Tag Archives: builder magazine

The Biggest Challenges for Builders in 2015 - Hanley Wood

Hanley Wood’s Builder 100 survey asked hundreds of builders “What is your biggest challenge to growing and building your business in 2015?”

We’re all familiar with the biggest challenges the market is facing right now–the availability of lots and qualified labor, rising material costs, and stringent mortgage qualification standards that are boxing out potential new home buyers.

But in the Builder 100 survey, we asked builders to identify the biggest impediments to their personal success in 2015, which provided insight into how pervasive some of these hot-button issues are, and how many builders are impeded by these bottlenecks at the same time.

In order to quantify the qualitative answers from each builder and search for any trends, we looked to the words. We compiled all the responses and set a minimum of five occurrences per word, leaving us with 31 words that appeared five times or more in all of the answers.

Top Five Occurring Words: (note that we combined words where no meaning would be lost)

  • land/lot/lots: 93 occurrences
  • labor/workforce: 36 occurrences
  • available/availability: 35 occurrences
  • cost/costs: 24 occurrences
  • finding/supply: 23 occurrences

 

Continue reading the analysis with interactive map at builderonline.com.

Last month, we discussed how Land Pressure: Combating Zombie Subdivisions is impacting homebuilders and how we can help. Clark Ellis at Big Builder has also discussed the impact of land competition in Homebuilder Moneyball. And labor just scratches the surface of the Pain Points in the Homebuilder Supply Chain found by Big Builder.

Join us at PCBC 2015 and we’ll show you how our solutions can help you reduce these costs before your competitors do.

PCBC 2015 Sneak Peek

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Homebuyer Service After the Sale

Attitude and service after the sale is as critical as it is before it.

I am every salesperson’s worst nightmare. Whether buying a new car or a home, I am constantly looking for the next best thing. Before the ink dries on my contract, I begin eyeing the house around the corner or the car next to me at the stoplight. I’m human. And that means I am prone to being suddenly drawn away from the products I thought were the answers to my problems only minutes earlier. I’m not unique in this—humans are switchers by nature. It behooves salespeople to know this reality and take steps to prevent cancellations.

One of my most basic (and powerful) approaches in business is to copy successful people. And there’s nobody with a better reputation for creating loyal relationships with buyers than Joe Girard, deemed the “Greatest Car Salesman” by The Guinness Book of World Records. Girard sold 1,425 cars in 1973 and 13,001 individual retail units over his 15-year career. According to Girard, though, he never sold a car—he sold himself. The most valuable products his customers walked away with were Joe Girard and his “service, service, service.” Girard’s principles worked out well for him, gaining him endless return customers and referrals.

If you want to keep your buyers from straying with your competitors, take a lesson from Girard. Never stop selling.

Girard says, “The sale begins after the sale.”

…keep reading via Big Builder.

Customer relationship management by Constellation:

 

Conasys eBook: The Homeowner Experience

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Homebuilder Moneyball

Take an ‘everything matters’ approach to operations, and ‘small ball’ will get you the wins.

With ballparks opening across the country, Clark Ellis for Big Builder draws similarities between the inflated numbers produced by “The Steroid Era” of baseball and the inflated numbers of the early 2000′s housing market.

“The Steroid Era” from 1996 to 2005 produced year after year of incredible baseball records until regulation came down hard on MLB. History has since proven that these numbers were not a meteoric rise in talent, but the result of an external factor: steroids. Here are a few of those numbers:

Isolated Power (ISO): a measure of batting power, 7 of the top 10 scores occurred in the Steroid Era.
40 Home Run Seasons: 27% of all 40 home run seasons occurred in the six seasons from 1996-2001.
Total Home Runs Per Season: Between 1996 and 2005, the average number of league-wide home runs per season was 5208. The average between 1980 and 2014 is 4262.

After “The Steroid Era” the best teams in baseball, once again, are well-rounded clubs focused on pitching, defence, on-base percentage. Baseball calls this razor-sharp focus on the details “small ball” or in Hollywood, Moneyball.

According to Ellis,

In the housing industry, we essentially had our “Steroid Era” as well in the early 2000’s through 2006 or 2007. Interest rates were extremely low, banks were willing to extend credit to consumers with little to no verification, and home building companies were able to borrow using low rates to purchase land and to finance construction. As we all recall, the numbers associated with the results of housing’s “Steroid Era” were just as exceptional for this industry as the baseball numbers were.

And, similar to baseball, homebuilding had its own inflated numbers:

First-Time New Home Buyers: In 2005, these accounted for 600,000 new units. The days of easy financing for the first-time buyer are gone.
Land: Competition has driven land prices up, making pricing from the early 2000′s no longer possible.
Operations: As prices ballooned faster than costs, inflated margins meant lots of flexibility in the operations department. We’ve heard from Scott Sedam and Ken Pinto that pressure from trades and suppliers is increasing fast.

Like the best baseball teams of the past decade, homebuilders must change their focus from a “long ball” to a “small ball” approach to operations and decisions.

Here is Clark Ellis’ How to Play “Small Ball” Top 10 List:

  1. Drive the market research and land evaluation process with realistic product, pricing and costing assumptions, clear roles, responsibilities and accountability. [Solution: Our land development systems manage every aspect of the planning process with strict rules and automation.]
  2. Know your customer: size of segment, demographics, psychographics, submarkets, price points and product needs.
  3. Deliver clean, flexible, low cost and easily constructible product.
  4. Attack and minimize “Sale to Start” cycle time. [Blog: DSLD's 43-day cycle time]
  5. Scheduling system must provide accurate, real-time visibility to trade partners and suppliers as well as internal staff. [Blog: Scheduling for Higher Profits]
  6. Make Material Management a critical discipline with the dual goals of optimizing margins and eliminating time wasted while waiting for additional material to be shipped to the job. [Blog: Pain Points in the Homebuilder Supply Chain]
  7. Engage Trade Partners in a collaborative fashion and develop incentives that align all interests towards executing efficiently, with high quality and on schedule. [Demo our trade partner portals.]
  8. In the context of #4, aggressively and ruthlessly attack Start to Completion (of construction) cycle time with a collaborative and motivated team of builders, trades and suppliers.
  9. Eliminate Punch Lists.
  10. Commit to the market. Partial effort and incomplete execution wastes time and money and only leaves you further behind your competition.

Ellis’ final “small ball” tip is to reduce opportunism: just because a deal is “too good to pass up” does not mean it aligns with your strategy and goals. Reconsider these decisions, while thinking like the manager of the Oakland A’s.

Request a demonstration of how our solutions can help with these goals.

See also: Homebuilder Shark Tank

Read the full article from Big Builder Magazine.
Clark Ellis is a principal at Continuum Advisory Group.

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2015 Housing Leadership Summit - Homebuilder Shark Tank

Would you like to put your next big idea in front of $2 billion of acquisition capital?

Here’s your chance to throw your idea into the Shark Tank. BUILDER and Metrostudy have put together “an all-star line-up of money men” to challenge, probe, and ultimately decide if your idea has merit.

Moderator: Brad Foster, Managing Director, Corporate Finance, FTI Consulting

Sharks: Bird Anderson, Executive Vice President, Commercial Real Estate-Home Builder Banking, Wells Fargo; Tony Avila, Managing Principal, Encore Funds; Theodore Karatz, Principal, GTIS Partners, Anthony J. McGill, Managing Director, Zelman & Associates; Rodney Montag, Chief Executive Officer & Managing Partner, RAM Real Estate Capital

Do you have a big idea? The Housing Leadership Summit is looking for three of them. Click here for more information and to submit your idea to the Shark Tank.

For the second consecutive year, Constellation is the Digital Sponsor of the Housing Leadership Summit.

Photo: Housing Leadership Summit Shark Tank “Sharks:” (from left) Rodney Montag, Theodore Karatz, and Bird Anderson

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Homebuilder Supply Chain Pain Points

Managing the various stages of the homebuilding supply chain is critical in order to maximize profits at each stage. Last week, we heard from Scott Sedam that last year’s trade labor shortages will trickle down into this year’s material shortages. Communicating future purchasing needs from the buyer (that’s you, the builder) down the chain allows each participant to plan effectively and maximize resources. It also ensures you get your lumber when you need it.

BIG BUILDER presents a graphical representation of how a lack of communication can add time and money to the process of purchasing. This targeted look at each step in the chain can serve as your road map to success.

Homebuilder Supply Chain Pain Points:

  1. Raw Materials: suppliers base their work on estimates from the manufacturer.
  2. Manufacturers: with little information, manufacturers are forced to estimate future demand.
  3. Distributors: guessing quantities, sizes, colors, etc.
  4. Dealers: routinely react to one-to-two-day lead times.
  5. Trade Contractors: last-minute changes cause trades to arrive (or not) at the wrong time.
  6. Builders: you are felt to pick up the costs.

We consider Scheduling, Estimating and Purchasing to be a fundamental part of the production process. Because our solutions integrate a single software platform throughout your business, you are able to effectively communicate purchasing intentions through to your trades without additional bells and whistles.

Our systems, like NEWSTAR, FAST, and BuildTopia, include trade partner portals designed to allow builders to communicate effectively down the chain. Request a demo for more information.

Request a demonstration of how our solutions can help with these goals.

Continue reading from BIG BUILDER Magazine.

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