Production and Accounting Software for Home Builders

Tim Davis – The Builder’s Coach
We’ve all heard the cliché that says “Nothing is neutral, your business is either growing or it’s dying.” I believe this is absolutely true. The problem is the definition most of us use for growing. Growth isn’t just about building more houses and hiring more people. More importantly, growth is about doing what you do better than you did it before.

If you built twenty houses with five employees last year and this year you built twenty houses with only four employees and everything else remained the same then you have grown your business. It has become more efficient. You were able to produce the exact same results with twenty percent fewer employees.

If you built twenty houses with five employees last year and this year you built twenty houses with five employees but your net profit ratio increased by two percent then you were able to produce better results from the same effort. This is business growth! Even though your business didn’t get bigger, it got stronger.

We need to stop thinking about growth as getting bigger and start thinking about it as getting better. With the current economic downturn and the slow housing market, this is the perfect time to grow your business! Don’t miss this golden opportunity to work on your business, its processes, systems, and procedures, while things are slow. Once things pick up again, and they will sooner than you think, it will be too late to make many of those improvements; you’ll be too busy working in the business to have time to work on the business.

Here are five ideas to grow you business by making it stronger instead of bigger:

1. Create a simple business plan
Don’t let the idea of creating a business plan make you nervous. If you’ve never created one before it’s not difficult, although it does require a lot of thought. There are many great books on how to write a business plan as well as resources on the internet which can easily be found through a google search.

2. Overhaul your web site
Most builders have a web site but very few builders have an effective web site. Of the dozens of builder web sites I’ve reviewed I have yet to find one that didn’t need major improvement. I’m not talking about looking pretty. I’m talking about taking prospects and turning them into customers. If you don’t know how to do this then I suggest you study some books on internet marketing.

3. Document your procedures
Every business does the same things over and over. Whether it is processing invoices, starting a new job, or closing a sale, we go through the same motions in the same order every time. If you don’t have these procedures documented then shame on you. With everything you do ask yourself; “What is the likelihood that we would ever do this again?” The more likely you will do it again the more you need to have the procedure documented.

4. Create a procedures manual
Once you have a procedure documented add it to your procedures manual. Use MS Word or a similar program to create an indexed manual grouped by subjects such as Job start up, Job close out, Loan draw procedures, etc. Having it in this format makes it easy to edit and easy to access. When the economy picks up again and you have to hire employees to keep up with the demand, you will find your new procedures manual invaluable. The time and money you will save will be worth whatever effort you have to use to create it.

5. Implement new software
Having software that integrates all aspects of the company is invaluable. It’s difficult to operate a construction company with piece milled software that doesn’t communicate between components. The worst time to implement new software is when the market is booming and you suddenly realize the software you are using is inadequate for the task. There are few things harder in the building business than launching new software in the middle of a building boom. Ask me how I know. If you’re considering new software make the move now while things are slow and you have time to get it up and running and learn how to use it.

Conclusion:
Growth can be about getting bigger but if you get bigger before you get better your business will likely end up dead or severely crippled. There hasn’t been a better time in years to fine tune your business.

About the Featured Author:
Tim Davis is the founder of The Builder’s Coach, a national coaching and consulting firm designed to assist small to mid sized builders with back-office management and marketing solutions. Tim is a published author, a speaker at the national level of the NAHB, has been a successful home builder for the past twenty years, and is also a licensed realtor. Visit The Builder’s Coach for more information and some free, but valuable downloads.

The problems and frustrations in most builder/realtor relationships can be traced back to a few basic reasons. Here are the top four and how to resolve them.

Reason # 1 – Unrealistic expectations
Each party brings with them their own set of expectations. These expectations will remain hidden until they are revealed during the relationship, then it can be a big problem to overcome. One side is going to accuse the other of being unreasonable, or having unrealistic expectations.

Solution:
Create a written list of what you expect your realtor to do for you. What seems obvious to you may not be obvious to your realtor. Share this list with all the realtors you are considering.

Once you have decided on a realtor have them go through the process of defining their expectations of you. I promise you that this will be a new exercise for them.

With both parties having fully disclosed their expectations of the other it’s just a matter of agreeing to those expectations. When frustrations come up in the relationship, which they always will, all either party has to do is to remind the other what they had agreed to in the beginning.

Reason # 2 – Lack of Training
A new home realtor should have a good working knowledge of how a house is constructed. They should know how to handle the most common buyer objections. They should know about financing and the loan process. They should know the area where they are selling, the schools, shopping, restaurants, entertainment, and employment. They should be very familiar with the neighborhood restrictive covenants and have a copy in their briefcase to answer any questions that may come up during the showing. They should have a grasp of current economic conditions and be able to answer objections that may be based on the economy. Most importantly they should know the builder they are representing and they should know his or her product.

Solution:
During the interview process ask some probing questions. Find out if they know the things you believe they should know. If not, create a simple training program. All you need are a few good books and the willingness to follow-up and make sure that they have learned the things they agreed to. Train them on how you do business and how you build a house. Take them on a two to three hour orientation of one of your completed homes and go over every detail of the house, including attic and crawl space. Later on send in some undercover testers to ask questions and see if they can answer correctly. They are representing your product. Make sure they know what they are talking about and have been trained how to sell it.

Reason # 3 – Lack of Communication
I have gone weeks without hearing from my realtor. When I finally call them they tell me that they had nothing new to report so they didn’t see any reason to bother me. If there is nothing new to report then we have a problem that we need to be discussing and figuring out a solution for.
By the same token, I have had things going on in my business that affected my realtor, but I neglected to inform them. It simply slipped my mind.

Solution:
Schedule a weekly meeting and make that meeting a priority. Each party should come to the meeting with their own pre-written agenda. This ensures that all important topics are covered and communication does not break down in either direction.

Reason # 4 – The Realtor is Not Involved in the Decisions
If you’ve worked with realtors then you’ve heard the many reasons given for a house not selling. Too much color, not enough color, wrong kind of carpet, master bed room too small, bad lot, poor kitchen lay out, on and on. It’s never the marketing.

Solution:
Get the realtor involved in all the decisions. Let them help pick the floor plans, the colors, the carpet, the counters, the lights, etc. You may be thinking that your decorator can do a better job of that than your realtor but if you have an experienced, successful realtor who has been around for a while they probably have a better handle on what customers are looking for than your decorator does. At the very least, have your realtor approve the selections.
Not only does this remove most all of the excuses but what you will find (if you have a good realtor) is that their opinions were actually right on the money. Most likely you will find your sales volume increasing and days on the market decreasing.

About the Featured Author:
Tim Davis is the founder of The Builder’s Coach, a national coaching and consulting firm designed to assist small to mid sized builders with back-office management and marketing solutions. Tim is a published author, a speaker at the national level of the NAHB, has been a successful home builder for the past twenty years, and is also a licensed realtor. Visit The Builder’s Coach for more information and some free, but valuable downloads.