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Ten Things to Do Immediately to Improve Profitability in 2013
By Charles C. Shinn, Jr., PhD
1. Wean Your Company Off Discounting Sales Price and Incentives
During the housing recession, builders discounted their sales prices and increased the sales incentives to maintain sales. Now that the market has turned, builders need to wean their companies off discounting and incentives. The amount of the discount is a 100% net profit so if you discounted $25,000 from your sales price you reduced your net profit $25,000. How many additional homes do you have to sell to regenerate the $25,000 of profit? If you are a 5% net-profit builder, the discount consumed the profit from $500,000 in sales.
The exception to reducing discounting is the aged inventory you have been holding through the recession. How much has this old inventory cost you to hold on to it? This old inventory needs to go so you can start fresh, free up your construction loans, and be able to have new inventory for this selling season.
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Experts' Corner: Advice for 2013
Over the years, Builder Partnerships, in conjunction with The Shinn Group, has produced an impressive array of webinars. We've lost count, but it's probably over 300, and we've enlisted dozens and dozens of experts to offer insight and tips for our members and the wider builder audience. We've covered finance, systems implementation, marketing, social networking, website development, energy efficiency, personal finance, and more. (All of these webinars are available at www.homebuilderuniversity.com.)
For this issue of the Builder Partnerships newsletter, we asked a group of experts to offer their predictions for 2013:
"Warranty service has been shown by every homeowner survey company to be the strongest influence on referrals. Commit to two builder-initiated visits and look for things to address for your homeowners. Set standards for warranty behavior as well as repairs: arrive on time, park in the street, complete repairs in one visit, clean up after the work, track response times, and analyze items to eliminate recurring problems."
Carol Smith, Home Address
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Introducing the Expanded, More Robust Builder Partnerships
At the International Builder Show in Las Vegas, January 22-24, 2013, builders and manufacturers will see a new Builder Partnerships. Stop by our booth (N1855) to learn firsthand what we're doing.
The company has always been more than just a rebate program, working hard to help our partners improve business, increase profitability, and heighten market share among other larger goals.
In January, though, all those efforts become more robust and more beneficial to our audience. Here's how.
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Product News
SCHULTE to be Organized Living
By SCHULTE
Now is a great opportunity to get in front of your home buyers with an exciting product and an ongoing experience! Let them know that you offer Organized Living storage upgrades. Organized Living is a powerful brand that will elevate your credibility with the home buyer. We offer the following points to help you talk to your home buyers about the change.
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 Organization is a key aspect of a home experience. We provide the best experience for you by offering Organized Living. You can enjoy everything from the highest quality products to the ongoing experience of Organized Living - online tips, time savers, communities, blogs, forums, and much, much more.
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Do Google Adwords Work for Homebuilders
By Brad Bombardiere, Reality Concepts
One of the homebuilders I know came back from the 2012 International Builders Show and declared that Google Adwords is dead and does not work for homebuilders so let's kill the budget. I asked several questions but she really did not remember in which class that was said or what was the context of why it was said. At Reality Concepts, we understand that internet marketing for homebuilders is different than other businesses. We manage thousands of dollars per month in Google Adwords, and it remains a very effective way to bring in unique visitors to a homebuilder's website. Often other internet marketers do not understand why homebuilder's online advertising needs are so unique.
To be successful with adwords as a homebuilder you must pay attention to some basic guidelines. One of those guidelines means understanding the scope or reach of an adwords campaign. Scope or reach is the size of the geographic area in which your ads will be shown. Do you want the ad campaign to go to the local area, state, region or entire country. The tighter the scope, the more specific your ads will become.
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The Art of the Purchase: New Project Start Up
By Mark Henderson, Builder Purchasing Services
When preparing for the start of a project, there are several crucial tasks a builder must perform:
- Review plans
- Refine the Scopes of Work (SOW)
- Create the Material Specifications
- Develop bid pricing documents
- Decide what will be offered as standard options
- Set up the purchase order database
- Provide instructions to bidders
- Assemble the preferred trade partners list for bid.
In this first part of "The Art of the Purchase," I will address the importance of integrating the Plan Review, the Scopes of Work and Material Specifications into one process, and how this process will lead to a more predictable budget as well as lower the variance purchase orders on a project.
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Financial and Operational Survey Results
By Emma Shinn
For 19 years, The Shinn Group has conducted a Financial and Operational Survey of home builders. The 2011 results, compared to 2006, confirm the reactions and actions builders took during the long years of the down cycle, which are leading the builders back to profitability.
2006 marks the best performance our sample builders had since we started doing the study. Builders enjoyed excellent gross profits (sales-lot cost-direct construction cost), in many instances because of the builders' ability to raise sales prices ahead of cost increases. In 2007, we began to see the deterioration of gross profit margins as builders began discounting to maintain sales velocity and to liquidate accumulating finished homes inventory.
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8th Annual Networking Reception at IBS 2013
Monday, January 21, 2013 6:00pm to 7:30pm PST
Embassy Suites Convention Center, 3600 Paradise Road
Las Vegas, NV 89109
Catch up with friends in the industry Join us on Monday, January 21, the evening prior to the 2013 International Builder Show, for an excellent evening of networking and camaraderie. The Builder Partnerships Networking reception provides a great environment where you can catch up with old friends and freely interact with others in the homebuilding industry to develop relationships even before IBS begins. We are expecting this year's event to be even larger than in the past and have reserved a bigger room to accommodate the crowds. Space is still limited so be sure to register as soon as possible.
To Register, click here Education at IBS Builder Partnerships Booth -- N1855
International Builders Show, Las Vegas January 22-24, 2013 We have many great things planned for our booth this year, including one-on-one consulting for members, educational forums and much more. We are also thrilled that many of our manufacturer partners will be joining us again in our booth this year. For a list of educational forums being held at the Builder Partnerships Booth, click here. Educational Sessions at IBS Builder Partnerships members are leading educators in the industry. Many will be sharing their knowledge at IBS. To see a list of Builder Partnerships recommended training sessions, click here. |
Builder Partnerships manages highly competitive rebate and incentive programs and works to strengthen relationships between builders, manufacturers and other service providers in the home building industry. Currently, we have more than 500 builders, more than 75 manufacturers and several service providers associated with our program.
For more information, visit www.builderpartnerships.com
The Shinn Group has more than 500 builder clients located across the U.S. and Canada, including top performers among regional homebuilders. We offer sound management and financial principles and practices to home builders across the U.S. and Canada.
For more information, visit www.theshinngroup.com
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