FINE HOMEBUILDING ARTICLES: BUILDING BUSINESS

Establishing strategic alliances can provide many of the benefits of partnerships without the contractual obligations.

The most common source of cost overruns comes with items omitted. Learn to spot the voids, and develop a systematic approach to avoid them.

A lifetime of construction work provides the right background for multiple lines of knowledge work that won’t strain your back or your patience.

If you give up your power in the purchasing end of your operation, you have little leverage to make any money.

How psychology’s five character types, and my three lenses model, can help you audit your business personality to leverage your strengths.

A personal adviser with a realistic viewpoint can help you spot the potholes up ahead.

Better to lose a sale but remain trustworthy than have the client feel tricked.

It’s not just carpenters. Salespeople also have tools of trade. You may want to tool up with sales software to get off the feast-and-famine seesaw.

A recent survey reveals how owners rank contractors, and there’s a lot we can learn from what homeowners say about our work and service.

What do the nation of Ecuador and Ben & Jerry’s Ice Cream Company have in common? Using trickle-up economics to create transparent pay policies and to solve the wage disparity problem.

You can learn to model lucky behaviors that will give you an edge in life, without resorting to astronomy or carrying a rabbit’s foot. It’s better to be lucky than good.

What’s the diff between sales and marketing? The new year is an excellent time to put on the bifocals and take a close look at your sales efforts and marketing plan.

Scenario analysis can help you make decisions today that are robust enough to thrive in an unknowable tomorrow.

Before we were homebuilders, we were called contractors. And contracts are the power tool we use to ply our business.

Do you find yourself enduring recurring problems? If so, your business may have a systemic glitch that requires a systemic solution.

Sometimes sticking to the business plan means missing an opportunity — then you may want to dance with destiny.

Spot bottlenecks in your operation that inhibit productivity and profitability — and unplug the blockage.

Subcontractor price creep can add significant costs to your operations, not all of which you can easily pass onto your customer. You need strategies to keep subs from eating up your profits.

Has technology improved the to-do list? I still rely on techniques I learned during the days of the Day-Timer, although apps keep popping up promising to provide an alternative to pencil and notepad.

Firing is never easy or pleasant. It’s not supposed to be. Nonetheless, you can do it well. Here’s what I have learned over the years that makes firing, if not easier on you, at least easier on your employee.

The growing trend of traditional neighborhood development requires adding architectural literacy to the builder’s skill set.

A project management technique to help you learn from mistakes you haven’t made yet.

A simple stress test for your business can motivate you to take defensive measures against a financial crisis.

Falling debris kills in a quake, just as well as collapsing buildings will. 

Because it requires a lot of time and accurate information to develop a reliable cost estimate for a remodeling or construction project, builders and their customers rely on ball park–or informed guesses–for initial budgetary guidelines. The project management process begins early in the process, so these informed guesses become an important tool for project planning.

Professional project managers study project planning in depth and have created a set of definitions and methods to run projects smoothly. Project management is a field builders would do well to study–as this is what we do: manage projects.

Using language precisely not only helps us communicate with others, it deepens our own sense of what we mean to communicate. Three financial terms that mean very different things, but you hear used interchangeably, can cause confusion that costs us money. Namely the three financial terms we explore in this blog: investments, costs, and expenses.

Unlike most industries, where production has risen dramatically over the last two decades, the construction industry remains stuck in a rut.

Remodelers are infamous for poor scheduling, promising completion dates that never come true. When the owner gets mad, the arguments begin.

Although he made no money, Loren returned from Togo a much richer man, simply by virtue of a new perspective, namely a deeper appreciation for all that he enjoys by luck of his birth as a citizen of the first world, and the wealth of happiness he witnessed in Africa, despite abject poverty.

Tracking all you spend on callbacks may help you identify and fix weak points in your construction processes.

We have all experienced the torment that the building business becomes when dealing with unreasonable, or simply unsatisfied customers.

Some influential ideas become part of the warp and weft of our culture. They become so intertwined in the community that we take ownership of them, forgetting how they informed conventional wisdom, shaped our dialog and became our identity. These are the “memes,” or trendsetting ideas that Irina Woelfle stalks on a daily basis, and her genius is spotting these contagious notions before anyone else does, and spreading them.

Michael McVey chose to have the good life now, rather than after he made a lot of money. In the process, he has developed a solid, sustainable general contracting business doing small and moderate jobs. A business model that allows him to spend ample time with his wife Caroline, and two children, Zach and Alina, “enjoying the wonderful parks, nature preserves, museums, and restaurants” where he lives in Oakland, Calif.

Getting to “yes” with a future partner may involve a lot of negotiating. This can take time, and it requires commitment. But you may not want to jump straight into a partnership any more than you would jump into a marriage without a period of engagement. A Letter of Intent can function as a kind of business “engagement” before a formal marriage.

We have accounting construction programs to track money, job-site-scheduling programs to track time, and some carry smartphone apps to keep track of daily exercise, calories, and sleep. Yet few builders monitor their job sites, equipment, and vehicles, taking the mystery out of, “What happens when I’m not there?”

Even with good intentions, honest people can end up with a big misunderstanding. No doubt you’ve experienced a handshake-deal turn sour only because each of you thought you were shaking hands on a different agreement.  

The better you are at one thing, the more likely you’ll land a good-paying job-whether as a drywall finisher, a residential electrician, or a finish carpenter. Gone are the days of the guys who dug footings, finished flatwork, framed houses, plastered walls, hung cabinets, painted interiors and exteriors, and installed wall-to-wall carpet.

We are all familiar with the extraordinary success stories of Silicon Valley, the stuff of major motion pictures such as The Social Network (about the founding of Facebook) and Jobs (the story of the hugely successful Steve Jobs, Apple’s founder). But the buzz in Silicon Valley nowadays is not about the unique stories of outsize success; rather, it’s about the many stories of common failure. In this, the building industry could learn from Silicon Valley.

To entice my employees and subcontractors to remain on the lookout for cost savings, I offer to split the money. Even if the suggestion only saves ten bucks, I give them five. By saving a few pennies at a time, I’ve continued to save thousands of dollars every year.

Sometimes I call my Olympus digital voice recorder my “prosthetic memory.” I keep jobsite observations on folders B-through-S and my daily reminders and to-do items on the A folder. As the day progresses and items are added to the list, I record them. Every morning, I transcribe the list into my Outlook to-do list, which sinks up to my Windows phone (i-Guys do the same with their iMacs and iPads and iPhones), and voilà, I have my tasks set up for the day–now getting it all done, that’s another story entirely!

Whether they are truly separate workstations, or just virtual ‘desks’ on your computer, separating estimating, accounting, and general tasks can help to keep your construction business clutter-free.

Once I knew exactly how long it took to frame soffits and eaves, we focused on new ways to make the process more efficient. 

At the negotiating table in Manta, Ecuador. I’ve always handled this scenario well, but at the corporate office I found myself stumbling. 

The T-Tech by Tumi. This rugged briefcase has an assortment of exterior pockets for fast-access items such as a tablet, tape measure, and smartphone. For a low-cost version of the same thing, take a look at the BonDura Overnight Briefcase.

Find an uncontested area of the market to ply your business and you’ll have smooth sailing toward success.

Joe Rongisch was perhaps my best hire. It didn’t surprise me when he went from an employee to become a competitor–and quickly surpass me. What surprised me was that he did it during the worst economic crises to hit the construction industry, starting his home-building business in late 2008. 

Sometimes knowing the battlefield not only provides an advantage in the attack, but the wisdom of a timely retreat.

I often receive emails from aspiring builders looking for guidance. Brett wrote a few weeks ago asking, “What are the various factors to get me from a hands-on residential builder to progress slowly into a more white-collar-businessman builder?”

Be aware of cultural allegiances.

Think of firing as putting out a fire in the company. You fire only for good cause, for serious violations or chronic and disruptive behavior.   

In brief, a job description summarizes an employee’s areas of activity and responsibility.

As the economy expands, many builders face a workforce shortage. Survivors of the Great Recession made it through by making painful cuts, including layoffs. The pain of letting people go remains a vivid reminder of the enormous personal commitment an employer makes to employees-for many of us, employees become family.

For most employees, a fat, reliable paycheck provides enough incentive to work well and to represent the company wholeheartedly. But fat paychecks can be rough on the employer. Although the economy has improved, most builders still don’t have a penny to spare.

Any builder reading this already knows that dealing with stressed-out couples ranks pretty high on the contractor’s stress scale, but there are ways to keep the peace between spouses and to improve your odds of avoiding builder-relationship burnout.

The negotiator’s playbook includes a handful of tactics and a few dirty tricks.

How do you feel when you see a fellow with little construction experience cutting a deep, wide swath through the local real-estate market selling new homes? I always felt a tinge of resentment and wonder. How and why? How can a guy (or gal) who knows half as much as I about home building do twice as well?

Automate the creation of schedules of building components in order to drive data and improve the visibility of costs and quantities.

Mike Walker teaches negotiation skills seminars through the Real Estate Negotiation Institute, a nationally accredited training and coaching company. He learned his skills the best way, the hard way. 

Like most builders, I came into the business as a manager, with an intimate knowledge of the trades and a good handle on running a job site. From the beginning, I was fortunate to work for bosses and with partners that had a different set of skills. They had learned to make something out of nothing by using their imagination to see an opportunity, envision how to develop it, and then gather the resources (people and money) to do it.

Small scale multi-unit buildings, from two to four dwellings, may represent a way to jump-start your construction business. 

We have talked about strategies to develop a business niche that works in today’s challenging environment. But there’s another way to find a productive outlet for your skills and services, and that’s to go where the business climate is not so challenging.

Mobile homes and RV sites turned into a profitable niche for a builder/developer from Montana. By inviting out-of-work builders from all over the United States, Michael Blend brought oil-boom employers badly needed employees and beefed up occupancy at his rentals.  

Refurbishing one deck is a small job, but when a crew is working in multifamily maintenance, one deck becomes 40 and a nice project with a significant payday. 

 Flags of every country: My niche was affordable housing for immigrants. AT Liberty Village we had such varied homeowner clientele that we gave every buyer two flags, the Stars and Stripes, and the flag of their nation of birth. 

You gain street cred when customers, inspectors and other builders see your projects featured prominently in the paper.

There’s a mathematical relationship between the number of calls you receive and the number of jobs you get. Once you know it, this relationship becomes a powerful tool to design and gauge your advertisement and marketing.

My business plan focused on affordable housing. Whenever I followed suite, my efforts paid off and projects were successful, such as this groundbreaking with HUD dignitaries in Omaha, NE. When I didn’t follow the plan, well, that’s another story without a happy ending. In the very effort made when creating a business plan lie the seeds of success-you thought it though. 

Remember to remain flexible, try different approaches and revisit your choices – your strategic planning process needs to be a permanent planning practice.

“HOPE IS NOT A STRATEGY” (Paperback: 156 pages Publisher: Dog Ear Publishing, LLC (November 10, 2008). Just because you are in a leadership position does not anoint you as an effective leader. Theodore V. (Ted) Gee Jr. a former executive at Pulte, with global experience in operational and strategic levels of leadership. His well received book (just look at Amazon comments) promises to provide the tools needed for planning and executing. 

One of the challenges of any company owner is to motivate employees, even if the company cannot offer benefit packages and great financial incentives.

It’s tough to put down your toolbelt and pick up a briefcase (or laptop computer). David Gerstel’s 1988 article, “Running the Company,” described this problem perfectly back when Fernando Pages Ruiz was wrestling with the demands his budding construction company.