CANADIAN CONTRACTOR NOV/DEC 2013 by Annex Business Media

Editorial

Feature

Contractor U

page 10

page 40

page 44

Deadbeats

Engineered wood

BUILD | GROW | PROFIT

CANADIAN

Referrals

Things that will

make

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2013

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CONTENTS

features Construct Canada 24 The biggest annual show for contractors on Dec. 4-6 at the Metro Toronto Convention Centre provides your first look into 2014

Four things that will make or break you 26 Successful contractors know how to keep their mindset, body, cashflow and partnerships in tip top shape

Things

Engineered for success 40 Engineered wood is growing in importance for renovators

that will

make

break you

Engineered for success 40

Improve Canada 50 A builder explains how his storefront in Canada’s first home improvement mall will ramp up his sales

departments Online 8 What you can do if a customer gets injured on site. Plus the ABCs of ICFs and an interview with Ontario MPP Garfield Dunlop, who opposes the Ontario College of Trades

Editorials 10 Rob and Steve rap about deadbeat customers: how to detect them and how to collect from them Voices 12 The best of our recent posts from contractors at www. canadiancontractor.ca: David Lupburger on becoming a “house doctor,” Ontario renovators in WSIB hell

www.canadiancontractor.ca

Nov/Dec 2013

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CONTENTS

creative

eye

Contractor U:

referrals

Photo: Bob Gundu

CONTENTS

departments The Creative Eye 20 Youâ&#x20AC;&#x2122;ve never seen a bungalow renovation like this beauty at Wanless Park, Toronto

Contractor U 44 Our resident contractor coach Mike Draper has some solid advice on getting more referrals so you can close more sales Site Notes 48 Union workers and sick days. Ontario College of Trades petition.

Struggling with debt? 54 If youâ&#x20AC;&#x2122;ve had enough of paying for the mistakes of your financial past, consider getting a trustee and cleaning it all up Stuff We Like 56 Bosch power, a masonry chain saw just for contractors, a sliding door system from Marvin

stuff we like 56

What Did They Pay? 58 Guess the cheque this renovator received to replace an old hot water system with a forced air HVAC system

www.canadiancontractor.ca

Nov/Dec 2013

ONLINE @

Head to the Web for more exclusive stories and videos… CANADIAN

ONLINE

CONTRACTOR BUILD | GROW | PROFIT

.ca

Join the conversation 16,832 contractors are having online OPINION:

When customers get injured on your jobsite The role of the Ontario Health and Safety Act (OHSA) seems to be expanding to cover anyone, including the general public, who is injured on your job site. What does that mean to you? Alec Caldwell asks the question and suggests how you can protect yourself and your company from bank-breaking litigation. Search “Injuries.”

INSULATED CONCRETE FORMS:

The ABCs of ICFs If you haven’t yet used ICF (Insulated Concrete Forms) as part of your renovating process, find out the basics of how they work, when they work best and how to profit from their use. Search “ICF.”

VIDEO:

The WSIB mess and what MPP Garfield Dunlop wants to do about it The expansion of mandatory WSIB in Ontario to include business owners is costing the renovation sector in Ontario tens or hundreds of millions of dollars. Conservative MPP Garfield Dunlop, skilled trades critic for the Tories (and a licensed plumber) says WSIB has to change. Search “Garfield Dunlop.”

CANADIAN

Here’s the page (www.renosummit.ca) where you can register for Canadian Contractor’s profit-building business seminars for renovators. They take place in Whitby, ON (Nov. 5), Toronto (Nov. 6) and London, ON (Nov. 8). Register now before these events sell out because space is strictly limited!

CONTRACTOR.ca BUILD | GROW | PROFIT

Volume 14, Number 6 November/December 2013 canadiancontractor.ca | Tel: 416 442 5600 | Fax: 416 510 5140 80 Valleybrook Drive, North York, ON, M3B 2S9 Canadian Contractor, established in 2000, is published 6 times a year by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd. ISSN 1498-8941 (Print) ISSN 1929-6495 (Online)

Editor: Steve Payne spayne@canadiancontractor.ca Contributing Editors: Mike Draper, Brynna Leslie, Steve Maxwell Art Director: Mary Peligra mpeligra@bizinfogroup.ca Publisher: Rob Koci rkoci@bizinfogroup.ca Production Manager: Gary White gwhite@bizinfogroup.ca

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BIG Magazines LP Corinne Lynds, Editorial Director Tim Dimopoulos, Executive Publisher Alex Papanou, Vice-President of Canadian Publishing Bruce Creighton, President of Business Information Group Subscriber Services: To subscribe, renew your subscription or to change your address or information contact us at 416 442 5600 x3547 Subscription Rates: Canada $45.95 per year, Outside Canada $83.95US per year, Single Copy Canada $9.95. Privacy Notice: From time to time we make our subscription list available to select companies and organizations whose product or service may be of interest to you. If you do not wish your contact information to be made available, please contact us via one of

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EDITORIALS

Voices

DEADBEATS 1: RED FLAGS By Rob Koci

”

At the beginning, deadbeats are scrupulous about payment.

”

Rob Koci Publisher

rkoci@canadiancontractor.ca

Nov/Dec 2013

www.canadiancontractor.ca

eadbeats: People who don’t want to pay you. I’ve dealt with them as a publisher; I’ve dealt with them as a contractor. You might be dealing with a deadbeat right now. The one characteristic that seems to unite all deadbeats is their ability to justify not paying you for your services. They invent offenses, demand discounts and manufacture mistakes. It’s hard to react professionally while you listen to their false accusations. It’s important to distinguish deadbeats from clients that actually didn’t get what they paid for. Sometimes you make mistakes and you have to take responsibility for that. To discern a deadbeat from a customer with a problem you need a very good, signed contract and, then, a very good job site journal. You also need to stay rational while they are explaining why you are such a lousy contractor (or person). Hear them out, then go get the contract and the journal. “Tell you what, Mr. Bluster,” you say, “let’s take a look at what we agreed to.” Or, “Let’s see what my site super recorded on that.” Of course, it’s better not to be working for a deadbeat in the first place. Here are some of the deadbeat “red flags” I’ve come to rely on over the years: They promise me big future profits. They offer me a deal that is heavily back-end loaded, or just plain weird. At first, they are scrupulous about paying me. They’ll swim rivers to get me my very small, up-front cheque. They will make me feel they have just sacrificed their first-born. Whatever happens, once you go through one cycle with a deadbeat, do yourself a favour and never work for them again. Deadbeats never reform; they just find new victims.

EDITORIALS

Voices

DEADBEATS 2: THE DANCE By Steve Payne

am thinking of a contractor with 30 years experience, who’s seen it all, having just completed a $250,000 renovation project, being forced to put a lien on the house. “Not gonna pay you,” the mega-rich owner had told him. I am thinking of a professional painter, a true craftsman, just a meticulous artisan, being stiffed for a total of $100,000 in unpaid bills by his own admission, from numerous clients. I am thinking of a two-man construction company owed $100,000 by a homeowner, at about 180 days past due, and not even worrying about it, because they knew the client was “trying” to find the money. I met all these contractors in the past year. Who’s to blame? The deadbeat clients or these fine, upstanding businesspeople? Sadly, the latter. Because as harsh as it is to admit, if someone stiffs you, you have usually violated at least one of the three cardinal rules of avoiding bad debts. 1. You need to pay attention to your gut feel during the early meetings (see Koci’s Red Flags, page opposite). 2. You need a rock solid contract specifying upfront payments, payments by stage completion, and holdback release. 3. You need to learn “The Dance,” as a contractor friend of mine from Thornhill once termed it. I was asking him about how he’s never been stiffed for a nickel in his 25 year career. He’s a custom homebuilder and high-end renovator. “Real simple,” he says. “I have my guys lay down their tools if the client falls behind on payments. I don’t accept having clients’ money and not doing the work on time, and I don’t accept working without having their money on time. I don’t know why people complicate it so much.”

”

Getting paid on time, as a contractor, is a dance step.

”

Steve Payne Editor

spayne@canadiancontractor.ca

www.canadiancontractor.ca

Nov/Dec 2013

VOICES

Voices

” ” Renovators need to develop trust-based relationships.

David Lupburger

A ‘client for life’ house doctor idea worth considering Many renovators are experiencing signs of a recovery from the economic downturn of 2008. It has been a challenging few years. With greater financial uncertainty, homeowners have been scared – and they have had reason to be. This has had a direct effect on renovators. Project size has diminished; contractors are competing with five, six, or even seven contractors in the bidding process; and homeowners are demanding additional price concessions. The result is that closing ratios are dropping. The downturn was real, and it has created a new economic order. In regards to this new economy, let’s examine this marketplace and begin to take a different stance. Let’s take back our marketplace, and begin to make a difference with the homeowners we work with.

Here is the good news. As renovators, we are part of a multi-billion-dollar industry, with millions of existing housing units across Canada. Many of these units were constructed over 40 years ago and so most of them require major renovation/ maintenance/repair, fuelling an ongoing demand for renovation. The future for the renovation industry, in spite of some economic forecasts, is bright. There are some principles in the service industry that will assist us in understanding how to shift our business model so that we can take control of our financial future. Think of the professional service people that you work with now: doctors, dentists, lawyers and accountants. These trusted advisors help manage physical and financial health. The relationships are not price-driven. They are based on trust, and that trust comes from relationships that develop as they take care of us and our families. I think the future of successful renovation is for the renovator to develop similar relationships with customers. Let’s introduce this “trusted advisor” role into the renovation industry. Who is providing homeowners with an annual physical check-up for their home, helping them manage their largest asset? Our customers’ homes are aging just like we are. Can we become their total home care advisor? Can we assist them with understanding what improvements need to be made on a regular basis, and help them prioritize those home care needs? Who else is better suited to provide this valuable service? There is an issue here. We presently develop these trust-based relationships organically as a result of the projects we do, but this is not by design. We need to change that. The challenge here is to transition from a project-driven business model (which works in a strong economy) to a relationship-driven business model (which works in any economy). Becoming a trusted advisor to past clients is an easy sales proposition, and homeowners are

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VOICES

Voices

receptive to the idea. If you understand the true lifetime value of a customer, your transition to the trusted advisor role makes even more sense. Over a 10-year period, you could well do over $100,000 in work for just one customer doing the following projects: Home repair and service Energy efficiency upgrades Home renovation, including ageing-in-place renovations There is a vital renovation marketplace out there, but it has shifted. If homeowners aren’t calling us, it’s time for us to call them. They need our services. Manage these relationships, and the work will follow. David Lupberger is a former renovator who now works with contractors in the area of client management. He is the author of Managing the Emotional Homeowner and The Home Asset Management Plan. For more information on the “client for life” business model, go to www.remodelforce.com

Defining the “legitimate” contractor An online reader recently asked the question: Just who exactly is a “legitimate” contractor? He wrote: “Is it the contractor who will gut the quality of his workmanship and overall quality of his product in order to stay competitive and comply blindly with every government program, fee, tax, insurance, etc? Or, is it the contractor who is willing tell a dead and bloated government to ‘Eff-off’ and work outside the rules in order provide their customers with affordable rates?” Online reader Steve responded: “Just look outside the Home Depot in the morning and see who is filling their truck or van with loads of drywall, construction material or plumbing supplies and see if there is a name or license number on the truck. Then ask yourself, if there is no license number, do they have liability insurance to cover 14

Nov/Dec 2013

www.canadiancontractor.ca

the job they are doing in your house, let alone a license and the proper qualifications to do the job properly? As a legitimate, licensed contractor, I say these guys are hurting us all. They don’t pay tax, they don’t contribute to WSIB and they are usually gone, never to be seen again, once the job is complete.” Another reader, Bill, added his comment: “Or are they firefighters who only work seven days a month for full pay? They are covered by WSIB or, here in the city of Hamilton, work part-time for full pay and have full use of city equipment to do the job.” And here’s an ad that Bill sent to us, from Kijiji: FIREMAN WITH TRADE HANDYMAN $30 HOUR – Apr 25, 2013 – Renovations, general contracting, handyman. Fireman who is also a carpenter/joiner by trade, who can do it all. Fix or replace faucets / toilets / baths / showers / water heaters. All general. Kijiji.ca. And two more comments about the “firefighter contractor” issue, which was first raised in Canadian Contractor earlier this year by Alec Caldwell (Canadian Association of Renovators and Home Services, CARAHS). ”Ok, so how do we solve this (firefighter contractors) problem or at least put a damper on the cash guy parade? Hate to say it, but we need province-wide contractor licensing. To see how this kind of system works, all you have to do is look to the south as a number of states have this in place. If you don’t have a licence, you can’t operate a contracting company, can’t get a building permit or call in for inspections, can’t sue a homeowner who stiffs you. The same goes for the homeowners: they can’t sue cash guys who take their money and run. For this to work, they will have to grandfather all of us legit operators and anybody starting up who wants to become licensed

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VOICES

Voices

will have to take an exam, show proof of CRA registration, WSIB registration and probably be on some kind of probation for a year or two. Permanent reinstatement of the home reno tax credit should go hand in hand with this. There has been no greater tool to discourage cash work than this. I am definitely no fan of government bureaucracy but I can’t think of any better way to make the cash guy’s life difficult and encourage homeowners to deal with legit contractors. We’re never going to eliminate all the cash guys because, after all, as long as there is a homeowner willing to pay cash, there will be somebody happy to take it. Sad to say, but I’m also putting, CRA, MoL and WSIB on speed dial. Hate to be that kind of guy, but I’m running out of options and my back is up against the wall with the 2013 WSIB contractor tax and, oh yeah, the College of Trades tax as well. The more I type the more aggravated I get, so I should probably stop now. Is anybody else in favour of this?” Patrick Grieco And a final comment about who’s ”legit”.... ”Legit companies? What makes self-employed contractors less legit? Most of the time they do a better job…if you can get better work for a cheaper price you would be stupid not too… that’s all part of fair market competition…. the fact of the matter is that not everyone’s situation is the same when it comes to renos. One person may have an unlimited budget and time constraints so a bigger more established company may be the way to go. If you have a tight budget and plenty of time and don’t want to be paying construction bills for the next five years a small reno company will suit your needs better. If you’re a big construction company that just lost a job to a little guy that was able to underbid you I say……. Good! Sounds like the homeowner made the right choice! And speaking of sacrificing everything to make a buck… if it’s okay for these so called legit contractors to sacrifice quality of work to save a buck then why

Nov/Dec 2013

www.canadiancontractor.ca

not sacrifice the ‘legit’ contractor and increase the quality of work and, oh yea, save all your dollars while your at it……. explains the amount of DIY work going on nowadays.” Dylan Campbell

More contractors enter WSIB ‘hell’ Ontario’s Workplace Safety and Insurance Board (WSIB) has been an ongoing headache for the province’s renovators. A story that we published online about WSIB audits last year (to view it, enter “Another Contractor Enters WSIB Hell” into our search bar at www.canadiancontractor.ca) went on to become one of the most viewed stories we have ever published. We followed that up a few weeks ago with an interview with Garfield Dunlop, Conservative MPP in the Ontario Legislature (and a licensed plumber) who explained his frustration with Bill 119, a bill to that extends mandatory WSIB premiums to company owners. This attracted a number of posts. The first one is from a contractor’s wife, and it’s hard to read without feeling an incredible sense of injustice. ”I am in hot water with the WSIB after being audited. The company I had was a carpentry business; my husband was the only employee. He ended up getting full-time work through a large renovation business, and they paid the WSIB coverage for him. He only worked on their jobsites, so I only paid WSIB on the money amounts that I transferred to my husband’s bank account. The WSIB say I have no way to prove that he was covered and want me to pay $8,600. We live paycheque to paycheque and my husband ended up going on the books with that company because all the paperwork, HST filing, receipts and stuff were just too hard for me to keep on top of. They started to garnishee our bank account. I explained the situation, but because I didn’t have the proper paperwork, they won’t do anything. I ended

VOICES

Here’s another comment we received online about the WSIB. ”This legislation (Bill 119) will do nothing to combat the underground economy. I feel it will only become worse. Of course the big firms like this legislation, as it will no doubt cut back on competition within their sector. I have been in business for 40 years and always paid into WSIB for any employee I had during this time. During this period I have seen the underground business expand rapidly with the advent of GST and HST. Also during this period, I had private coverage for myself and family, which was much better coverage than WSIB. What makes me laugh (even though it really isn’t a laughing matter), the WSIB became totally disorganized under Elizabeth Witmer when she was Labour Minister and then she was appointed

Director by the McGuinty Liberals to run it. Government works in mysterious, stupid ways sometimes. Now someone explain to me how this legislation will reduce the underground economy? The only way I see anything impactful is to allow a homeowner to deduct a certain percentage of work done on their homes and then they would care about getting receipts for services rendered.” Henry Rasmussen Master Mason

Voices

up having to propose a payment plan, and I had to put the first lump sum of $1,000 on my line of credit. Now I have to make bi-weekly payments of $200, when there is literally no extra money coming in and we are already frugal! Our kids can’t enroll in sports, we only buy used clothing: life sucks. I already work a full-time job, and now it looks like I’ll have to get a night job, too. That’s great for a family with two kids. I’m sure they will thrive with me being away from the home all the time. I even have the T5018 contractor statements from the company he did work for, that prove that all of the money our ‘company’ made was from this particular company, who paid his WSIB coverage. Apparently, it’s still not good enough. They are getting double dues from one worker, and I’m pretty close to having to claim bankruptcy or a consumer proposal because of the regular family debt we have. This was just the icing on the cake. My husband is mad at me for not knowing what I was doing paperwork wise, and my marriage is crumbling. Thanks, WSIB!” Anonymous

And one more on the WSIB... In an interview with Garfield Dunlop, Ontario Conservative MPP, Dunlop suggested it was time to reform the WSIB and let private insurers provide workplace insurance. Regular “voice” Sean Keane, who is currently in a legal battle with the WSIB in Ontario, wrote to clarify why Bill 119 was introduced in the first place. “Actually whether this comes as a surprise to everyone or not, Bill 119 has not changed the WSI Act 97 (the Act that established the WSIB). The inclination of Bill 119 was to reign in the self-employed construction workers in the province. The wording of the legislation and the process for determining who is and who is not considered self-employed has not actually changed. The only thing that Bill 119 changed is one simple fact: in the past a self-employed individual could opt out of coverage. That option has now been removed. The determination of who is selfemployed and who is not is still completely intact. But here is the issue. Prior to the implementation of Bill 119 the WSIB audit regime wrongfully declared that independent operators were actually workers for the purposes of the WSI act and their interpretation. This is an interpretation that was proven over and over again by WSIAT (the appeals process within WSIB) as incorrect. There are two points here that should be made clear: 1) Audit fraud perpetrated through the audit process. If the declaration of self-employed has not www.canadiancontractor.ca

Nov/Dec 2013

VOICES

Voices

changed from the previous legislation, the new legislation proves that the actions of the audit department in cases dealing with independent operators was wrong. 2.) What you must look at within the WSI act now is the ability not to change the determination of who is or who is not self-employed, it is who pays. The audit department now has the power to charge up the ladder. If you are confused as to who pays, it is clear. If you hire a person in the construction industry and specifically one who has not registered with the WSIB, and you do not have a clearance certificate for that individual, you will be held responsible to pay WSIB premiums on his behalf. Now just to make it clear to the unions who have told their members that the onus is on the companies they work for, I have contacted the Ministry of Labour for that determination. There are no such exemptions for members of a union who declare themselves self-employed. They are required to pay premiums to the WSIB on their own behalf.

ICF question and answer Insulated Concrete Forms (ICFs) are becoming more popular, not only for foundation walls, but as whole house exterior walls. On-line reader Andrew asked us about the regulations in Canada on ICF use. We asked Gary Brown of Amvic Building Systems for help. ”Where can I find info/standards to use ICF’s where one back wall 24 feet long and two stories tall will be buried? The only thing I can find so far is for the US and only takes a 10-foot wall and buries it nine feet? It seems super hard to find simple details like how much rebar I am required to use in Canada?” Hi Andrew. With respect to your question on a 24-foot long wall that is two stories tall, all of which is to be installed below grade, this application would fall outside of the National Building Code of Canada and would need to be designed by a structural engineer. The limitation on foundations walls in the NBC is three meters or 9.85 feet. You can find our technical and installation guide with respect to wall engineering on our website (www.amvicsystem.com). We can also direct you to a qualified structural engineer if you require. We would need to know the province where you are planning to build your project. Gary Brown, Amvic Building System

More on MIKE

n response to another popular post, “Mike Holmes says that 80 per cent of contractor are bad,” Melanie Baumgaertner says this about Martin Levesque, a friend and owner of Complete Renovation Services in Kitchener, Ontario. I don’t know Mike Holmes, but he seems to be a pretty genuine guy, who sincerely wishes to help people. Some of these comments about him (in Canadian Contractor magazine and canadiancontractor.ca) sound a little bit venomous. My fella is a contractor who takes pride in his work. We watch Holmes’ shows together and he never complains about him, because he knows his own work is quality work. Of course, it is the responsibility of the homeowner

Nov/Dec 2013

to do their own research on material and labour costs, so that they understand what they’re paying for, and to check for references, to get to know their contractor and his/her reputation, and the quality of work they can expect. To do any less, is irresponsible on the homeowner’s part. What Mike Holmes does is very costly in terms of labour and materials, evidently, but I think it’s great that he has homeowners asking questions. I do think that he should consider listing the actual cost of the renovations he does at the end of each show, to dispel any potential confusion. I think that would be the responsible thing to do, on his part. Melanie Baumgaertner Kitchener, Ont.

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THE CREATIVE EYE

A BUNGALOW RENOVATION LIKE YOU’VE NEVER SEEN Abenbare House, Wanless Park, Toronto If you heard a project was a rebuild of a 50s bungalow, your first thought might be of a second floor top-up. Or a complete teardown, with the classic 3,000 sq. ft. in-fill monster home to replace it. But for this rebuild near Yonge and Lawrence in midtown TO, Vancouver-based designer D’Arcy Jones and Toronto builder Derek Nicholson had something much more interesting – and elegant – in mind. The house remains a bungalow and the footprint did not stray far from the original foundation. As well, the roofline is virtually identical to the original house. But then the backyard (right) and the hall interior (above) say ‘different’ most dramatically with their complex angles, concrete planes, floor-to-ceiling glass and strong vertical and horizontal lines. It’s a bungalow still – but now so much more.

Nov/Dec 2013

www.canadiancontractor.ca

Photos: Bob Gundu

THE CREATIVE EYE

www.canadiancontractor.ca

Nov/Dec 2013

THE CREATIVE EYE

“IF THEY COME, CAN YOU BUILD IT?” Abenbare House, Wanless Park, Toronto The oak-sheathed cathedral ceilings, oak wall panels and hardwood floors throughout this project highlight the origami-like character of the interior. The use of continuous laminate reveals at almost every intersection of the oak panels, drywall, concrete and floor made the build exacting in the extreme. “There was no tolerance for errors,” says builder Derek Nicholson. The skylight in the corridor combines with the surrounding glass to introduce changing light throughout the day. Abenbare is the Danish word for “reveal.” Clearly this type of work isn’t for every client’s budget, but it does reveal possibilities for bungalows well beyond top-ups and monsters. The question is, “If they come, can you build it?”

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Photos: Bob Gundu

THE CREATIVE EYE

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Nov/Dec 2013

TRADE SHOW PREVIEW

Still the biggest show for Canadian renovators

CONSTRUCT CANADA

Canada’s largest building industry show is set to impress again this year, December 4-6 at the Metro Toronto Convention Centre, South Building. Construct Canada is actually seven shows in one, with the Homebuilder & Renovator Expo part of the event attracting huge numbers of Canadian Contractor’s loyal readers.

igger and better than ever, Construct Canada, including the Homebuilder & Renovator Expo, will this year be celebrating 25 years at the service of the Canadian building industry. The giant show will have more exhibits, more features, more enlightening seminars and tons of opportunity to network with other successful contractors. For renovators, it is the seminars that have the greatest impact, with energy efficiency front and centre on the list of important topics. Canadian Contractor has been involved with this show every year since our founding in 2000. We invite you to come by our booth (#341) and meet our staff. We’ve presented a number of seminars at this show over the years. We’re not on stage this year (apparently their security can’t handle the crowds we attract), but there are a number of seminars we

Nov/Dec 2013

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will be personally attending. And we think you can probably benefit from them to… Please note, we don’t have dates or locations for these seminars at press time, but they will be posted at www.constructcanada.ca by the end of October.

Achieving Greater Energy Savings Through Powerful Building Envelope Design The house of the future is bright, healthy – and heating costs one-tenth of what it does today. The house of the future is being built now! Custom home builder Ed Marion will take you on a visual tour of his super-efficient home built in Oakville, Ont. in 2011. Ed will discuss the features that make his home “future proof.” In contrast, home energy consultant Greg Labbe will take you on a picture and videobased tour of homes that are not future proofed. That sounds ominous, huh?

TRADE SHOW PREVIEW

New and Innovative Products for Residential Construction

Renewing the Building Envelope: A Multi-Residential Case Study

In 2009, Toronto’s Building Industry and Land Development Association (BILD) and the Toronto and Region Conservation Authority (TRCA) partnered to build two of Canada’s most sustainable productionbuilt homes at The Living City Campus at Kortright, near Vaughan, Ont. Each home is rated under multiple new home labeling systems including EnergyStar, GreenHouse, and LEED Canada for Homes (to the Platinum level). The houses also have over 300 points of monitoring so that the existing and future technologies can be tested and evaluated. This seminar will provide an overview of the green building practices and sustainable technologies demonstrated these homes.

With over 2,000 aging high-rise towers in the Greater Toronto Area, the time has come to look long and hard at how to ensure these major assets can provide value to owners, tenants and our society. This seminar will examine a current project involving two aging 1970's vintage towers in Etobicoke, where the condo corporation decided to invest money and energy in a renewal project. Their goal was to improve both the buildings’ performance so that they can compete with the brand new towers being constructed today. This session will be useful for anyone wondering how to determine priorities in retrofitting older multi-residential buildings to extend the life of their building envelope. All the while, of course, justifying the capital expenditure and increasing the value of your client’s assets.

Lessons Learned from the First Generation of “Active Houses”: The Holistic Approach to Comfort, Energy and Environment The “Active House” is an internationallydeveloped standard for incredibly energy-efficient, environmentally-sensitive and healthy homes that has been developed by architects, developers, manufactures and research institutes in Europe and North America. Active House is based on a “holistic” view of comfort, energy and environment. Several Active House projects have already been built in Denmark, Germany, England, France, USA and Canada. This session will review these first projects and will include evaluations of their performance and livability.

Latest Update on Residential Construction Energy Innovations Understand what you need to know when solar energy becomes a must, driven by government regulations. This seminar will provide examples of mandatory codes from around the world to showcase how solar technology and other forms of renewable energy and non-fossil based resources are being brought into the home-building market, and the construction industry. This seminar will also demonstrate examples of how electric vehicles (EV) will affect the future of homebuilding.

Geothermal Heating and Cooling

The Impact of Building Codes on Renovation: A Cross-Canada Perspective

This seminar will examine how to incorporate geothermal technology in just about every home in Ontario. As this technology has been around now for over 30 years in Ontario, return-on-investment, comfort, and efficiency will all be reviewed with actual results. There will be a discussion about where and when to bring geothermal into a project. Questions will include: How important is this technology for a ‘green’ home'? What does it mean for the resale value of the property?

This session will examine how building codes are being applied to existing buildings in different jurisdictions throughout Canada, providing attendees with a better understanding of what should and should not be require upgrading during a renovation project. The presentation will identify code and standards applicable to renovations of existing buildings; and help contractor participants identify major code requirements applicable to renovation projects. cc www.canadiancontractor.ca

Nov/Dec 2013

COVER STORY

Things that will

make

or break you

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COVER STORY

1 2

3 4

MINDSET MAINTAIN A POSITIVE MINDSET The world of reno contracting can be a minefield with countless ways to blow yourself up psychologically. So, whenever you catch yourself getting negative, push the ‘reset’ button and start afresh.

Page 30

BODY TAKE CARE OF YOUR HEALTH Whether you are on the tools yourself or running your jobsites as an owner/manager, your body is a cash machine. Treat yourself like a professional athlete – eat right, stop smoking and stay fit.

Page 34

CASH WATCH YOUR CASHFLOW This may sound patently obvious, but you’ve got to speed up your cash inflow and slow down your cash outflow – if you want to stay in business. Government bailouts are for bankers, not builders.

Page 36

PARTNERSHIPS PICK YOUR PARTNERS CAREFULLY If you’re going into business with someone for the first time, be careful. Do your due diligence, go slowly, work some “one-off” projects with them first – and find a similar work ethic to yours.

Page 38

COVER STORY

MINDSET ”In any business, you – the owner – are the beacon,“ says Szabo. “You attract people to you that are like you.”

Five Tips for a Positive Mindset 1. Discover what you love and do more of it. 2. Hit the ‘reset’ button frequently. 3. Build teams: Mentor and challenge employees. 4. Establish systems so people can focus on their jobs. 5. Empower your employees by asking for and respecting their opinions.

By Brynna Leslie

Nov/Dec 2013

aintaining a positive mindset is the single most important thing that makes the difference between a successful renovation business and one that's just slogging along, says Flip School (www. flipschool.ca) founder, contractor and former celebrity chef Ian Szabo. (Now he’s cooking with gas on his profitable renovation projects.) “This industry is the most underappreciated there is – for the amount of work you do and the time you invest,” says Szabo, many of whose Flip School principles can be found in his book From Renos to Riches. “The number one thing you have to do is remember why you’re in this business in the first place.” Szabo admits he found this out the hard way. The former culinary star came to his second career as a renovation contractor ten years ago. About halfway in, he was starting to feel burned out. He was 65-pounds overweight, “drinking too many beers,” and attracting sub-standard trades to his business. “In any business, you – the owner – are the beacon,” says Szabo. “You attract people to you that are like you. I wasn't respecting myself. I got lazy. I was attracting the wrong workers and

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the wrong clients.”

Find a mentor At considerable cost – and debt – Szabo hired a professional mentor. Over six months, he worked through the process of change. The core message? It all starts with mindset. “The only way you can make more money is by being clear, systematic and organized - with happy employees,” says Szabo. “You can't do that unless you have support – otherwise you waste a lot of valuable time because you think your time isn't valuable.”

Play to your strengths “From my background as a chef, I am very regimented and organized,” said Szabo. “I'm also a way better sales guy than I am a renovator, so I started to free up my time to do more of that. And I’m creative – a bit of an artist.” Szabo also realised there were elements of his job he didn’t like – mainly, dealing with clients. “I never thought I could have a business where I could eliminate or fire my customers," said Szabo. But that's exactly what he did. Instead

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COVER STORY

MINDSET – Continued

of doing renovations for homeowners, Szabo – whose work has been featured on a number of Home and Garden Television (HGTV) programs - changed his business model. He now buys houses, renovates them and flips them. Szabo continues to take time out from working like crazy for “selfish time for selfreflection.” “If I don't know what I like, don't like or how I’m doing things, I can't portray that to anyone else,” says Szabo.

Hit the ‘preset’ button Formalizing systems has also helped Szabo to attract a different kind of sub-trade. “I'm attracting the guy that wants to work hard in an organized environment,” says Szabo, “because I've got all the systems in place to allow them to do their jobs effectively.” Every new project begins with a thorough cleaning of the workspace – when the crew arrives on-site, they already have all the supplies they need and a schedule in place. But perhaps more importantly, the week ends the same way. “On a Friday we'll shut the whole job down early, clean-up and order supplies for next week,” explains Szabo. This helps to pre-set his employees for the week to come. “If they don't have to spend the weekend worrying about returning to a messy job site, or not having the supplies they need to do their jobs, they can spend the time in a much more productive way – relaxing with their families.”

And then hit the ‘reset’ button One of the biggest drags on morale is

Nov/Dec 2013

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feeling like you’re getting nothing done. People often start projects with a lot of enthusiasm and interest, says Szabo, but the daily grind – the inevitable problems and delays -- starts to get them down. Szabo says it’s essential to hit the reset button frequently throughout a project by fostering employees’ time for personal reflection and appreciation. “We live in a world of instant gratification,” says Szabo. “Everyone wants everything today, and no one takes the time to look back and see where they've come from.” After the early Friday afternoon shutdown, Szabo frequently takes his entire crew out for pizza and beer – while they're still on the clock. It’s a chance to connect as a team, discuss the project and, mostly, to reflect on the week that was. “Give yourself and your employees the chance to reset and say, ‘Look what you guys have accomplished this week!’ Don’t remind them of the delays and the problems, but the 40 or 50 great things that they actually got done. This is a very powerful thing.” Szabo also likes to allow his employees to give their input on the next phases of the project, understanding that each has the potential to make a unique and valuable contribution. “It's not unusual for me to stop by a jobsite in the evening and find an employee there showing off the project to his girlfriend or spouse,” says Szabo. “They have an intrinsic sense of ownership over the project.” “I'm spending a lot of time investing in my subtrades, mentoring them, and if eventually they become really good and leave – I’m OK with that.” cc

COVER STORY

BODY “It took years for me to get over the damage to my lungs and the rest of my body from inhaling too many paint fumes.”

Five Tips to Protect your Health 1. Never cut corners on safety to save time. 2. Buy the best ergonomic tools you can afford. 3. Stop smoking and cut out the junk food. 4. Learn to be assertive with clients. 5. Stop being in such a damn hurry.

By Bruce MacKinnon

n renovation contracting, your body is your cash machine. If you don’t take care of that machine, it will break down just like your truck. Almost everybody takes his or her health for granted. As a painter, I should know. I built up repetitive-strain injuries from just blasting ahead; I blew out a knee; and then I did very serious damage to myself from inhaling too many paint fumes. I now have heart problems and diabetes.

candidate for a heart attack or stroke at worst. If you smoke, you’re crazy. If you drink excess coffee or energy drinks to speed up, you’re going to get slowed down by illness real soon. Drugs? Insanity. Trying to speed up by cutting corners on safety may seem like a good idea at the time, but it is the leading cause of workplace injuries nationwide.

Stop rushing Get ergonomic, eat right, don’t smoke

In contracting, poor time management or poor organization will create stress that will make you sick. The only solution to this is to have a plan for your daily activities and be ruthless with your time. If you’re doing the work yourself, remember that there are ergonomic tools created for almost every construction task. Use them. Sometimes they cost more money, but they’re worth it in the long run. Watch your diet. Eat poorly and you’ll be sluggish and miserable. If you put junk in, you’ll get junk out. If you eat mostly fast food, you’ll be tired and sick at best and a

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Trying to get it all done in a panic rush is, in fact, the biggest health hazard in this business. Delegate some time in your day for unexpected interruptions or changes you didn’t see coming. If you don’t give yourself this space, every interruption and every unexpected circumstance will stress you out. Learn to be assertive with clients. If they want you to do something that’s not up to code, not in the contract, or not feasible within the time frame, tell them straight. Finally, budget to do the job with the right materials. Improvising with the wrong products is a surefire way to cause injuries and accidents. cc

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COVER STORY

CASHFLOW “If you don’t watch the flow of money into and out of your renovation business, you’ll be pumping gas for a living.”

Five Tips for Better Cashflow 1. Understand the difference between revenues and profits. 2. Build profit margins into every project proposal. 3. Establish payment milestones with clients and stick to them. 4. Use – but don't abuse – trade credit. 5. Leave some money in the bank.

By Brynna Leslie

“

ot having enough cash at the proper time has been the death knell for many a profitable company,” says Victoria Downing, president of Maryland-based contractor-training organization Remodelers Advantage. This industry has a lot of cash flow demands but thin profit margins. “Months of heavy construction volume means you have the need for lots of cash to pay your labour and job costs,” Downing explains. “You may be earning profit, but you’re not seeing it yet.” Just as a dip comes in the work cycle, you start collecting all the money from your last jobs and your bank account feels “flush,” says Downing. With all that money rolling in, it’s hard not to feel like you’re making big profits. You may actually be losing money.

Forget “10 + 10“ Mike Draper of Renovantage, a Torontobased contractor training organization, says that one of the biggest cashflow killers is not charging enough money for your work in the first place. If you’ve ever heard of the “10+10” method of estimating a renovation job, forget it.

Ten percent for overheads and 10 per cent for profits provides nowhere near enough gross margin. You need to mark up all of your direct job costs by more like 35 to 40 per cent, to account for all of your overheads (vehicle costs, insurance, bookkeeping, permits, licences, office costs, etc.) as well as your labour and materials – and still have a half-decent profit.

Be diligent about collecting To maintain cashflow, you have to be disciplined about getting paid. Have milestone payment schedules in place from the getgo. If a client can't pay by a scheduled date, don't be afraid to stop work for a while. “You should always get paid before you have to pay your suppliers, such as your lumberyard or subcontractors,” says Draper. “You're not in the business of financing your clients’ projects.” Managing the payment schedule with suppliers is important, too. Draper recommends using – but not abusing – trade credit where possible. This will often give you 30 days of interest-free credit and slow down the flow of money out of your company. cc

W W D A

T E

S S

B P O

Nov/Dec 2013

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WE FIGURED THE WORLD’S LEADING DECK BRAND DESERVED THE WORLD’S MOST AMAZING DECK FRAME.

TREX ELEVATIONS

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T R E X .CO M

COVER STORY

PARTNERSHIPS “Business partnerships are like marriages. They require hard work, dedication and, above all, compatibility.”

Five Tips for Better Partnerships 1. Do your due diligence before partnering up. 2. Do a couple of jobs before you make it ‘permanent.’ 3. Have a legal partnership agreement. 4. Bringing a friend into your business is risky. 5. Hiring part-time support people might be better.

By Ian Burns

“

t’s a common scenario. A tradesperson makes the transition into general contracting: managing his own jobs, running the show. He bids, he lowballs, he wins. And then, suddenly, success happens. Contracts and requests for quotes surge, generating more paper, more demands, more delays, more payroll, more headaches, more stress. A partnership seems the perfect solution. Think Banting and Best, Baskin and Robbins, bacon and eggs. When done right, partnerships can be a beautiful thing. But partnerships are like marriages. They require hard work, dedication and, above all, compatibility.

Before you take on a partner Start with due diligence. Ask questions and research your potential partner’s background and skillset. What are they bringing to the table? Do they have credentials? Are they compatible with your work style and work ethic? Why do they want to be your partner? If they tell you they simply tired for of working for a boss, that’s a red flag. A ‘tryout’ is a good idea. Agree to work a couple of jobs together before signing on the dotted line. Partnerships can appear perfect until you have a problematic job.

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It’s best for all involved to see how you both handle the pressure. New partnerships can be much like the Toronto Maple Leafs: they look great on paper but wait until the puck drops.

Get it in writing If nothing else, when deciding to take on a partner, get a lawyer to put it in writing. A partnership agreement can define roles, document what assets each party brings into the relationship, and outline an exit strategy. Remember that friendships and business don’t always mix well. Bringing a friend on board because they have capital, but no specific skillset, won’t help you. Your potential partner should have related skills that aren’t necessarily your best skills, so you can complement each other. Get organized. If your filing system looks like George Costanza’s wallet, hire a bookkeeper. You may find that, rather than taking on a full business partner, getting outside help is all you need to do. But if you find yourself facing the perfect scenario, attracting interest from an esteemed peer who can bring new strengths to your business, you may well be seeing the beginning of a beautiful relationship. cc

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ENGINEERED

for SUCCESS How wooden I-joists, composite studs and engineered By Steve Maxwell panels deliver better buildings

traighter, stronger, simpler. These are the three main reasons engineered wood building components continue to gain in popularity. There are other reasons, too, not the least of which are environmental. As the size and quality of sawlogs declines, solid lumber becomes less consistent and more unpredictable. All else being equal, building materials made using bonded strips and chips from smaller, fastgrowing trees are inherently more ecologically responsible than joists and 40

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All Photos: Steve Maxwell

ENGINEERED WOOD

beams sawn from shrinking stands of large, oldgrowth timber. Rising homeowner expectations are also driving the advance of engineered building materials. People are less inclined to overlook nail pops and the general wonkiness of solid wood framing these days, plus there are design advantages, too. Engineered building materials span farther, support wider and take pipes and wires more easily than sawn lumber. So let me show you three applications where you might be able to use engineered lumber in your next project.

Wood I-joists Flatter floors, longer spans, happier clients. What’s not to love about wood I-joists? They deliver the greatest floor and roof performance from the least amount of wood and, if you’re like most builders, once you work with these things you’ll probably be hooked. Putting wood where it counts is how wooden I-joists deliver more floor with less wood. If you could see exactly what part of a solid wood floor joist or roof rafter is actually doing the work of supporting a load, you might be surprised. It’s the wood fibres near the top and bottom edges of the joist or rafter which carry most of the tension or compression, with a swath covering 80 per cent of the middle not actually contributing much to the bearing capacity of a structure. Where regular

sawn lumber wastes lots of wood fiber because they’re a consistent thickness across their width, I-joists have almost no wood sitting between the top and bottom flanges. Instead, the area here is spanned with high-grade, structural OSB webs that are typically only about 3/8” thick. Besides making for a strong, light package, thin webs are also easily drilled to accept wires and pipes. Better yet, most are also prepunched for 3” or 4” diameter knockouts that make it a breeze to fish wires and flexible plumbing pipes. So, the obvious advantages of I-joists are clear. What’s not so obvious, until you work with them, is how arrow-straight these things are right off the truck. It’s really nice. No more ordering extra floor joists, high-grading the pile, then sending the junk

Smaller and smaller trees

few years ago I got to visit one of the biggest, most-automated sawmills in the country. It’s in northeastern Ontario and can produce enough 2x6 studs to frame 15,000 homes each year. What surprised me the most wasn’t the technology I saw, but something an electrician on duty said to me in passing: “We only mill small stuff these days,” he said. “There just aren’t enough big logs in the bush to make 2x10s and 2x12s anymore.” Engineered building products have advantages all on their own, but perhaps one of the biggest is the way it offers long, wide building materials made from the smallest and fastest growing trees. Like it or not, engineered building materials are here because of environmental realities.

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Nov/Dec 2013

ENGINEERED WOOD

Way more floor

back or sawing it up for blocking. Since wooden I-joists are so consistent, they’re part of an evolution in floor design that’s delivering better living experiences in finished homes across Canada. Read the sidebar ’Way more floor’ at right to see how you can home in on the right combination of floor construction cost versus performance.

Engineered wood beams Even if you had a pile of the best West Coast rainforest beams in the world, they’re still going to limit the designs you can build. Even the best trees only grow so long and so wide, which is why engineered composite beams are used more and more often these days. Everyone can see the design advantages of buildings with fewer internal supports, but what’s less obvious is how engineered beams make this happen. Looking something like thick, high-grade OSB, engineered beam manufacturers

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ood frame floors have been getting better over the last three decades, both because of the way engineered building products perform, as well as the design refinements they allow. The TJ-Pro Rating system is a case in point. It lets you zero in on that sweet spot between cost savings and floor performance that’s right for each project. Using more than 1,000 field and laboratory floor performance measurements gathered since the early 1990s, this data drives a computer model that’s at the heart of the TJ-Pro Rating system. Materials that come together to create a rating of 25 on the TJ-Pro Rating scale yield a floor that about 28 per cent of homeowners find acceptable. TJ-Pro Rating numbers go up to 65, with 99.9 per cent of the people finding a rating or 60 to be acceptable. Construction variables such as size and type of floor joists, subfloor materials and subfloor anchoring systems determine the rating.

ENGINEERED WOOD

turn fast, young, structurally useless trees into the longest-spanning wood-based structural materials the world has ever seen. As much as 75 per cent of the timber harvest that leaves a forest bound for an engineered lumber plant makes its way into finished materials. These components are also low in moisture, exceptionally rigid, reliably straight and hold up much longer in a fire than structural steel. In the world of engineered building materials, the word “timber” has a wider meaning than when referring to solid wood. It’s shorthand for a family of products that varies in composition, appearance and size. That’s because applications go beyond just honking-big horizontal members used to build old-time barns. Engineered timbers make the most sense for headers, interior beams and columns. Rim boards for capping the ends of wide, composite I-beam floor joists and rafters are also the ideal application for engineered timber stock. Had enough of nailpop callbacks? Engineered studs are an option that limits this kind of nonsense, especially as part of tall, prominent walls in great rooms and in gables under the peaks of cathedral ceilings.

Nearly joist-free floors Though structural insulated panels (SIPs) are used most often for walls, they also make rigid and very warm floors that go down quickly. Used most often in projects without basements, a 10”-thick panel spans a whopping 16’ without support. Each panel is 48” wide, with recessed edges that are filled during construction with double 2-by solid lumber that spans the joint. Spray foam applied to the groove before panels go together make the assembly air tight. SIPs are rigid for the same reason that wooden I-joists are – the OSB sheeting on the top and bottom surfaces are held solidly to the foam inner core. They act like the flanges on I-joists, with the foam functioning like the OSB webbing. Since no sliding is possible between the OSB and foam, compression and tension stresses are concentrated on the top and bottom surfaces. That’s why these floors are so solid. Everyone likes progress, but no one likes change. This mentality is one reason innovations take off so slowly in the building world. The hitch is, you can’t get progress without change. Now that engineered lumber is taking off in a big way, there’s no turning back. Not that anyone would want to. cc

Cutting composites

uilding your projects with engineered headers and beams saves time because you don’t have to cut and assemble 2x8s and 2x10s to do the job. But the efficiency is only realized if you can cut big wood quickly, and that comes down to equipment. An excellent tool for this work is a simple circ saw attachment called the Prazi Beam Cutter (www.praziusa.com; 508-7471490). Imagine a cross between a chainsaw and a sidewinder circular saw. That’s how a Prazi handles up to a 12” depth of cut in one pass. I bought my first one in 2003, and it’s one of the go-to saws I use for big cuts. The other is a chainsaw accessory called a 75º Head Cutter. It’s made by a small, west coast tool company

called Big Foot Tools (www.bigfootsaws.com; 702-5659954), the 75º Head Cutter is a thick, flat, milled plate that clamps to a chainsaw bar. During my tests sawing multiple 8x8 and 8x12 beams with a 50cc chainsaw, the Head Cutter produced perfectly square cuts every time as measured with my framing square. It’s beefy enough that there’s no bending or twisting of the saw bar, either. For the smoothest possible cuts, clamp or screw a wooden guide strip to your workpiece, then slide the edge of the Head Cutter along it, with the chainsaw running. As the name suggests, the swiveling action of the Head Cutter allows you to heel the bar of your chainsaw over for angled cuts.

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Nov/Dec 2013

CONTRACTOR U

Referral

MARKETING 101 If you aren’t asking for referrals when you finish a successful renovation for a happy client, you are missing out on future work. The average ‘close’ rate on referrals is more than 30 per cent. That compares to something like 5 per cent on leads that come to you from the web. The key to getting referrals is to ask for them. By Mike Draper www.renovantage.com

lmost every contractor I talk to tells me that, although they get a lot of business through referrals, they want more. Not only do they wish they could get more referrals, they wish they knew how to get more referrals. Let’s start off this discussion by looking at two ways to get referrals. One, which is passive (it happens without your participation, usually), is called Word of Mouth (WOM) marketing. The second,

Nov/Dec 2013

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better way to get referrals is called Referral Marketing. WOM marketing isn’t really marketing since, as we’ve established, you don’t really do anything to create the WOM lead. The lead comes to you or it doesn’t. You don’t know if someone called you because they were referred to you. And you also don’t know how many times your name was given out by a happy client of yours but the prospective

CONTRACTOR U

new customers didn’t call! There are even more problems with this passive approach. If you do get a call, you don’t know if someone gave your name to the type of person you want to do work for. Or if that incoming call is for the type of work that you want to do. The whole problem with WOM marketing is that it’s all uncontrolled, random and, in essence, a crapshoot.

Take control In business, we want to have control over our own success. If we have control, we can take action to make our business grow and, ultimately, make more money. We want to be able to do more of a good thing and less of a bad thing. Passive WOM marketing means that we can only grow by chance as our name gets passed along. So, let’s look at a better way to operate. Let’s look at referral marketing. This is a more active form of marketing whereby you, the contractor, can do specific things that will create more business through referrals. One specific thing that you can do under this model is to provide an incentive to someone when they give a referral to a friend or relative. I am not suggesting that this tactic is all there is to referral marketing. Or that you will like that tactic. But this is what referral marketing consists of, having actionable tools and tactics to get more referrals. Before we go much further, let’s establish our terms. What is a referral? A referral is: “A business opportunity initiated for you by a third party – a transfer of trust.” And what is referral marketing? Referral marketing is: “The systematic cultivation of business opportunities by referrals.”

business through referral marketing. The first is that a referral is a transfer of trust. The potential new client who receives a referral from one of your happy customers is trusting that their friend (or relative or business associate) is telling them the truth about you and that their friend wouldn’t misguide them. So, the trust of the person you have done great work for is transferred to the recipient. And your (hopefully) new prospect already has a level of trust in your capabilities. That initial trust is a very, very good thing. As we all know, in the renovation business, when a homeowner has trust in a contractor, the whole quoting and proposal process is going to run much more smoothly. In the best of all possible worlds, your brand new prospect won’t even get more quotes because they already have so much trust in you. After all, they’ve just been referred to you by someone that they themselves trust. And you’ve just done a superb job on a project for the person that referred you. The potential to either reduce or eliminate competitive bidding is now very real. Imagine: No competition, or very little competition. No price wars. No long, drawn out bidding and decision processes. Referrals will typically close faster, close easier and often with greater margins for the contractor. There is more good news. The average close rate of a referral is over 30 per cent, whereas an internetbased lead could be as low as five per cent. How many internet leads have you received where you called the homeowner only to find out you were the tenth contractor they have called? Compare that close ratio with the typical close rates of direct mail marketing, which can be as low as one per cent. No wonder everyone wants more referrals.

“A referral is a transfer of trust.”

Taking action to generate referrals Two key concepts There are two key concepts in these definitions that are critical to understanding and growing your

It’s absolutely critical that you understand the need to get out of the habit of letting referrals just “come” to you, passively. www.canadiancontractor.ca

Nov/Dec 2013

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Here is a list of actions that you can take to make those referrals materialize >> 1. Ask for a referral! It sounds so simple, yet not enough contractors do it. I was guilty of this bad habit myself, until recently. I have a Renovantage client that I have been coaching for a long time. He asked me two weeks ago if I was looking for more clients. I was floored. Here I was, helping my client to make major changes in his business and he didn’t know that I was looking to do this for more clients like him! It was 100 per cent my fault. I hadn’t asked him if he knew of another company like his that could benefit from my coaching.

>> 2. Finish the current project

on a high note.

The last 10 per cent of a job is where it’s very human to start thinking about your next job, to rush to completion, to just want that project to end! But you need to buckle down and do your very best work at the end of a job. Not only is your 10 per cent holdback in play here, you will be looking to get a referral at this stage for future work.

>> 3. Don’t try to make up for

losses already sustained on a project. When you have a project where you have made a mistake or where you have had to eat some costs, the worst thing you can do, from a referral marketing perspective, is to try to make up the loss on the project by charging too much for extras or – cardinal sin – for things that you know should already have been included. Suck up the

Nov/Dec 2013

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mistake and complete the project on a high note. You are far more likely to impress the homeowner that you are a stand-up contractor if you eat your losses and just get it done the right way. A great referral will go a long way towards helping you win new business where you will make the profit you “should” have made on this job.

>> 4. Go the extra mile. Take the time to treat your client with the utmost respect as you wrap up a job. Take their complaints about any deficiencies seriously, and fix them as soon as you can without whining. Your client won’t remember the 90 per cent of the job that you did brilliantly if the last 10 per cent of it was hurried, slipshod or slapdash.

5. Follow up before the warranty expires. At first glance, this advice may seem like a big waste of time, but you should consider two things. First, if there is a warranty problem and you don’t fix it, the problem will bother your client for a long time and the likelihood of them passing your name along will be diminished. Whereas, if you fixed the warranty item ahead of time, your client will be so impressed that they will want to tell their friends how great you are. When you go for the walk through, there is a much higher probability that the homeowner will ask you to take a look at something that they were thinking of doing, like that basement upgrade or master bath upgrade. By following up in this way, you will set yourself apart from the 99 per cent of

CONTRACTOR U

other contractors who, assuredly, will not find the time to generate positive impressions in this way.

>> 6. Stay in touch in a systematic,

ongoing way with all clients you have worked for. Email them a newsletter. Send birthday cards. Send Christmas cards, if appropriate. With the permission of new clients, send photos of new work that you are doing, with a little note that you are excited about some new product or technique you have discovered. And if you get referrals from clients, for goodness’ sake, thank them.

>> 7. Let clients know what type

of work you like best.

If you let your clients know what kind of referral you are looking for, you are more likely to receive exactly the type of lead you want. If your client doesn’t know what your ideal referral is, they will either send you a whole bunch of referrals that you don’t want or they won’t send you any at all. When you receive referrals you really don’t want, the typical reaction is to not do a good job

following up on them, therefore you won’t win them. When this occurs, the original homeowner is going to stop referring you. When your client knows what type of referral you are looking for, they will be far more inclined to provide you with the referral.

>> Summing up As you can see, the difference between Word of Mouth (WOM) marketing and true Referral Marketing is absolutely critical to understand. If you don’t think you are getting enough referrals, either you are doing poor work or you are doing great work but being too passive about referrals. You have to be very active in what you do to generate more referrals for your business. Execute on the ideas in this article and you will see the increased benefits of going the extra mile for your clients. Ultimately, you will receive more referrals. And, you are going to make a lot more money. Mike Draper is a business coach for Renovantage (www.renovantage.com) and a frequent contributor to Canadian Contractor. See his columns and videos online at www.canadiancontractor.ca (type Mike Draper into the search bar for easy access).

www.canadiancontractor.ca

Nov/Dec 2013

SITE NOTES

Are you banking your contractor sick days? O

bviously, we’re kidding. Self-employed contractors don’t get any paid sick days at all. But over the last 30 years, the use of sick days in Canada’s overall workforce has sharply increased. The increase raises questions about why Canadians are getting sicker and what can be done about it. A report named Absent With Leave: The Implications of Demographic Change for Worker Absenteeism, by the C.D. Howe Institute, examines the issue and asks why public service employees and union employees report more sickness than private sector and non-union employees. The most striking difference in “lost day averages” is between union and non-union rates. (You’re shocked, aren’t you?) The most recent statistics show that non-union workers are losing 5.6 workdays a year, whereas union workers are losing 10.8 days. Why are union workers getting so sick? Given the demanding requirements of union-based workplace safety, it seems the very opposite of what one would expect. What’s happening? The study suggests a reason. The higher absenteeism within unions, the authors claim, is a result of attempts by some employers to discontinue the “banking” of sick days. Historically, many union employees have been allowed to save up sick days and use them as part of their retirement savings. When sick days are no longer bankable, employees tend to use them up. The study points out that the use of sick days by public service employees (75 per cent of which are unionized) is particularly problematic. So, despite efforts on the part of the various governments to improve the working conditions of public service employees, they appear to be getting “sicker” statistically – though perhaps not in reality.

Nov/Dec 2013

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A petition to abolish the Ontario College of Trades On Sept. 25, during question period in the Ontario Legislature, Conservative MPP Randy Pettapiece (Perth-Wellington) read the following petition to the House. “Whereas Ontario’s tradespeople are subject to stifling regulation and are compelled to pay membership fees to the unaccountable College of Trades; and whereas these fees are a tax grab that drives down the wages of skilled tradespeople; and whereas Ontario desperately needs a plan to solve our critical shortage of skilled tradespeople by encouraging our youth to enter the trades and attracting new tradespeople; and whereas the latest policies from the Wynne government only aggravate the looming skilled trades shortage in Ontario, we, the undersigned, petition the Legislative Assembly of Ontario as follows: To immediately disband the College of Trades, cease imposing need less membership fees and enact policies to attract young Ontarians into skilled trade careers.” Pettapiece’s petition to the house suggests there is general ill towards both the Ontario College of Trades and the party (the Liberals) that created it. And not just in the construction trades. Is this petition likely to go anywhere? Unfortunately, no. The petition was one of a long list of motions and petitions that day; pronouncements that are put forward during question period (and recorded in Hansard) always disappear into history. It is expected, however, that the Conservative Party will make it an election issue next year. Go to www.canadiancontractor.ca, type in “Dunlop” in the search bar, and see publisher Rob Koci’s interview with another staunch opponent of the College, MPP Garfield Dunlop.

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MARKETING

RENOVATORS

l i a t e r g goin

A unique home improvement centre called Improve, north of Toronto, could provide a model for contractors eager to increase their business By Don Douloff Photo: Larry Arnal

CONTRACTO

Oleg Chekhter, Improve’s co-owner, with Meridian Windows’ vice-president Igor Zask.

R PROFILE

e: Company Nam ws and Doors do in W Meridian Year Founded: 2003 Head Office: . Vaughan, Ont : Recent Growth w location in ne a Established e Alta., to servic Grand Prairie, ce, in ov rt of the pr the northern pa th ow 35 per cent gr contributing to this year. of the company Next Steps: to other ing to expand Meridian is look innipeg, s, including W Canadian citie l as skatoon, as wel Regina and Sa arket in y into the US m making its fora Florida.

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eing a contractor in a competitive marketplace has its challenges. Chief among them: How to increase business in a crowded field, especially in large cities where competition is particularly fierce? Maintaining a website providing product info and informing customers of product discounts is all well and good, but it’s only one component of the sales and marketing toolbox. The savvy operator will take a proactive approach and bring its message directly to their target customers. A potentially effective way to accomplish that is to create a retail presence displaying your products and services. Enter Improve, a unique home-improvement centre under construction on a site just north of Toronto, near the intersection of Keele Street and Highway 407. A mix of home-improvement product suppliers and related services, including contractors, Improve is slated to open in late summer, 2014 (see sidebar on page TK). Meridian Windows & Doors has been an early adopter of the

MARKETING

concept, having purchased space with Improve. Based in Vaughan, Ont., north of Toronto, Meridian sells and installs high-end, Energy Star-rated exterior windows and doors, with a product line that includes casement, bay and double-slider windows, as well as French and patio doors. By taking a unit in Improve, “we’re hoping to get more sales in the Greater Toronto Area,” says president Michael Shribman. Meridian’s Improve space will focus on the residential side of the business - and Shribman is thinking big. In fact, he’s hoping the company’s Improve unit will generate “at least an extra $1-million per year in gross residential sales.” With those numbers in mind, Shribman says Meridian could recoup its initial investment in three to four years. By participating in Improve, he says, Meridian will reap the rewards of being part of a large home-improvement community. “All the trades will be there and we can give each other referrals,” he says. On top of that, each of Improve’s 401 unit owners will pay into a pooled advertising and marketing fund that will encompass print, TV, radio, online, social media and special events. Improve’s website will also assist in the centre’s marketing efforts.

2,000 people a day, minimum Robust traffic projections – “On a bad day, there will be 2,000 people,” says Improve co-owner Oleg Chekhter – include a forecasted mix of residential and commercial customers. For his part, Meridian vice-president Igor Zask says having a presence at the home-improvement complex “will give us a new niche, of people who want to see product before they buy. We expect to get leads from displaying at Improve.” Furthermore, Shribman was, at the time of writing, considering buying a second unit at Improve, dedicated to the commercial side of Meridian’s business. Of course, Improve won’t be Meridian’s first experience with bringing its product into direct

contact with its customer base. Historically, Meridian has invested, and continues to invest, annually, between $250,000 and $300,000 in its advertising program across various platforms such as radio, catalogues, flyers, Internet and telemarketing. For four years, the company operated a showroom at its old offices, in Toronto’s Steeles Avenue/Keele Street area. “There wasn’t enough traffic,” says Shribman, who says showrooms need heavy advertising support in order to draw enough foot traffic to make them viable. The company's four-year-old Calgary showroom is very successful. Covering 2,500 sq. ft., that space is “a point of contact for our residential customers,” says Zask, who oversees the residential side of the business. “(Operating a showroom) allows our customers to see what we do, how we operate. It makes them familiar and comfortable with our product and personnel.” Meridian opened its Calgary office in 2007 and currently employs seven salespeople that cover the city and Southern Alberta. Zask says the region has proven fertile ground, thanks to a market that’s less competitive than Toronto’s. Calgary and Toronto form the hub of the company’s residential business, which comprises 80 per cent to 85 per cent of Meridian’s overall billings. On the product side, Meridian’s key suppliers include Window City, Queens Doors and Sunview Patio Doors on the residential side. On the commercial side, Meridian features products from Alumicor, Windspec, CRL, Integral Seal, Novatech and Triple Seal. Not coincidentally, all are based in the Toronto area and embody the trait Meridian prizes in its suppliers: reliability. “We prefer Canadian suppliers because they deliver quality product, on time, with no screwups,” says Shribman. “We’ve used suppliers from the U.S. and China, and while their prices are sometimes cheaper, they’re not reliable,” he adds. Shribman oversees the commercial side of Meridian’s business. www.canadiancontractor.ca

Nov/Dec 2013

MARKETING

No longer a manufacturer

IMPROVE 401 home improvement retail units under one roof A Canadian first, Improve will house, under one roof, 401 home-improvement services and products in a 320,000-sq.-ft. building on 21 acres of land, including a parking lot for 1,500 cars. Rather than renting units, Improve is using the industrial condominium model. Clients can purchase the space, measuring 430 sq. ft. (20 ft. x 21.5 ft.) of useable space, with prices beginning at $370,000. Total monthly expenses for unit owners are around $1000. This includes a monthly maintenance and hydro fee of $396, and a $200 per month advertising fee, which will be pooled into a common marketing fund. In addition, owners will pay estimated property taxes of $300 to $400 per month on each unit. The project, currently under construction north of Toronto, in the Keele Street and Highway 407 area, has sold more than 90 per cent of the 401 units that are expected to open in 2014. Improve co-owner Oleg Chekhter estimates services - among them, contractors - will comprise 20 per cent to 25 per cent of the mix, with products (in more than 36 categories, according to the project’s website) accounting for the rest. Chekhter says he expects about 300 stores in total because a number of companies are purchasing multiple units. Spaces will be configured similar to a tradeshow, but will be permanent units, and consist of drywall sides fronted by glass facades. Unit owners will have free access to six on-site meeting rooms, for client consultations, and a 240-seat auditorium, for product presentations. Rounding out the amenities are a café and restaurant. Nothing on this scale has ever been done before. In the size, scope and breadth of its offering, to trades and consumers, of products and services related to construction, renovation and design, Improve will be unique to the Canadian marketplace.

Nov/Dec 2013

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Michael Shribman’s industry background includes working in sales and marketing (“a long time ago,” he chuckles) for a large window manufacturer. He also worked in construction as an estimator/surveyor. For a time, Meridian was vertically integrated and manufactured doors and windows. But in 2008, after four years of making its own product lines, the company ended that part of the business and sold off its manufacturing facilities. So what accounts for Meridian’s success? What sets it apart from its competitors? In a nutshell, rigorous dedication to customer service – which might sound clichéd, but at Meridian, it’s anything but, and forms the backbone of its business. “Our business philosophy is to deliver to people what they expect and then get referrals from them,” notes Zask. Indeed, the Meridian team’s vast experience in the business has equipped it to meet customers’ high expectations. Key to its success is delivering timely installation, which includes being flexible to accommodate residential customers’ busy and oftchanging schedules. “We work in the rain, the snow; we don’t break our schedule,” he says. Moreover, Meridian maintains an extensive customer database. After each installation, the company follows up with customers to solicit their feedback on the job, gauging their satisfaction level. “We learn from our customers,” says Zask. “We do our best to develop the business in ways that build longterm relationships with them.” In addition, most of the company’s installers “have been working with Meridian from day one,” he says. Meridian trains its installers – all of whom are licensed – and pays top dollar; hence, their loyalty and high retention rate. Backing up its products to the max, the company offers a 25-year warranty on workmanship, a 15-year warranty on sealed units (against seal failure and condensation) and a lifetime warranty on windows. All systems featuring the company’s vinyl window frame components carry a warranty against chipping,

cracking, peeling and blistering. Plus, Meridian’s warranty is transferable by the original property owner to a subsequent owner.

The future of the company What lies ahead? Shribman wants to increase the commercial side of the equation, which currently comprises 15 per cent to 20 per cent of the company’s business. Currently, Meridian’s commercial projects are centered in the Caribbean and are, for the most part, design/build developments originating with an architect’s plans for the building. Based on those specs, Meridian’s team then designs the windows and doors for each project. In the Caribbean, Meridian has undertaken commercial projects Barbados, Turks and Caicos. It also has projects in Bermuda. For a time, Meridian invested in a factory in Barbados that manufactured windows. After two years, the company sold its shares. Testament to its ability to adapt to different sets of conditions, Meridian’s assignment, in Bermuda, took on a decidedly local flavor, since the project required windows, doors, railings and skylights built to withstand the hurricane-force winds endemic to the region. Though Meridian’s commercial work is centered in the Caribbean and Bermuda, it’s not confined to that region. In the Toronto area, the company’s commercial projects have included the Global Business Centre in Mississauga, west of the city; Scotiabank in Brampton, northwest of the city; retail storefront operations such as Hugo Boss and Forever 21; restaurants; and the high-profile Shops at Don Mills outdoor lifestyle mall, in the northeast quadrant. In Calgary, Meridian has undertaken condominium projects and, in 2011, outfitted lowrise and highrise condos in Red Deer, Alta. Looking ahead, Shribman is eyeing additional expansion, on the commercial side, in the Greater Toronto Area (GTA) and Alberta markets. Possibilities include a project to replace windows in existing

Calgary condominiums. He’s also considering markets in Northern Alberta. In May, Meridian Alberta opened a new location in Grand Prairie. Zask is considering expansion of the residential business. He’s giving priority to the Alberta market, where a generally high level of salary translates to more disposable income available for home renovations. But although Calgary is less competitive than Toronto, it is becoming a tougher market, as competing companies set up shop there, says Zask.

Ten per cent margins “Today’s market is tough,” he notes. “We need to spend 70 cents to make a dollar.” Typically, Meridian works on margins of 10 per cent. He’s also looking at Regina and Saskatoon, because of those cities’ “fast-moving economies driving new-home construction and renovation.” If Meridian does decide to expand to one or both of those cities – in the next year or two, if it happens – the company would go full-tilt, opening a branch office and warehouse, hiring salespeople and local installers. Further down the road, Winnipeg could be considered for residential and commercial projects. When Meridian decides to enter a market, “we typically open in the city for a year, to test the waters, then see how it goes,” says Shribman. The U.S., a logical target, could be in the cards for the company. Specifically, Shribman is considering the Miami, Fla. area, where he’s exploring a possible project involving window replacement targeted for condos and residential houses. As part of his residential growth strategy, Zask is considering a new product line: skylights. According to Zask, adding skylights to Meridian’s repertoire would provide a competitive edge because that product isn’t commonly part of window contractors’ offering. At the time of writing, Zask was talking to Torontoarea suppliers. If things go forward, Meridian will test-drive skylights on a trial basis, with a final decision possible by the end of this year. cc

www.canadiancontractor.ca

Nov/Dec 2013

PERSONAL FINANCE

Struggling with debt? Filing for bankruptcy or a proposal to creditors is not a sign of weakness – but a recognition that you finally want to stop paying By Frank S. Kisluk for the past and start living for the future

or many, the word bankruptcy can evoke feelings of failure, guilt and shame. Like our parents and grandparents before us, most people hold strong to the philosophy that no matter what, you pay your debts. So then, what do you do when the unexpected happens? And how do you move forward when you are stuck paying for the past? Most bankruptcy stories have the same root cause: unfortunate circumstances. Financial challenges are more common than you think, and they are often due to reasons beyond your control. Filing for bankruptcy or a proposal to creditors (we’ll explain the difference in a second) is not a sign of weakness – it is the recognition that you finally want to stop paying for the past and start living for the future.

Bankruptcy versus proposal Bankruptcy, in which virtually all significant assets are seized by a trustee and sold for the benefit of creditors, is almost never a meaningful alternative for a self-employed entrepreneur. Offering a proposal to creditors for a series of payments from regular cash flow offers a more attractive return to creditors than bankruptcy. In a proposal, the debtor retains control of his or her assets while a trustee negotiates a settlement with creditors. Sometimes the settlement involves the agreed sale of particular assets to yield funds for creditors, but the debtor retains control of this. Unlike a bankruptcy, a proposal is not published as a legal announcement in a newspaper. It is a private affair between the debtor and the creditors. In effect, a proposal is simply an offer to all creditors to pay them an amount that you can 54

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afford, in return for which you are released from any further obligation under the existing debt. The proposal can be structured in any way that makes sense, including a single lump-sum payment, a series of monthly payments over several years, or any combination of these. A critical principle of all proposals is that the payments received by creditors exceed the expected payment that they would obtain from the alternative of a bankruptcy filing. When structured properly, proposals are almost always agreed to by creditors. Only accredited trustees in bankruptcy can file proposals. Trustees are experts in helping people who are struggling with debt by tailoring solutions to the particular individual’s circumstances. Trustees can consolidate your debt into one easy payment plan so that you can get out of debt sooner and start living for the future. A trustee will review your financial affairs and work with you to develop a plan that will minimize disruption in your life and still be meaningful to your creditors. This could involve the sale of assets, infusion of cash from a third party and, often, monthly payments (non-interest bearing) for a period of several years. In essence, a trustee will provide you with a road map so that you can get to where you want to be. They give you the full picture so that you know what to expect and how it will impact your life. If you would like further information, at no obligation, feel free to contact me as below. Frank S. Kisluk is a trustee in bankruptcy at msi Spergel inc., Toronto. His practice concentrates on financial restructuring for self-employed individuals and businesses. Email: fkisluk@spergel.ca

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BOSCH POWER TOOLS

Hardest-hitting drilling hammer

Released earlier this year, the RH850VC is the hardest-hitting and fastest drilling hammer in its class. But with three levels of vibration control, you may not feel a thing. It also offers tool-free bit changes, an automatic bit lock, built-in dust protection and a Vario-lock mechanism that rotates and locks the hammer's chisel into 12 different positions.

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IRWIN

Folding knives with bladelock technology It may be the most ubiquitous item in the toolbox – the utility knife. Irwin's new series of folding knives, have liner locks for safe, one-handed operation. Irwin's BladeLock Technology ensures no blades will slip or fly out on the job – you can only change blades when the holder is open to 45 degrees and the release button is engaged. Sharp and safe – it doesn't get better than that.

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LENOX

Fleam ground reciprocating saw blades LENOX has found a way to cut wood quicker and cleaner. These fleam ground reciprocating saw blades are designed for smooth cutting, with wider gullets to minimize debris. Each blade has two cutting edges per tooth – so the blade cuts on both the push stroke and the back stroke. Available in 6” and 9” lengths with one version offering tapered plunge cutting tip for faster, cleaner drywall cutting.

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STUFF WE LIKE

ICS

Concrete & masonry chain saw How can a 94cc petrol-powered saw be quiet? Well, it's not exactly. But ICS has come up with the perfect concrete and masonry saw for renovations contractors – it offers dampened vibration and sound and uses micro o-rings to seal out abrasive slurry when cutting concreter or brick. Keep your jobs quieter and tidier – and your clients happy.

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HITACHI POWER TOOLS

Coil framing nailer

MARVIN WINDOWS

Integrity All Ultrex sliding patio doors The trend these days is for sleek style – not to mention low maintenance. The Integrity All Ultrex Sliding Patio Doors from Marvin Windows are almost invisible, offering unobstructed views to a patio, porch or deck. The Ultrex sliding door frame is also less likely to sag or misalign, gliding effortlessly for years to come.

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Nov/Dec 2013

WHAT DID THEY PAY? WHAT DID THEY PAY?

Win me! me! Win

Email us with the cost of the job below & win a level email spayne@canadiancontractor.ca

The IRWIN 2550 box beam level. It’s The IRWIN 2550 box beam level. It’s accurate, rugged framed, and has a accurate, rugged framed, and has a continuous edge for scribing complete and continuous edge for scribing complete and accurate lines anywhere. It includes Irwin’s accurate lines anywhere. It includes Irwin’s Plumb Site feature, which provides dual Plumb Site feature, which provides dual viewing from awkward angles. Embedded viewing from awkward angles. Embedded earth magnets allow for hands-free use. earth magnets allow for hands-free use.

What did they pay? What didBASEMENT they BATHROOM pay? What did this three piece bathroom cost? This basement bathroom was a relatively quick reno done in a very high-end This 2,000 square-foot house is being neighbourhood of Toronto. The area of the renovation is roughlyplaced 8 ft. x 5on ft. gutted and a new addition

HEATING SYSTEM

the back, but we want you to just

There was a rough-in alreadythe for old the sink guess what removing and and the shower butheating the toiletsystem rough-in is installing the new cost. new.The The drop in thewas ceiling hides the old system a rad-based, steel beam that runs down the centre oil-fed hot water system (that was of the house. The contractor made originally coal fired). The new sure it was properly insulated to avoid system is forced air natural condensation occurring behind thegas. tile.

TheThe removal 15lighting cast ironis rads, mirrorincluded and all the new. allEverything the pipes related to the and, behind the tilesystem is old style, including the concrete pan. fancy of course, the boiler, oilNo tank andnew the tile-backing the walls you left over oil. system. In your All estimate, add in see the here aregas interior so no insulation natural system hookup fromwas the necessary (except aroundthe the lines steel beam) street, which included for the and the stove floor isand a very straightforward kitchen fireplace. The new vinyl finish on concrete. American Standard furnace is a high efficiency, high-end unit pushing out 60,000 BTUs per cent efficiency. What do at you95think this basement Include thebathroom new American Standard installation cost 2.5 ton the AChomeowner? unit as well. Email us your best estimate, So, what’d it cost? if you of the Howand much doare youone think the three closest towas the cost, General Contractor paid youclient will win level by his to dothe allIrwin this work? shown above.

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May/June 2013 5858 Nov/Dec 2013

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Email us your best estimate.

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13-04-26 8:08 AM

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