<body><div><figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=0GeZ4u_0wC1j03v00" alt="https://img.particlenews.com/image.php?url=0GeZ4u_0wC1j03v00" width="585" height="390" ><figcaption>Justin Zeller, founder and general manager, Red House Design Build, Providence, R.I. Photo: Mark Wilson Images</figcaption></figure>It’s not where you start, but where you end up that matters most. The early years of Justin Zeller’s experience as a new remodeler and founder of Red House Design Build in Providence, Rhode Island, might resonate with other remodelers around the country who are just starting out as remodeling company owners.Having been very successful as a carpenter and lead carpenter, he had what Michael Gerber refers to as an “entrepreneurial seizure.” He started his own business.In 2006, he and his wife moved to Providence from New York City, where he had been managing jobs for a general contractor. He had never lived in New England, but he was drawn to it. His father’s family was from the region. Zeller grew up in southwest Georgia and attended college in Oregon.What will resonate with other contractors are the common pitfalls and mistakes that Zeller encountered as a new remodeler. He sought a lot of jobs to generate income, but he did not know how to properly price them. Most of the jobs were repairs, but over time he moved up to more complex remodeling work, namely kitchens and baths.Sensing that he needed to improve his skills, in 2008 he attended the JLC Live conference where he bought Tim Faller’s instructional book on becoming a lead carpenter. He was literally paging through it on the way to one of his first bath remodels.“I remember reading that on the way to one of these jobs. We were doing a bathroom remodel that turned into a basement remodel, and then some siding. This job was snowballing. But I remember reading his lead-carpenter binder, and it said, ‘When the sales department talks to the production department, here’s what you need to do,’” Zeller recalls. “I just remember laughing at myself like, that will never happen. There’s no way that [growing to a size to have departments] is even a thing, you know?”<figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=000Vua_0wC1j03v00" alt="https://img.particlenews.com/image.php?url=000Vua_0wC1j03v00" width="1750" height="798" ></figure>Zeller and his company have come a long way since then. Today, Red House Design Build has 21 employees with many departments. Last year the company generated $5.2 million in revenue on 19 jobs. In the process the company exceeded its target gross profit, which resulted in a $98,000 profit-sharing payout to the company’s employees. For the record, their 2023 GP was 36.6 percent.“I tried a profit share for the first time in 2020 when we moved into the building that we’re in now. That was an exciting moment. And I remember having a company meeting and saying we’re going to do this. And then in setting these goals that were not achieved how sheepish we felt,” Zeller says.“We learned that when there’s full transparency in the gross-profit dollars, the team will manage to that target. In 2020 we were able to share out like $5,000—not a lot, right? But then in 2021 it was maybe $12,000. In 2022 we shared out $64,000. That was the year that we missed going one level higher by $800 in gross profit. Our production team really took that home and sat with it and thought, How many ways could we have just made that $800, which would’ve taken us to $72,000 in share? You want your team to think about those production costs, to think about how they can do their part of the work most efficiently in order to protect the gross and net profit that’s been planned into the job.”Again, it’s where you end up that matters most. For Zeller, who started with a Tim Faller binder and moved up to a membership in NARI Eastern Massachusetts, who sought out coaching from outside experts like QR columnist Shawn McCadden, who later joined an independent business peer group called The Patriots, and who then formed a more highly focused peer group called AMP, it’s about not settling and continually grinding for improvement at every step of the way.This sustained zeal for business improvement, above all else, is the overriding reason why Zeller earned the 2024 Fred Case Remodeling Entrepreneur of the Year Award.<h2>Two Entrepreneurial Initiatives</h2>Each of the finalists and the winner of this award is required to submit two entrepreneurial initiatives and how they ultimately resulted in growth and/or increased profit. Initiative No. 1 involved seeking out more outside advice and expertise like the kind that is available to him via his peer group, The Patriots. He wanted that same peer-group input on a more frequent basis.As a result, Zeller formed a Patriot sub-group called AMP with three other design-build remodelers (ranging in size from $3 million to $14 million and located in other parts of the country) that serve as a de facto executive advisory board. They meet for two hours each month and conduct in-person meetings twice per year.“I wanted to look outside the company for honest, frank feedback and to develop an organization that engages talent, aligns goals and fosters a sense of belonging and purpose. AMP is a four-company executive advisory board of leaders willing to push and hold each other accountable to grow professionally and personally for the good of their companies,” Zeller says in summarizing the initiative.Monthly meetings are scheduled for two hours and focus on the same agenda for each member. Each member has 30 minutes to cover the following topics, which are updated for review prior to each meeting: yearly financial goals with progress year-to-last-month for each; quarterly goals for each member as well as individuals on each members leadership team; and pressing issues.<figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=3svMw9_0wC1j03v00" alt="https://img.particlenews.com/image.php?url=3svMw9_0wC1j03v00" width="986" height="1144" ></figure>“In the heart of COVID, good people at Red House began viewing their work as a burden, and many left for other opportunities,” Zeller wrote in his Case Award application.“I needed to level up by seeking valuable feedback from outside leaders with a strong track record. The goal was to see each other’s company from an outside perspective and to develop inspiring companies that would engage strong, thoughtful and hardworking individuals who find purpose in meeting challenges at work. Looking back, I expected improvement, but those expectations were exceeded. Since 2021, turnover decreased by 66 percent, headcount doubled, and net-profit increased seven-fold.”Zeller attributes the effectiveness of AMP to its smaller size, its quicker meeting cadence, and the resulting deep familiarity each member has with the other companies and their people. For example, when members of the AMP group first visited Red House in 2021, they quickly concluded that Zeller was pushing his group too hard and in too many directions at one time.They helped him defer some initiatives in favor of addressing a handful of critical issues: the need for team building; building the capacity of teams and people; and focusing on helping to grow specific individuals with high potential.“AMP’s core initiative is to keep the ground fertile to grow strong leaders, and the monthly meetings keep team ownership and engagement top of mind. The core goal of AMP was always to create a structure that excels through self-management. The group pushes each member to create organizational frameworks that encourage freedom in decision-making, clear responsibility, and ownership of initiatives by the team that serve the greater team. Growing these strong leaders in this environment, with clear and explicit goals that are co-created, engages everyone. With good teams, all rowing in the same direction, we have gained amazing ground.”<h2>Workplace Gains</h2><figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=43PlxS_0wC1j03v00" alt="https://img.particlenews.com/image.php?url=43PlxS_0wC1j03v00" width="1200" height="800" ><figcaption>From left to right: Vivian Tedeschi (architectural designer), Bridget Bacon (development manager), Justin Zeller (founder and general manager), Scott Barlow (project manager), Ray Dutch (carpenter II), Marc Coutu (carpenter II), Chris Huff (carpenter II), Julia Vandal (design studio manager), Connor Strom (assistant project manager), Kathy Royce (lead designer), Jules Labriola (marketing coordinator), Aaron Crocker (lead carpenter).</figcaption></figure>The second entrepreneurial initiative outlined by Zeller in his Case Award application amounted to an amalgamation of separate improvements to create an environment at Red House that helps its employees thrive personally and professionally. That is no easy task.And it was quite ambitious. The impetus for change was a higher-than-acceptable rate of turnover among employees that became unsustainable during the COVID-19 pandemic.Zeller, with input from his AMP and Patriot peer groups, sought “to look inside the company to unlock and celebrate its creativity, talent and potential by intentionally crafting an environment where the basic and psychological needs of the team are met,” Zeller wrote in describing the initiative.And to “create a healthy community where belonging and care enable the desire for achievement, strength and confidence when working collaboratively toward goals. Maslow’s Hierarchy of Needs meets Lencioni’s Five Dysfunctions of a Team.”To get the ball rolling, Zeller and his leadership team researched the criteria for the “Best Places to Work.” Additionally, the team pulled some key themes from the business book, First Break All of the Rules. Together these would form the basis of a three-year work plan with specific projects designed to improve the Red House working environment.Some of the specific implementations include an annual employee engagement survey that is administered by a third party. There are two team events annually, one community service project annually and two incentive programs. Zeller and team also implemented a series of pop-up social hours held four to five times per year at local venues.The timing of these pop-ups is determined by any increase in stress levels or low morale detected by members of Zeller’s leadership team. The final project was to spend the company’s retained earnings renovating the company’s office and studio with the goal of enhancing the physical working environment.<figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=1j0MRm_0wC1j03v00" alt="https://img.particlenews.com/image.php?url=1j0MRm_0wC1j03v00" width="1032" height="1262" ></figure>One of the annual team events was an all-company dinner at a restaurant designed and built by fellow members of the Red House team. Spouses were included. Another team event was to hire a chef to cook for the company in its newly completed company kitchen.All Red House team members are also invited to a charitable Winter Bash dinner each year in support of the Providence Preservation Society. The organization is supported by Red House, and the formal event serves as the company’s anchor winter event.<h2>New Incentives</h2>The previously mentioned profit-sharing program is fully up and running and is available to all employees after six months of employment with the company. As the program has been refined over the years, employee engagement and teamwork have grown. They work together to hit the company’s gross profit goals and stretch goals.When an employee logs five years with the company, they earn a two-day travel stipend for themselves and a significant other. The goal is to have employees create a “mission-aligned” experience. The employee sets up a weekend getaway with a budget of $500 per night for lodging and $250 a day for food.The itinerary must include learning potential and estimated costs and must be submitted to the company leadership. The goal is to make the employee feel valued and to have them come back with fresh perspectives and ideas to share with the team.These initiatives are ongoing, and Zeller reports a significant decrease in turnover and an increase in collaboration among teams with “dynamic problem solving” in evidence along the way. “People feel safe, supported and engaged,” Zeller summarizes.Taken together, the two initiatives have given Zeller and his team the time, money and data they need to make more purposeful decisions about the future direction of the company.“I have more strategic freedom as a CEO to make executive decisions on spending excess gross profit dollars if we have an exceptional year or identify an exceptional opportunity. For example, I can spend gross profit dollars on another designer, marketing initiatives, sales, etc., without worrying that those dollars are promised elsewhere.” QR</div></body>

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2024 Fred Case Award Winner: Outside Input and Workplace Gains

It’s not where you start, but where you end up that matters most. The early years of Justin Zeller’s experience as a new remodeler and founder of Red House Design Build in Providence, Rhode Island, might resonate with other remodelers around the country who are just starting out as remodeling company owners.