October 2015             Volume X, Issue 10
Homebuilder Value: The Multiple Myth
By Ron Robichaud, Managing Partner, Robichaud Associates

Robichaud
It's very common to hear Merger & Acquisitions transactions described in terms of multiples of Book Value, EBITDA and Income. It's an interesting exercise but not very useful, particularly in the case of homebuilders. The multiple is about the past, and the value is really about the future. As Michael Porter puts it, "the only reliable test of economic value is sustainable profitability, measured by superiority in long-term return on investment." All industries experience changes in the marketplace and very few companies are consistently equally profitable for any length of time. In homebuiding, financial performance is even more inconsistent than most industries for two primary reasons.
  1. The first is the cyclicality of the industry itself. Homebuilding is subject to a wide range of influences such as consumer confidence, job creation, household formation and interest rates. It is also important to note that since it is a very local business conditions can vary greatly between geographic markets at any point in time. In the period leading to the "great recession" it was common to hear the argument that cyclicality was a phenomenon of the past. That proved to be a myth and the cycles are triggered by a variety of causes, often with little to no warning.
  2. The second reason is equally important if not more so and that is that success of the majority of successful homebuilder business models is totally dependent on the quantity and quality of their land holdings - they are only as good as their next project. It's very difficult to maintain a steady and consistent pipeline of lots and land, and the profitability between sites can vary significantly.
 


7 Steps to a Referral Program
By Carol Smith, Home Address

The key to getting referrals is deserving them. To do that two conditions must exist: (1) Your client must believe intellectually that he got good value for his housing dollar and (2) he must feel that he was well-treated. The emotional aspect is the stronger motivator.
 
Once you accomplish these two vital goals, setting up a program to collect the happy results is easy.
 
1.   Establish Your Benchmark & Set a Goal 
  • What percentage of last year's sales were referrals by previous clients?
  • Set a challenging but attainable goal-this may involve updating procedures or training
  • Communicate these numbers to company personnel
  • Report on progress toward the goal on a monthly basis
2.   Develop a Tracking Method
  • Institute an objective way to measure referrals
    • For example: When the contract is signed by the builder, an administrator can call: Thank you for choosing us as your builder; your signed agreement is on its way
  • Then ask two valuable questions
    • How did you find us?
    • Why did you decide to buy from us

Read More...


Saving Time and Controlling Costs Using Quality Control Checklists
By Colin Scattergood, Mark Systems.

The stronger market, the more important it is to be vigilant in controlling direct construction costs in order to expand our profit margins. It is crucial to automate this process so that as our backlog grows and our superintendents get busier, our cost controls don't slip through the cracks, taking our profits with them.
 
Nothing destroys profit as quickly as poor quality:
  • Poor quality increases direct construction costs. 
  • It reduces customer satisfaction, affecting future sales. 
  • It increases employee frustration, making it hard to recruit and keep quality personnel. 
  • It increases your contracted costs, because subs know they will be doing things two and three times.
Guess who's paying for that on every house!
 
The best way to control quality is to implement checklists. These quality control checklists serve many purposes for us and are easy to maintain, even in the busiest of times. Checklists ensure we're building a consistent product, save our supers time (and help us on-board new supers more effectively), aid communications between the field and back office personnel, and help us build a better quality home.
 
Whose House Is It?
 
One of the most costly mistakes a builder can make is building a house incorrectly the first time. From wasted material to increased labor costs, fixing errors is an expensive mistake to make. One of the most common causes is inconsistent information that creates a lack of uniformity from project manager to superintendent, and from one trade partner to another. 

Read More...



Builder Partnerships at IBS

 


Celebrate Builder Partnerships' 10th Anniversary at our IBS Reception

11th Annual Builder Partnerships Reception
January 18, 2016 
5:30 - 8:00 pm
Embassy Suites Convention Center, Las Vegas 
 
The night before IBS opens, the place to gather is at the Builder Partnerships Annual reception. Every year, hundreds of builders, manufacturers and friends gather to catch up with old friends and prime the pump for the big show.
 
Space is limited so RSVP early and get your name on the list. 

 
For more information, click here.


Product News
 
You Can Have Energy Efficiency and Clean Air
By BEAM

Important Notice: BEAM doubles rebate for Builder Partnerships Members. Learn more here.

The quest for more energy efficient homes has brought an unintended consequence-deteriorating indoor air quality. According to the U.S. Environmental Protection Agency, the air in today's typical American home can be 20 times more polluted than outdoor air. Contaminants inside the living space, including dust, dust miles, pet dander and other allergens constitute a genuine health risk for up to 60 million Americans who suffer from allergies or asthma.

Improving the air quality of today's home ranks as a top priority of new home buyers, on par with their demands for energy efficiency. The good news is homebuilders can provide their buyers with both-healthy living environments and lower heating and cooling costs.

Central Vacuums Improve Indoor Air

Installing central vacuum systems is a good first step. BEAM Built-in Vacuums are up to five times more powerful than a typical upright so they can capture more dirt and allergens. And unlike portable vacuums, a central vacuum system won't leak.

The added cleaning power plus superior filtration makes for a cleaner environment that is proven to relieve allergies. A clinical study of allergy patients by the University of California-Davis College of Medicine found that patients experienced up to a 61 percent reduction in symptoms when they used a BEAM Built-in Vacuum instead of a conventional upright vacuum to clean their homes.

 

Builder Partnerships Logo  
Get Recognized for Your Excellence: Apply for Builder Partnerships Awards

Builder Partnerships is pleased to announce our award programs for 2016. All applications are due November 15, 2015.

Lee Evans Award for Management Excellence

The Lee Evans Award for Management Excellence is a prestigious award, given annually, to a top builder who displays exceptional, sound management principles, and reflects the high standards that we encourage our builders to strive to reach. 


Builder Partnerships Achievement Award - Customer Satisfaction

The Builder Partnership Achievement Award (BPAA) was created to provide customer-centric home builders with third-party customer satisfaction validation from a credible source. BPAA is awarded in two classifications "Customer Satisfaction" and "Highest Distinction in Customer Satisfaction." Recipients will receive recognition at the 2015 IBS. 


Builder of Choice Award

The Builder of Choice Award (BOC) was created to provide builders with third-party validation and certification from a credible source to demonstrate their commitment to excellence in working with suppliers, trade contractors and other organizations that support the home building process. Recipients will receive recognition at the 2015 IBS. 


Awards will be presented to the Winners at the 11th Annual Builder Partnerships Networking Reception on January 18th at the Embassy Suites - Convention Center in Las Vegas (the evening prior to the International Builders Show).

Click here to register 

 
 
Builder Partnerships Logo  
October Partner Notes

Chuck_Shinn_Pic
 









 

 








 
 
 



 






Thermatru logo  

Insinkerator  


Kwikset logo

 
 
In This Issue
Homebuilder Value Myths
7 Steps to Referral Program
Save Time and Control Costs
Builder Partnerships at IBS
Energy Efficiency and Clean Air
Get Recognized for Excellence
October Partner Notes
Upcoming Events

Find us on Facebook

View our profile on LinkedIn

Follow us on Twitter

 

Join Our Mailing List


Live Events


Managing for Profit

Nov. 4-6, 2015
Chicago

Managing for Profit is an intensive seminar designed to put you on track to improved profitability. Loaded with valuable insight on management techniques specific to home building companies, this seminar will provide tools you can use to realize improved results across the entire organization. Systems, procedures and forms will be demonstrated so you can begin using concepts learned immediately upon return to your company.

For more information, click here.

Southern Builders Network

Nov. 16-18, 2015
Charleston, S.C.

The Home Builders Association of South Carolina is pleased to announce the 2nd Annual Southern Builders Network (SBN). The SBN is a highly intensive, comprehensive networking conference reserved for executive level home building professionals. The pre-scheduled 20 minute private builder / vendor meetings offers the ideal environment to establish relationships and engage in meaningful dialog with your best potential customers in the region. As in 2014, Builder Partnerships manufacturers will receive a special "Builder Partnerships" 10% discount on the Vendor Fee. To take advantage of the discount, you will need to complete the Vendor Agreement and return it by June 20th.

For more information, click here.

Purchasing, Estimating and Job Costing

Feb. 10-12, 2016
Atlanta

Purchasing, Estimating and Job Costing is a comprehensive seminar designed to improve profitability through a more accurate and effective estimating and purchasing department. Good estimating and purchasing is critical to obtaining superior profitability, and can increase your bottom line by as much as 5%. Our goal is to provide a wide range of tools that attendees can use to realize results immediately upon return to their companies.

For more information, click here.

Superintendent's Job: Front Line Manager

Feb. 18-20, 2016
Atlanta

The Superintendent's Job - Front Line Manager is designed as an interactive experience to help your team improve job site management techniques. It will provide the necessary tools to increase overall profitability and customer satisfaction through a strong focus on building the house right the first time: on quality, on budget, and on time.
 
For more information, click here.

Managing for Profit

March 2-4, 2016
Atlanta

Managing for Profit is an intensive seminar designed to put you on track to improved profitability. Loaded with valuable insight on management techniques specific to home building companies, this seminar will provide tools you can use to realize improved results across the entire organization. Systems, procedures and forms will be demonstrated so you can begin using concepts learned immediately upon return to your company.

For more information, click here.

Webinars

Sign Up for the InSinkerator 100Plus Program

Enhance Customer Satisfaction and Get a Hot 100 Instant Hot Water Dispenser

All Builder Partnerships members are eligible to participate in the new 100Plus Program, which gives builders the chance to receive training on InSinkErator products and a special builder certification, PLUS have the chance to offer their customers a free or discounted HOT100™ instant hot water dispensing system when they upgrade from a Badger® Series to any InSinkErator PRO Series® food waste disposer. 

To view the webinar, click here.

Home Automation: Legrand's New Intuity System

Nov. 12, 2015
11:30am ET
 
The smart home used to be something only for the rich and an unattainable dream for most homeowners. But as always happens, we've reached a point where that dream is no longer a dream. Advances in technology, familiarity to it, and simple capitalistic market competition have combined to turn home automation from the luxury of yesterday to an expectation today. 

For more information, click here.

10 Steps to Get to 40% Referral Sales
 
Nov. 13, 2015
11:30am ET
 
Referral Sales are the lowest cost, most effective way to sell more homes and have been the key to success for many builders. In this webinar, Charlie Scott of Woodland, O'Brien & Scott, presents 10 steps builders can take to significantly increase their referral sales. 

For more information, click here.
 
Real-world Paperless Processing Offers Instant ROI by Mark Systems 
 
Dec. 11, 2015 
11:30am ET
 
The ideas of sustainability, efficiency, ecological impact and low carbon footprint are changing virtually every aspect of residential construction. However, there is one area of green business practice that returns substantial savings directly to the builder and developer immediately and continually.

For more information, click here. 

For the Complete list of events, click here
Builder Partnerships

 

Builder Partnerships is a member organization focused on providing management training and support to help builders improve their performance and profit. Currently we represents approximately 550 builders in the United States and Canada who have projected about 75,000 homes built collectively this year. With over 75 manufacturer and service providers associated with our group, Builder Partnerships also manages highly competitive rebate and incentive programs and works to strengthen relationships between builders, manufacturers and other service providers in the home building industry. 

 

For more information, visit www.builderpartnerships.com
Footer_02-11-13