“There is a world of difference in building 20 homes per year and moving into the 50- to 150-per-year range,” Whitten warns. His session, The Ten Secrets to Growing Your Company and Improving Profitability Even in a Down Market, is designed to keep builders from moving their companies blindly toward an ever-increasing volume of new homes.

Among the other 22 Business Management sessions at the 2007 IBS are:

• Schedule Management for Profits with M.M. (Mike) Weiss, WeissRCMI. He will demonstrate how to get buy in for a schedule in the same way that you do for plans and specifications. Learn how to develop a working schedule that reduces cycle time, boosts quality, and increases customer satisfaction.
• Risk Management: The New Role of Construction Superintendents with Stan Luhr, Quality Built, and Steve McGee, Associated Builder Solutions, LLC, will discuss the top risks your company faces and how to train your superintendents to recognize and alleviate them. This program will teach you how to hone the forensic expertise of your superintendents so they can protect your company and alleviate disaster. 
• How to Implement a Purchase Order System. Featuring Russel Neumann of SMA Consulting, Inc. This program, in a nutshell, will discuss necessary pre-implementation systems and step-by-step deployment—from the first step to the typical timeline.
• Essential Contract Elements to Keep You Out of Court & In the Black! with custom builder Dennis Dixon, will show you how to stop conflict before it starts. “Successful home building and remodeling starts with a simple, but thorough, construction contract,” Dixon says, yet too many building professionals minimize the contract’s importance until disputes or discrepancies arise. If you are a builder modeling your contracts after the American Institute of Architects’ contract, this session will discuss options better suited to you needs.
• Business Planning Basics for Today’s Builder with consultant Clay Nelson will help you jump start your written business plan and avoid common plan mistakes. Many small- to medium-volume builders operate without one, missing opportunities for effective communication, accountability, delegation, and, ultimately, success.

In addition, back by popular demand will be sessions featuring experts on cost-cutting, processing your business, the proper way to handle change orders, customer service, trade partnerships, and other issues important to your business.

To register and add any of these sessions to My Show Planner, go online to http://www.buildersshow.com/. And, don't forget to pick up our free Builder Business Guides in select Business Management education sessions at IBS. These three guides—on technology, strategic planning, and financial management—are packed with tips from home builders and other industry experts. [return to top]

Please be sure to enroll in the NAHB-sponsored UPS discount program prior to the show.  If you already have a UPS shipper number, simply include it on the enrollment form.  If you don’t have one, UPS will assign one to you when you enroll in this program. 

Visit  http://www.savewithups.com/nahb/ to sign up today! [return to top]

More than 550 listeners tuned into a free NAHB audio conference in January designed to provide tips to home builders and other industry professionals struggling with the ramifications of a slower housing market.

The live, one-hour audio conference, which included a Q&A session with NAHB members from around the country and across the border, featured three veterans of home construction business cycles. Tom Stephani, a custom home builder in Crystal Lake, Ill.;  Bill Becker, managing director and president of The William E. Becker Organization; and S. Robert August, president and founder of S. Robert August & Company, offered a number of tips based on years of hands-on experience in marketing and selling homes—when walk-in customers are plentiful and when leads are scarce.

The good news is, there are always customers. The other good news is, a variety of strategies will work to attract those customers to your homes, the trio said. They offered advice on moving unsold inventory, handling cash flow problems, overcoming customer objections, and attracting new clients, among other valuable take-aways.

Don't "play catch-up with the competition,”  Becker advised. Instead, emphasize “what you have and they don’t” and “review your successes over the years and capitalize on your strengths.”

Some specific selling suggestions from Becker:

• Actively solicit testimonials from happy customers; this is “one of the best things to beat the competition.”
• Research why buyers aren’t going through with the sale. If they’re afraid they won’t be able to sell their home, “you should go to the mortgage company and say we need a certain kind of mortgage to help our people sell their existing home.” Buydowns are among the financing options that might help your buyer.
• Allow the salesperson to offer the buyer optional products to close the sale, up to a certain dollar limit; the seller gets to keep the amount by which the incentive package comes in under the limit, on top of a regular commission.
• Let your receptionist handle pre-qualification of prospects so your sales staff can concentrate on what they do best—selling. The sales manager should be on the floor and making sales. “Get the sales team together, outline the problem, and let them come up with new strategies."

August provided additional advice on how builders should re-evaluate their sales team to stay on top of the marketplace when it is slowing:

• Review performance of each individual employee and shop them at least three, possibly four times a year to ensure that the right people are in place.
• Pay the standard real estate commission to avoid driving up the price of your homes.
• Review all subcontractors to ensure that they are performing.
• Meet with your management team to set new expectations, including that they get out in the field regularly to inspect sites and meet individually with employees to discuss what needs to be done to move the business forward.

“Take the time to go out and understand the strengths and weaknesses of each neighborhood," August advised. "The entire team should go out there,” because those who haven’t been to the site will look at the neighborhood with a fresh perspective. Then a plan of action should be developed to sell out the homes in each neighborhood, giving the plan time to produce results, but constantly re-evaluating its effectiveness.

A slow market is a good opportunity to discontinue product that does not sell well and look at the entire product mix, Becker added. Besides discontinuing "soft sellers," he advised builders to "understand the model mix concept" and to show customers the top of the line or a mid-priced model first—not your lowest-priced home. That strategy allows your buyer to make the choice to trade up or down according to their needs and desires.

How many models should you carry? Since it takes 40 to 50 production units to pay for a furnished model, Becker advised only two to three unfurnished models for a community of 75 to 100 homes and only one to two furnished models, out of four models total, for a 250- to 300-unit community.

Keeping Tabs on the Competition

To keep tabs on the competition, Becker advised shopping them—their product, presentation, and approaches for welcoming buyers. He also advised talking to their buyers about their experiences purchasing their new home.

Finally, Becker said, builders can learn a lot about the competition through public records. Reviewing sales prices from closings and comparing those with base prices can tell you how much your competition is selling in options and upgrades. Looking at what's in the planning and zoning pipeline can tell you about your competition's future plans.

Restoring balance to the inventory is the leading challenge in many of today’s markets, August said, so he urged builders to reduce speculative construction and re-evaluate lot holdings and absorption data. Rather than staying the course, "sometimes it's better to walk away from a large lot lineup," he noted.

Create Curb Appeal

To draw drive-by prospects to your current inventory, be sure you are sending a message of quality by ensuring curb appeal with your signage and landscaping. Inside, make sure that your homes—both finished and under construction—are left clean daily, so they are ready to view. "Every home and street should look perfect," August reminded builders. Striving for zero defects at closing builds a happy customer base and ambassadors for your company, he added.

In response to a question from a custom builder, Stephani said that previous satisfied customers are your best collateral. Get involved in your community, then let word-of-mouth do your marketing for you. Of course, a concise brochure with testimonials from previous satisfied customers never hurts, he said.

Systematize Marketing

You've run promotional campaigns before—but do you know which ones drew the most prospects? "Maintaining a scrap book of promotional campaigns ... provides a good archive of what was successful," August said. He urged setting up a grid to pinpoint where your buyers came from in the past and to identify areas worth targeting through direct mail.

“You need to review all of the prospective buyers and determine what it will take to get them to buy” and identify programs that will be helpful to them. Only 5% of salespeople on the floor have been following up with prospects on a regular basis, when they need to be working to understand the specific needs of each buyer, according to August.

Ramp Up Your Sales & Marketing in a Changing Market was taped and is available online at www.nahb.org/ac1, along with handouts from the presentation. In addition, hundreds of pages of the most up-to-date information on running a home building business in today’s buyer’s market are available to NAHB members online. Click here to access “Back to Basics — NAHB’s Toolkit for a Changing Environment.”
[return to top]

Patterned after the Malcolm Baldrige Quality Awards, entries are judged by seasoned building industry professionals and former award winners who evaluate the role that customer-focused quality plays in construction, business management, sales, design, and warranty service. During the process, applicants receive in-depth feedback with suggestions for improvement.

“Unlike quality awards concerned only with the finished product, the National Housing Quality Award examines the builder's business and quality management practices. We are concerned with the builder's ability to deliver a quality product consistently, satisfy home buyers, and achieve a high level of productivity,” says Michael Luzier, president of the NAHB Research Center, cosponsor with Professional Builder magazine of the NHQ Award.

Three NHQ Award winners and two honorable mentions were named in 2006:

• Gold Award - Estes Builders of Sequim, Wash. 
• Silver Awards - Floor Art of Tempe, Ariz.; and Schuck and Sons Construction of Glendale, Ariz. 
• Honorable Mentions - Atlantic Builders of Fredericksburg, Va., and Keystone Custom Homes of Willow Street, Pa.

“The award is not about sophisticated systems, fancy pictures, or elaborate applications,” said Frank Alexander, NHQ Programs director. “It focuses on the degree to which builders integrate quality into their businesses. Builders of any size are capable of achieving this, and we encourage all quality driven builders, large and small, to apply.”

For builders who want to learn about the elements of Total Quality, the award application is an education in itself. The application's 24 questions invite builders to examine their quality practices in eight categories—leadership, strategic planning, performance management, customer satisfaction, human resources, construction quality, trade relationships, and business results. Applicants learn their strengths and weaknesses, and recognize opportunities to improve their business.

For more information on the National Housing Quality Award contact the NAHB Research Center at (800) 638-8556, x6225 or visit www.nahbrc.org/quality. [return to top]

HousingEconomics.com is your single source for market analysis, forecasts, housing statistics and more. In-depth analysis and detailed Excel tables and overviews are available for all the state and metro forecasts. HousingEconomics.com combines unique scientific research with practical applications providing insights that are original and useful.

This interactive Web site at the executive level provides critical data and information quickly, easily and frequently, and includes the following features:

• Home Builders Forecast ― state, metro, non-residential, remodeling, etc.
• Exclusive access to NAHB’s staff of economists
• The Seiders' Report
• Housing Market Statistics — 36 tables including housing starts, home prices, building permits, home sales, value of new construction, and more 
• In-depth analysis

For more details, visit http://www.housingeconomics.com/. [return to top]