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Relationships Are the Core of the Building Industry
 To succeed in any business, it is imperative to know the industry you are in. And if you’re in the U.S. home building industry, that can be a bit of a mystery because of the many smaller market segments and the diversity of housing product and producers. The graphic of the industry below can help you position your company to maximize its effectiveness.
Relationships Develop Through Transactions
Relationships are the heart of the building industry, and transactions are the way these relationships develop ― whether with a banker, a trade contractor, a supplier or a real estate agent. Education, information sharing, financial transactions and social interaction are examples of the transactional DNA that is so essential for building relationships in the housing industry. As the value of these cumulative transactions increases, the likelihood of forming a positive relationship increases.
Structurally, the industry is comprised of “affinity groups” — manufacturers, media, government, retailers, trade associations, non-profits, academics and the supply chain players. They all interact with each other through established relationships.
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Industry "affinity groups" all interact with each other through established relationships. | Education is a powerful transactional way to establish relationships: manufacturers educating wholesalers, builders educating government, retailers educating builders.
Cultivating Relationships Is Important to Business
And it is easy to see why cultivating these relationships is so important in our business. It’s a lot easier to get a loan from a banker who you know than sending an application through the Internet. The trade contractor you know is far more likely to make an emergency service call than the one you find in the yellow pages. These are relationships to be valued, and you don’t want to put them in jeopardy by failing to pay a bill or abusing a trade contractor. The stability of your company and its long-term profitability depend upon the relationships you have formed.
When you create your business plan, make sure you chart the resources that will be available to move that plan forward. Your financial assets will be at the top of that inventory, for sure, but additional resources should include all of the relationships you have in hand.
From the model above, you should also make a proactive effort to fill the vacant slots among the affinity groups where relationships do not currently exist. Do you have a relationship within the media? If that’s a relationship that can help further your plans, then that’s probably a relationship you will want to cultivate.
The same holds true for the other affinity groups in the diagram and any other groups that may come to mind but have not been identified here. Supporting existing relationships and adding others directly contributes to your company’s resources, and a broad base of resources is your best foundation for a successful business plan.
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Supporting existing relationships and adding others directly contributes to your company’s resources. |
Bill Asdal is president of Asdal Builders LLC, of Chester, N.J. Asdal Builders has been providing quality building and remodeling services since 1973. For more information, e-mail or call his company at 908-879-4427, or visit the Asdal Builders Web site at www.asdalbuilders.com.
The NAHB University of Housing Offers Designation Programs for Builders and Remodelers
The NAHB University of Housing offers CAPS, CGR, CGB and a variety of other professional designation programs and business management courses that set builders and remodelers apart from the competition. To learn more about NAHB’s designation programs, visit www.nahb.org/designations. For a complete list of all current education offerings, click here.
Effective Strategies for Running a Profitable Business
“More! Management Ideas that Work,” available through BuilderBooks.com, contains more than 175 ideas on how to help run your home building business more profitably. It’s filled with real-world, practical advice from builders across the country. To view or purchase this publication online, click here, or call 800-223-2665.
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