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ShareFor small-size home builders that are up against publicly-held, large regional builders, the playing field is far from even. Maintaining growth, profitability, and market-share while competing against builders who have access to virtually unlimited capital—or those that attain a competitive edge on the basis of lower price—is no easy undertaking.
Ask they look to meet their goals of increasing sales, while steering clear of unnecessary costs, small local builders tend to make these common mistakes: becoming trapped in the custom-home syndrome and attempting to be all things to all buyers.
Over the course of this blog post, we’ll provide 3 tips on how small builders can prevail and succeed in today’s ultra-competitive new construction marketplace.
Keep the Number of Trades and Suppliers to a Minimum
A high number of suppliers and trades places an additional burden on your enterprise in terms of data processing, bookkeeping, and administration, which adds to your expenses. Just keeping up with addresses, checks, phone numbers, W-9s, and federal numbers can be a struggle.
Purchasing and construction must learn the idiosyncrasies, weaknesses, and strengths of a large number of companies. Which have the best crews? Which are the most efficient? Which are the most timely? Building homes already involves utilizing tens of companies and hundreds of people. Is adding another ring to that circus really what you need?
Reduce Turnover in Trades and Suppliers
After retaining the absolute minimum number of suppliers you require, the next step is reducing the turnover in ones you’re working with. This is a more difficult undertaking than reducing turnover in your own employees since you have lesser control. When it comes to your own people, you can supervise or train them directly. You can throw more bodies at it or institute internal workarounds on a temporary basis.
However, you can’t do this with trades and suppliers. On a cursory glance, you notice the production loss, decreasing quality measures, and other inefficiencies. Look closer and you’ll observe increasing cell phone minutes, extra trips to the construction sites, and slipping customer satisfaction.
Simplification in Options, Elevations, and Plans
Whether you build large mansions or small homes, remember that complexity breeds chaos. For home builders—particularly small ones—the goal should always be to simplify their construction processes. Does it make sense to festoon your model with designer options that most of your customers can’t even afford? Do your need to offer a four-page catalog of handrail choices with your small family homes?
Remember, when it comes to competing with large builders, simplicity and efficiency are key.
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