The Association of Professional Builders (APB), a leading business coaching service for custom home builders, with members in the United States, Canada, Australia and New Zealand, recently shared a 2023 trend forecast for custom builders and remodelers.
Despite many issues that plagued 2022 including supply chain delays, labor shortages, low unemployment rates, high inflation, interest rate rises and builder burn out, optimistically, two of the biggest findings in the forecast by the Association of Professional Builders indicates that 58% of builders surveyed still delivered homes on time and are operating in the black.
According to the report, builders also reported 2022 as a record year for revenue and most importantly, their net profits were up. Many builders also reported signing contracts at record margins during the last quarter of 2022 even as the market softened.
What do these findings by the APB mean?
Residential home builders should be encouraged by these signs and continue to understand how to remain profitable, no matter their company structure. APB cited a slower sales cycle in 2023 and emphasized the value of builders implementing a structured approach to selling.
APB noted in particular that builders must understand how their sales will affect their margins. Builders who do not are often forced to drop their prices in order to win jobs, which can then in turn create a long-lasting domino effect that will ultimately impact their bottom line.
“We are pleased to see that builders are turning record revenues and net profit margins as it hasn’t always happened this way, even with less economic turbulence. We’re seeing builders get smarter about how to operate their companies. They are turning more profitable as a result of a better understanding of their finances, implementing better technology, and putting in place better sales and marketing processes,” commented Russ Stephens, co-founder, APB.
What should builders do in response to these trends?
First things first, let’s talk about sales
The Association of Professional Builders’ trend forecast emphasizes the importance of a structured approach to sales, as a slower sales cycle is expected in 2023. Builders must understand how their sales will affect their margins, as dropping prices to win jobs can have a long-lasting negative impact on their bottom line. So, what’s the best approach to sales? It’s all about understanding your target market and tailoring your approach to meet their needs.
Think of it like a soccer game: you need to know your opponent’s strengths and weaknesses in order to come out on top. Do your research and be strategic in your sales approach.
Next up, technology
The APB’s trend forecast suggests that builders are turning more profitable as a result of implementing better technology. This includes everything from project management software to 3D modeling tools. Embrace technology and stay ahead of the curve. It’s like in basketball, where teams that are quick to adapt to new plays and strategies often come out on top.
Mind your finances
Another key takeaway from the forecast is the importance of understanding your finances. Builders who have a better understanding of their finances are turning more profitable, according to the APB. This includes tracking key performance indicators (KPIs) such as net profit margin, gross profit margin, and return on investment (ROI). It’s like in cricket, where players track their stats to identify areas for improvement and maximize their performance.
But it’s not just about understanding your finances – it’s also about implementing better sales and marketing processes. Builders who put in place effective sales and marketing strategies are seeing success, even in a softening market. It’s like in Friends, where Joey’s acting career takes off when he starts marketing himself and networking with industry professionals.
Communicate, communicate, communicate!
It’s vital to avoid mistakes that can negatively impact your business. One common mistake is failing to communicate effectively with clients. Keep your clients in the loop throughout the project and be transparent about any rising issues. It’s like in The Wire, where effective communication between law enforcement agencies was key to solving complex cases.
Builders who want to keep up with or take advantage of the trends identified in the APB’s forecast should focus on a structured approach to sales, embracing tech, understanding their finances, implementing effective sales and marketing strategies, and avoiding common mistakes. Keep these in mind and you’ll be on your way to record revenues and net profits.
And remember, it’s not all about business – have some fun with it! Like in Harry Potter, where Hermione’s attention to detail and love of learning ultimately leads to her success.
For more information and to access additional resources and insights, please visit the website. To get a copy of the 2023 SORCI Report, please visit the website.
Gerald Ainomugisha is a freelance Content Solutions Provider (CSP) offering both content and copy writing services for businesses of all kinds, especially in the niches of management, marketing and technology.
