With my morning coffee, I read an article about the post-recession "landscape" of remodeling in this past Saturday's Washington Post. It reminded me of a piece I had previously written before the major economic downturn, "How we protect your money and our trade partners' faith?"
The article suggested homeowners should be considering a company's financial viability-not only is this notion one we agree with, but it has always been our strong conviction.
How can you look into uncovering a company's financial viability?
Trying to figure out and obtain financial information about a company might seem challenging. I spoke with two representatives at our bank and both explained to me that banks aren't going to give out any information without explicit written permission and verifications of that permission from the account holder. There are privacy laws to protect individuals and companies. With some effort though, the task is not impossible, just cumbersome. Certainly, depending on the size of your project, you might seriously consider the effort.
In addition to customer references, ask for subcontractor references. It's a simple call and can begin with a couple of questions.
How long have you been doing business with XYZ Remodeling as their plumber, electrician, or painter etc.?
Have they been reliable with payments?
You should feel encouraged when you hear evidence of existing, long term relationships. Companies that don't pay their bills, typically, will have a difficult time maintaining relationships with their subcontractors and suppliers.
If a subcontractor is new to XYZ Remodeling, ask whom they used prior. If a subcontractor isn't being used any longer because of poor workmanship for example-you might consider verifying that information by speaking with a past customer familiar with that subcontractor.
In addition to subcontractor references, you might also consider asking for supplier references. You could ask to see recent monthly statements from lumber yards, and/or plumbing supply houses. Is the company's account current? Or, does the statement show them as being 60-90 days behind?
You'll probably have a quick impression of a company's history, once you start to inquire about references beyond the more commonplace and typical customer references. Does the contractor seem comfortable and does he/she demonstrate a willingness to accommodate your questions and concerns?