The Housing Chronicles Blog: 50 Ways for Home Builders to Waste Money

Friday, August 13, 2010

50 Ways for Home Builders to Waste Money

If a penny saved is a penny earned, then it certainly makes sense to avoid wasting money. To help builders avoid common pitfalls in today's environment, Builder magazine has compiled a list of 50 ways to boost profits and avoid leaving money on the table:

It’s fair to say that home builders are more worried about cash flow and cost efficiencies today than ever before. It’s a necessity. After all, that botched foundation pour, costly callback, or unchecked billing error could mean the difference between making or breaking a wafer-thin margin.

Which makes it all the more mystifying that so many builders continue to leave money on the table, or—as some expert observers and peers will tell you—commit the operational equivalent of throwing a pile of cash into a dumpster and setting it ablaze. Even in the most brutal of economic conditions, capital is being squandered in some amazing and clueless ways.

So, if your ultimate goal is to bury your business, forgo all of your worldly possessions, and live in a yurt on the edge of eastern nowhere, then by all means, go ahead and do what many builders have been doing for years. Sticking to the status quo could be your ticket out.

But if you’re looking to shore up your bottom line, run a tighter ship, and maintain the time-honored American tradition of turning a profit, then read these tips as a cautionary tale. And, if you have cautionary tales of your own to tell, pass them on. Submit a comment at

Then, make a new plan, Stan. Hop on the bus, Gus. Drop off the key, Lee. And get yourself free.

I have to admit one of my personal favorites is #13, "Eschew Market Research:"

Outsourced surveys and independent research reports can be expensive, but spending an hour or two of your day to read the local newspaper and/or business journal, talk with suppliers, subs, and lenders, give a home buyer seminar to a community group, and set up a simple survey on your website and at your sales center(s) can go a long way toward identifying market opportunities. And, even easier, the NAHB’s “Consumer Preferences Survey” and the National Association of Realtors’ “Profile of Buyers and Sellers” report, both available online for a modest cost, provide national and MSA-level data to broaden your perspective.

Although these are all good suggestions, I would also recommend asking for another opinion when pulling the trigger on a new development. And be sure to add Builder & Developer magazine and The Housing Chronicles Blog to that reading list. :)

For a list of all 50 suggestions, click here.

No comments: