Week of March 28, 2005
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Constantly Reinventing the Wheel? — Not With 20 Club

In 1986, Dave Stormont got the bug. He wanted to build homes, to be a general contractor. So he said good-bye to a managerial job in the retail industry, packed up his wife and two small sons and set off to the Outer Banks of North Carolina to start a new career ― his third.

At the time, Stormont felt very comfortable with his decision, but it didn’t take him long before he began having serious doubts. In fact, within a year he ran up against many, if not most, of the same challenges that other contractors have faced when going into business for themselves for the first time.

An All-Too-Well-Worn Path

He had difficulties getting a contractor’s license, establishing credit and finding and hiring the right trade contractors. As the head of a company with little or no established reputation, he had trouble marketing himself and bringing in customers. Once he did, he ran into the “customer from hell” buzz saw. He had trouble recognizing which prospects might be troublesome and needed help writing contracts that could withstand their inordinate demands.

On the business and money side of things, Stormont had difficultly establishing a fair margin at estimate time, writing and getting paid adequately for change orders, establishing fair compensation levels for himself and his employees — you get the picture.

“There were times when I felt overwhelmed and had no clue what the next step might, or should, be,” Stormont said, “but I

A Stormont & Co. custom home.

continued to build in a good market and somehow pushed through those first few years.”

Those days are far behind Stormont now. His company, Stormont & Co. based in Kitty Hawk, N.C., has a well-established reputation for creating quality, luxury homes. But, looking back, Stormont sometimes wonders how he was able to avoid bankruptcy (some of his competitors did not).

He also clearly knows that he “left a great deal of money on the table” because back then he was not exposed to, and could not implement, good construction business practices.

A Familiar, Go-It-Alone Profile

“As a small volume custom design/build company, I really do not know how a builder would obtain the practical knowledge that could help him speed up the learning curve to profitability ― except to just spend years in the market learning as he goes,” Stormont says.

“Most of us fit the profile of being self employed, building up to eight projects a year in a local market, maybe having up to four employees and producing up to $6 million in sales from an office in our home or truck or in small commercial space,” Stormont continues. “I would assume that this profile fits many builder members in NAHB, and it does not give the builder an opportunity to see what other builders are making possible in their markets. I doubt your local competitors are in a hurry to share their ‘secrets of success.’ ”

Stormont is an avid proponent of learning as much as he can when participating in NAHB shows, symposiums and educational offerings. “I learned something new every time."

“The ‘nuggets’ of good information and practices I picked up by communicating with other builders were actually helping my small business,” Stormont says.

20 Club Accelerates His Learning Curve

Stormont learned abut the 20 Club program when it was first being launched about a decade ago. He was attending the Custom Builder Symposium in California at the time. “I saw the 20 Club program as a vehicle that would speed up my learning curve and possibly save me from having to learn everything on my own from the ‘school of hard knocks,’” Stormont says.

Stormont is a member of Club #2, “The Nails.” They gather twice a year, either at a club member’s location or a resort, to review each other’s business plans, financial data, marketing efforts, growth pains and failures and successes.

“It is like having 19 consulting directors at my disposal who collectively have already experienced what I am experiencing, and have implemented what I want to implement. They have encouraged me to move to another level in my business or advised me to slow down,” Stormont says. “They have become a group of friends who know my business and have watched it grow, stumble and grow again.”

Stormont says his fellow 20 Club members have been professionals, first and foremost. They have been cheerleaders and strict advisors. They have helped him transition from being a "one-man operation" — who had no personal life ― to an operation where “five of us share the responsibilities and make our careers.”

“The club is the group of professionals who have helped me to carve my niche in my market," Stormont says. "And they continue to help me learn how to use my employee resources to take this company into its third decade — to a level I could never have reached by myself.”

There are more than 45 clubs operating with each focusing on a particular segment of the home building industry, such as custom home building, production building, small volume building, land development, seniors housing, urban infill, marketing, remodeling and more.

For more information on the 20 Clubs program, visit www.nahb.org/20clubs.

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