Volume-Oriented Builders vs. Profit-Oriented Builders
As much as some home builders would like to blame external forces for low profitability, the truth is, well-run, efficient, profit-oriented home building companies make double-digit profits in ANY market, under ANY market conditions, with ANY product lines. Conversely, disorganized, inefficient, volume-oriented home building companies often struggle to reach a 5% profit margin, even in peak economic times.
Volume-oriented builders often fight for every deal and blame low profitability on things outside of their control: market conditions, labor shortages, material shortages, the competition, etc. They focus strictly on sales volume instead of focusing on management skills and efficiency in their organizations.
Profit-oriented builders implement good management practices and build strong, integrated management systems. They focus on things within their control: pricing of homes, controlling construction costs, maintaining a balance between operating costs and sales volume, etc. Profit-oriented builders are open to change, they challenge conventional wisdom, and they involve the entire company as a team.
Creating and maintaining an environment in which people can accomplish goals efficiently and effectively is the responsibility of the management team. To control the two factors that have a direct impact on profitability—time and cost—managers need to implement standard processes and procedures that focus on efficiency. An effective management team sets the stage for profitability, structures the company for profitability, hires and trains for profitability, leads the staff to profitability, and monitors performance to ensure profitability.
Builders interested in increasing the effectiveness of their management teams to improve performance and profits are wise to invest in management training. When your entire organization is on the same page and committed to implementing effective systems and procedures, cross-functional collaboration improves, and there is increased efficiency across the company.
Our training programs have helped hundreds of home builders across the U.S. and Canada improve their management practices and achieve double-digit profits. A veteran of the home building industry, Stuart Terl said “When you first told me we should be making 12% [net profit], I thought you were crazy. Now the 12% is in our rear view mirror.”
Our Managing for Profit seminar was developed to provide management teams with a strong foundation in effective management techniques and a road map to increased profitability. Our next Managing for Profit seminar will be held in the spring of 2022. Registrations will open soon. Visit the Events page on our website to view all upcoming seminars and check back often for updates. We hope you will join us for this one-of-a-kind learning experience to gain valuable insights on effective management techniques from industry experts to improve performance and achieve your profit goals.