent, powerful website branding and online marketing campaign to each franchise within the next 90 days. We’ve transitioned website hosting responsibilities to our new web design and online marketing company. They’ve taken over security and maintenance for each franchise site as well. Nothing else has been changed on franchise websites. This should result in a considerable decrease in malware attacks and outages. In the coming months, we’ll be unveiling an additional package for lead generation. This package will include a managed pay-per-click (PPC) Google AdWords campaign specific to your territory, content and social media campaign, call tracking, email marketing, SEO monitoring and planning, reputation management and a dashboard for monitoring leads and revenue. What does this mean for franchises? ● ● ● ●
New website hosting and security monitoring = minimal outages or issues New website standard branding New keyword analysis and SEO strategies New editorial calendar
Please feel free to email Jason with any questions or comments.
Hail so large it blows out all the windows! DDS of Southern Colorado got this one taken care of!
Sometimes hail happens! Delta Disaster Services of Southern Colorado, continually strives to meet the challenges within their market area. Their team took on an excess of 60 jobs literally overnight. Many employees worked around the clock to help stabilize customers’ homes and buildings. This building is one example of the dedication they have to serving clients in their market area. Great job!
Employee Shortages? There's not a publication in the industry or a tradeshow that doesn't discuss the lack of construction related employees available in the Western United States. Overall, the Rocky Mountain Region has seen a tremendous boost in both residential and commercial trade related work. So what is a restoration contractor to do? First thing, you need to be conscious of the current employees you have. You do not want to lose them! Make sure you are providing everything possible, within your means, to keep your quality employees, happy. Looking for new employees on the other hand is a challenge, but one that can be met. Here are some ideas that we are using in our Denver office: • Signs around the office that state we are hiring. We put them on major intersections near our office • Company vehicles. You've all seen the signs and company vehicles that state “we are hiring”. We are now having professional adhesives applied to the back of all of our Delta trucks in Denver to state this. • Employee incentives to bring on more Delta employees. We are offering $25 to an employee who brings in a candidate for an interview. We are then paying up to $400 after 30 days of employment to that employee. We are on all possible Internet sites, posting our job requests. • • • • •
Craigslist monster.com indeed.com ziprecruiter.com And a few others we are trying out for the first time.
We have also contracted with two national headhunters to support certain search requests. Our suggestion is when a good candidate either shows up at your office or sends in a resume, that a management or owner level person needs to get involved. Mike Mastous personally calls or e-mails, all potential Supervisor candidates for the Denver office. He wants them to know that the President/Owner of the company is reaching out to them and is interested. It makes a very good first impression.
And we will leave you with this…