Being a modular home builder is hard work. It seems like the
only time you come up for air is, well, never!
That can be a real problem for a builder. There is
relentless pressure to close the next sale, keeping the books in the black and
constantly putting out fires can be harmful to the business. Being driven and ambitious
are admirable but you have to hit the pause button once in a while and take
stock of your life and your business.
The perfect time for this is when you hand over the keys to
a new home owner. Take a day off and reflect on how you did on the project.
Take a couple of days with the family. It doesn’t mean you’re putting the
brakes on your business; look at it as half time in football or between innings
in baseball.
One of the most crucial aspects of improving your
profitability and keeping your business on track is taking the time to evaluate
it.
Here are some tips for an “after closing” review”:
Walk through each house sale from ‘top-to-bottom’
Be brutally honest. Most builders are sole proprietors and
we all have a tough time reviewing our own performance. Enlist a spouse or
maybe one of your employees but you need to do this for every house. Call it a
debriefing.
Answers to these questions will show you the weak areas that
need improving and also what you did right. How did you acquire the client? How
was the quote and order process with the factory? How was the flow from first
meeting to final walk through with the client?
How did my subs and employees perform? Did you meet your timeline?
Call on outside eyes
Go over the books on each house with your accountant. You
might think that you had it priced right but with Obamacare beginning to hit
home this year, new tax codes and other things that are coming soon, getting the
accountant to go over each home is critical.
Talk to you banker. If things are getting tight, talking to
the person that knows how money flows is a good thing. It good to have the
banker on your side.
Call your customers
During the first year, call every one of your home buyers at
least every 90 days. Calling them will tell them you are concerned about their
home and ask if there are any items that need your attention. Cracked drywall
at the 90 day mark is less of a problem than to wait until the year is almost
up and find that the owner has been stewing about those cracks all year.
Remember, you want to be invited over for a bar-b-que, not to be bar-b-qued!
Walk it off
If you’ve done your review after each home and found that
you didn’t make as much profit as you projected or even lost money, you’ve go
to walk it off. If you have other homes in the pipeline, use the information
you gleaned from the last home and adjust accordingly. If the next house is
already under contract or actually being built, use that information to tweak
the process in order to improve your chances of making the profit you need.
If you have prospective home buyers that haven’t signed,
make those changes now. I talked with several modular factory owners the past
few weeks and they are expecting up to a 17% increase in costs this year. Knowing
your exact costs and profit from your last home is the basis for your new
pricing.
Don’t just sit around looking at the four walls in your
office and reading Facebook. Get up and do something but make sure you know
what you have done before you start looking for that next new home buyer.
