As recent history has shown, assumptions can get you into trouble. The current recession can be blamed on a number of assumptions: that the bubble would never burst, that home prices would continue to soar, and that bad debt on top of bad debt could continue to support itself. If assumptions can bring down an entire economy, they certainly can do the same to your business.
To compete successfully in these troubled times, you must rethink every assumption and evaluate critically what you could and should be doing differently. Here are some of the most common long-held assumptions custom builders make:
The custom market wants the same homes built the same way today as they were eight, five, or even three years ago.
Even when the market comes roaring back, the financial crisis won’t soon be forgotten. Custom home builders can’t assume things will go back to “normal.” Today’s clients are savvier than ever, considering environmental factors when making design decisions, and demanding more of smaller spaces. It’s up to you to deliver what customers in your area are seeking; if you don’t, they’ll find someone who can.
The success of a business is based solely on its leader.
You can’t be the thinker, doer, and worrier of all things. Instead, become the visionary leader you are paid to be and build an incredible team around you. Take the pulse of your market, then come up with a plan and communicate it to your team so they can implement it.
If you’re good at what you do, the financials will take care of themselves.
Not having a firm grasp on your financials is risky behavior, even in the best of times. Especially now, you must understand what the numbers are telling you. Cut your margins to the edge and stay on top of accounts payable and receivable. Honor the financial commitments you make and hold others accountable for their commitments to you.
Your bank will be there for you.
Banks have drastically changed how they operate. Even with easing credit markets, this isn’t likely to change (nor should it). You can no longer assume that you’re still what they consider an acceptable risk. If you want to keep or extend your line of credit, you’re going to have to prove your business is worthy of it—and that you have a solid plan in place to repay your debts.
You can no longer afford to assume anything will remain static for very long. Taking a close, honest look at how you operate and stepping out of your comfort zone can be difficult, but it’s crucial that you ask yourself:
If you don’t take the time now to evaluate how you do business and put in place a new way of doing things, you’ll go back to business as usual when the world rebounds. To survive and thrive, you’ll need a fresh perspective. Don’t allow assumptions based on past experiences dictate how you choose to lead your company today.—Former contractor Clay S. Nelson is a radio talk show host, speaker, and business coach to home builders nationwide. He can be reached at clay@claynelsonlifebalance.com.
