Capizzi Home Improvement grew its business by $600,000 in 1998. Not bad, but what really impressive is the fact that the remodeler's gross margin grew by 1.4 percent - from 36.5 percent in 1997 to 38 percent in 1998.

For tom Capizzi jr., company vice president, profitable growth is no fluke when you operate your business strictly by the numbers. That's the approach the Cape Cod remodeler subscribes to and it's one that has helped shape the company to what it is today.

When his father, Tom Capizzi, started the business in 1976, he focused primarily on windows and siding. As time went on, the company expanded it's offering, being a full-service remodeler. When the younger Capizzi joined the company in 1986, the business hovered around $1 million in annual sales.

Start by Listening

"I wanted to get into the sales side of the business, so I would listen to what the various industry gurus had to say about how to run your business and how o be successful, and then I would pound the pavement all week long making sales calls," Capizzi says.

Absorbing Advice.

Early on in Capizzi's efforts to grow the business, he befriended a couple of industry leaders and absorbed all the mentoring advice they had to offer.
"I don't carry a lot of baggage and I always listen to what people have to say," he says. "I'm open to a new way of doing things. Too many people who say they have 20 years of experience actually mean they have one year of experience they've repeated 20 times. You can't expect to stay on top if you keep doing the same things over and over."
Another common mistake many remodelers fall victim to is they "give away a bunch of their work."
"We're very detailed in our plans and proposals. Every single item is accounted for and any additional changes and charges are itemized and signed off by the customer through a change order," Capizzi says.
Since most of the work Capizzi contracts is of a home improvement nature, he's able to use generic order forms to cover the supplies and labor required to complete the project. Anything above and beyond the generic proposal for a roofing job, a siding job or any other typical home improvement jobs is charged accordingly and handled with change orders. "You can't rely on verbal communications. Changes must be in writing and customers must approve the changes and additional charges with their signature," Capizzi says.
Capizzi's field staff is a paid a commission on change orders, for one to make sure additional products and services are accounted for and also to encourage crews to look for additional work that can be easily addressed while they're on the job.
"We spend two to three hours presenting our high company standards, as well as the actual nuts and bolts of the proposed project. So when we're on the job, it's a lot easier for us to propose additional items and a lot easier for the customer to sign off on them, because it just makes sense to take care of the item at the time," Capizzi says.

Daily Profit

One important financial measure Capizzi monitors closely is the company's per day profit. It doesn't matter whether it's a remodeling project, like an addition, that takes two months, or a home improvement project, like a new roof, that takes three days, profits can quickly erode if the job runs over.
Capizzi tracks his profitability monthly, quarterly and at the end of the year.

He likens the business to a three-legged stool, with the three legs being sales, production and administration.
" Most importantly, you first have to sell the job," Capizzi states. "Then you have to produce the job on-time in order to be profitable. Finally, you have to watch and manage all of your overhead costs- all expenses that can't be billed directly to a job."
Capizzi's two production managers not only keep jobs on schedule, but also make sure projects are completed within budget. His field supervisor handles quality control and customer service.

"It's a team effort between my production managers, field supervisor and my field staff," he notes. "We're always pulling information back into our front office to assess what we did and then make adjustments where necessary."
With production maintaining schedules, keeping costs within project budgets and generating a profitable return as a result, Capizzi then turns to the company's administration staff to manage overhead costs and make sure the profit generated to this point is not lost through inefficiencies in the operation.

"For many companies it seems that the more volume of business they do, the more slippage they experience in their profitability," Capizzi says. "The people we have in the front office do an excellent job in keeping track of what goes on to make sure we're able to hang on to our profits. I'm constantly thinking about how to strengthen each area of the company and I've been fortunate to surround myself with high-quality people."
Finding the right people is only part of the equation. You also have to match an individual's qualifications with the right job." A square peg won't fit in a round hole, so don't push what doesn't fit."
Capizzi also believes it's important to recognize what type of owner you are and them make adjustments t accommodate your shortcomings.

"If you're a tradesman and that's what you like then hire someone to handle the business management side," he says. "If you like the business management side of running accompany, then make decisions based on what you think a CEO would do and hire good trades people to handle the production side of your company."

For Capizzi, it's the only way to maintain control over the business and avoid the roller coaster ride many entrepreneurs experience.
"I don't participate in bad economies, I do whatever I can to smooth out the roller coaster ride of business by building bridges that span expected dips in the economy," Capizzi says. "You have to start from the beginning by selling a job right, having good people to produce the job and mage its cost, and then controlling the overhead costs associated with running a business. If you settle for selling a job at what you think the market will bear, rather that what you need to be profitable, you'll end up struggling through the process and eventually fail. I'm not interested in failing- I want to be successful and profitable."