Business of Building e-Source - 08/18/2004 (Plain Text Version)

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Smart Solutions to Tough Business and IT Challenges

Bungled Installation Derails a Home Builder’s Data

The Challenge

For 10 years, On the Level, Inc., a custom home building company in Chaska, MN, used bookkeeping software as a simple check register. The program worked fine, but it couldn’t meet the company’s increasing technology needs: President Chris Thompson, a member of NAHB’s Business Management & Information Technology Committee, wanted to automate On the Level’s accounting and construction management functions.

He and his staff started using electronic spreadsheets to handle budgeting, estimating, and scheduling. They used their trusty bookkeeping software, too, but the results were less than ideal.

“We found we were duplicating tasks,” says Thompson. When he prepared a budget, for example, he typed the numbers into the spreadsheet and then had to manually re-enter the data into the bookkeeping software. “It wasn’t very accurate,” says the builder. On the Level had outgrown its stand-alone software programs.

The builder spent six months researching integrated business software packages. He wanted something that could do scheduling, budgeting, estimates, take-offs, accounting—the whole shebang—and allow his back-office operations to share information and work together.

Thompson talked to a business consultant and spent lots of time examining software offerings at the 2002 International Builders’ Show. He and the business consultant narrowed their top picks to two software packages and talked to the companies’ salespeople.

One of the salespeople was a CPA and had a good take on financial matters. He demonstrated a program on Thompson’s short list and explained its capabilities. The software did all the accounting and construction management functions the builder wanted, allowed the functions to work in tandem and share data, and had additional modules for payroll, inventory, and other applications that could be added later. It even was designed to work with the NAHB Chart of Accounts, which Thompson had been using for years. He was sold.

The salesperson traveled to On the Level’s offices to install the software. Afterwards, he transferred data from the company’s stand-alone software programs into the integrated software’s database. All told, Thompson spent about $11,000 for the software and installation.

When the new program produced incorrect financial statements, Thompson figured his bookkeeper didn’t have enough of a financial background to handle it. He signed her up to take some accounting classes. She learned plenty, but still wasn’t able to whip the software—and On the Level’s financial data—into shape.

“Things were getting screwed up and going into the wrong accounts,” Thompson recalls. He contacted the software salesperson/installer, who walked him through one fix after another. Nothing seemed to work.

Thompson had the foresight to hang onto his old budgeting spreadsheets; he hadn’t gotten into the new program’s budgeting module yet. “We had a backup,” says the builder. But he was back at square one.

The Solution

The bookkeeper continued with the classes and told the instructor, Gary Sabby, about her employer’s struggles with the software. Sabby had an inkling that perhaps the program hadn’t been installed properly. The bookkeeper relayed that information to Thompson, who asked the instructor to troubleshoot his software.

Sabby heads up Sauk Rapids, MN-based Heartland Financial Strategies, a software and systems consulting firm with clients in the construction industry. Like the guy who sold Thompson the business software, Sabby is a CPA. Unlike the salesperson, Sabby had been a builder and knows the industry inside out.

It didn’t take him long to realize that his suspicions about On the Level’s new integrated software were right. The program wasn’t working with the NAHB Chart of Accounts—or much of anything. Thompson was frustrated, but relieved. “We thought we were blowing it,” he says, “but the software hadn’t been set up right.”

Like an old house slated for an extensive remodel, the software had to be “gutted.” After uninstalling it, Sabby guided Thompson and his staff through the painstaking reinstallation process. They had to re-enter all of the data that had been transferred from their old stand-alone software and spreadsheets into the new software.

Sabby wondered about the original installer’s process. “He hadn’t sat down with the staff and asked them what they needed,” says the consultant. “That’s why none of the figures or other data seemed to balance.”

He configured the software to work with the NAHB Chart of Accounts. He also established a clear audit trail to show where On the Level’s data had “lived” in its old stand-alone systems, where it appeared in the new software’s database (and how it got there), and how one set of data impacted another (e.g., roofing take-off as part of an estimate; company assets increased by the purchase of a lot; etc.). “You need an audit trail in case an accountant asks, ‘where did this number come from?’ ” Sabby explains.

The Payoff

It took about two weeks to reinstall the integrated software, but the program finally worked as intended. Data went into the right accounts, and On the Level’s financial operations were no longer in a tailspin. “Things were a lot more accurate, which is the whole reason why we bought the software in the first place,” Thompson says.

One thing he’s found particularly useful is the program’s trade contractor module. It alerts him if he starts to write a check to a trade contractor whose liability insurance has lapsed or agreement hasn’t been signed.

Additionally, the builder can now compare construction budgets to his actual costs. “That lets us make a more money,” he says. By smoothing out On the Level’s back-office operations, improving the accuracy of its financial data, and boosting the company’s profits, the software investment paid for itself—and really paid off.

What You Can Do

If business management software (or any kind of office automation) is in your future,

Read NAHB’s series of Tech Talk articles, which explain how to use technology to improve your home building or remodeling business. Author and IT consultant Bill Allen stresses a “systems before software” approach that can keep you from jumping the gun and automating your operations before you’re ready.
While you’re at it, check out the other resources in the Computer & Information Technology section of www.nahb.org/biztools.
Follow Thompson’s advice for builders who are evaluating integrated software packages:
- Make sure the people you’re dealing with (those who sell you the software and install it) know the construction industry. Check into their backgrounds. “When builders invest in software, it is important that the software rep is knowledgeable about the software, but it is more important that he or she knows the building industry,” says Thompson.
- Talk to other builders the salesperson and installer have worked with. What was their experience like?
- Ask if anything went wrong, and how the software company dealt with it.
Make sure the software is a good fit for your company—and vice versa. Figure out your needs first; the software’s salesperson can help you with this. At the very minimum, says Sabby, the salesperson should ask:
- What do you want to change about the way your company does things?
- Why are you buying software?
- What do you want the software to do for you?

If the salesperson doesn’t ask about your company’s business needs, gives you a hard-sell pitch about the software’s capabilities, and then tells you’ll probably just need a “standard” set-up, move on.

Use the JLC Online Computer Solutions Discussion Forum link on NAHB’s Web site to research specific software packages. You can post a question online and get feedback from tech-savvy builders and remodelers. Note: After registering to post messages, the best bet is to search for the software’s name on the forum’s existing discussion threads. Somebody may have already posted—and answered—your question.
Get yourself and your staff trained on how to use the new software. The software company probably will provide the training, and in some cases can do it in your offices. If the training is off-site, send everyone who will be using the new program to the training classes. That’s much better than sending just one or two employees and asking them to pass on what they’ve learned to the rest of your staff. They might forget a crucial step or two.
Have backup systems in place. Those old papers, files, and stand-alone computer programs that used to drive you crazy can be a lifesaver if your new software has a steep learning curve or—heaven forbid—malfunctions. After all, you must carry on business as usual while you and your staff get used to the new software.

In a Bind?
Tell us about a business management or IT challenge you’re facing and we’ll ask NAHB members to suggest solutions. If you have a Smart Solution—or know someone who came up with one—we want to hear about that, too. Contact us at jtunick@nahb.com or at 800-368-5242, ext. 8461.

Help Your Peers Avoid Software Snafus

Have you had a frustrating—or fabulous—experience with business software? Tell other builders about it and get answers to your software questions at the Builder Technology Forums.

Brand new at the 2005 International Builders’ Show, these forums are moderated panels of builders and software vendors who’ll give you the low-down on what you need to know about choosing and implementing IT and software solutions for your home building company. These are not sales presentations. You’ll hear from builders like you who have been through the process. They’ll tell you about the pitfalls to avoid and the best way to use technology to increase your profits.

Builder Technology Forums will cover these three software topics:

financial control software (job costing & purchasing)
project management software
sales automation software

Want to participate? Need more information? Contact Wil Heslop at 800-368-5242, x8472. [return to top]

Fax Regulations and Your Business

Using faxes to communicate with clients and members would remain a permissible activity for small businesses and trade associations under the NAHB-supported Junk Fax Prevention Act of 2004, which was passed by voice vote in the House of Representatives the last week of July. The Act relieves the excessive regulatory burden of the new FCC rule mandating that all faxes be authorized by a written and signed consent form from the intended recipient. That rule, which is part of the agency's anti-telemarketing campaign, goes into effect at the end of 2004. The legislation, H.R. 4600, creates an “established business relationship” exception to the general rule against unsolicited commercial faxes, allowing NAHB members to communicate via fax with existing customers without the burdensome regulatory requirements. Also, for NAHB and its state and local affiliates, H.R. 4600 would allow legitimate communication with all of our 215,000 members regardless of consent forms. Companion legislation in the Senate passed out of committee just prior to the House action. We'll keep you posted on this issue. For more information, contact Jim Tobin at 800-368-5242, x8258. [return to top]

New HR Tools from NAHB

“Where can I find labor?”
“How much should I pay my production manager?”
“What should I do if someone’s taking money from the till?”

NAHB’s Business Management Department gets questions like this all the time, so we’ve developed a brand-new section in www.nahb.org/biztools to help you manage the “people part” of your business and develop motivated, productive employees who can help boost your bottom line.

Human Resource Management Tools features articles on communication and leadership, incentive plans, managing your labor burden, succession planning, teamwork, and other topics, and will soon include links to books on compensation, job descriptions, and managing your employees. Whether you have a human resources department or handle employee issues yourself, bookmark Human Resource Management Tools for tools and tips on managing one of your company’s most valuable assets.
[return to top]

Build Smarter by Pricing for Profits

You build lots of value into your homes, yet does pricing them involve more guesswork than knowledge of the actual costs and the profits you should be making?

Attend Pricing for Profits, a brand-new seminar offered by NAHB’s University of Housing, to learn how to build homes with dead-on cost estimates and budgets.

Instructor Mitch Cohen is a consultant with The Lumin Group and a former home building industry executive who negotiated labor and materials for one of the largest builders in the country. He’ll walk you through a proven, simple-to-use financial model he developed expressly for home builders. You’ll leave the seminar with a better understanding of how costing homes accurately is crucial to earning profits, and with more confidence in your sales prices. When you return to your office, you can immediately use what you’ve learned to simplify and standardize the financial costs of every home you build--and make more money on each.

Gain an edge over other builders in your market by registering now for the first Pricing for Profits seminar on September 29, 2004. It will be held in conjunction with NAHB’s Fall Board of Directors Meeting at the Greater Columbus Convention Center in Columbus, Ohio. You’ll have additional opportunities to learn the secrets of Pricing for Profits on October 22 at a seminar held in conjunction with the National Conference on Membership; on November 11 at the Custom Builders Symposium; and on January 11 and 12 at the 2005 International Builders’ Show.

Space is limited, so register today at Pricing for Profits and learn how to become a more profitable builder. For more information about this seminar, call NAHB’s Office of the Registrar at 800-368-5242, x8338. [return to top]

Pass it On

You probably know someone who wants to read this valuable newsletter, too. So go ahead and send this newsletter to any NAHB member you know who might benefit from it. They’ll be sure to thank you for it. [return to top]

How Does Your Business Measure Up?

Get your copy of the 2004 Cost of Doing Business Study and you’ll instantly see how your financial performance stacks up against the rest of the industry. The publication gives home builders a rare glimpse at other builders’ books by providing data about profitability, cost of sales, and expenses from hundreds of home builders across the country.

In this 2004 edition, you’ll learn how to develop cost control systems and get tips on cutting cycle time. Start working more profitably by ordering it today. [return to top]

Business Opportunities From NAHB Councils and Departments

Million Dollar Circle Awards Deadline Extended

Want to reward your sales team for last year’s efforts? It’s not too late; you can still order Million Dollar Circle Awards online until August 31. Sponsored by NAHB’s National Sales and Marketing Council, the Awards honor outstanding salesperson and sales manager achievements for the 2003 calendar year.

To order award citations, lifetime plaques, or lapel pins, visit www.MillionDollarCircle.com. Don’t forget to finish off 2004 with strong sales; Million Dollar Circle awards for 2004 will be available in January 2005.

Remodelor^TM of the Year Award

Applications for the Remodelor™ of the Year Award are now available online at www.nahb.org/remodelors under the Awards section.

Sponsored by NAHB’s Remodelors^TM Council, The Remodelor™ of the Year Award recognizes exemplary NAHB involvement at any level, superior business management, and an outstanding contribution to the remodeling industry. Councils should nominate individual remodelers, but the nominee must write his or her own entry essay.

The entry deadline is September 3. The winner will be announced at the Remodelors™ Council Gala during the 2004 Remodeling Show in Chicago. Questions? Contact Melanie Hinton at 800-368-5242, x8451.

Building Systems Councils Excellence in Marketing & Home Design Awards

NAHB’s Building Systems Councils (BSC) are accepting entries for the annual BSC Excellence in Marketing & Home Design Awards. Categories for systems-built housing manufacturers and associates are open only to current BSC members; builder categories are open to any NAHB builder member using building systems. The Building Systems Councils represents the interests of the concrete, log, modular, and panelized home building industries.

All entries must be received by September 10. Winners will be recognized during the Building Systems Councils SHOWCASE in Austin, TX. Select this link for more information about the competition, or contact Eric Fulton at 800-368-5242, x8577.

National Sales and Marketing Awards

Sponsored by NAHB’s National Sales and Marketing Council, the National Sales and Marketing Awards recognize excellence in new-home sales and marketing. The awards are held each year at the International Builders’ Show, and pay tribute to the best in architectural achievement, design, advertising and promotion, interior merchandising, Web site design, and more. The entry deadline is September 24.

Select this link for more information and a listing of last year’s award winners. Questions? Contact Taylor Blanchard at 800-368-5242, x8680.

2005 Best of Seniors Housing Design and Marketing Awards

The NAHB Seniors Housing Council has revamped its seniors housing awards program with 108 categories and an increased emphasis on marketing. The 2005 Best of Seniors Housing design and marketing awards program, “Celebrating Excellence … Visions of the Future,” rewards projects for their innovative designs and marketing approaches.

The contest is open to architects, builders, remodelers, engineers, and other professionals who produce or sell housing for the 50+ market. The entry deadline is October 22. Awards will be presented during the 2005 International Builders’ Show in Orlando, FL.

Select this link to download contest rules and the call for entries. Or contact Eucklan Matthews at 800-368-5242, x8220 to have a copy of the call for entries mailed to you.

2005 Pillars of the Industry Awards

Apartment owners and developers, property managers, architects, interior designers and others involved in the multifamily housing industry are invited to submit entries to this annual competition sponsored by NAHB’s Multifamily Council. The entry deadline is November 1.

Select this link for more information. Eligibility requirements and application forms are available at http://www.pillarsconference.com/.

Do Business in Mexico

The Mexican home building market is expected to grow to a value of $6.7 billion by 2005. Want a piece of it? Attend the 2nd International Housing Conference of the Americas, which takes place November 7-10 in Mexico City and is sponsored by NAHB International.

Conference highlights include pre-arranged, one-on-one networking meetings between U.S. and Mexican company representatives, property tours of Mexico’s top builders, and interactive, highly informative panels. Simultaneous English/Spanish translation is included for all sessions.
The first 200 registrants to the 2nd International Housing Conference of the Americas will receive complimentary registration to the 2005 International Builders Show in Orlando, FL.

Select this link to register online for the conference. For more information, contact Matt Monjan at 800-368-5242, x8419.

New Builder 20 Club Addresses 50+ Market

NAHB is in the process of launching its first Builder 20 Club for professionals in the growing 50+ housing market.

Executives of home building and development companies that produce for-sale or rental communities catering to boomers, empty nesters, pre-retirees, active adults, and seniors are encouraged to join NAHB’s 50+ Senior Builder 20 Club.

Other Builder 20 Clubs are planned for architects as well as industry professionals involved in assisted living.

Members of the 50+ Senior Builder Club will be grouped with other industry leaders from non-competing markets whose companies have a similar size and operations. They will meet privately to exchange ideas and develop business, strategic and marketing plans to better position their organizations for success.

For more information on the 50+ Senior Builder 20 Club, visit www.nahb.org/20clubs or contact Kristin Peck at 800-368-5242, x8105. [return to top]

Did Someone Forward This to You?

Select this link to get this valuable newsletter every month. Check the top box for Business of Building e/Source, add your e-mail address, and click the "Subscribe" button at the bottom. That's it! [return to top]

Member Advantage: NAHB Members Can Get One Month Free from Williams Scotsman

Williams Scotsman, Inc., North America's leading provider of mobile and modular space, is offering NAHB members one month of free rent (up to $500) for each mobile office, storage unit, or specialty trailer leased for six months or longer. Williams Scotsman has more than 90 locations nationwide and a fleet of 90,000 mobile offices, modular classrooms, and storage units

For details, go to www.willscot.com or call 877-884-3068 and identify yourself as an NAHB member.

For the most up-to-date details on the Member Advantage discount program and all of the participating companies, go to http://memberadvantage.nahb.org. Or visit www.nahb.org to explore the full range of benefits associated with membership in your local, state, and national home builders associations. [return to top]