Do your sales go up and down from year to year?
Are you struggling to produce a consistent workflow of new homes for your building company?
It happens to a lot of new home builders that are not capping their supply. Which means they always have availability to build for anyone, and everyone that chooses them. So their sales follow a natural pattern of boom and bust...which is a terrible way to run a building company.
What if you could build the same number of homes every year so that your resources were optimised for maximum efficiency? Your net margins would increase on every job, and you would have a queue of excited consumers who are prepared to wait, in order for you to build their home for them.
Construction Industry experts refer to these builders as being ‘overbooked’.
When your building company is overbooked you can choose your clients...and your margins.
According to Wayshak Research and Insights, "a staggering 50% of all prospects are NOT a good fit for your building company". Which is why Professional New Home Builders proactively plan how many leads they need to hit their sales target, and then create a budget to generate those leads. Meanwhile, old school builders are only marketing their building company when they desperately need more contracts.
Stop Marketing Only When You NEED Sales
Start planning your marketing campaigns while you still have cash-flow. When you do this, your building company will be overbooked, which means you can choose your clients...and your margins.
One of the biggest myths in our industry, is that a well run building company will adapt to the peaks and troughs in revenue, in order to maintain profitability. Truth is, a well run building company does not experience peaks and troughs in their revenue because their sales are consistent.
This means they never hit the peaks that other builders experience, where they get multiple contracts signed in one month. And they never experience the lows that other builders experience, because they always have pent up demand in their sales funnel.
So don’t try and generate leads to fill your capacity to build. Instead, generate enough leads to exceed your capacity twice over. Then you can choose your clients and enjoy higher margins.
Maximise Efficiency By Being 'Overbooked'
Here are some tips that may help you to optimise your building company for maximum efficiency and profit, by being ‘overbooked’.
Firstly, you need to plan your capacity. What is the ideal contract value of the homes you would prefer to build? And how many would you like to build over a 12 month period?
When you know how many homes you’d like to build, the next step is to plan the start dates throughout the year, so that you always have a consistent and balanced workflow. Consider both start times and estimated finish times when planning your build slots. For instance, rather than offering a build slot with a start date that means you will be finishing the job at the beginning of January, bring that slot forward a couple of weeks so that the build is off your books before the holiday shut down.
When you have a realistic plan for your supply, you can start planning out your resources, including staff and subcontractors, because you know exactly how many builds you will have on-the-go at any one time.
Utilise Marketing To Generate Enough Leads
The third step to optimise your building company for maximum efficiency and profit, is to set your marketing budget.
Remember, in order to put your building company in a position where you have consistency in your workflow, you will need to have consistency in your sales. And the only way to do that is by being ‘overbooked’. This means you will need to generate twice as many Preliminary Building Agreements as building contracts.
Yes, you will be turning clients away.
But you cannot buckle, you cannot limit your supply and then make exceptions just to accommodate ‘one more client’. If you do this, then at some point your clients will find out and your strategy for being overbooked will fail. You need to be strong and ready to disappoint the potential clients that ‘need to think about it’, or have tried to negotiate on the contract price that you proposed.
So set your marketing budget to a level that will produce twice as many Preliminary Building Agreements as Building Contracts. The marketing budget you will need to allocate will depend on your conversion rate from lead to Preliminary Building Agreement; and how much it costs you to generate a new lead.
Regardless, whatever it costs, make sure you include that figure in the price you charge your client for the Preliminary Building Agreement. That way you will be able to recover your advertising costs at the prelim stage rather than at the construction stage.
However, you will never optimise your building company for maximum efficiency and profit, unless you have more leads than you need… So executing your marketing strategy now is the key to long term success.
The sales process for signing building contracts is extremely long, and getting longer. Which means you need to be generating leads today.
The most cost effective way for new home builders to generate leads is online, using channels such as Facebook, Instagram, Google and YouTube. If you are not already advertising on these channels, then pick one and start today. Once you’ve mastered it you can move on to the next channel, but for now, start with one.
When you generate enough leads to sign two Preliminary Building Agreements for every Building Contract, you are on the way to being ‘overbooked’.
"Doing what you've been doing is going to get you what you've been getting"
- Seth Godin
So what if you could build the same number of homes every year so that your resources were optimised for maximum efficiency? Your net margins would increase on every job, and you would have a queue of excited consumers who are prepared to wait in order for you to build their home for them.
Would it allow you to choose your clients...and increase your margins?
If you are not overbooked, you will always struggle. And that's why we are offering a limited number of free marketing strategy sessions to new home builders.
When you have the right strategy your building company will be overbooked. So you can choose your clients...and increase your margins