Business of Building e-Source - 08/20/2003 (Plain Text Version)View Graphical Version | Subscribe to NAHB Publications | Email our Editor... New Phone Regs Are a Wake-Up Call for Business OwnersPacking violation penalties of up to $11,000, new federal Do-Not-Call regulations could reshape companies’ marketing plans. Most home builders and remodelers don’t run telemarketing “boiler rooms” to find customers. However, if you use the phone at all in your marketing efforts, it’s smart to keep an eye on new federal Do-Not-Call regulations and what they mean for business owners. On June 26, 2003, the Federal Communications Commission (FCC) and Federal Trade Commission (FTC) established a Do-Not-Call (DNC) registry. By mid August, 30 million consumers who don’t want their phones to ring with credit card offers and other solicitations had added their phone numbers to a national database; the FTC expects the registry to contain 60 million numbers by the time it goes into effect. Starting October 1, 2003, companies are prohibited from calling phone numbers on the DNC list for five years. There are a few exemptions:
Comply, or It’ll Cost You To comply with the regulations, businesses that do any kind of phone solicitation must periodically buy the DNC list to strip opt-out consumers from their call lists. States have individual DNC lists, too, and they have 18 months to fold them into the national registry. Some state lists will merge with the national list on October 1, but in the meantime business owners must continue to buy local DNC lists from their state’s department of commerce. And individual businesses also have to maintain lists of consumers who ask not to be contacted by their companies. Prices vary for state DNC lists. The FTC has set fees for businesses to buy the national list at $25 per area code (the first five area codes are free), up to maximum annual fee of $7,375. That’s peanuts, though, compared to the consequences for violating the federal DNC regulations. Each violation is subject to a penalty of up to $11,000. Yes, eleven grand. Most home building contractors don’t do phone solicitation. However, the DNC regulations are a concern for builders in certain markets and for specialty remodelers who have traditionally used the phone to find prospects. “It’s a big deal for those who are slow to buy, especially active adult buyers,” says Jim Lesinski, vice president of sales and marketing for Del Webb Corporation. The Bloomfield, MI-based builder/developer maintains call centers to field inquiries from prospects and follow up with them after they’ve visited its active adult communities. “We’re tying the Do-Not-Call list into our customer relationship management systems,” says Lesinski. Marketing Mix Pays Off Some specialty remodelers are already using alternate marketing methods. “We got away from cold calling years ago,” says Dan Betz, president and CEO of USA Deck in Woodbridge, VA. The company leaves brochures at homes that don’t have decks (it pinpoints them ahead of time with aerial photography), and then knocks on doors or sometimes calls to set up appointments with homeowners who express interest in its deck components. Likewise, at Case Design/Remodeling, Inc., which has a handyman division, “we do outbound calls only to our client base to keep in touch with them,” says Mark Richardson, president of the Bethesda, MD company. “We have not noticed any effect [from the DNC regulations], but it will be interesting to see how they impact the remodeling community.” Certainly, the regulations call for using diverse marketing strategies, which makes good business sense no matter what you build or remodel. Direct-mail, radio and television spots, newspaper and magazine ads, newsletters, site and truck signage, a strong Web presence, charity events, and home parades are several effective ways to get your name in front of the public. E-mail’s a good communication tool for current customers, but don’t use it to farm for prospects or you’ll be considered a spammer. (And besides, federal Do-Not-E-mail legislation is in the pipeline.) Commercial faxes are a tricky subject and are now governed by FCC regulations of their own. After January 1, 2005, businesses cannot send any unsolicited faxes; that is, “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission,” as the FCC puts it. Previously, the FCC had ruled that businesses had to stop sending unsolicited fax advertisements on August 25, 2003, whether or not they had prior business relationships with the recipients. The FCC granted a stay of those rules on August 18, which means you now have more time to comply with the regulations and, in the meantime, can still fax advertisements to people you’ve never done business with. However, it’s a good idea to plan ahead and put systems in place so you’ll be in compliance when 2005 rolls around. Be Prepared “I would recommend that any business that uses fax communication develop and implement a written consent form,” says Daniel E. Durden, NAHB’s Association Counsel. Durden also recommends that NAHB members contact their attorneys for specific legal advice about complying with the DNC and fax regulations. The FTC and FCC are currently developing procedures for businesses to order the national DNC list. The Direct Marketing Association maintains an online list of state DNC laws and list sources. Be sure to get a copy of your state’s DNC list if you have not already done so. We’re not saying you should consider phone contact taboo, but in the light of regulations that could impact your business, it’s good to do as the Boy Scouts do and be prepared. Pick up a copy of The Best of Sales & Marketing Ideas for some more strategies to augment your marketing program. Compiled from the most popular articles in Sales & Marketing Ideas magazine, the book offers tips, techniques, and advice from successful home builders and prominent new-home marketing pros. It costs $33.75 for NAHB members and $37.50 for non-members. Call 800-223-2665 or visit www.builderbooks.com to order it online. While you’re on the Web, check out the resources available from NAHB’s Business Management Department: Business Management Tools. You’ll find articles about regulatory issues, human resources, financial management, sales, production, technology, customer service, and other business-related topics. We’re constantly adding more, so check back frequently. NAHB-Supported Tax Bill Benefits Builders and Small BusinessesProvisions of the economic growth package that NAHB helped shepherd through Congress this spring and that President Bush signed into law on May 28 should soon start to produce some good news for consumers and home builders and other small businesses. Thanks to the ongoing involvement of NAHB, the new law also preserves the value of the Low-Income Housing Tax Credit. Citing the vital role that the nation’s home builders played in working with the Bush Administration to enact the landmark tax-cutting legislation, NAHB President Kent Conine said that the new law represents “a great victory for the housing industry,” because it will help home building businesses save money and grow. Effective this year, small businesses can immediately and fully deduct as much as $100,000 they spend on equipment they put into service. This represents a four-fold increase over the $25,000 allowed previously. For example, a builder who purchases two $30,000 heavy-duty trucks for his business can write off the cost and still have $40,000 left over for other depreciable expenses. The new law also redefines small businesses as those making no more than $400,000 in capital purchases annually, up from $200,000. Conine provided examples of how the new tax provisions will encourage small builders to invest in new equipment and make their businesses more productive and profitable in the process:
The White House estimates that 23 million small businesses, which as subchapter S, sole proprietorships, or limited partnerships pay taxes at the individual rate, will receive an average tax cut of $2,209 this year. The new law also encourages investment by reducing income from capital gains and dividends to a maximum 15% tax rate. Both are now being taxed at the same level for the first time since 1990. The top tax rate on dividends was 38.6% under prior law. For those in the lowest two income tax brackets, the dividend and capital gains tax rates have been reduced to 5%, and they fall to 0% in 2008. Builders should be aware of two important provisions to gain the maximum advantage for their businesses under the new law, Conine said. First, the various tax provisions are scheduled to sunset at different times in upcoming years. This was done in order to hold the overall cost of the tax package to $350 billion. Second, because of the law’s significant cuts in dividend taxes, it may now be advantageous for builders to receive more income from dividends and less from salaries. This might be accomplished by changing the tax structure of a building company and any of the financing syndications with which it is involved. In any event, builders are advised to consult with their tax analyst or accountant to devise the best financial strategy to maximize tax benefits. [return to top] Mexican Market is Focus of NAHB International Housing ConferenceBuilders and building product suppliers looking to tap the lucrative and growing Mexican housing market will gain practical advice and make valuable business connections at NAHB’s upcoming International Housing Conference of the Americas. Taking place in Mexico City, October 16 to 18, the conference is expected to attract key players from both sides of the U.S.-Mexico border. Mexico currently confronts pent-up demand for 6 million homes. The market is expected to grow at 4.5 percent per year, with an estimated value of US$6.7 billion by the end of 2005. Mexican builders plan to build more than a million new low- and middle-income homes a year for the next three years. President Vicente Fox has set a goal of meeting the housing needs of 45 million new households by 2030. “NAHB’s first International Housing Conference of the Americas can help U.S. and Mexican companies identify opportunities to help reach Mexico’s housing goal,” says NAHB President Kent Conine. “Now is the time for members of the home building industry to learn about the Mexican market. With one-on-one meetings, education sessions, and ample networking opportunities, NAHB hopes the conference will pave the way for cross-border collaboration between builders and suppliers from both nations.” Conference sessions will feature industry experts leading discussions on the latest building concepts, housing and design trends, building efficiencies and technologies, green building, building codes and work-site safety, marketing strategies, Mexico's emerging mortgage finance system, and more. The conference is designed to appeal to a broad range of participants including U.S. and Mexican builders, manufacturers, suppliers, financial representatives, architects, and designers. Attendees will gain valuable information, insights, and contacts in the Mexican housing market. NAHB has co-located the conference with EXPO CIHAC, Mexico’s largest housing and construction-industry trade show, which features move than 500 exhibitors including over 70 U.S. companies — and typically attracts over 60,000 visitors. More Business Opportunities from NAHB’s Councils and Departments
NAHB’s National Sales and Marketing Council (NSMC) is preparing to shine the spotlight on the nation's finest industry professionals at the NSMC Awards on January 19, 2004. “The Nationals” pays tribute to superior new-home sales and marketing achievements by individual sales and marketing professionals, home builders, and associates. Home builders, developers, associates, and consultants are invited to submit entries, including fees and exhibits, until October 3, 2003.
NAHB’s University of Housing is offering educational programs to help you grow your business as pre-show events for the 2003 Remodelers’ Show, which will take place October 23-25 at the Baltimore Convention Center in Baltimore. The pre-show education begins on Monday, October 20. Pre-show courses include:
The pre-show course schedule and descriptions are available at the Remodelers’ Show Web site. Go to http://www.remodelersshow.com/ for course and show registration or for detailed show information. Sign-up for the NAHB courses is available when completing the Show registration. NAHB’s Multifamily Council invites applications and nominations for its 2004 Pillars of the Industry Awards. Considered the most prestigious awards in the industry, the Pillars awards recognize excellence in multifamily design, development, finance, management, and marketing, and showcase of future trends and innovation. Applications will be accepted through November 2003. For an official call for entries application form, visit www.pillarsconference.com or call the Multifamily Council at 800-368-5242 x8215. [return to top] Builder Bright IdeasTry these tips from the 2002 Custom Builder Symposium: Considering implementing a formal change-order system? Here are some benefits to convince you it’s a good move:
Do you have a great builder tip to share? E-mail it to us at jtunick@nahb.com. The NAHB Custom Builder Symposium is a two-day program full of education and networking opportunities designed exclusively for custom builders by custom builders. Survey Aimed at Improving Arbitration ServicesBuilders who use the American Arbitration Association (AAA) can participate in a survey designed to improve the services of that organization. At a time when arbitration is becoming an important alternative for resolving disputes, NAHB is working with the National Construction Dispute Resolution Committee (NCDRC) to encourage the use of dispute avoidance and resolution in the construction industry and to help AAA become more responsive to industry needs. About 21 construction industry organizations, including NAHB, are members of NCDRC. The committee is conducting the survey as part of its mission to provide comprehensive guidance to AAA. Those who use AAA services, along with their attorneys, are strongly encouraged to complete the survey. To participate, click here. [return to top] Member Advantage: NOVA Provides Discounts For Credit Card TransactionsNAHB members with credit card processing needs can take advantage of a special program that offers discounts on rates, services, and fees associated with electronic payment processing. NOVA delivers with speed, reliability and flexibility—and with transaction discount rates as low as 1.64 percent. For more information or to contact us directly, please visit www.NAHB.org | ©2003, National Association of Home Builders |