A year ago, Royce Builders posted its best year ever with 1,875 closings, and the Houston-based company expected to parlay expansions into Charlotte, N.C., and Atlanta as part of a growth and diversification plan. But early in 2007, senior vice president Shonna Speer, who was also working in a corporate capacity in Houston, recognized that the company needed to turn the strategic foresight it executes so flawlessly in Houston into an action plan in its emerging markets. As part of a young, entrepreneurial senior management team, Speer led a strategic planning process that helped to ensure the company made smarter decisions. Despite the fact that functions like purchasing, accounting, and marketing were all centralized, the strategic processes had never made their way into the other divisions.
By reducing her responsibility in Houston, Speer was able to focus on Atlanta. Each subdivision had its own unique story. In one, lot prices no longer penciled. One townhome community was competing against single-family with $25,000 discounts, which influenced Royce's ability to get appraisals. Margins, of course, were an issue.
"The first thing I did was to take all of them and do community walks," Speer says. "I started at the entrance to the neighborhood, and I reminded them, 'Ok, this is your business. When you have a customer come in, you want it to run efficiently and look the right way.' So we literally walked every single inventory home and made sure every single option in our system was right with what's in the house. We nailed down the basics that weren't 100 percent done before."
Impact
After "getting into the weeds," the Atlanta management team was also relentless about getting labor and material costs down and renegotiating to decrease land costs. Now the division is doing a much better job supporting the company's overall topline. Although Royce started the year in four neighborhoods, it is currently active in six and has a contract for a seventh.
"Things began to turn around in the last month," Speer says. "I think we'll come out the rest of the year in much better shape than we did for the first eight months. In this environment, we are realizing that you have to put your resources on the things that are draining you. It's the whole debate of: Do you put your good sales person in a good neighborhood, or in a bad neighborhood?"
Vitals
Speers has spent nine years learning the business, from accounting, to sales, to recruiting and training, to her current position. As senior vice president, she heads up the expanding operations in Atlanta and Charlotte, N.C.
Outlook
"We are still trying to expand in those markets, but we are extremely conservative," Speers says. "In the last couple of months, developers have finally woken up and realized they need to work with builders. There are some subdivisions that you can get in with very low earnest money and very low takedowns, and, if they are [a fit], then its probably a good decision for us. There are so many things that just keep coming. You think you are in a stabilizing situation, and then something new happens. We just try to make the very best decisions we can every day–it's truly an every day thing. It's about being realistic and accepting that it's not going to be business plan '06 for a while."
–Lisa Marquis Jackson
Learn more about markets featured in this article: Houston, TX, Charlotte, NC.
