Experts' Corner: Advice for 2018

Industry leaders offer insights and recommendations for growth and profitability in the coming months

"With escalating construction costs, a shortage of skilled labor, and the increase in technology, it looks like the era for industrialization is upon us. It will change the industry as we know it. Builders will become assemblers of components that are built in factories.  

I have been working on these concepts for more than 20 years. The components will be ordered from a catalog, delivered to the job site to be assembled by the builder. Every house can have a unique combination of components that have match points to assemble. Learn about this transformation of the housing industry at the 2018 Executive Summit, which will be held March 6-8, 2018 in Breckenridge, Colorado."  

Charles C. Shinn Jr., PhD, founder, Builder Partnerships


"Superior gross profit (at least 30 percent) starts with design, and design must start with insightful knowledge of the customer; this provides the builder with an immeasurable competitive advantage in the market. It also maximizes gross profit, as only features the buyers are willing to pay for are included in the design, allowing for more competitive pricing and lower cost.  

Take the time to do real customer research. You can’t do this by just visiting your competitors’ models. Ask your buyers what they want and are willing to pay for. Being at a crossroad of changing demographics and lifestyles requires knowledge of what the new customer wants. Make sure you are ready to respond to the challenge!"

Emma Shinn, chief financial officer, Builder Partnerships
 
"This year, I would like to encourage our members to focus on improving partnerships with manufacturers and/or builders who can support their efforts in the local market. These invaluable partnerships between builders and manufacturers can give our members a unique view of the overall build strategy and insight into upcoming trends and cutting-edge issues as they arise for today’s buyers." 

Monica Wheaton, chief executive officer, Builder Partnerships
 
"Marketing has always been as much a science as an art. Today, however, the ability for manufacturers to identify potential builder customers and tailor a message to show how a product can address the builder’s needs has reached previously unattainable levels of precision. This change in technology has had — and will continue to have — significant impacts on the way manufacturers approach the builder segment of the market."

Stephen Crouch, vice president of operations, Builder Partnerships 


"Good direct construction costs start with cost-effective designs. Keeping the designs effective will allow you to include market-leading details and amenities that will help you sell more homes. Builders need to focus on the details in the product development process."

Ed Hauck, senior consultant, Builder Partnerships
 

"The current market’s strong sales pace is accompanied by longer cycle times and scheduling woes. Get ahead of it; own the solution, create a schedule that works, and then measure your results against the scheduling target. Keep track of all scheduling variances so you know where you lose and gain time. Make certain the jobs are ready for the next trade and hold them accountable. You get what you measure."

Matt Collins, senior consultant, Builder Partnerships


"Put your customer at the top of your organizational chart and see what happens to the customer experience — and your sales."

John Kamin, senior consultant, Builder Partnerships

"We might very well be at the stage of the market when “market euphoria” sets in. Memories of the recession fade. The appetite for risk grows. 

At the same time, we are in the middle of an “asset bubble.” We all know how that works; one fine day the bubble bursts without warning. Beware! Focus on mitigating risk and maximizing profits and returns, as opposed to growth."  
 
Ronald J. Robichaud, principal, Robichaud Financial Services
 

"In 2018, we are going to see a demand for spaces where buyers can focus more on their private time and less on their tech-filled lives. Spaces that satisfy the wonderful experiences buyers want to enjoy, while allowing them the flexibility to be free of the frantic outside world, will be a deciding factor in a purchase decision. Whether it’s enjoying a glass of wine from a built-in beverage center or pampering a pet in a doggie nook off the laundry room, creating spaces that drive experiences — and merchandising them correctly — will help your sales."
 
Lita Dirks, principal, Lita Dirks and Co.  


"No matter what side of the debate you are on regarding a housing bubble brewing in 2018, home buyers are looking for ways to feel confident in a new home purchase. Builders need to continually provide consistent, strong customer service; differentiate themselves in the marketplace with valuable offerings such as a third-party-administered builder’s warranty; manage their reputation online, in print and via word-of-mouth; and market their homes with the best tools available." 
 
Roger Langford, vice president of sales and marketing, Professional Warranty Service Corp.  
 

"Your financial foundation is the cornerstone that helps to ensure your future profitability.
For 2018, If you haven’t yet done the following, commit to adding solid measurement and tracking footings in your construction business to include:
• Job-costing, so you can see exact gross profit dollars and percentages for each job.
• Estimated vs. actual variance reports for every major project, allowing you to continually improve by seeing what went right and what didn’t.
• Internal controls, such as purchase orders and change order tracking, to minimize cost slippage."
 
Diane Gilson, president, Info Plus Accounting Inc. 
 

"Builders and manufacturers should watch out for complacency in 2018. Business will probably be just good enough that you can take it easy. Don't let that happen!"

Mark Mitchell, president, Whizard Strategy

"The economic outlook for 2018 is positive, with home starts on the increase. Market conditions are good, prices continue to increase, and demand for homes is high. Adaptability will be critical for your sales and marketing teams as there continues to be a shift in the buyers' approach and expectations. Your customers will demand a smarter and more personalized buyer experience, and this will be the differentiator for consumers.
 
Understanding and listening to your buyers, both personally and digitally, will allow you to better understand their desires and expectations. Consumer digital engagement will be a key determiner in defining interest. Sales agents need to continually adapt and modify their approach to best suit their customers' demands. You must be able to market and sell to your prospects based on their behavior."
 
Dave Betcher, vice president of sales, Lasso Data Systems