Archive for the ‘Constellation BLUEPRINT’ Category

Is Your Business Growing or Dying?

Monday, June 9th, 2008
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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.

Working with Realtors: Four Reasons Why Most Builder/Realtor Relationships Don’t Work (and How to Fix Them)

Monday, May 5th, 2008
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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.

Gain Business Insight and Streamline Communication with Constellation FOCUS

Monday, April 21st, 2008
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FOCUS Business Intelligence
The FOCUS Business Intelligence solution has quickly become one of the most popular offerings at Constellation HomeBuilder Systems, with its nearly 1000 users.  Home builders utilize FOCUS Business Intelligence to analyze the data that resides in NEWSTAR Enterprise and NEWSTAR Sales to make informed decisions.  This insight enables homebuilders to

  • Increase revenue
  • Maximize profitability
  • Enhance productivity
  • Build strong customer relationships

FOCUS Business Intelligence offers unparalleled features that supply home builders with significant advantages within their competitive environment, and includes

  • Automated report delivery
  • Pre-configured reports
  • Exception based reporting

FOCUS Communicator
Constellation’s latest FOCUS product line extension, the FOCUS Communicator solution provides home builders the capability to automatically distribute timely and personalized reports, to any internal and external stakeholders, and immediately gain insight into the construction scheduling area of their business.

FOCUS Communicator can automatically notify suppliers of schedule changes, enabling home builders to effectively manage their suppliers with pre-defined reports, and with minimal setup and training.  The solution immediately allows home builders to

  • Eliminate supplier dry-runs
  • Reduce resource requirements
  • Prevent communication errors
  • Increase superintendent productivity
  • Enhance supplier relationships

Want to Learn More?
For more information, or to schedule a free online demonstration of this solution, contact Constellation Sales at (888) 723-2222 or sales@constellationhb.com.

About Constellation HomeBuilder Systems
As the largest home building software company in the industry, Constellation has helped more than 1,400 home building companies manage their information technology costs with integrated software solutions to run their business from dirt to warranty. From planning to homeowner services, we have land development software, new home sales and marketing software, production, purchasing, scheduling, accounting, warranty and homebuilding vendor portal solutions designed exclusively for the home building industry.

Media Inquiries
Cathy Kotsopoulos
ckotsopoulos@constellationhb.com
(888) 723-2222

What’s in a Name?

Friday, March 28th, 2008
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In a world of political correctness who would guess that something as seemingly innocent as calling warranty “customer care” could have negative repercussions? Certainly not companies striving to please customers. But builders should consider at least three points before naming their warranty department the customer care department.

Big Picture Implications
The old adage “Customer service is an attitude, not a department” applies. Having a department named “customer care” (or for that matter, “customer service”) implies to the rest of a company’s employees that customer service is the responsibility of the Customer Care staff.

Service responsibilities and skills should be part of every job description in the organization. Precise performance standards for service should be integrated throughout each step of the experience, should express the integrity of the company, and should impress customers with its energy and attention to details. While these goals are certainly appropriate targets for the warranty staff, sales, mortgage, selections, construction, and closing personnel should share the same objectives.

Homeowner Expectations
Customer care implies great flexibility – a nurturing, generous, almost limitless package of services. This subjectivity is built into the title customer care. Homeowners are likely to expect service based on their personal standards and wishes.

What actually follows in most cases is warranty service based on the company’s limited warranty guidelines and practices. Many points are non-negotiable and measurable standards are often applied. This objective approach contrasts sharply with the implications of the friendly name. A soft name does not guarantee that homeowners will hold a high opinion of warranty service any more than a bouquet of flowers will convince a buyer that his home is complete when it is not.

“New Home Warranty Department” on the other hand implies a black and white set of repairs are available for a specified amount of time. Still, nothing in this name prohibits a builder from considering individual circumstances and making common sense exceptions when appropriate. Written warranty guidelines are a starting point – subject always to sound judgment.

More is gained if the builder retains control from the beginning instead of attempting to take control back from homeowners who expected “customer care” – not just warranty service. When a warranty office begins with black and white guidelines then makes appropriate exceptions, it can be a hero to many homeowners. Conversely, starting with an undefined “customer care” image often leads to hostile opinions from homeowners when warranty requests are denied.

Survey Savvy
Many satisfaction surveys include questions about customer care – intending to gather feedback about after move in services. Builders logically interpret responses to these questions as an evaluation of the warranty person or department.

Meanwhile, customers see a company’s service as a fluid component, coming from all personnel and all directions, flowing in and around the transaction from start to finish. Unless the questionnaire clearly identifies warranty service, the customers’ ratings may be a reflection of service from other departments: Phone calls not returned by sales? Pricing information slow to come from design? Lack of empathy from the field staff? Trade contractors eating lunch in their under-construction home?

Frustrated warranty personnel often lament low ratings from survey respondents who have never contacted the warranty office. Imagine the effect of this if those same warranty personnel work under an incentive program and this confusion is costing them bonus money.

Referring to warranty as “warranty” both on the organizational chart and in satisfaction questionnaires reduces the chances of such confusion and misinterpretation. Survey questions should ask customers to rate the service of each company function from sales through warranty. Feedback then provides more accurate indicators of where improvement is needed.

A rose is a rose is a rose… but “customer care” and “warranty service” are not interchangeable names.

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About Carol Smith
Carol Smith offers customer service assessment, consulting, and training programs for home builders. For more information, visit www.cjsmithhomeaddress.com.

Differentiate Yourself – A Homebuilder’s Perspective

Friday, February 29th, 2008
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Chuck Miller

In one of my early Institute of Residential Marketing courses, the instructor said something that really hit home with me as a builder. He pointed out that marketing is about differentiating yourself in the marketplace and stated that you can differentiate yourself by product or you can differentiate yourself by process and procedure. He then pointed out that if you differentiate yourself by product and you have a great product – great floor plans, unique trim details, energy-efficient building practices – eventually everyone is going to copy what you’re doing. Thus, you constantly struggle to find new ways to differentiate yourself. But then he emphasized that if you differentiate yourself by process and procedure, others are far less likely to copy what you do.

Previously featured authors have discussed the value of best management practices like using purchase orders and work orders and eliminating billing errors to save money and improve your bottom line. But there are a number of best management practices and implementing any or all of them will save you money and improve your bottom line. More importantly, implementing best management practices will increase your sales. I believe that everything we do is marketing and the best, most cost-effective marketing is referral marketing. I emphasize that our customers include not only the people who hire us to build their homes but also our trade contractors, vendors, and service providers. Particularly in today’s market, buyers are hesitant. They have read and heard all the news stories about builders facing financial problems or filing bankruptcy. But people are still buying new homes. If you follow best management practices in your business, it can go along way toward reassuring them that you are not like all the others.

Differentiate yourself by implementing best management practices like creating critical path schedules for all of your jobs and updating those schedules at least weekly; using work orders and purchase orders that not only set the price but that are also tied to your job schedule; having a system in place to notify your trade contractors and suppliers when they are expected to be on your job and when they are expected to complete their work; ensuring that your jobs are ready for them when they show up as scheduled; managing your accounts receivable and accounts payable so that trade contractors, vendors, and service providers are paid in a timely manner; and providing your lenders with accurate financial statements on a monthly basis. Not only will you receive preferential service and pricing from you trade contractor and vendor partners, but I guarantee that if you do all of these things, the word will spread. Your trade contractors, vendors, service providers, and lenders will become some of your best sales people. You will become the builder of choice in your market.

Integrated software programs make it relatively easy to implement most of these best management practices. But like any good tool, you have to take it out of your tool box and learn how to use it. I encourage you to do so.

About the Featured Author:
Chuck Miller is a Graduate Master Builder (GMB), a Member of the Institute of Residential Marketing (MIRM), a Certified New Home Marketing Professional (CMP), a Master New Home Sales Professional (MCSP), and a Certified New Home Sales Professional (CSP). In addition to his role as President and CEO of Chuck Miller Construction Inc. Chuck is an instructor for the National Association of Home Builders University of Housing Graduate Builder, Graduate Remodeler, and Institute of Residential Marketing programs. Chuck has been a Buildsoft user since 1992. You can learn more about Chuck and his company at www.chuckmillerconstruction.com.

About Constellation HomeBuilder Systems
As the largest homebuilding software company in the industry, Constellation has helped more than 1,400 homebuilding companies manage their information technology costs with integrated software solutions to run their business from dirt to warranty. From planning to homeowner services, we have land development software, new home sales and marketing software, production, purchasing, scheduling, accounting, warranty and homebuilding vendor portal solutions designed exclusively for the homebuilding industry.

Media Inquiries
Cathy Kotsopoulos
ckotsopoulos@constellationhb.com
(888) 723-2222

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Make an Extra $1,000 per Home

Thursday, January 17th, 2008
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Craig Schweikart

In this article we will discuss the value of integrated purchasing and how it can improve the profitability on each and every home you build. Industry experts and the NAHB for years have touted the value of purchase order and work order management.

It is a simple process – - – estimate your costs and hold the trades accountable to their pricing. The idea is to send your suppliers and subcontractors written documentation in advance outlining the agreed upon pricing and the scope of work the sub is responsible for. These bids can either be solid estimates or lump sum prices. Later on when invoices are received, the invoices can readily be compared to the original purchase orders.

The value comes from having agreement across estimates, purchase orders, pay-points and job cost information. An integrated purchasing system does this automatically and all you need to do is manage the exceptions or variances. If these four components are not automatically integrated you have to manage all the detail manually. The result is you manage all of the “mundane detail” four times and exceptions need to be tracked in a fifth process.

There are several problems you can anticipate with a “stand-alone” purchasing system. Without an integrated system you are liable to run into the common problem of double billing of invoices. Another problem is that multiple manual processes are error prone and time consuming.

Most experts agree that an integrated purchase order system can generate cost savings of 10 to 20 dollars per cost code. I would bet most of you would agree by focusing attention on pre-pricing your labor and material based on estimates, then holding your trades to that price (after all they agreed to the price) — you could save at least $10 per cost code on average. You will save less on some and much more on others and remember this is not just a one time savings; you will be saving ten dollars for each cost code on each house!

If you are structured like most builders you typically have about 100 to 120 cost codes per house. So, do the math – - – a purchase order system is expected to generate between $1000 and $1200 per house in cost savings. If you build and close one house per month or 12 per year you can add at least $12,000 in profits just by implementing a purchase order system.

In today’s market what could you do with an additional $12,000? What if you could reach the cost savings of $20 per cost code?

In addition to the financial savings, a strong purchase order system will greatly reduce headaches. Everything your subcontractors are responsible for is well documented so there is little room for dispute later on. Similarly paying your bills becomes a more automated, faster process with far less error.

If you look for software solutions to help manage your business take care to select a product with a strong purchase order and work order system. Make sure it has a proven track record for generating results similar to those in our example and you won’t be disappointed.

About the featured Author
As a respected consultant and national speaker, Craig Schweikart has developed and presented numerous seminars to homebuilders. He has spent over twenty years advising homebuilders on system selection, process management, and profit improvement.

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