It is now twelve months since Australia closed its international borders and Queensland closed its borders to the rest of Australia for the first time in over 100 years. So much has occurred since then.
This time last year the home building industry was waiting in trepidation and unsure how the lockdowns would affect the millions of people who work in the industry across Australia. For two months, home builders saw their sales pipeline almost shrink to nothing. In June 2020, after much lobbying by the industry associations, in particular the HIA, the federal government then announced a Home Builder stimulus package for the construction of new homes and substantial renovations.
Since then, we have seen a flurry of activity in the new home building sector like nothing we have ever seen. Record numbers of detached homes are due to be built on the back of the stimulus package. For every $25,000 in stimulus, the economy receives around a further $300,000 - $500,000 injection meaning the federal government will receive the stimulus back in GST and State governments will receive record amounts of stamp duty and land tax. The economy will receive an injection of an additional $25 billion conservatively. Not bad when you think back to March 2020 when the industry was unsure how this would all play out.
The question is, will all home builders benefit from the record activity currently being seen in the industry? Based on some research I did with QBCC residential building work numbers around the end of 2020, it seems that the big boys did very well and from what I hear, in some cases closed off their books due to excessive demand.
However, there is a group of builders who have not really benefited from the stimulus because their numbers had either stayed the same or had less contracts than the previous year. These builders are the ones which had signed between 1 and 20 contracts back in FY19/20. There are some exceptions but in the main, this group of builders has stagnated or gone backwards in terms of growth.
These builders must be asking themselves, why haven’t we received the same level of increase in sales as the big boys?
In a previous article, I wrote about the seven traits of a successful new home builder. If you were to do a ‘deep dive’ into the businesses in this group of builders, you would find, I am sure, that many of these traits are missing.
The other missing ingredient will be their marketing and in particular, their ‘market dominating position’. All too often, builders have no idea what makes them different to other builders and why new home buyers should buy from them rather than one of the other builders down the road. Shouldn’t they be able to offer more personalised service than the big boys? Do they even understand how a customer buys from them and what parts of that journey can be made more effective and more enjoyable than dealing with a large home builder? Don’t get me wrong, the big boys do it extremely well and that is why they make hundreds and hundreds of sales each year.
So how do these smaller builders achieve the level of sales they need and compete in the marketplace with hundreds of other builders? Many home builders would benefit from creating a more comprehensive strategic growth plan on which to act. Here are some of the steps to get started.
1. Where is your home building business at today?
The strategic planning process begins with a thorough examination of your company as it exists today and the business environment in which you operate. Ask: What are you good at? What makes your company unique? What are your particular competitive advantages? What is your ‘market dominating position’? Who are your competitors and what advantages do they possess? How do you differentiate yourself from them? What is happening in your market and how will you take advantage of any changes? What are the threats that imperil your company’s future growth?
Until you can answer these and other questions, and can articulate your strengths, weaknesses, opportunities, and threats, you are not ready to begin planning your strategy for the future. But most companies completely skip this step and consider only where they want to go, without understanding where they are now.
Alpha Edge has developed a unique ‘Business Discovery’ assessment of a residential building company that will show where the business is not performing and benchmark it against best practice. This will show the priority areas to address in building the business into a state of ‘growth’. Alpha Edge also has proprietary Profit Acceleration Software that can assess a business’s capacity to increase profits and it looks at it from a digital marketing perspective and what needs to be done to build the pipeline of sales with a ‘roadmap’ of the steps to achieving the growth required.
2. Where do you want your business to go?
The next step in the planning process involves defining, in specific terms, where you want your company to be in one year, three years, and five years. Will you expand into new markets? Will you broaden your product array? Will you change your competitive position? Will you change your organizational structure? Will you develop new business processes? What will be your growth trajectory? What performance metrics will you use to monitor operational execution?
At the end of this step, you should be able to spell out where you plan to take your company; define your specific financial, growth, and performance targets; and describe in detail what your company will look like and how it will operate in the future. You should be able to describe, in specific terms, the unique competitive advantage you’ll create or expand upon and how you’ll develop the core competencies and operating processes to enable that advantage.
Alpha Edge has developed ‘Strategic Focus’, a one-day workshop that visually builds up your business model that is required to achieve the growth and direction over the next three to five years.
3. How will you get your business there?
The third step in the planning process is the most difficult and demands the most discipline. Here, you need to determine, in precise terms, how you are going to achieve the goals set in Step 2. What resources will you need to achieve your plans? What financial investment will be required? How will you attain the new skills you will need? Who will take on the big projects? And how long will they take to complete? How long will it take to get your organizational structure in place? What will you improve about your operation, and how will you go about it? What is your customer journey?
Without this step—and the intensive oversight needed to ensure that you can achieve your plans—your strategic plan will simply be a wish list.
The real work begins when you’ve thoroughly and compellingly articulated where you want to go. Figuring out exactly how to get there and then doing it is the biggest challenge. You will need to create a disciplined follow-up and monitoring regimen to monitor progress. How are the projects coming along? Are project leaders meeting time targets and milestones? Do you need to change course or add more resources? Are you beginning to see the results you were hoping for?
Along with the roadmaps created from the Business Discovery and Profit Acceleration Software assessments, an enormous amount of work is required to change the focus and operations of the business. But what’s the alternative? Going broke and causing all sorts of mental health issues for numerous people from staff to contractors, not to mention yourself and family?
If you don’t possess the skills for strategic planning and implementing the changes necessary, Alpha Edge can help you. The key lies in understanding the process outlined above and crafting a detailed road map to follow. Otherwise, you may find yourself in the same position as last year.
Understanding where your business can improve and how to implement the necessary changes is the key to getting your business on the right foot to succeed. The whole purpose of The 3C Mentor and Alpha Edge is to help create really great businesses in the residential building industry. The strategic planning and the deep dive assessments discussed above are all serviced and delivered by our ‘Four Pillars to Success’ – Business Coaching, Business Consulting, Business Resources and Construction Software.
For an overview of these four pillars go to Alpha Edge here. To find out more about our Business Coaching go to The 3C Mentor here, for further information about the services Alpha Edge can provide go directly to Alpha Edge here and to access the many documents and resources you need as a residential builder, go to our Builder’s Business Resource Centre here. For more information on the construction software and how to ‘Be a Better Builder’, click here.
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