It’s already almost March! What do you resolve to do in your business for the balance of this year?
If you don't know the answer you're not alone. The time-honored rite of setting resolutions has fallen out of favor. Our fast-paced, media-driven culture encourages a sort of habitual attention deficit that works against thoughtful, strategic thinking and makes business decisions a perpetual game of whack-a-mole. And since we keep an embarrassingly low percentage of New Year’s resolutions anyway, why bother?
That's a valid point. My counter-point is that you won't improve results in any part of the business unless you first spend some time thinking about it. The start of the year is a perfect time to make plans to do so.
Many of us have strong internal forces that oppose this type of analysis, but they're worth overcoming. In my case, while it's tempting to give in to sloth in yet another corner of my life--having given up running, handwriting, yard work and house work--I find great value in letting the rhythm of the calendar trigger a bit of self-reflection and inventory taking, no matter how much resistance I feel. This exercise has led me to plan changes in my business (scheduling monthly time to developing employees and identify areas that need improvement) and my health (getting more sleep). Even if I don't achieve all of my goals, just taking a shot at them always brings measurable rewards.
We're at the beginning of a year that's spawning optimism from the building industry, so a little focus will go a long way toward helping you take advantage of that. Start by pondering the following three questions.
What is your number one?
This is THE big question everyone should be asking. What is the most important thing you need to do in your business in 2017 to be successful? The usual responses I hear are “everything is number one” or “I can’t pick one thing because there are too many important things.”
Those responses are predictable when you realize that for much of the homebuilding industry, the above-mentioned game of whack-a-mole manifests as the pursuit of one shiny object after another. For instance I've seen managers respond to margin slippage on two units with a hyper-focus on margin improvement but with little thought to overall profitability trends. I've seen those same managers switch focus to addressing negative reviews on customer surveys while ignoring the underlying causes of those reviews.
This approach reflects an industry dominated by entrepreneurial mavericks who seem to revel in the fast-paced chaos that's usually associated with startups and who feel most at home when putting out fires. But they're less motivated when it comes to the plodding work of managing long-term growth and profitability. These mavericks aren't confined to smaller companies; they are found thriving in many roles for big national home builders.
If you're one of these, the good news is that you need only commit to improving one thing. Say your sales-to-start process takes about 60 days. If you decide to work on reducing that to 30 days and you close an average of 10 houses per month, you've will have potentially added 10 units per year without raising fixed costs or having to recruit more workers.
Consider spending a couple of hours over the next couple of weeks thinking about what improvement would have the greatest impact on your business this year. Then involve your management team or department making it happen.
What keeps you up at night?
Maybe you're awakened in the wee hours by the growing volume of variance purchase orders eroding your margins. Or maybe you toss and turn thinking about the lengthening cycle times required to guide land assets through the process of becoming buildable lots, or about those empty sold lots waiting for trades to show up and begin building.
If these or other issues are interfering with your sleep, you could take an Ambien. Or better yet, you could take action!
The action I suggest is creating a plan to solve your most troubling business problem. If it's trade shortages, put a team together from your key operating departments, including construction, purchasing, sales and warranty. Have them determine what capacity is needed from your key trades compared to what's available, and ask them to suggest ways to close the gap. You should also ask your most important trades for ideas on how to do this.
For instance if a builder's PO's are consistently inaccurate and it works to fix them, trades will be able to complete their work more quickly because they won't have to waste time ordering and waiting for extra material to fix incorrect orders. And if the builder improves the accuracy of its schedules, the trades will be more likely to show up exactly when they're needed.
Whatever problem has taken up residence in your mind, addressing it with a well-conceived plan is more likely to help than either surrendering to sleep deprivation or continuing to do the same thing while hoping for a different result. The former will drive you insane and the latter is the definition of insanity.
What does your company offer?
The third question is "why do staff and employees love coming to work at your company?" This question is not just for CEO’s and owners, but for everyone. If you lead or manage any number of people you can answer for your team. If you are member of one of those teams, then offer your perspective and your colleagues’ perspectives.
It’s easy to be flippant and say, “hey, nobody loves coming to work, at least not every day.” Maybe so, but why not humor the question? Doing so may lead to happier, more productive employees.
A wise woman once told me “you might as well love your work because even eight hours doing something you don't love is enough to pretty much ruin your day!” Companies that understand why people love to work there and learn to maximize “it” are able to create a Death Star-rated tractor beam that attracts the best people with only a minimal recruiting budget.
That "it" doesn't have to be money. A lot of builders still digging themselves out post-recession financial holes, so there may be little room to raise salaries. But there are other ways earn loyalty, such as helping employees develop their professional skills and empowering them to make decisions appropriate to their roles. If you have done the work mentioned above of focusing on creating long-term profit growth, a plan for linking pay raises to specific business benchmarks will motivate employees to help you achieve that growth. Companies that operate this way continue to bring top talent on board.
In fact a great work environment is one of the most powerful sources of competitive advantage out there—no small thing in an industry where it's taking longer and costing more to find new qualified employees than ever. Be warned though, that you may need to do a lot of work to become “loved.” That's OK – asking the question is the starting point.
So, there you go: three simple but--if you approach them with serious effort--deep questions to start off your year. Give them a shot. You may find your mindset somewhat refreshed and energetic. You even develop a sharper focus, which helps you be more present in the important moments at work.