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Six Tips for Getting the Most From Your Business
Finding and securing that choice piece of property is central to any home builder’s success, but when it comes to
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Jim Weber, CPA, Weber-O'Brien, Ltd. | profitability and getting the most from your business over the long run and when you retire, don’t overlook other important factors — such as partners, sharing profits with your employees and protecting assets.
At NAHB’s Custom Builder Symposium last month, Jim Weber, CPA, of Weber-O’Brien Ltd., an accounting firm in Sylvania, Ohio, offered builders six tips to improve profitability and, as he put it, “make it out alive.” They included:
Find a Partner
Find that person who may be as good or better than you at running a home building business and “replace yourself,” advises Weber, who had a heart attack after trying to do the work of several people for too long. Once he found a partner at his CPA firm, he was able to grow the firm to 50 associates.
Employees and partners should sign non-compete and non-solicitation agreements as well as promise — in writing — that they will not take documents with them when they leave, Weber advised.
If you don’t have, or don’t want a partner, Weber suggests that, at the very least, you should secure a written agreement from a friendly competitor that they will complete your inventory if you become disabled or incapacitated in the middle of a project or projects.
Invest in Your People
End-of-year bonuses have become a popular way to share the wealth with workers when times are flush. But what if some of them are saving their bonuses to start their own home building company?
Weber suggests that you consider “golden handcuffs” — a deferred compensation program that will keep your best employees on board and help build a healthy retirement nest egg for yourself.
“Your best employees will leave unless there is something to make them stay,” Weber warns.
Another way to invest in your people, Weber suggests, is to pay your children to work in your business, even if they are not part of your succession plan. Your children can use the money they earn to pay their college expenses.
Build a Nest Egg
Weber says that a couple who wants to retire at age 65 on an income of $10,000 a month will need $2.3 million to do so.
He recommends that the best place to invest that money is in a retirement account because it is the last untouchable in a bankruptcy proceeding. “It’s not all about buying land,” Weber says. “You can go bankrupt and the last item you’ll have standing is your retirement account."
People who are considering that $10,000-a-month level of retirement should be putting $60,000 a year in their retirement accounts, he adds. They should also have an updated power of attorney, living will and life insurance and long-term care insurance policies.
Fire Your Advisers
The last place you want complacency, Weber says, is among those handling your life-or-death matters — your health, tax, income and legal issues. Consequently, he recommends that you fire your advisers every decade or so ― and find new ones.
Look hard at your doctor, lawyer and accountant and be sure that they are worthy of your trust — and your money.
Scrutinize your business advisers, he says. Do they know your business? Do they walk your job sites with you? Does your CPA even know you?
Don’t wait a year to meet with your CFO, Weber warns. If you do, you may find out too late that your investment strategy is off the mark, or that you’ve missed out on an important deadline for a tax deduction, such as the new section 199 deduction for domestic manufacturing or the energy-efficient home credit.
Once you have trusted advisers, Weber says, listen to what they tell you. After all, that is what you hired them for.
Invest in Business Systems
Businesses need reporting systems that allow owners to monitor performance month by month, week by week.
Accurate, functional reporting systems let you know how well your business is performing. For instances, Weber says they can tell you your current cycle time, determine how much gross profit you are making, and help you understand the value of all of your assets and how to depreciate them.
“Invest in systems — in things that help you manage day to day,” Weber stresses. “Invest in things that give you information.”
Protect Your Assets
Most builders understand that holding land in your building company can put a significant asset at risk in the event that the comany is sued and hold their land in a different company. Along the same principle, Weber suggests that builders can form other companies to hold heavy equipment, buildings and other necessities.
Weber consults regularly with NAHB Builder 20 Clubs and says fraud has been detected in nearly all of the companies he has worked with.
“Almost half of you have fraud in your companies and you’re not aware of that,” he says. Bonding your employees is an inexpensive way to protect your company.
Jim Weber is a CPA with Weber-O’Brien Ltd., based in Sylvania, Ohio. For more information, e-mail Weber, call him at 419-885-8338, or visit the Weber-O’Brien Web site at www.weberobrien.com.
 NAHB Has Nearly Resources to Help You Run Your Business More Profitably
Go to NAHB's Business Management Tools Web pages (available to members only) for instant access to nearly 300 timesaving, moneymaking and cost-cutting business resources to help you run your business more profitably. Get guidance on accounting and financial management, business strategy, computers and information technology, customer service, human resources and more.
Resources are added weekly, so bookmark www.nahb.org/biztools to go directly to these vital business management resources.
Local and state home builders associations can link directly to www.nahb.org/biztools from their Web site and give their members instant access to these resources. It will make your HBA's Web site the place to go for the information and guidance that members need to succeed.
 NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market
With the current cooling of the nation’s housing market expected to persist into the middle of next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.
Subscribe to NAHB’s Business of Building e/Source
NAHB’s Business of Building e/Source is your monthly electronic guide to the hot issues and emerging trends in home building business management. You’ll find practical advice, tricks of the trade and sound business guidance — all delivered monthly, straight to your desktop, in a quick and easy-to-read format. Business of Building e/Source is available free to NAHB members and their employees.
To subscribe, visit www.nahb.org/BoB on the Members Only side of the NAHB Web site.
 Protect Your Profits Through Defensive Estimating
“Defensive Estimating: Protecting Your Profits,” available through BuilderBooks.com, shows builders and remodelers how to estimate based on fiscal goals and protecting the company’s bottom line.
This approach to estimating gives readers user-friendly systems to improve the process and provides hundreds of ideas and simple suggestions.
To view or purchase this publication online, click here, or call 800-223-2665.
 Survive Changing Markets
Bill Webb, MIRM, shows you how in “Sweet Success in New Home Sales,” available through BuilderBooks.com. This book provides powerful techniques for selling more homes and making more money in leaner times. This book lays out the proven approaches for crafting and delivering sales excellence.
To view or purchase this publication online, click here, or call 800-223-2665.
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