I'm a process guy. I like to figure out the best way to do something and develop a way to implement that on a consistent basis. I think many builders like to do that for construction issues, but most custom builders tend to only build a business process after something goes horribly wrong. For some reason, smaller builders don't realize the advantage of having sophisticated, highly implemented systems within their smaller organizations. Perhaps they see it as too much overhead.
But not Estes Builders. This year, the Sequim, Wash., firm, which produces true custom homes and has completed development of a retirement community, won a National Housing Quality Gold Award. In 2005, Kevin and Jo Anne Estes' firm closed 37 homes, making their company one of the smallest builders ever to achieve this distinction.
The NHQ award is co-sponsored by NAHB Research Center and Professional Builder, our sister magazine, and it is the highest recognition offered by the housing industry for quality achievement.
Why is this important other than to recognize a great builder doing fabulous work? Because to win this award you must have in place sophisticated business and management systems — systems that compete against what the large private and publicly traded builders have.
Why, you might ask, would a small builder spend the time and effort to create such a crystal palace of organization when the investment would seem to outweigh the return? Here's one enormous advantage: differentiation.
The NHQ awards measure implementation of quality in these areas: strategic planning, customer satisfaction, human resources, trade relations, performance management, leadership, construction quality and business results. Continuous improvement in all of those areas will increase the productivity of your business and generate better profits. What I saw in Sequim, Wash., when the judging panel visited Estes Builders, though, was something even more dramatic. Estes Builders had a market advantage in two specific areas that are of particular interest to all builders: attracting quality human capital and combating increased competition.
Estes Builders' built its reputation in the community with the company's attention and devotion to quality. Consequently, it attracts and retains employees who can recognize a great company. People who know high quality are the kind of people you want working for you.
The same is true with trade contractors. In those areas alone, where most builders often beg to attract the best of the area, Estes Builders has been able to clearly differentiate itself from the competition because of its devotion to improvement. At Estes Builders, no management or key employee has ever left the business. And most of its trade partners have similar tenures.
Having such a strong and devoted team in place certainly helps when competition moves into the area. Sequim is not necessarily known as a hotbed of home building, but its position on the northern edge of the Olympic Peninsula has positioned it to be a fine retirement community. In fact, nearly 85 percent of the home building market is for active adults, a demographic that has attracted the attention of larger builders. Most builders in the area complete only 3 to 4 homes annually, so Estes Builders was the company most likely to be affected by an incursion of larger builders.
Because of the Estes' knowledge of the market divined from strong market research practices, Estes Builders has successfully grown its company while the larger builders have seen projects flounder and go unsold.
This small builder is the best argument I've ever seen for the need to invest in business processes.
630/288-8190, paul.deffenbaugh@reedbusiness.com