Our founder, Jake Schloegel, was recently featured in the KC Business Journal.
Remodeling the model: Schloegel Design adapts business plan to attract new, frugal client base
Kansas City Business Journal - by Krista Klaus, Staff Writer
Friday, April 8, 2011
When the construction and remodeling markets dried up in 2008, Jake Schloegel was in the middle of a 2,200-square-foot expansion and remodel of his Waldo office and showroom. The 30-year veteran of Kansas City’s high-end remodeling industry had a choice: Plow forward in the face of a shrinking construction pipeline, or put the updates on indefinite hold.
Schloegel called off the project, which included new office space, desks and finishes at Schloegel Design Remodel Inc.’s 311 W. 80th St. showroom and office. Instead, he hunkered down. “We went from 29 employees down to 17 employees,” Schloegel said. “We tried to survive, downsized and went into stabilizing mode.”
Three years later, the company’s back offices remain unfinished, with concrete flooring and unpainted walls. Still, Schloegel’s decision to wait and conserve cash for a coming economic crisis is emblematic of the company’s fiscal conservatism. But that doesn’t mean the company isn’t innovative and adaptive. It may be coming off the two slowest years in its history, but it is poised for new growth after restructuring to accommodate a new, more frugal client base emerging from the ashes of the worst construction downturn since the Great Depression.
“In 2009, our team was saying, ‘This is the time to diversify,’” Schloegel said. “I figured if we were going to do something, we needed to get started.” In 2010, the company launched One Week Bath LLC, a one-stop shopping and pricing concept that guarantees an entirely new bathroom in one week for between $18,000 and $20,000. The project brings in a three-person crew to take a bathroom down to the studs and restore it with vanity tops, faucets, toilets and shower within seven days. The first year saw healthy growth in the niche that appealed to time- and money-pinching families.
“People are very interested in controlling time, especially because when you’re out of a bathroom, it’s a major hassle,” said Debby Allmon, Schloegel Design Remodel’s marketing director. “We have a three-man crew, so basically they get done in a third of the time.” Allmon said the company controls time frames by making sure all the items for a project are received before the crew begins. That limits overall selections, but the choices remain plentiful. “Everything is ready to go when we start the job,” Allmon said.
The company saw its One Week Bath business grow to $700,000 in sales in 2010 and projects 20 percent growth in 2011.
Brookside/Waldo resident Helen Ravenhill hired Schloegel’s One Week Bath for a full gut and redo of her master bath. She found the concept in a newspaper ad, she said, and the project came in on time and without a creep in costs. “To be able to have the luxury of having it done in one week is nothing close to a miracle,” said Ravenhill, who referred a friend seeking a similar bathroom remodel to Schloegel.
Ravenhill admitted that she feared the slightly limited selections offered by the company would be a frustration. “That was one of my worries, but it turned out to be unfounded,” she said. Schloegel hopes another concept launching in the spring, Express Custom Kitchen, will piggyback on the success of One Week Bath. The new kitchen business promises all-new floors, cabinetry, granite, sinks, tile, lighting and backsplash for about $35,000. In the boom times from 2000 to 2006, Schloegel’s typical customers paid $50,000 to $100,000 for a new kitchen, often taking equity out of their homes for the project. Those days are gone.
“In the early 2000s, all the charts were going up,” Schloegel said. “It’s like you just turned the chart upside down.” But now, he said: “Everyone is saying it’s not cool to be extravagant. It’s cool to be prudent; it’s cool to be cautious.”
Granite countertop supplier Dimensional Stonework LLC has done business with Schloegel’s company for 11 years, from the boom to the bust and now through a predicted recovery. Sales Manager Sheryl Calvin said she is impressed by Schloegel Design’s decision to diversify its offerings and cater to customers’ changing tastes. “In the industry, the projects are a lot smaller than they used to be. Everything anymore is all about costs,” Calvin said. “I think that will work well for them. You go in and limit the options a customer has. Anytime you can manage the product that way, you’re managing time and costs, and you can be more efficient and get the project done (quicker).”
Schloegel also launched a handyman division stacked with certified craftsmen to build good will among existing customers and to help draw in new ones. “We found we needed to make our company more approachable,” he said. The company offers specials on handyman services — including “Buy 3 Hours, Get One Free” — and promotes handyman services with certain remodeling contracts or referrals.