BSC Summit

Thursday, February 16, 2017

4 Ways to Increase Profits and Reduce Stress

Things are finally getting back to almost normal in your home building business. Sales contracts are being signed and houses built. It hasn’t been easy.

Since things have settled down since the housing recession to business as usual, it’s time to take a look at how to increase your bottom line.

Here are 4 ways to make it even more fun to build homes.


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1. Put up prices by 3% or more.

This creates more profit (per sale). Now if you sell exactly the same number of houses as before, both your turnover and your profits have increased. For example, if your average house contract is $200.000 with a Net Profit of 5% after taxes and all expenses, you only made $10.000. Selling 8 homes a year is $80,000 net income.

Now add 3% to the selling price without increasing your costs and another $6,000 drops to the bottom line. $16,000 per times 10 homes a year is $160,000 net profit. Double what you normally have after all the flying monkeys take their share of your gross profit.

2. Decrease direct costs by 3% or more.

Go to all your suppliers and factories and ask them for a better price… ask “Is that the best you can do?” and say nothing till they come up with a better price. There is a technique used by the asking party in this situation called the pregnant pause.

“The first to speak...loses” It could be the longest 3-5 seconds you’ve ever experienced but I guarantee that the person being asked for a better price will think it is more unnerving than you. Don’t ask for a specific amount or percentage discount as the longer YOU remain silent, the higher the discount or better the terms you will get.

Even if you only get a $2,000 discount combined from everyone ask, that drops another $20,000 in your pocket. Now your are up to $180,000.

3. Sack underperforming suppliers, prospective customers and staff as appropriate.

This gets rid of the suppliers, customers and employees who make the working day more stressful. This will create a better working environment for your team and remove any potential new home buyers who are losing you money.

You really don’t need anyone to consult with you on this one. Every day when you walk into your offices or showroom you know instinctively who pulling the wagon and who is sitting in the back just along for the ride.

Walking onto the job site brings you face to face with workers and subcontractors that aren’t working on your behalf. Shoddy work, poor attitudes, back stabbing and theft on the job site doesn’t have to be par for the course. You wouldn’t allow yourself to do these things so why tolerate it in others, especially since you are paying them and they are robbing from your bottom line profit.

How many builders have sat across from potential buyers and only after a few minutes thought to yourself “I hope they go to another builder”? Your experienced builder gut is screaming “GET OUT!” You’ve had these types before in your career. They push back at every opportunity, argue over something they read on Google, posted crap about you on social media, had selected hearing and tried to hold back the final payment. Do you really need the added stress of another bad customer?

Fire them all! You can do better. And your bottom line will thank you too.

4. Rethink the way you present your homes, your business and yourself.

Start talking to your customers about what they get as a result of buying from you – what’s left after the purchase. Focus on the benefits that they gain from buying a home from you. This will improve your sales performance.

What makes you different from the rest? Why should people buy from you rather than the competition? Be able to articulate the ‘why’ and ‘what’ of your business in a way that is truly effective.

You should be able to do it in ten words or less.

Yes, I said ten words or less. It may take you a lot of trial and error to come up with it. Write down a few and go over them with your business partner and/or your spouse. You should have something nailed down in a couple of hours.

Then practice saying it everyone that asks what you do for a living. Soon all that practice will pay off handsomely.

Four easy ways to increase your bottom line and relieve some of your stress. It’s a great feeling, isn’t it!

2 comments:

Carl Nolan said...

Coach, easier said than done. Maybe you and I could talk about it. I have your email.

mahomed said...
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