Business of Building e-Source - 01/15/2003 (Plain Text Version)

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Want To Improve Your Business? Read On!

Welcome to the first issue of NAHB's Business of Building e/Source, your monthly electronic guide to home building business management hot issues and emerging trends. You’ll find practical advice, tricks of the trade, and sound business guidance. All delivered monthly, straight to your desktop, in a quick and easy-to-read format. It’s free, too!

We want your feedback on Business of Building e/Source and the topics most crucial to your business. Let us know what you think by sending an e-mail to business_management@nahb.com.

The GL Insurance Crisis: Seven Strategies For Builders

Buying affordable general liability insurance coverage is getting harder all the time, but you can do plenty to manage risk in your business. That will make you a more attractive customer to insurance companies. According to Bruce Harrell, CEO of HBW Insurance Services, which provides warranty insurance to the home building industry, effective risk management comes down to these critical steps:

Keep good records. Document all aspects of the building and selling process — those records will be crucial if you ever get sued. Retain all plans, materials lists, schedules, change orders, trade contractor agreements, certificates of insurance, and sales contracts.
Pay attention to site conditions. Most GL policies don’t cover defects related to soil movement, so it’s up to you to ensure that your lot doesn’t have expansive or collapsible soils. Retain all soil testing records.
Transfer risks to trade contractors. Your trade contractor agreements should include “hold harmless” indemnity agreements, specify the required insurance coverage ($500,000 minimum for each home on which trades work), and require all disputes to be resolved through binding arbitration. Include a waiver of subrogation, which protects you if trades get sued for work performed on your homes.
Manage supervisors with care. Site supervisors are the front line of defense in your risk management program, as they oversee construction quality and enforce job-site safety procedures. Make sure you thoroughly train and manage them.
Make safety a priority. Follow all standard job-site safety procedures to prevent falls and keep workers safe from other hazards. Document your safety and safety training programs. Post “Private Property – Unauthorized Entry Prohibited” signs at all points where someone might access the site, and notify homeowners and vendors in writing that they cannot visit the site without an escort. These steps will demonstrate in court that you warned people to stay away.
Use a comprehensive sales contract. Have an attorney review all your contracts. Make sure they contain strong arbitration provisions. Document all changes and have homeowners sign the change orders.
Implement a solid warranty program. Proactively handle all requests for warranty service after the sale. Make sure your employees and trades understand the importance of customer service and warranty calls. Document all requests for warranty service and keep copies of work orders showing you handled the requests.

All of these steps help demonstrate your commitment to running your business safely, responsibly, and professionally. That makes you a better risk and can make it easier to buy affordable general liability insurance.

Want to learn even more? The University of Housing is offering a course at the International Builders' Show on Sunday, Jan. 19, just before convention that will help you survive the general liability insurance crisis. Click here to learn more or call the University of Housing’s Office of the Registrar at 800-368-5242 x8EDU

Check out the myriad resources available from NAHB’s Business Management Department for new ways to run your business better and more profitably. They’re located online at NAHB.net: Business Management. [return to top]

Housing Buoys the Economy

A banner year for housing has just concluded, ironically amidst some of the toughest economic times in recent history. The latest evidence: Sales of new homes hit yet another record in November as the best financing conditions in decades and solid market fundamentals drove buyers to simply go for it.

Sales rose 5.7% to hit an all-time high seasonally adjusted annual rate of 1.07 million units in November, marking the fourth consecutive month above the million-unit pace. While the final tally isn't in yet, it now looks like 2002 was the best year ever for new-home sales, with 975,000. That's far above the previous record of 908,000 units set in 2001, and truly something to crow about. Keep in mind that this number doesn't even include custom homes built on the owner's lot. Click these links to see NAHB's press release or the government's figures. [return to top]

Business Opportunities From NAHB’s National Councils

Pumping Up Sales Pros

Keeping your sales professionals motivated in today’s challenging market is more important than ever. One simple way to reward and encourage your new-home sales team is through the Million Dollar Circle Awards. Sponsored by NAHB’s National Sales and Marketing Council, the program pays tribute to the housing industry’s best salespeople and sales managers across the country. If your sales professionals have sold one million dollars or more in new-home sales over the past year, they are eligible to participate.

The program offers personalized citations, plaques, and pins that provide prestigious recognition to your team. It’s a truly cost-efficient way to acknowledge your most valuable employees and managers. Your investment will pay off with a more enthusiastic team, which will in turn reward you with improved performance and increased sales.

Visit www.milliondollarcircle.com for an application and return it to the National Sales and Marketing Council (NSMC) today. If you have any questions, please contact NSMC at 800- 368-5242, extension 8192 or e-mail us at nsmc@nahb.com. For information about NSMC, click here NAHB.net: Members Only Web Site - NSMC.

Selling To Seniors

Increase your bottom line by capitalizing on the lucrative 50+ housing market. Learn more about baby boomers and mature consumers and how they will affect the new-home market at Smart Planning for Active Adult Communities, a pilot program in the NAHB Seniors Housing Council’s Seniors Housing Specialist Program. This research and trends course will take place from 8 a.m.-4 p.m. Monday, Jan. 20, during the International Builders’ Show at the Las Vegas Convention Center. The cost is $175 for NAHB members, $125 for Seniors Housing Council members.

To review IBS pre-convention seminars, visit www.buildersshow.com. Click on the Attendee Area and Education & Meetings. To register or more details, contact NAHB’s University of Housing at 800-368-5242, x8338 or registrar@nahb.com. For information about NAHB’s Seniors Housing Council, click here: NAHB.net: Seniors Housing Council. [return to top] [return to top]

Bright Ideas From Builders

Try these tips to boost your business:

Invest a little money for a lot of feedback. We heard about a builder who offers a “$1 for your thoughts, $100 for your time” program. Prospects who complete an exit survey receive a dollar; those who agree to participate in a focus group get $100. The builder uses the information to modify current designs that aren’t moving, and to make future product decisions.
When a customer sends you a referral or allows you to show her home, send your landscaper by with a plant or shrub and ask the customer where she would like it planted.

Do you have a great builder tip to share? E-mail it to us at jtunick@nahb.com.

You’ll find hundreds of terrific tips on accounting, personnel, customer service, sales and marketing, management, trades, production, and design in Management Ideas That Work and More! Management Ideas That Work from NAHB’s Business Management Department. Each book costs $25 for NAHB members and $31.25 for non-members. Both are available from BuilderBooks; call 1-800-223-2665 or visit www.builderbooks.com to order. [return to top]

Member Advantage: Get Special Discounts From Hertz®

NAHB members can get deals on car class upgrades and one-way double upgrades, and discounts off weekly and weekend rentals from Hertz. For more information, call 800-654-2200. Be sure to use CDP No. 051046.

To order online and for details on more than a dozen other money-saving Member Advantage discount programs click here, or send a blank e-mail to membersavings@nahb.com.
Go to www.nahb.org to explore the numerous advantages associated with membership in your local, state, and national home builders association. [return to top]