One for the books . . .

NAHB recently predicted that an increasing number of couples are opting to sleep apart . . . well . . . I’m not so sure this is an idea whose time has come . . . at least not in my house.

The NAHB, National Association of Home Builders, recently reported that by year 2015, 60% of custom-built homes will contain two . . . separate, but equal . . . master suites. Others will opt for “special” sleeping nooks off a central master suite.

This has nothing to do with what two consenting adults may, or may not do in the privacy of thier bedroom, but actually has more to do with snoring, as well as the the need for late night emails and early trips to the gym.

So . . . why would I make mention of this? Next time you’re sitting with a client for a new home or preparing to add a spiffy master suite and you need an edge to make the sale, keep this mind. Tactfully handled. this subject might prove you a forward and innovative thinker . . . just the kind of contractor an upwardly mobile couple would want to take on thier next project.

Business Plan II

On January 3rd (2008) I identified the two basic reasons for a business plan; create a map of your business, and preparing for a loan. In that post I briefly discussed the steps to create a business plan ending with keep it simple and well edited. Then I ended with the link to Microsoft’s business start-up kit. Today I’m going to return to return to the business success diagram from January 2nd, and continue the business plan discussion. In this post I’m going to identify and briefly discuss the remaining six reasons to create and follow a business plan.

Analysis – By analyzing the previous year’s plan, a contractor can easily and quickly see if he’s making headway, losing headway, and merely mired somewhere in the middle. Analysis of the previous year’s financial projections against the actual end-of-year results says it all.

Setting Goals – Setting business (and personal) goals is the contractor’s New Year’s Resolution. Goals should realistic and attainable, they should be specific and performance, not outcome related. Guidelines for setting goals:

  • Express as a positive statement
  • Measurable (include dates)
  • Prioritized by importance
  • Written (hold your own feet to the fire!)
  • Immediate, small and achievable

Prioritize Opportunities and Acknowledge Threats – Perform a SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis and develop a separate strategy to deal with each.

Review and Set Budgets – Setting budgets for an upcoming year involves an in-depth review of your last year’s financial successes and failures. Ask your CPA to sit with you and point out the incidentals you may miss in your own analysis . . . you pay him/her for their financial expertise, not just for your taxes at the end of the year.

Reorganize Responsibly – Based on your financial and SWOT analysis identify and reorganize your responsibilities to your clients, employees, trade partners, and yourself.

Establish an “Action Plan” – Do you need more and better marketing? Is it time for an influx in capital for growth? Is your mark-up adequate to maintain profit margins? Are your trade partners and vendors contributing to your success? With these and other conclusions create a plan to make all the elements of your business click.

What’s Subprime mean to me?

Plainly said, it should mean nothing, but that’s simply not the case is it? This should be the best of times for remodelers and builders. The cost of money is still at an all time low, material is readily available, there’s an available workforce, and you’re a better than average contractor . . . just ask anybody. Trouble is Mr and Mrs. Anybody doesn’t live here anymore . . .

We, contractors, are taking a pretty hefty hit over events which we had nothing, absolutely nothing to do with. For the most part we don’t sell real estate nor generate loans for home buyers. It’s clearly not our fault that unsophisticated mortgage seekers smitten with ill-place ego buy more than they can afford, but we are paying the price just as if we were, somehow, at fault. If we have a fault, it’s not educating clients better, through better marketing, but that for another time.

Contractors with a head for business and the ability to continue to market will survive. Those lacking one or both will probably not, but there may still be a light at the end of the tunnel. By that I mean we are seeing more and more contractors, especially remodeling contractors, scaling back their operations, cutting their overhead by getting rid of in-house cabinet shops, and though it’s hard to do, lying off employees, choosing to be paper generals.

Most of these contractors are maintaining decent margins, working fewer hours, and just as importantly, satisfying their clients. Instead of fielding a plethora of employees in expensive vehicles, they are hiring one or two smart, talented, dedicated project managers who know how to get the job done with fewer hiccups, and keeping sophisticated clients, those with 7, 15, and 30 year conventional mortgages, happy.

So who’s doing the actual hammer swinging? Yes, that would be the contractors of yesterday who didn’t have the back log of clients in-waiting are now today’s subs, or they’re doing installs for big orange and big blue getting the mouse’s share of the pie.

But I digress . . . there have been tough times in the past, there will be tough times in the future. Some will survive by adapting to the times, rearranging their business model, and doing what’s smart, not expedient. As my son is fond of saying, “Sleep, food, water . . . they’re only a crutch.”