Getting into maintenance

How would you like to add 3 percent to your bottom line? It may not sound like much but with the cost of building materials going up and contractors under pressure to hold the line on prices for their customers, a 3 percent boost in your profit margins could make a crucial difference.
Where can you find 3 percent? Cutting back on, say, wages or on advertising could end up costing you in lost productivity or lost sales. “But we add about 3 percent a year to our volume,” says president Leo Souder of MPB Builders in Ripon, Wis., “by simply asking our customers if they need any maintenance work on the buildings we’ve constructed for them.”
At MPB those buildings can run the gamut from post-frame to stud-frame structures and from residential to equestrian projects, and from agricultural to commercial buildings. The company’s wide range of customers include homeowners, farmers, churches, convenience stores, golf courses, manufacturers, small businesses, and more. In an average year, Souder estimates, maintenance work on those existing buildings will bring in about $150,000 in revenue. “And one year when we had a bad hailstorm,” he recalls, “we did $1 million in repair projects.”
How does MPB do it? While many builders figure it’s more profitable to construct one building and then move onto the next — rather than go back to old jobsites — Souder says his company’s approach to maintenance work actually generates new projects as well.
“When our sales representatives call on past customers,” Souder explains, “they ask about the possibility of inspecting the old building. In fact, simply calling up an old customer and asking about preventive maintenance on their existing building is better than cold-calling them. It’s a good way to stay reacquainted with our customer base. We might get a repair job — and, as we chat with the customer, we might get a referral for a new job.”
Might get a referral? Souder reports that MPB Builders generates a hefty 10 percent of its new construction projects through leads and referrals generated by maintenance work. “Few of our competitors like to do maintenance work,” Souder adds, “and so maintenance is one way our company can differentiate itself.”
Indeed, Souder figures that even if MPB gives a customer a 10 percent discount on maintenance and repair work, “that 10 percent we basically donated is actually better than advertising.” Soliciting maintenance projects also has the benefit, he believes, of generating paid work for those winter months or business cycles when new construction activity is slow.
MPB has been around since 1961 and Souder can testify that the situations which can lead to preventive maintenance and repairs on existing building is endless. “If it’s a potato barn, then it’s good to check for ventilation,” Souder notes. “Or a farmer is driving his tractor and bumps a building post. Or the floor planks or the truss plates can start to rot. Thirty or 40 years ago the technology for posts wasn’t as advanced as it is today, but we can go fix them now.”
The guiding principle, states Souder, is that “it’s better to fix something before you have a problem.” For that reason, MPB sales reps find that past customers are receptive to discussing preventive maintenance. “Even by offering to look at our customers’ buildings,” he says, “generates good will for our company.”
Souder admits, however, that maintenance and repair work is not a good fit for every rural builder. “Eighty percent of our work is within a 40-mile radius,” he points out, while other contractors who cover longer distances might have too much travel expense to cost-justify a maintenance call. Also, MPB operates a lumberyard and builders supply store, so that Souder’s team already stocks the materials it needs to do maintenance and repair projects. “Other buildings who don’t stock materials might find it too much of a hassle to get items for a simple repair job,” he confesses.
Then, too, MPB has kept good records since its founding in 1961. If an older building needs preventive maintenance or repairs, sales reps have the construction knowledge and institutional memory to check MPB’s records. The needed materials can be identified or, if they are no longer made, old drawings or specifications can help MPB custom-fabricate an item.
Maintenance work at MPB has grown to the point where Souder would like to have two crews specializing on these projects. “Then we could advertise and generate even more,” he notes. The drawback is that company sales reps naturally focus on top-dollar new construction projects. But if Souder can find a rep who is “ready to semi-retire and be part-time, then I’d love to put him on maintenance and repair jobs.”
For now, however, its approach to building maintenance is providing MPB’s bottom line a “3 percent solution” that is paying good dividends for Souder and his company.

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