Budgets, we learn before long in business, are living, breathing, nagging beings. As much work and as painstaking as it is to make them in the first place, a business or a household budget is only meaningful if it works as designed, as a money plan for the year.
Coming up on mid-year 2015, it's probably safe to say this. Housing and all its respective component parts and stakeholders face uncertainty that make a budget's projections on the top line a tricky proposition. The quality and intensity of 2015's uncertainty may vary from prior years--2014, 2013, 2012, and 2011--each of which displayed "front-half-back-half" split personalities with respect to how they performed in broad terms. Is this year different, or the same?
Only time will tell. Signals are mixed. Stakes are high. The energy, focus, and investment put in place is working at a more intense level than it has in a decade.
So, for a mid-year reality check on what's happening in at least some of the trenches, I find it helpful to spend time at the Pacific Coast Builders Conference, which this year takes place in San Diego. PCBC senior vp for meetings and conventions Linda Baysari anticipates that although attendee registration pacing for the event in SoCal tends to lag when PCBC takes place in San Francisco, the event could easily exceed 10,000.
That's partly because in a market whose odds are so close of going either way, opportunism, excellence in execution, and local market intel, in many cases, are going to make all the difference in whether companies make their budget numbers for 2015, or miss them, or even blow through them.
We know that operational excellence and near-flawless execution are practically a given in markets where land-base costs are nothing to sneeze at, directs are under pressure, and labor scheduling, logistics, and costing is a crap-shoot. Variances can get hellish very quickly, especially when community count pressure to deliver greater volume and absorb a bigger lift of overheads is on many company executives' minds.
If you're like many businesses, mid-year budget re-projections involve coming to grips with misses either on the expense side or the revenue side. Only wearing the big-boy pants will yield the right answer as to whether the business can reconcile with budget by driving the revenue leaders to go out and make up for the mid-year misses.
All of which makes the message of one of the keynote speakers, Simon Sinek, a timely stroke of PCBC programming foresight.
Simon says that his message is particularly relevant to leaders in the home building and residential development space only under two conditions: "Are their employees human beings? Are their customer human beings? My remarks will feel relevant only if those two conditions are true about their industry."
Sinek's bottom line focus is on the fact that people value, are motivated by, and crave trust. Leaders very often excel at a particular skill-set in business, but often have no prior experience or training when it comes to the skill of leading others and building trust. They tend to revert to "command-and-control" tactics that invoke fear and authoritarian imperatives as the way to drive the outcomes they're looking for, but what they should be doing is learning--by daily practice--to get the human beings who work with them to trust them.
"Without exception everybody who's really distinguished him or herself as a leader affirms that there's not a day goes by that the 'learning' mode is not one of the biggest part of leadership," says Sinek. "Leadership is not about being in charge; it's about taking responsibility for those in your charge."
So, at mid-year budget re-projection time, when difficult decisions need to be made to either cut costs or dig deeper for greater revenue production, a leader who can get folks to trust them is critical. Who in the organization is going to be able to make up that big V in actuals vs. projections for the first quarter-plus of 2015?
"Leadership doesn't begin when something bad happens," says Sinek. "Like parenting, or fitness, or nutrition, leadership is something that is part of the daily grind, that begins with practice and keeps going with practice. It's a function of how much people who lead are willing to put the lives of others before their own."