To profit, specialize
you need to do one thing well By Steve Greer
December 14, 2011 by Robert Koci
I have been in the building industry now for 25 years, and if I know one thing about it, it is this: specialization is the only way to profitability.
Even in my first job selling lumber to custom builders I had a niche; I had an architectural and engineering background, which was something none of the other sales guys had.
With the knowledge I had I could help my clients take a close look at their designs and see if there was a more efficient way to frame using engineered lumber products. Twenty-five years ago very few people really had a handle on that. As a specialist in engineered lumber, I was saving contractors money on design and not compromising the structure and they wanted to do business with me because of it. That meant my lumber pricing was not being haggled down like the other sale guys’ pricing. Contractors saw value in my specialty.
Today I build high-end luxury homes and renovations. When the market is good, a lot of builders and contractors come out of the woodwork looking for easy money. As a general contractor, you can find yourself pricing jobs with subtrade bids ranging as much as 40 per cent—sometimes even more.
But when the bad times are back and there is less work out there, pricing gets tight. You seem to lose a lot of the easy-money guys. The best defense so you don’t get caught up in the highs and lows of the business and the unbelievable range of pricing is to specialize.
And by specialize I mean even within the custom home building sector I have developed a specific offering. I build energy efficient and environmentally friendly homes with very complex systems for home entertainment services. It’s a start-to-finish package: help in finding a property, design services, building construction services, permit applications and landscaping.
It’s pretty high-end. We build much more complex HVAC details. I am constantly studying new products so we can offer our clients up-to-date homes with the latest technology. We are now starting our first LEED-certified home. There are a lot of items that you have to take a close look at if you want to have this certification—Energy Star, air quality, low VOC paints, energy star, insulating below the slab and using spray foam throughout the house. We try and stay so far ahead of our competition that we will eliminate a large portion of that competition and get the jobs that others can’t or won’t do. We can only do that because we specialize. In my book it is the only way to go.
Steve Greer is a custom homebuilder in Oakville, Ont.