Dennis Oz: Hello everyone and welcome back to the Remodeler Success Podcast, where we highlight the people and strategies shaping today’s remodeling industry. Today’s guest leads one of the longest running design build firms in the Midwest, a company that’s been serving homeowners in Cincinnati for more than 50 years. Yeah, you heard it right — it’s more than five decades. Today my guest joined the family business back in 1993 after a start in banking and insurance. You see how different things are today, with so many different cross functions that we’re going to talk about. Since then, he has helped the company grow while keeping design, estimating, and construction all under one roof. Please welcome the CEO of Neal’s Design Remodel, Alan Hendy. Alan, welcome to the show.

Alan Hendy: Thanks, Dennis. Good to be here with you.

Dennis Oz: Great. Alan, could you please introduce yourself a little bit before we dive into our questions?

Alan Hendy: Sure. I’ve been running Neal’s Design Remodel since 2012. I’ve been back with the company since 1993. Neal is not my name — it’s my dad’s first name. He started the business 53 years ago. Out of necessity, he had six kids. He was 40 years old and had no money, so he started it. From the very beginning, it was design build. He had a designer with him, a great little construction crew, and that’s how it started.

He started the business out of our home. For the first 10 or so years we were doing business on one side of town, and the business started to grow. My oldest brother, who just retired two years ago, joined the business in 1977. We started in 1972. My other brother joined in 1985. I was sure I was so smart, Dennis, that I knew I would never work in this business. I told my dad that much. I really didn’t know if this was where I wanted to be.

My background was a degree in finance, by way of institutional investing through a bank. I wanted to work on Wall Street and do what institutional traders do, but things moved around a lot and I ended up in insurance as an underwriter for a local company. I really learned a lot there. Then in 1993, I was the last brother to join the business. So we had been in business about 21 years when I joined.

By then, three brothers were second generation. We were full service and still are a full service design build remodeling company, all residential. That’s how we built the business: a dad with three sons. He was very nervous about keeping all of us fed and making it grow.

My dad is an amazing person. He is very quiet. He is 93, my mother is 91, and they’ve been married 70 years. I have lunch with him every Tuesday with my brothers. He’s a force in my life. This place is named after him. About 40% of what we do every year is in the same house, with the same clients over all these years. We’re extremely blessed.

We have an amazing staff, about 50 employees. Volume wise, it has moved around a lot. Year to date we’re at about 12 or 13 million, so we’ll probably finish at 17 or 18 million this year. Thirty of our 50 employees are carpenters in the field. We have an architectural design team as well, and five salespeople with support staff.

We managed through the first generation with my dad, to the second with my brothers and me, and now we’re transitioning. My nephew Mike, who’s 39, is in the business, and my son Jimmy, who’s 28, is also here. So generation three is involved. We also have an outside family member, Derek, our operations manager, who is wonderful and has a piece of ownership.

It’s a very steady business. It is not easy, but we use some simple principles every day. Cincinnati is a wonderful market.

Dennis Oz: That’s also a competitive market too. I have some questions about that market as well.

Alan Hendy: Yes, it’s a competitive market, but we don’t have as many players as you would see in DC or other places with very large design build companies all competing. I have a couple of really wonderful competitors here, but we don’t run into each other much. When you talk to people in design build and realize their market share is under 2% for just about all of them, you see there’s plenty of work and plenty of room to grow.

Dennis Oz: Perfect. Thanks for that. Let me ask you a question. We’re talking about decades-old companies. You’ve been in this since 1993, which means running this company also means dealing with legacy processes. At the same time, the market is evolving and client expectations are changing. How have you kept Neal’s Design Remodel relevant and growing in a market like Cincinnati?

Alan Hendy: Growth is good for companies, but it can also kill a company. If you’re not prepared for it, it can destroy a very good company quickly. We looked at growth in a stair step process. We understood that. I would say to all your listeners, I encourage them to join a peer group right away.

We’ve been in peer groups for the last 25 years. Having somebody to talk to about what it means to be a $1 million company, a $3 million company, and why it’s hard to get to $5 million is huge. Selling things is interesting, but producing things is when you get paid. You must make sure your WIP revenue and your production levels can keep up with what you sell.

We’ve done a good job of planning through $1 million, $3 million, $5 million, $10 million, and where we’re heading now. Much of that comes from friends who shared with me the production structures needed. These things take years to plan. If you want to be a $10 million company, what does that mean for your production staff? For your design staff workload?

The key thing is being able to see your workload. We work hard to make sure each designer is teamed with a salesperson, so it’s a two-person team. Many in the industry have one person wearing all the hats — designer, salesperson, customer service. That might work at $1 million or $3 million, but at $10 or $15 million with 150 employees, it’s different.

My business background rather than construction background has helped me understand what’s coming — not because I know it all, but because I’ve asked people who are already at that level. We don’t compete outside of an hour from here, so I can call a friend in Columbus, who is bigger than we are, and ask him directly: What’s the trick to getting 400 or 500 thousand a month in production WIP? What does it take to get to a million a month? How do you maintain profitability during growth?

A lot of people focus on top line revenue — “I’m a $5 million company” — but I think the focus should be on profitability. Whatever your gross profit is, that’s your true revenue. If you’re a $12 million company with $4 million gross profit, that’s the real number after jobs are built and overhead is covered.

So it’s about perspective and planning for what’s coming. The market moves a lot, but you must decide what kind of company you want to be at $5 million or $10 million.

Dennis Oz: Thanks so much for dropping this knowledge. I’m sure that’s helpful for our listeners. Let me ask you this: you had different experiences outside of remodeling. You were in banking and insurance before joining the business, which is not the usual path in construction. How did that background shape the way you scaled your business?

Alan Hendy: In different ways. When I was an insurance underwriter with Cincinnati Insurance, I learned how policies are written. That helps now with things like builder’s risk policies on million-dollar jobs or fleet insurance.

My banking background and passion for finance also helped. It didn’t bring anything incredibly remarkable to the business, but it helped me cut through the numbers.

I walked into a business that was already 21 years old. My brothers and I all sold work. By 2012, with my dad retired, we realized we were a three-headed monster. Nobody was truly running the business. Employees would go to me for vacation approval, to my brother for healthcare questions, and so on. That wasn’t healthy.

Instead of just waking up every day and selling more, someone had to focus on people. That’s when my brothers asked me to be CEO in 2012. From there, we transformed from just selling to building structure, a management team, and support systems to care for our people and clients.

Dennis Oz: Amazing. Thanks for sharing this. Alan, I want to talk a little more about team management. Most remodelers struggle to build reliable and accountable teams, especially when running millions of dollars in projects. Many listeners aren’t there yet, but they want to be. What have you learned about hiring and retaining great people that others often overlook?

Alan Hendy: Well, great question. The hard part is you’re working yourself right out of a job, and that is your job every day. I miss selling. I haven’t sold a project since 2013 or 2014, but my job at that point was to take my book of business and make sure my nephew was a great salesperson and that he knew how to do it.

Really, I think each person inside your organization, Dennis, first of all, if you’re a small remodeling company and you don’t have a production manager yet, or you don’t even have a person that supports you yet, you’ve got to get comfortable with other people making mistakes. You have to develop processes and not just have it all up here. It feels good to be the man, it feels good to be the guy and have all the answers, but you quickly realize once you get past a million dollars that you’re going to have to find people you can trust, the right culture, and the right people who get along with everyone else.

I’m big on culture. I train on it. I onboard every single person that comes into this company. They all end up with this wonderful card that I have in front of me that tells what our service values are and how we’re going to treat each other. Company culture is what we’re talking about here, right? When you study great companies, whatever size they are, you can look at Zappos that sells shoes and Ritz Carlton that runs hotels. They are all working on their people.

So I spend all my time now on the people side of the business, which I think a lot of people want to avoid. If we’re being honest, it is probably more fun to work on a beautiful kitchen project than it is to talk to someone about why they can’t get to work on time. I’ve gotten very comfortable with the people parts of the business. A lot of contractors who are becoming larger are afraid of putting the tool belt away, of not being the guy.

I have an amazing operations person, Derek, who’s in the office next to me, a non-family member who now basically runs this business on a day-to-day basis. That transformation over the past 15 years has been humbling for me, and humbling with family involved. What’s my place? What’s my process? So you’ve got to be super intentional about what you want your company to be and how you want it to function.

I call myself, Dennis, a bird feeder. I sit out there and attract the best possible talent in this city that I can get. I want it to be very hard to leave here. I want people to be attracted here, make great wages, and have excellent benefits. Because you know and I know that we’re in people’s homes every day.

We’re in a very difficult business because a lot of times the client can see progress faster than I can. It’s them and the lead carpenter, that person representing our company on the front lines. We probably have 25 or 30 jobs going at once, so there’s a lot happening. You’re quickly going to run out of runway if you think you can do it all yourself. There’s a lot of ego that comes with being the man, but you have to be willing to give most of that up and work your way right out of the job.

Dennis Oz: Yeah. Well this is great, thanks so much. My next question is going to be all about processes. Let’s focus more on the sales processes. When you run a full service design build firm, that means managing client expectations with design, estimating, and production — which you already touched on earlier. But let’s focus more on the sales process. How does your sales process look, and how do you keep it both personal and predictable?

Alan Hendy: Great question. Our sales process starts with the marketing piece. We’ll get anywhere from 15 to 20 leads a week. We have five salespeople, who we call project consultants. That’s our sales function. A consultant makes an initial visit to the house to listen and learn. We show them a physical form that outlines our process, and our website does the same. If you go to neals.com, our website, you’ll see a dropdown that says “What is our process” and “How much do things cost.”

We put numbers there to assist clients. By the time they reach out, we know how much homework they’ve done. We want to be respectful by sharing round numbers at first. So that first visit is about round numbers and process, and about getting to know them.

Forty percent of our work is in the same house, so repeat clients are obviously easier at that first visit. We ask them to go into a design retainer with us. We’ll spend 60 to 90 days exploring the project with them. Our sales cycle used to be over 100 days from initial visit through designs and presentation. We now have it down to 60-some days, cutting it in half.

I like to make sure the client has a frictionless process and feels in control. At the first visit, we ask for a design retainer, which applies toward the project. A couple weeks later, once they agree, a designer comes out to measure the space. That two-person sales and design team works with them through project completion.

The designer will create Plan A, Plan B, and Plan C. We do a lot of outdoor living, large additions, kitchens, baths, lower levels. We develop schematic designs and bring clients into our showroom. Not every remodeler will do a showroom, but I highly recommend it. Buy a building, pay yourself rent, and let clients see your stability.

Once they see the plans, if they like Plan B, we provide preliminary numbers. For example: when we first met, we thought it was a $150,000 project. Plan A is $150, Plan B is $185, Plan C is $230. If they prefer Plan B, we’ll prepare a detailed estimate and write specs, one through 80, of everything included, then present a contract to sign.

So clients now spend about 60 to 80 days in this process instead of 100. Then it moves to production.

Dennis Oz: Great. I’m sure our listeners sometimes struggle with planning a sales process. Folks, I hope you found it really helpful hearing Alan talk about sales. Thank you so much for sharing this.

Alan Hendy: I do want to point out — you should be able to see your sales process. Make a graphic for your client.

Dennis Oz: A visual process, right? Not just numbers, but graphics and everything?

Alan Hendy: Exactly. People know how to buy a condominium. They know how to buy a car. But they have no idea how to buy what we sell. They don’t know the price. They’ve probably heard from a friend, but often that friend lied. A project that cost $150,000 might be described as $100,000.

So clients are not hearing accurate numbers. Share the numbers. Be honest about where things could be. I never work off a cost-plus contract. We bid out projects so clients know the number. Then we apply the design retainer toward the project, finalize planning, and begin production.

Dennis Oz: That’s amazing to hear, thanks so much, Alan. I’m sure our listeners are getting real value from this. Well, I’d like to shift the conversation to AI. When we were preparing for the podcast, Alan shared some bullet points with me, and one of them was so interesting I told him to bring it to the session. We’ve seen many applications of AI lately. Alan, how are you using AI in your business? Do you have something interesting to share?

Alan Hendy: Well, the way we currently use it is pretty limited. Besides throwing things in ChatGPT and using it more the same way we use search, when you nip around the edges, AI seems a little scary and, very honestly, people do not know how it is going to affect us. But starting this week, we are about to enter into an agreement with a company called Merlin, which has been wonderful. Some people in my peer group, I mentioned before having a peer group, are early adopters. I have people that always say no, and I have people that never buy any software. I love seeing that group of people debating whether to use a piece of software. I think that is more helpful than reading reviews or studying it yourself on the computer.

We are about to take the mundane tasks that we do here and have AI work through those mundane tasks. I will give you some examples if that helps. We build a written schedule for every single project. It is a little risky. Clients can take that schedule and make you feel awful for what you put together because you might not hit it. If it rains and things happen in your schedule, we spend a lot of time on those 30 projects going at once, adjusting all the schedules and contacting the people involved. We use Smartsheets for our scheduling, so we do have some digital schedules that are all put together.

Could you imagine a world where rain happened? Maybe you have a specialty company or design build company, but rain will affect a lot. What if AI knew that it rained? What if AI knew that your clients all needed the same description of what is going on and everybody was communicated with? What if that was a five minute process? I think for design and for estimating, it is a no brainer that AI is going to affect us.

On the HR side, when you become larger like we are and you have 50 people to take care of, let us say you have to spend the summer doing 50 reviews for 50 employees when you should want to be over estimating. You can use things like Otter and other tools that transcribe voice to text. I think those kinds of things incorporated into AI would be good. Another thing we think is going to change is purchasing. When an estimate is done, would it not be nice if your estimate was updated daily? That would be great. That is what AI will do. AI will search the web. It will search all your suppliers.

Would it not be nice if, when you get an invoice back from the stone mason on your project, we know what he said to us one through twenty on the quote. How does that compare with the final invoice? AI can tell you that. There are a myriad of things. I am just trying to scratch on a few of them here. I think four to five months from now, from what we start this week, our experience is going to be that we are spending more time on training and more time on other things that the tactical work is pulling us from.

My wife does all the books and I know she is very exacting. She likes things a certain way, and I think once she teaches AI to do a report like a WIP report, it is going to make a mistake here and there. It is going to make a mistake once, but it is not going to make it twice. I think it is going to help all of us. Clients are going to want human contact, but I know that a lot of the humans who work here are spending a lot of time, Dennis, on things that are repetitive. Making sure a change order is accurate, making sure that a draw schedule on a job project is accurate. If we can ask AI to do those things, it is not for me about getting rid of people. I do not have any interest in that. I have spent a lot of time and money bringing in the absolute best people here.

It is going to change the marketing for our business, and I am excited about it. I am a glass half full AI person. I think it is going to make some jobs different, completely different. Preliminary design work is one area. We already have clients coming to us with something designed in AI. You could either look at that and be spooked and say, I do not know what to do, head for the hills, or you can embrace it and say, now that you bring this to us, let us use our experience to develop this design and tell you why this would be a better design, why this will not work for the HVAC, and why taking out this wall is not as easy as what the computer thought.

We are going to be needed, but we also have to utilize AI to help us with our workload, our payables, everything, and our client information. Once a week each of my thirteen lead carpenters here who are doing projects are required to send out a great email to the clients. That can be easily done by AI. A summary of the week. I think there are things I am excited to use it for. I am sure there are things that are going to bother me about it, but I am not going to let my competition do it before me. I am going to figure it out and let my team adjust.

Dennis Oz: Wow. This is great. Thanks so much. This is one of the most honest answers when we ask about these kinds of new technologies. Thanks so much for sharing this. This is great to hear, and I am sure our listeners are really enjoying this conversation as much as I do. Everyone, I am sure you are tuning in today or watching us, and you are getting the maximum value out of this conversation. Thank you so much.

We are here. I will be asking questions, so let us continue. I would like to take the conversation, since you already mentioned in our AI chat, you talked about marketing and some of the challenges and some of the sweet spots about marketing. How are you dealing with the marketing? What do you think is working today? What would you like to explore more? What are your marketing activities today in the company?

Alan Hendy: We have always done our own marketing here. We have not had an agency. It has been a pet project for us forever, and I think we are very good at it. The big change for us looking back was becoming a good digital marketing company, which started around 2010 or 2012. We use software called HubSpot, which is excellent client contact software. It has two sides, the marketing side and the sales side.

Website calls to action and being able to make your website a lead machine require a good piece of software like that. We built up a large database of emails. We would do shows and give people a copy of our USB with our thousand great ideas if we could get their email, that type of thing for years, just to build an email database. We became good at the blog space. I have two people here who are exceptional at marketing. Jenny Reed runs our marketing, and Janice, who works with her, is a graphic design specialist and a very serious student of HubSpot. Those two together run it with myself.

Over the years we have done traditional print and the traditional home shows. Those things have moved around. We are big on print. We like print a lot. We sell a product that is aesthetically beautiful. We spend a lot of money on photography, and I would say that is the biggest thing for marketing to tell the folks who are listening. Do not take the pictures yourself with your phone. Do not try to do bad lighting. It is going to do you more harm than good. Look like a ten million dollar remodeler when you are a one million dollar remodeler. Just spend the money on photography.

We leverage that into all kinds of things. Video is incredibly important for us and continues to be. I think we are leaning less on digital and a little more into traditional. We did our first billboards in 1974, two years after we were in business. I just started doing them again this year to try something new. It has gone pretty well. We have had a very nice year to date, far outpacing what we thought we would be. I do not know if it is all from billboards. It is very hard to track where your leads are coming from. You can ask, but clients will tell you something different and remember things differently.

We are a marketing company that happens to do design build remodeling. You have to look at your company that way.

Dennis Oz: Wow, amazing. That’s a really good angle to look at it, and I’m sure our listeners today are also taking note. Of course, Alan here is talking about years and years of legacy. Maybe if Alan started marketing today, referrals would still lead him for many years, I’m sure of this. But being a rock star in the area is not something you can do from day one.

Just like Alan mentioned, marketing makes your business more visible. When you show what you do and how great you are at doing it, your ideal prospects will understand what you offer and maybe convert and start working with you. Thank you so much, Alan.

Well, before we wrap up, I have one last question for you. We’ve talked about AI, marketing, hiring, operations, sales—so many different functions. But there is complexity when all these functions are working together. For new remodelers, many of our listeners today, they often underestimate the complexity of running a business with all these moving parts. Sometimes they focus on projects, maybe not systems.

What would be the one piece of advice you would give someone just starting out in remodeling today?

Alan Hendy: Great question. I really believe that my relationships with other remodelers outside of my market are incredibly important. If you’re a $1 million remodeler, take a $3 million remodeler to lunch, or join a group with them. Spend time with them, get to know them personally, their spouse, and their business.

You probably have somebody in your market who is your hero or who you’re trying to be. They may not want to share everything with you, which I understand. You may have to look outside your market. One of the most important things to do is make a friend. Find a successful business and understand that every time you make the jump in sales, as you go up the ladder, you’ll have to break every system you have.

Get comfortable with that. If you have a sales system, it will probably change. It was great when you did it, but now somebody else has to represent you. Training people and hiring well is critical. Whether you are producing, selling, designing, or marketing, you’ll need others who understand it as well as you do.

So I would make a friend who is where I want to be and ask them where the pain was. Ask them, “How did you get through this? What did you learn when you lost money between $2 million and $3 million? What would you change?” Most will tell you production is the foundation. Start with production. Come up with a WIP report. Understand your work in progress, measure it, and look at it. That’s where you’re getting paid—not what you’re selling, but what you’re producing. That’s where I would start.

Dennis Oz: Perfect. Thanks so much for all these answers. One last question, Alan. Sometimes, I know this is a B2B talk—we’re speaking to business owners—but homeowners or prospects might also come across the content we publish. If a homeowner with a future project wanted to learn more about you, could you tell us a little more about your company and what you bring to the market? Answer this as if you were speaking directly to a homeowner. Why should they go with you?

Alan Hendy: It’s really simple. A lot of people do excellent construction work. Their miter joints are perfect, their craftsmanship is excellent. Let’s assume the construction is perfect. What you’re really looking for, and what we’re good at, is putting wonderful people in your home—people you can trust to be there even when you’re not.

We are in the inner sanctum of where you live. You have to trust us. My old job as an insurance underwriter was to understand risk. Spending $100,000 on your house is risky. If you spend it with somebody who does an okay job, you’re going to be upset. So make sure the person you work with has processes.

Ask to see their sales process. Ask to see their production processes. Ask what their pre-construction meeting looks like. How do they handle pets? How do they manage a child’s peanut allergy? When it’s a customer-focused company, you’ll be able to tell right away because you’ll see how they care for your needs and your family’s needs.

Dennis Oz: Well, folks, that was one of the greatest episodes of all time. Alan, thank you so much for joining. If someone—whether a business owner or a homeowner—wants to follow up with you, what’s the best way to reach you? Please don’t share a cell phone number since we’ll be sharing this with 15,000 people.

Alan Hendy: Yes, absolutely. All through social media. Anything with Neal’s Design Remodel. Or just go to neals.com—it’s simple: N-E-A-L-S.com. You’ll be able to see who we are. My email is alan@neals.com

. I pick up the phone, I’m happy to talk to anyone. If someone has a question, I’d be more than happy to spend time with them. You get what you give. This is a very difficult business. Outside of the restaurant business, this may be the hardest—being in someone’s home and performing at a high level. If somebody needs me, I’m happy to help.

Dennis Oz: Thanks so much, Alan, for all the golden nuggets and everything you shared today. Folks, as you can see, we will continue bringing you pioneers like Alan Hendy. Thank you for joining us today. That’s the end of this episode of the Remodeler Success Podcast. We’ll see you next time. Goodbye.