It's so tempting to think your job is about only one thing: building houses. But whether you deliver 10 homes a year or 10,000, your success as a builder depends on more than just the task of construction, as critical as that is. To truly excel, you need to expand your frame of vision.
The 2004 America's Best Builders have that all figured out. From a small production builder to a large public company, these three companies know how to look at and capitalize on the big picture while achieving excellence in finance and operations, marketing, customer satisfaction, and construction.
In Canada, tiny Land Ark Homes develops its own select subdivisions for its high-end production homes, a move that gives the builder more control over the setting for its appealing product than most small builders enjoy--and greater profitability. In Florida, Lee Wetherington Cos. serves both its buyers' needs and its business goals with a series of affiliated companies that help customers buy their home, add a pool, and even decorate their new house. Finally, also in Florida, public builder WCI Communities makes its name and its numbers by providing a fully developed and expertly managed lifestyle that delivers the experience of living in a luxurious Florida resort.
Seeing the big picture isn't always easy. But as these companies' stories show, there are real rewards--financial, competitive, and personal--to expanding your vision of what a successful home building company looks like.
Land Ark Homes; 1-25 Units; Stittsville, Ontario
Stephen and Diana Rolston of Land Ark Homes present a new model for small-volume builders.
Any small builder who has wondered whether it's possible to run a profitable company and enjoy personal time should take heart from the story of Stephen and Diana Rolston and their company, Land Ark Homes.
Based outside of Ottawa in Stittsville, Ontario, the Rolstons build high-end, Craftsman-style homes that sell for more than twice their market's average sales price. They value construction quality and the contribution of their trades. They manage the financial and operational side of their business with precision, achieving double-digit net profits while delivering just 22 homes in their fiscal 2003, which ended July 31.
"They are totally deserving" of being named one of America's Best Builders, says George Parry, a Pennsylvania custom builder familiar with the Rolstons and their work at Land Ark.
Just as impressive, the husband-and-wife team accomplished such feats while still leaving time for family and friends. Hardworking and education-oriented, the Rolstons also know when it's time for a break, and they take eight weeks of vacation annually.
Says their accountant, Steve Maltzman: "There is hope for the small-volume builders who want to have a life and run a successful business."
Out of isolation
Stephen and Diana didn't always run Land Ark like they do now.
"When we first started, we built homes just like everybody else," Diana says.
"On lots owned or developed by other people," Stephen adds. "We were beating our heads against the wall."
Founded in 1987 as a renovation contractor, Land Ark Homes turned into a home building company in 1991, when the Rolstons bought their first lot and built their first house. Their market of choice: Ottawa, the Canadian capital city, which offered a stable employment base, residents with high household incomes, and strong economic growth--all positive indicators for the hopeful move-up builders. Within the Ottawa metro area, they settled in Stittsville, a small bedroom community about a half-hour from the city.
Like many small builders, they felt the pressure of figuring things out on their own. "When you're building in your own market, you feel alone," Diana says. "You feel isolated. You just keep doing the best you can."
"And hope there's some money left at the end of the year," Stephen jokes.
They found the guidance they were seeking in the late 1990s, when they began attending the Custom Builder Symposiums and joined the NAHB's Builder 20 Club program, which allows builders to benchmark themselves against similar companies in other markets. "When Land Ark Homes became a member of the Builder 20 Club program, they did not have advanced systems or a business plan, but they knew that they wanted to build a recognized quality product and be successful doing it," says Melony Bildhauer, who manages the NAHB program and nominated Land Ark for the America's Best Builder award.
Educating the Rolstons
Land Ark's owners had a big job ahead of them--especially on the financial side. When they began working with Maltzman in 2000, "They had no accounting systems whatsoever," the accountant remembers. "Stephen had just purchased QuickBooks and didn't really know what to do with it."
As the Rolstons talked with builders in other markets, they seriously began reconsidering both their land strategy and target market. In 1999, they made the leap from scattered lots to subdivisions, becoming the exclusive builder in a small community featuring move-up homes in the $400s and $500s (Canadian). They also upscaled their offerings, moving into a new niche: luxury production homes that sold for two to three times the price of their market's average new home. As promising and profitable the Rolstons believed their new approach would be, the couple still remembers their qualms. "It was scary," Diana says. "Nobody buys $500,000 [Canadian] houses. We were going into a market where nobody was, but that's where you need to be--where nobody is."
It worked. Five years after switching its niche, Land Ark Homes is both a larger and more profitable builder with a reputation for architectural distinction. "Stephen and Diana are like sponges," says Atlanta builder Bill Grant, who belongs to the same Builder 20 Club and, with wife Peggy, has been a mentor to the Canadian couple. "Everything you say to them, everything you show them, they take it home and do something better with it."
That dedication to doing things better has won Land Ark many fans. Among the most loyal: the builder's subcontractors. "If all of my customers were as easy to get along with as Steve is, paid as well as he does, and as well-organized as he is, I'd have a lot less gray hairs," says Dave Brown, a subcontractor who's worked with the builder for a decade. "He pays his bills like clockwork, and he treats his trades well."
That treatment includes higher than average pay. "We shop like heck on materials, but where labor is concerned, price is not really an issue for us," says Stephen, who acts as superintendent on his own jobs. "Quality in the field is."
His subs agree. "Steve will not shop his trades," Brown says. "When he latches onto a trade that does quality work at a fair price, he stays with them."
Land Ark also offers a reliable schedule, a priority born from Stephen's own experience in the field. "Having been a trade contractor for four years while I was at university, I had lots of opportunity to see what didn't work," Stephen says, half laughing. "Such as getting to a job that isn't even remotely ready." That doesn't happen at Land Ark, where evenflow production results in a new home start every two weeks. Subs receive their schedule as far as two months in advance, giving them the freedom to do other jobs as long as they're ready to go when Land Ark is.
As Land Ark has evolved, so has the Rolstons' approach to running their business. "We [used to be] very reactive to situations," dealing with each situation on an individual basis, Diana says. "Now we have the systems and the experience to handle them."
They also have the staff. Land Ark now employs 11 people, some part-time, who handle everything from estimating to interior design. Each one has been a boon to Stephen and Diana, who started out swapping weekend sales shifts in their model home. ("We never saw each other," Diana says.) As the company has grown, the couple has gratefully relinquished control of different details to concentrate instead on Land Ark's larger picture. "Every employee we have hired has added value," Diana says, and Stephen agrees. "Our first hire [a sales manager] was very important," he adds. "That's when we saw the increase in our financials, because it let us focus on more important things ... instead of me being all things to all people, which I couldn't do."
Those "more important things" included Land Ark's financials, which are stellar. The company runs extraordinarily low variances, manages to increase net profit even when gross margins dip, and forecasts its cash flow as far as 24 months into the future. "Now, [Stephen] really knows his numbers," Maltzman says.
But Stephen manages not to get wrapped up in them. Unlike many, the prosperity of their business has not distracted the Rolstons from their top priority: having a life. "We think vacation is very important," says Stephen. "And it's important that our staff have the same philosophy, because we believe that having a life outside of work makes you more creative."
Not to mention being successful at work you enjoy. Brown, the Land Ark subcontractor, still remembers the conversation he heard amongst an affluent-looking bunch at a holiday party a few years ago. "I overheard a gentleman talking about how great his home was and how the couple that built it took such an interest," says Brown, who finally heard the builder's name: Land Ark Homes. "It was a million dollars' worth of advertising among new millionaires who would soon be shopping for a home. You can't buy advertising like that."
Land Ark Homes
Owners: Stephen and Diana Rolston
Focus: Small builder doing luxury production homes in Ottawa suburbs.
Web site: www.landark.com
Notable: Sponsors local sports teams (including minor league hockey), community celebrations, and special fundraisers such as a recent campaign for a young Stittsville girl needing special cancer treatment in the United States.
Tips From a Winner: How to Enjoy Life and Profits
Running a home building company is a demanding job. But as Land Ark Homes shows, you can enjoy both a profitable business and a rewarding personal life if you manage your company right by following these five practices:
1.Know when to ask for help. Stephen and Diana Rolston didn't turn Land Ark Homes into the company it is today by stubbornly doing everything themselves. Instead, they turn to consultants, drawing on the expertise of Steve Maltzman for builder-specific ac- counting advice and Al Trellis' Home Builders Network for marketing and other issues.
2. Keep your jobs close. Working on scattered lots takes more time for you and your subs, as you drive from place to place. Building in only one subdivision lets you boost your volume without upping your workload.
3. Standardize your offerings to simplify life for you and your buyers. Land Ark gives customers a choice of seven, two-story plans--"all proven winners," Stephen says--available in four elevations.
4. Work with trades you can trust. "We give a lot of responsibility to our trade contractors," Diana says. "They know we trust their judgment on things. Sometimes we won't even hear about a problem until afterward, because they've dealt with it in the field and fixed it."
5. Establish goals for yourself (such as finally taking a real vacation) just as you would for your business. "If you don't sit back and set your goals, time just goes by," Diana says.