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  1. #1
    Join Date
    Feb 2005
    Location
    Marquette, MI
    Posts
    14

    Default Down with the Tool Belt

    Hello everyone. First I'd like to say thank you to all of you for offering so much great advice over the years. I've been studying your advice for quite sometime and have recently decided to make the switch over from running the crews to running the company. I have a small company in Northern Michigan with about 9 employees grossing about 4-5 hundred a year. We have recently started some land developement and I've started a subdivision which should consist of around 27 custom homes. I've split my work load to about 50% remodeling and decks and the rest into the subdidision. I believe I have done or at least tried to follow the general rule here of tracking and studying my own numbers. I use quickbooks to do so and it seems to be working pretty well.
    What I need now is some advice. I am looking for some kind of resource that will tell me what to do with all this information. I have sat down and broken things out into a percentage basis so I know where my numbers are in relation to one another but, what I would like to know is where they should be. I know this obviuousely will vary from area to area but there must be some general rules to follow? I guess I am just looking for some help with whats next. Maybe there is something I am missing here but I just feel that I am at a stand still with it all. Again, thank you for all your help to this point and any advice you can offer me now would be greatly appreciated.

  2. #2
    Join Date
    Jan 2006
    Location
    Haleiwa, HI
    Posts
    545

    Default Re: Down with the Tool Belt

    I think you might get some answers like compare the national builders @ NAHB ect. to evaluate your companies performance.
    I personally use my numbers to make choices about what projects I want to take on in the future. Do you make more money with your decks/ remodels/ stock house plans/ customs, ect. I know what my competition is selling in my market so I am constantly evaluating my cost of building in one neihborhood or another vs my profit margin and time length of construction. I also use the info to evaluate what products I will use and if subs will be used or we will self perform. All of these effect my bottom line. So I can decide if hardie plank siding is better than stucco for my bottom line. How you use your numbers will also give you a clue as to what numbers you should collect.
    I like to track labor data. I know that my carpenters make the greatest profit doing single story frames. Decks take more time and drag my profit numbers down, so I am careful to put enough deck on to deliver what is expected in my market but not much extra. However if a house is sold before it is completed and the new owner would like a larger lanai they get to pay for it at my prefered profit margin making it worth the time keeping them away from the next house frame.
    Or you could look at pie charts and compare yourself to the national average.
    To me it's all about finding the best place to invest money and time, for the highest quality, safety, and profit.
    Jason

  3. #3
    Join Date
    Jun 2004
    Location
    Houston & Washington Texas
    Posts
    12,259

    Default Re: Down with the Tool Belt

    TimberRidge:

    Congratulations on your new venture. I’m not sure what you are specifically looking for, but you might start by digging up information about how the various cost categories of a house are broken down on a percentage basis. Hard costs, marketing expenses, overhead, financing expenses, gross and net profit etc. There are certain benchmarks that you should try to hit in your operation. You might try to buy some books or literature from either the SMA Consulting Group or Lee Evans Group. And the NAHB bookstore will also have some good books. http://store.builderbooks.com/cgi-bi...at_id/tf=title “Accounting and Financial Management” by Emma Shinn would be an excellent book to start with. With a 27 unit development, seems you could possibly justify a model home?

  4. #4
    Join Date
    Jun 2004
    Location
    Houston & Washington Texas
    Posts
    12,259

    Default Re: Down with the Tool Belt

    Another good book is by Dennis Dixon, a builder from Arizona. He is an excellent speaker at NAHB shows. I agree with about 98% of his business philosphy regarding custom building. http://store.builderbooks.com/cgi-bi...8g3q&mv_pc=297

  5. #5
    Join Date
    Feb 2005
    Location
    Marquette, MI
    Posts
    14

    Default Re: Down with the Tool Belt

    Thank you for such a fast response. I looked at both the " Finding Hidden Profits" and "Accounting and Financial Management" books, and ordered them both. I'm sure I'll learn a ton from each. The model home is in the work's. I've been working wih a local conc. supplier who is interested in having a model as well. SO its looking like an ICF all the way to roofline. I haven't done these before but with this morings temperature of 24, I guess I'm in an area where learning how can't hurt. It's suprising here in Northern Michigan that no one is really doing green or super energy efficient building. Maybe a market there as well. Any experienced suggestions welcome ?? Again, thanks for your help..
    Tim

  6. #6
    Join Date
    Jun 2004
    Location
    Houston & Washington Texas
    Posts
    12,259

    Default Re: Down with the Tool Belt

    Tim:

    I don't have any green building tips, because it hasn't caught on in Houston (it has in Austin). I actually just built a house where we ran AC ducts to a large uncovered rear porch, so I guess I’m not a green builder.

    I would mention on the model home, that you should look at it as a merchandising strategy in the way you decorate and furnish it. There are specialists around that take a poorly built tract home and make them look like the Trump Tower. It’s all in how it looks. Perception is everything.

  7. #7
    Join Date
    Jun 2004
    Location
    Houston & Washington Texas
    Posts
    12,259

    Default Re: Down with the Tool Belt

    By the way, the book by Dennis Dixon has some great practical ideas for custom builders. The other book (by Emma Shinn) is more technical and somewhat boring, but nonetheless very important in how you set up your accounting, which I consider very important. And it does have some practical ideas too on the financial side of things.

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