Dennis Oz: Welcome back to the Remodeler Success Podcast, where we dive into the successful stories of design and build from remodelers and all construction companies. I’m so excited. So it’s a really remarkable day today because I’m hosting a guest today. She really has her own game, like started with a little company and grew that company into a top 500 design-build company in the United States. With over 15, and maybe more than that, years of experience leading operations. She’s really successful, scaled the business while building the systems—like how to get better profitability, and also like hiring teams and managing departments and all these, making these financial decisions too.
So it’s going to be a really exciting agenda today. Because my questions are really interesting. I’m sure that you’re gonna enjoy this. Please join me in welcoming Teri McDermott. Teri, welcome to the show.

Teri McDermott: Well, Dennis, thank you for having me. I’m so excited to be here and to share as much as I can and give back to our wonderful community.

Dennis Oz: Perfect. Thank you so much. We are at the right place, Teri. And Teri, when I look at your background and read about you, you are one of the guests that I felt really most seriously excited about having at the show. I also want all our audience to learn a little bit about you.
Could you please introduce yourself a little bit?

Teri McDermott: Okay, great. Well, um, let’s see. I’m from Washington. That’s where our company is. I’ve been around construction for, you know, 30-plus years. I hate to admit it. And I started out in the commercial construction industry and moved over to residential remodeling because I wanted to make people’s lives—or, you know, wanting to make their dreams come to be reality. And so, gosh, I’ve had my own business since 2000 and purchased CRD in 2019, and we tripled its size in the last five years.

Dennis Oz: Amazing. This is amazing. We gotta talk about CRD as well.
Because I’m sure that it’s an amazing journey with you too.
Let’s dive in right away. With all these things happening and with all these experiences that you have, what are the financial decisions you made early on that really helped you grow, that created that sustainability for the growth?
And also, I’m not asking these questions only for the revenue-wise. I’m also asking profit-wise as well.

Teri McDermott: Right. So, you know, one of the things that I truly believe in is having standard operating procedures and cost tracking. Huge. Those are the two things that will save you, and you can go back to them for accountability. And really hold your team accountable so that they can help grow a team, and you can work with them.
And people actually get excited about being held accountable. And so really focusing on those processes and cost tracking—huge.

Dennis Oz: So, when you say tracking the cost, could you please dive a little more into that one?

Teri McDermott: Sure. So for every job that we do, we estimate it. And as we go through the production of the project, we look at it every two weeks to find out how are we doing on our labor hours and dollars. Are our subs sending in the bills? Are they matching our budget? You know, are we over in materials? You know, are the guys spending too much time going out to the store to get stuff? Are they not planning?
There’s just so many things that you can get from the financial numbers.
The numbers are the numbers. Yeah, you can play with them, but they’re still the numbers. The bottom line is the bottom line.

Dennis Oz: Yeah. Right. That’s right. Well, I think you also mentioned that we are going to dive more into KPIs—

Teri McDermott: Mm-hmm.

Dennis Oz: Key performance indicators. But let’s talk about this. One thing that I realized about your company and your structure—

Teri McDermott: Mm-hmm.

Dennis Oz: Is you have the design and the construction in-house.

Teri McDermott: Correct.

Dennis Oz: I’m sure it helps you to stay on budget. What do you think about this? Do you think it’s a really big contributing factor for better margins?

Teri McDermott: Oh, it’s huge for margins because you can manage the process from beginning to end. And so, you know, if you’re on a job site and you’ve hired an architect, you might have to wait three days. So that’s costing you money before they might get back to you. Also, we can do things in-house that we don’t have to pay to have done outside and pay a premium to have that work done. And we are meeting our client’s needs by doing that. We are the one-stop shop. I think we are what I like to call an ideal design-build company.
So, you know, you don’t want to have to get your plans and then try to find somebody to build it. And from a perspective of a business owner who is trying to look to make better money, I would bring everything in-house for sure. You have control over everything, and that makes a huge difference—not only revenue, but gross profit and net profit.

Dennis Oz: So, when you look at these, also, I’m sure that not just, like you said, not every department should be in-house, right? Also, some of them should be, maybe could be, third parties. Right. Do you also support getting those third parties sometimes? Like, instead of doing that in-house, do you also support or follow that path to get some more third parties, and are you getting any benefit out of that one as well?

Teri McDermott: Yes. So, the one thing that we don’t do is structural engineering here, and then there are some subcontractors that we just use because that’s not our expertise, right? So we don’t do plumbing, we don’t do electrical, we don’t do HVAC. We let those people do that and get their own permits, you know, and work with us. Absolutely.

Dennis Oz: This is great. This is amazing. And I’m sure our listeners here today, even if they may be watching, they are also learning from this one, because we cannot be the jack of all trades. Of course, there are some good things that we can do in-house, right? Maybe the things that you really most find enjoyable could be in-house, right? But the things that you don’t even like, just like you said, Teri—plumbing, for example.
Folks, if you are just here and trying to understand all these growth factors of a business, it’s not being jack of all trades, for sure, just like Teri described here. So I believe that’s a very important thing that you can get from that answer. That’s very important.

Alright. Also, Teri, let’s talk about this KPI a little more.

Teri McDermott: Mm-hmm.

Dennis Oz: What we’ve seen also in the industry—this is based on my also personal experience, exhibiting at KBIS and also IBS, different shows—

Teri McDermott: Mm-hmm.

Dennis Oz: I hear, and also our listeners here share, a lot of different things. They’re really good at building, but they struggle with running a profitable business.

Teri McDermott: Mm-hmm.

Dennis Oz: I’m sure that you really track, like, a really close traction that you have from some financial KPIs. What are those, to make sure that you’re profitable?

Teri McDermott: So number one is gross profit. We are constantly watching gross profit on our change orders, making sure that we’re just not doing change orders and giving them to the clients, right? We’re making sure that we are charging for our change orders, making sure our guys just aren’t doing them, like I said.
And then production efficiency, you know? Are you on schedule? Because that’s a KPI that can kill you. If you don’t keep your schedule—those are the three main ones that we watch. I mean, gross profit for us is huge. Again, I look at that every two weeks.

Dennis Oz: Right. I’m sure that is also important. Some of the KPIs also have some influence on other KPIs, so, you know, we are looking at the costs and everything. Maybe you will see a strange, I would say, change in costs, and you can go there—as a business owner, you can go there—and understand what’s really changing, what’s affecting that change.
Maybe that change could be for the better. Maybe it’s going worse. So, of course, we would like to understand what’s the contributing factor to this change. But I’m sure looking at a closer look, like you said, it’s always better, right? We should not let go of any of our KPIs. They’re always safe to be in front of us, and we have to look at them. Right? Is that what you said?

Teri McDermott: Yeah, a hundred percent. You gotta be looking at key things all the time. And then, you know what? The other thing that I think is huge is hours. Hours—it is a great KPI to look at, because you can quickly—once you get delayed on a job, right? So a KPI is your job delayed. Okay, if it’s delayed, why is it delayed?
Right? Then that can lead to an hours KPI, just like you were saying. You know, once you see one, you can start digging in. So then, you know, I’ll give a really good example I kind of mentioned earlier, which was one thing that we realized is our guys in the field weren’t pre-planning. So they weren’t doing what I call three-week and four-week outlooks, and so they would go to the store every day.
Right? So then what happens? Their hours went up, job got delayed, you know? And so there’s like a domino effect to that. So yes, KPIs—creating KPIs for your company—is huge.

Dennis Oz: That’s perfect. Thanks so much for sharing these golden nuggets with us.
Just wanted to talk about a little more about hiring.

Teri McDermott: And I’m sure—

Dennis Oz: Really big on that as well, because just like a person that you created successful teams and mentored those teams, that’s your strong suit.
Let me ask you, to be able to be a one-stop shop—

Teri McDermott: Mm-hmm.

Dennis Oz: Do you think that differs from one business to another? Or do you have your favorite positions that you have to hire when you scale? What are these roles? Because I have a follow-up question about that.

Teri McDermott: Okay, so let me clarify. Are you asking me, like, do I have certain triggers for when I hire somebody?

Dennis Oz: Key positions. I’m asking the key positions that—

Teri McDermott: Oh, key positions—

Dennis Oz: Require to hire the most. Yes.

Teri McDermott: Oh my goodness. Key positions for us are lead carpenters and interior designers. Those are the two that I could not live without.

Dennis Oz: Perfect. For sure.
Let’s talk about the hiring process first, because this is a very big thing. I’m sure that most of our listeners here in the construction industry—could be a design-build company or construction company—they rely on their network, or sometimes they do advertise on different hiring platforms. What’s your, like, magic bullet over there? Do you have anything that you use?

Teri McDermott: So, you know, honestly, where we’ve had our most success the past two years is on Indeed. That’s who we use. We do have a very vigorous hiring process here.
We get all of our applicants in, and then we have somebody in HR who has a set set of questions for every position that we have within our company. They go through those questions, and if it seems like they want to move on, then for an interior designer, it would go to our design manager.
And then she would evaluate and make a call and then she would meet with them. Then we would have another interior designer and an architect come in and meet with them. Then they would get together—the design manager, architect, and interior designer—we get together, say, okay, yay or nay. And then we would have them come back, and either they’re going to get hired or they’re not.

Dennis Oz: That’s the final decision right there, right?

Teri McDermott: Yeah.

Dennis Oz: Yeah. That’s perfect. That’s great. Yeah. So, as you can see folks, there’s a process here. And I’m sure, Teri, I will also ask you how you assess people when you look at them and assess their suitability and their, you know, maybe they could be a good candidate, but they may not be a great fit for the company culture.
You also check that as well?

Teri McDermott: Yes, a hundred percent. So we have a huge culture of accountability here at CRD. We have a mission and we have a vision, and we have core values. And it’s super important that they meet our core values. We hire, we fire, we do bonuses—we do everything by our core processes. Our core values.

Dennis Oz: And I believe having those core values and core processes is also contributing to your company culture. Is that correct?

Teri McDermott: A hundred percent. Everything we do.
And I’ll tell you what, this probably isn’t in alignment with this question, but I’ll give out a little something we do at our company meeting.

Dennis Oz: Please, please, please.

Teri McDermott: So, we have our core values, and during our company meeting, we ask our people to shout out our other employees. So it’s just all employees—all of us in a room—and everybody shouts everybody out based on a core value, like community.
Somebody will say, “Oh, Jim took the subcontractor donuts,” or, you know, we have… you know, so we just do that back and forth. And then I give out raffle tickets, and then we do raffles for gift cards. So if you want to do something fun for your team, that’s a great way to do it.
And people will shout other people out, and then people get excited. Sometimes it goes on for like a half an hour, and then I’m like, “Okay guys, save them for next time.”

Dennis Oz: This is great. So folks, I’m sure that you’re learning a lot of great things from Teri today, and thank you so much for sharing all these. These are interesting facts as well, folks.
Look, I’m sure when you start from scratch, those are not the things that you’re gonna get overnight, but learning things from people like Teri—it’ll just really take you there. Because the things that have been here in effect have already been tried, and it’s already been confirmed that it is effective.
So just try to understand. I’m sure this is going to be an episode that is going to be listened to over and over by some of the people who are tuning in.
So thank you so much for this. Let’s dive into pricing a little bit. You know, we are talking about financials and we are talking about HR. Let’s talk about the pricing strategy.

Teri McDermott: Also—

Dennis Oz: We’re going to have some questions about marketing as well.

Teri McDermott: Mm-hmm.

Dennis Oz: But let’s talk about pricing here. What we see is, if a seller—just like a company—if you just really sell the value instead of just chasing low-price bids, you end up eating the profits at the end of the day.
And most of the remodelers really discount so fast. So what’s your take on pricing strategy?

Teri McDermott: You know, what we always tell our clients is, you know, we really talk about how we’re going to do—or how we’re going to meet—their needs and their wants.
And our sales team is trained on just really focusing in on our finishes, our warranty, our workmanship, and everything that they’re going to get from us.
So, you know, we don’t let—we try not to let them discount us. You know, when they say, “Oh, we don’t want to do this because of this,” we’ll come back with, “No.”
Let’s talk about countertops. So let’s just say they’re like, “Oh, we don’t want this huge countertop.” We’ll help them pick out a countertop that meets their needs, but we’re not going to sacrifice our price. We’re not going to discount that for them.
We’re going to get them where they want to go.
Does that answer that question?

Dennis Oz: Exactly, yes, definitely. That’s a great answer and a big part of it all. Just like you said, I believe being in the process, right?

Teri McDermott: Mm-hmm. Mm-hmm. Exactly. You know, just really—our goal, if you look at our website, and I think any website—the goal should be education. Educate your client who you’re providing that service for. Educate them about you and what you can do for them.

Dennis Oz: Great. Do you use any tools to educate them, or just like when they sit down in front of you, just give them any information that they’re looking for? Do you have any training?

Teri McDermott: Oh, yeah.

Dennis Oz: Yeah.

Teri McDermott: We put our processes on our website. We put out pricing guides on our website. You know, we do our best to walk our clients through the process. So by the time—if you’ve gone to our website—you will understand our process, and you have chosen to work with us because you have an understanding of our process.
Then once we start talking to our clients, we actually have presentations that we do for them during our initial calls so they really understand the value that they’re getting from us.

Dennis Oz: And I believe that you also set your website not like a digital brochure. It’s a portal for you. People are learning from that. And it’s also working for you as an appointment setter, right? People are contacting you.
And because I would like to dive into marketing a little bit—

Teri McDermott: Sure.

Dennis Oz: I would like to ask you how to make the website visible. And the website is a very fundamental thing, but we have mentioned that effect so many different times on our episodes here. Right. But let’s talk about marketing. Our website is very important. How do you create traffic over that website?

Teri McDermott: You know, we do a lot of SEO, and we do a lot of Google Ads and Facebook Ads. We just really try to focus on our headlines and being number one, and getting Google reviews.
We’ve done—uh, I have a really good team that gets—
I mean, we don’t have a problem getting Google reviews because we have a good product. But the more you can get out there, the more you do—like podcasts or, like, I was just in a magazine, Modern Home Builders—you know, all those different things that you can connect.
I’m not exactly sure how it works, but you backlink or something, and then that just really promotes your website.
So when you go to CRD, you can see it. In fact, we just started getting clients from AI—ChatGPT. You know, it’s amazing. And we did it offsite, because I was like, “No we didn’t.” And—no—we did it outside of our location and around Washington, just to see if we would come up. And we did.
So, you know, you’ll never know where you’ll come up, so you just gotta get your stuff out there.

Dennis Oz: Yeah, exactly. This is a very interesting moment—to see ChatGPT is bringing leads. Because, Teri, imagine that someone is just like a raving fan, just recommending your business to their friends.

Teri McDermott: Mm-hmm.

Dennis Oz: Now AI is your referral. That system is referring your name to people. Isn’t that great?

Teri McDermott: It’s crazy.

Dennis Oz: Yes, yes. There is a process we will talk about. If there are some audience members here who would like to learn more about that—
But folks, I will be running a Generative Engine Optimization webinar coming up next month.
So I will share information on our website. So we’ll talk about that.
I know that is very important because just being recognized by the search engines—
I know that you would like to learn more about that, and it’s going to change the way people make search.
Because right now, as you can see, when you make searches on Google, you will see AI answers on top of your search and your results pages.
No ads anymore. Sometimes even on top of the map results—you will see those.
So we’ll talk about this. Just to give you a little parenthesis—without stealing your thunder here—I just wanted to talk about that because we have a really big webinar coming up.
So I will share more and more details for you guys a little later.
But I don’t want to really interrupt my guest speaker here, because she’s here for a limited time.
Folks, you can steal me anytime. She’s here for a limited time.

Let’s go back to our conversation.
So, Teri, let’s talk about the qualification of the lead.
Let’s say we have a great website, people are coming here and there, and they’re requesting something—and I’m sure not all these leads are a great fit for you.
Sometimes you have to say no to these people without breaking hearts,

Teri McDermott: Right. So—

Dennis Oz: How do you turn these skies down, and how do you qualify? How do you disqualify?

Teri McDermott: Okay, so our biggest qualifier for us is service location. So if you’re out of our service location, we will then refer you to one of our competitors. And we have a really close relationship with all our competitors, which may sound weird, but we all refer to each other, especially for out-of-service.
You know, we will talk to almost everybody who sends something in, but we respond within one to two days—sometimes same day—on all our leads. You either get referred, or you get asked to have an additional conversation, or you are just told, you know, this won’t work for us, or this may be out for this reason. But we respond to every single lead—period.

Dennis Oz: Do you use a tool to respond to them, or are you just texting them or calling them? What is the way?

Teri McDermott: We have a client services department, and that’s part of their job. So they review the leads every single day, and they respond. We use HubSpot, so we have the ability to text through HubSpot.
We can email. So whatever they decide they’re going to do for whatever client, that’s their decision. I let them deal with that. But that’s how.

Dennis Oz: Just to open up parentheses, folks—HubSpot is a CRM program, software that allows you to sometimes automate your conversations with different prospects. Right, Teri?
What are the most used cases where you use HubSpot in your business?

Teri McDermott: Where do we use it the most?

Dennis Oz: Yeah. I believe those text messages, I believe, right?

Teri McDermott: Yeah. So basically, we use it to track everything from point of contact through a design agreement. And it is automated to keep in touch. So if we sign somebody and they haven’t started design, they’ll get emails that go out—there are automated emails.
It’s also really great—it’s amazing—it’s hooked to our website. And if somebody goes out to our website and clicks on kitchens, and then two weeks later clicks on bathrooms, or then goes in and reads our process, HubSpot assigns it a number—I don’t know, like one to ten or something.
And then once they get to a certain number, we have automated emails that start going out.
“Hey, I see you’re looking at bathrooms and have a good understanding of our process,” you know.
And so then we start communicating with them like that.
So it’s a really great tool, and it helps us limit our work, makes our team much more efficient, and—
It doesn’t do it too much, though, because I don’t want a cadence where a potential client might feel like we’re tracking them.

Dennis Oz: So automated messages don’t feel like so authentic.

Teri McDermott: Exactly.

Dennis Oz: Yeah, yeah. But yeah, thanks so much for sharing this because—
Folks, as you can see, if you have a few leads, if you have just referrals, you may not need HubSpot or Go High Level or any kind of CRM system in place to get back to these people.
These are some of the tools that, just like Teri said, give you some shortcuts. And if you have a team, you can evaluate your team’s performance just by how they’re performing and getting back to those prospects as well.
But at the end of the day, you’ll be looking at one thing: if you just don’t need it—software here—just because Teri has a big team over there, and she needs to see what’s going on. That’s why we have a CRM system.
But if you are just starting—Teri, do you think that if you are just starting and you’re just making your first couple of thousand dollars from your job, do you think that we need the CRM from the get-go?

Teri McDermott: No, it wouldn’t make any sense. You wouldn’t see your ROI—return on investment.

Dennis Oz: Right. Exactly. Thanks so much. Thanks so much for sharing that.

Well, let me wrap up here. I just have one final question before we wrap up.
Well, this is going to be a little high-level question. It’s not going to be talking to the new people who just started their business, but some of our listeners—they have revenues around $1 million, $3 million, that area—and it’s really open scaling.
And if they would like to really hit $5 million plus, where it’s going to be maybe a big game changer for them—where they’re going to be on top of the business instead of in the business. Right?

Teri McDermott: Right.

Dennis Oz: What’s the smartest financial move that they should make this year to get there?

Teri McDermott: I would say the smartest move that they could do would be to make sure that they have a job tracking system. Make sure that, you know, they’re using some sort of accounting software, and that they have a way to track their gross profit and some of their KPIs. That’s gonna be huge.
You start there. And then once you get a good feel for what your business is doing, then you can do a CRM. Or then you might do Buildertrend, you know—things.
You’re always looking at ways to become more efficient and get the return on the investment.

Dennis Oz: Great. Wow. Thanks so much. So as far as I understand, you’re just saying hard work will take you to a certain level, and your systems and processes will take you there. Is that correct?

Teri McDermott: A hundred percent correct. Yes.

Dennis Oz: Wow. Well, that’s an amazing conversation, folks. I’m sure you enjoyed this conversation as much as I did.
And, I don’t know, Teri—how I cannot thank you enough just for being here, sharing all your wisdom and all these experiences here.
Well, if someone has a follow-up question—sometimes it happens—
And some of the people, maybe sometimes they have some follow-up questions.
What is the best way? Is it good? Can they go to your website?
Well, I don’t recommend you share your phone number here because it’s going to be distributed to thousands of people, but what do you think?
Your website or any—
I don’t know—maybe email?

Teri McDermott: Website is best. Click on the contact me—you know, click on the contact—and it will go to the main mail.
And if they just put in the podcast name and send me a question, then I can respond back easily.

Dennis Oz: This is perfect. This is great.
Well, folks, you see that we keep hosting stellar and pioneering people from our industry.
And Teri, again, thank you so much for being here today and for all these golden nuggets.
That was another episode of the Remodeler Success Podcast.
We’re gonna see you next time, folks. Goodbye.

Teri McDermott: Bye-bye. Thank you.