It's only natural at this time of year to look back on the year past and make plans and predictions for the year ahead. And a lot of the mass media and business pundits are not very optimistic about the coming year when it relates to the building trades. But I refuse to join the chorus of doom and gloom. I think a lot of it becomes self-fulfilling prophesies as business owners take every little setback as a sign of bad times ahead.

Certainly small woodworking shops do face challenges in the coming year. I just got back from a meeting with members of the North American Building Material Distribution Assn. Most of the distributors reported flat sales for 2007 and were expecting flat or slightly down for 2008. Lower housing starts have had their impact. But many distributors are also seeing their smarter customers make important shifts in anticipation of this. For example, they are seeing more movement from new construction to remodeling.

I'm hearing much the same thing from shops all across the country. The ones who have relied on builders and new construction for most of their revenue are making adjustments and looking for remodeling and commercial work. But rather than doom and gloom ahead, many of them are discovering something else. It's often more profitable working directly with homeowners at retail prices than it is working with builders at wholesale prices.

Another thing they are discovering is that people who put off buying or selling their home because of the slow real estate market are often more interested in fixing up what they have. That new kitchen or bath is more important if they are going to stay in the same house.

What's more, these same retail remodeling customers are typically much easier to upsell into more profitable add-ons and features. Rather than cranking out lower-end and lower profit kitchens for builders at wholesale prices, think about the attractive things that you can add to benefit your next retail kitchen customer. Distributors today offer a huge volume of optional hardware that is practical and attractive and adds big value. Think of all the convenience features such as roll-outs, organizational hardware, and new soft-close slides and hinges. Then think about architectural embellishments such as corbels and carvings that are also quite popular and now profitable as well with outsourced options.

Doing fewer projects with more profitable customers also brings benefits in fewer jobs for you to track, fewer people to deal with and less work to manage, while still making more money.

So, don't listen to the economic doomsayers. Think instead how you can transform your business to take advantage of changes in the economic winds. Think how you can sell more to fewer customers. Think how you can raise the value and profit of what you sell.