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Business Analysis Builds on Strengths, Isolates Threats
 Many builders are second guessing their business strategies while trying to figure out a way to get through the downturn.
One way to make the right decisions, especially if you plan on making long-term decisions, is to conduct a SWOT (strengths, weaknesses, opportunities, threats) analysis of your business.
By examining your business’s internal strengths and weaknesses, you can look at your business assets and detriments side-by-side.
Your strengths can include such things as a good marketing plan, keeping meticulous records, fair trade partners and developing solid business relationships.
Weaknesses are more difficult to target. Be honest about your business when you develop this list or the SWOT analysis will not help you improve your business. List items like construction schedules that are always late and a selection process that needs better documentation, if they are applicable.
Evaluate Available Opportunities and Harmful Threats
List every opportunity and new revenue stream you can think of that can potentially boost your business. For example, residential builders could consider pursuing remodeling or commercial build-outs to supplement their business or partnering with Realtors® or developers. Creativity is key when filling this list.
Threats, on the other hand, are potential hazards to a company and can include such realities as the weakening state of your local market, growing competition or too many spec homes in your inventory.
Understand SWOTs, Then Think Strategically
First, evaluate which strengths to build upon to help maximize business, which ones don’t need changing and which ones should be aligned with available opportunities.
Then focus on weaknesses. Fix the weaknesses that are critical and de-emphasize the weaknesses that are difficult to eliminate.
Finally, look at the strengths and weaknesses collectively and apply them to your available opportunities. If one of your strengths is having a well-documented building process and great sub-contractors and your weakness is marketing, for example, then look for opportunities to contract your marketing and sales.
Keep in mind that every SWOT analysis can yield multiple strategies worth pursuing.
Consider this scenario. Your strengths are working with customers and designing plans. Your weaknesses include having little building experience and a poor trade partnership network.
One strategy might be to hire skilled employees with building expertise who are well connected to preferred vendors. Another strategy might be to develop a partnership with a general contracting company that can do the actual construction work once you finish the design.
Further analysis will determine which strategy is best. Hiring skilled employees works if the “skilled workers available” represent an opportunity and “cash flow” is not a weakness. Likewise, partnering with another general contractor could work for you if you listed “plenty of prospects” as one of your strengths.
If “increased competition” is a threat, consider more marketing to increase demand as a strategy.
Once you’ve performed a thorough SWOT analysis, the key is to create strategies that insulate your business from threats.
Andy Elsbury, a member of NAHB’s Custom Home Builders Committee, is the founder of Indianapolis-based SelectionWare, which provides consulting services and solutions for home builders to improve the building process. For more information, e-mail Elsbury, call him at 866-585-9222 or visit the SelectionWare Web site at www.SelectionWare.com.
 NAHB Has Nearly 300 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.
 Improve Business Operations With ‘Cost of Doing Business Study’
The “Cost of Doing Business Study, 2008 Edition,” available through BuilderBooks.com, enables home builders to compare their business operations with like-sized builders across the country so they can fine-tune their businesses and boost profits.
The study analyzes several operational business categories ― including volume, operation type and land vs. no land costs ― and enables builders to identify their strengths and weaknesses, increase efficiency, set realistic budget targets and improve business practices.
The categories have been analyzed, where applicable, by average and by the top and bottom 25% of performers by net profitability.
Builders can use the the study to develop proven strategies to succeed in an increasingly competitive market.
To view or order the “Cost of Doing Business Study” online, click here, or call 800-223-2665.
 Add Success to Your Schedule
Missing a deadline can seriously damage your bottom line. The "Scheduling" course from The NAHB University of Housing shows building professionals how to set workable schedules and use various time-management tools.
The course teaches the benefits of scheduling and integrating scheduling with other management activities and will help builders, remodelers and site managers deal with those days when nothing goes according to plan.
Find upcoming Scheduling courses here, or call 800-368-5242 x8154 for more information.
 Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
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.
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