Despite the industry-wide slow-down, it’s been a heck of a last 12 months for Suwanee, Ga.–based Touchstone Homes. The company won an America’s Best Builders award in 2007 and was presented with the 2008 Lee Evans Award for Management Excellence by home building consultant Chuck Shinn at the Lee Evans Group Executive Summit in Vail, Colo., in mid-March.
Born from United General Industries, a land development company that began building homes in 1994, Touchstone thought long and hard about residential construction before it dove in. The company would be run to make money, not just to build houses and turn ground, says Touchstone president Bryan Cohen.
That drive to make money led Touchstone to focus on its operations and processes to make sure the business never outgrew its ability to generate profits.
“You can’t simply grow by unit count and be profitable simultaneously,” Cohen says. “We’ve been just as focused on trying to assure that our processes have been able to keep up with our growth pattern over the last few years, and not only maintain strong profit margins, but increase them. Fundamentally, at the end of the day, growth is great, product is fun, but if you are not making money and you’re not striving to be successful in the future, it really doesn’t matter.”
Touchstone has taken a series of steps over the years that have directly contributed to its success and positioned it for strong future growth. It established dedicated customer service and quality assurance departments. The company also created strict purchasing standards, along with setting overall business goals and driving results to meet those goals.
Another major factor in its success was bringing sales and marketing functions in-house to gain control of the buying process, Cohen says. By having sales agents as Touchstone employees and giving them benefits, Cohen feels the company was able to attract better agents and was better able to guide them toward Touchstone’s goals, instead of those of their brokerage.
“When you are subbing out the sales and marketing process to another company, it doesn’t matter how good they are; you don’t have day-to-day control over the selling process and marketing process of your company,” he says.
The move has paid off by helping maintain profits during the downturn, Cohen says.
“In the crazy market we’re operating in right now, you have to make sure your real estate agents are aligned with the way the company thinks to try to assure that they are demonstrating the value of being a Touchstone customer, as opposed to, ‘How do we get you into this home cheap?’ which is the natural inclination in this market,” Cohen says.
Cohen advises builders to spend time during the downturn making sure their companies are primed for the future. And a big part of fine-tuning operations now is working with the best consultants, many of whom can be found locally, he says.
“Try to align yourselves with those folks,” Cohen adds. “Keep asking questions, and don’t be scared to spend what ultimately is the cheap money getting professionals, who have done this time and time again with multiple people, to assist you in getting your business operation together. ... This is not the time to be staring at the ground and thinking woe is me.”