Product redesign and performance engineering were popular topics at the 2023 Executive Summit
. Home builders willing to get creative and make tough decisions to protect their businesses and profit margins during the downturn will be in a better position to take advantage of the subsequent recovery.
A housing downturn demands tough decisions. When traffic slows (or comes to a halt), discounting is not the answer. You need to drop costs, not prices. To drop costs, you need to stop building for yourself and start building for your customers. This often requires new product lines with lower square footage and new prices to compete with the existing home market.
Dropping prices and discounting can result in negative feedback from your existing homeowners and cancellations from pending buyers. When you launch redesigned product that is smaller square footage and more efficient at a lower price, you mitigate these issues.
You are not in this alone. Your trades and suppliers have a vested interest in your company’s survival. Ask them to pitch in and help you come up with cost saving ideas to trim your margins in order to keep building and selling.
Another partner you can turn to for support during a downturn is your banker. Use this time to strengthen that relationship. Banks (along with other builders) can be a source for low cost lots during tough times.
As a builder who took advantage of opportunities and experienced growth during the housing recession of 2008, my goal is to help our builder community be well-prepared to navigate the challenges of the changing market and be ready to seize opportunities during the recovery.
Shinn Consulting offers customized consulting and coaching packages involving every area of the home building business including how to maintain home affordability through product redesign and performance engineering. Contact us at 303-972-7666 or firstname.lastname@example.org
to discover how we can help you use housing cycles to your advantage to grow your business.
Ed Hauck is a senior consultant at Shinn Consulting. He specializes in helping builders around the country reduce direct construction cost, streamline operations, and guide new product design towards efficiency and cost control.