History credits the famous architect Le Corbusier with the phrase "God is in the details." He was offering a more positive affirmation of the old proverb, "The devil is in the details." While I generally have a positive attitude, I believe custom builders are going to find this year that the devil really is in the details.
I recently attended a conference where two economists predicted that 2006 closings would fall about 8 percent below the record high set in 2005. Oddly, in an informal survey of builder attendees (mostly production builders and not custom builders) the general consensus was that they would increase their business in 2006 between 10 and 15 percent.
I have no doubt that some builders will be able to increase business this year 10 to 15 percent, even if the economists' predictions hold true. Some builders will have the advantage of a still-hot real estate market, a week competitor or, perhaps, the windfall of a dynamic marketing campaign. If you can grow business in a down market, you get greater market share, which has a much larger upside than just growing with the market.
My concern is that too many custom builders have seen fantastic growth in their businesses and become complacent. Maybe they have attributed more credit for the growth to their own wily business sense than to the boon that comes from a great market.God may be in the details of their fine, soaring and life-affirming designs, but I'm willing to bet the devil is down in the muck of the business details, rooting around and making a horribly sour mess.
In this month's issue we offer two articles that really dig into the details of running a custom building business. Senior Editor of Business, Bill Lurz, writes about the lessons custom builders can learn from production builders' even-flow production processes. There are few things in construction that force such attention to detail as putting in place an even-flow process. While it does not translate easy to true one-off custom building, it does provide lessons on scheduling, planning, communicating and executing that we can all learn from.
Perhaps more pertinent to your day-to-day business operations is the story Senior Contributing Editor Matthew Power penned on benchmarking your business. After years of being able to run an operation with a little fat on it, many custom builders are going to need to reevaluate decisions they have made in the past and compare themselves to industry averages and other successful builders. This story provides both a road map for such decisions and some strong direction on the kinds of numbers against which you should be benchmarking.
As I said, though, I am a positive person and while it looks like we're going to see a bit of a slowdown, I do not believe it will last very long. The good news is this will allow builders to focus on improving their businesses rather than just holding onto the reins for dear life. The devil has been setting up camp in the details of your business. It's time to run him out of there.