Residential Remodeling Business Plan

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Market Analysis Summary

Anywhere Remodeling is focusing on both the commercial and residential markets of Anytown America, with the residential being about 80% of the overall volume of the company.

As housing prices fall, potential clients will be more apt to remodel their high-end homes, rather than try to sell them.

4.1 Market Segmentation

In an era of decreasing residential property values and relatively stable rates of personal income growth, Anywhere Remodeling, Inc. is focusing on two segments of the residential remodeling market:

1) Neighborhoods where homeowners have achieved success in their careers and have room in their budget for investment in their homes, but are not eager to incur a much higher mortgage payment by selling their house and 'buying up.' [Such targeted neighborhoods have housing stock with room to expand and are deemed to be worth the upgrade expenditures.]

2) Run-down neighborhoods that have been targeted by community decision-makers for renewal.

About 20% of Anywhere's overall volume consists of remodeling projects for businesses within the community areas being revitalized.

Market Analysis
2008 2009 2010 2011 2012
Potential Customers Growth CAGR
Small growth 5% 500,000 525,000 551,250 578,813 607,754 5.00%
Moderate growth 7% 500,000 535,000 572,450 612,522 655,399 7.00%
Moderate - Large growth 10% 500,000 550,000 605,000 665,500 732,050 10.00%
Large growth 15% 500,000 575,000 661,250 760,438 874,504 15.00%
Total 9.45% 2,000,000 2,185,000 2,389,950 2,617,273 2,869,707 9.45%

4.2 Target Market Segment Strategy

Anywhere Remodeling's targeted market groups were chosen because of the long-term potential for continued sales. Assuming high quality work and effective word-of-mouth marketing, the targeted, potentially upgradeable, neighborhoods afford a continuing supply of work to do. The business remodels, while providing a smaller portion of the firm's income, offer an important opportunity to build relationships and generate trust with business owners and managers who have homes in the targeted ‘upgradeable' homes.

4.3 Service Business Analysis

As a whole, the building industry is a very fragmented industry. Despite large homebuilders, no single company has as much as a 2% market share.

The remodeling industry is even more diluted with only a handful of companies in the nation showing annual sales in excess of $10 million. Under the standard definition, all remodelers fall into the category of a small business.

4.3.1 Competition and Buying Patterns

The remodeling market is made up of potential customers who weigh three competing values: Price, Quality and Service. There is a saying that a remodeling company can deliver any two of those values. A large portion of the potential customers are asking for quality and service, and then go shopping for price. These customers are extremely difficult to work for and make a profit.

There is another segment of the market that is concerned with getting a "fair" price, but is primarily concerned with getting quality work and superior service--they want to be "taken care of." This customer is generally happy to work with one contractor, developed a trusting relationship, and pay a little bit more for this comfort.