Harassment Clause

While we always tried to identify bad customers before the contract was signed it was not always possible.  As we grew and I was less involved in the contract process we had a few that went to contract that should have been weeded out in the contract process.

We had one customer who was a retired engineer. He would come to the construction site every morning with a lawn chair and sit and watch the construction. Often he would go up to the trades people and ask questions about what they were doing and question why they were using a particular tool or material. In the evening he would go to the library and do research. Often he would bring a do-it-yourself book to the home and ask why the tradesperson was not using a certain technique. It not only slowed down the construction but was upsetting all our trades' people.

We used pre-fabricated wood I-beams on our floors because they were more uniform, shrunk less and provided quieter floors. Our customer had envisioned traditional lumber. He questioned the carpenter who explained that that the product was superior to the traditional lumber. The next morning the engineer customer came to the job site with a bucket full of water with an I-beam cut off he had taken from the jobsite the night before floating in it. It had, of course, swollen on the cut edges.  He believed because the truss absorbed water it was inferior. Our Carpenter contractor was ready to walk off the job.

To deal with situations such as this we had the following clause in our contract;

32 .ADDITIONAL REMEDIES:  :  If Purchaser in any way harasses Seller or any of its employees or subcontractors, or interferes with construction of the residence or conducts unauthorized visits to the site, or makes repeated complaints to third parties, or indicates a fundamental unhappiness with the residence or the project, or otherwise indicates any material lack of creditability in Seller or Seller’s ability and willingness to perform its obligations under this Agreement, then Seller may, in its sole discretion, terminate this Agreement by notice to Purchaser and refund to Purchaser any earnest money payments made by Purchaser.  Seller shall not be obligated to return or pay to Purchaser any deposits or payments for upgrades, extras or non-standard items which have been installed or made or cut to order.  Upon such termination of this Agreement and return of earnest money payments, Purchaser shall have no further remedies against Seller.

I took a check in the full amount of his deposit and went to his current home and knocked on his door. When he answered I explained that we were canceling the contract under the clause above and handed him a letter to that effect. He took the letter but refused to accept the check. Within an hour I received a call from his attorney. After a short conversation his attorney – who was also Mayor of the village where we were building the home - sent me a letter saying that if we completed the house the home buyer would cease all harassment and in fact would not visit the house until completion. We did complete the home.  As the final walk through approached we were concerned about an explosion of pent up frustration but the process went smoothly and we never received a single warranty call from this home owner.

A harassment clause such as the one suggested in this article will not only help you once you get into this situation but it may also help you in the weeding out process. The more a customer objects to the clause the more likely they are to be a problem. 

Original Content copyright 2011 Thomas Robinson

Fire the Customer

In our housing business we worked hard to identify, locate and bring leads to the table. Often as we were negotiating the contract and sometimes even after we went to contract things would not feel right or even begin to go wrong and we would recognize that a customer would be more problems than the contract was worth. Firing a customer is hard emotionally and can be difficult legally.

The saying goes eighty percent of your problems come from twenty percent of your customers. I always thought the ratio was more like 90/10. The sooner you identify problem customers the easier it is to disassociate. As good as it might feel to "fire" them that process can have legal and public relations consequences that you may not want.

A real bad sign of problems was when one of or the other of a couple took complete control of the process particularly if the lead partner was condescending to the other partner. If they argue openly in front of you it is also a bad sign but in my experience not as bad as only one controlling the process because it often means the disagreements are going on outside of your presence and you can be caught in the crossfire.  You cannot be a marriage counselor so do not try. If you get bad feelings that the customers are not on the same page it is often better not to even go to contract.

There are other signs of problems. The "researcher" was one of my favorites. He would often start out a conversation by saying "I know you are the expert but," and then would launch into a monologue on what he had found n the internet or at the library. As we were moving through the process he informed me that he had purchased a CD that had contract forms he intended to use for his new home purchase which included a penalty clause if we were late on completion which he had needed to use on a previous new home purchase.

I told this customer that we had a standard purchase agreement prepared by our attorney and that we did not use third party contracts particularly ones purchase off the internet. His response was "We'll see."

The process of selecting a lot and completing final drawings was usually a two to three month process for us but with this customer it took us nearly six months to finally get to the contract signing.  We completed the contract and sent it to his attorney for approval. The Contract came back with his penalty clause written into the pre-printed form. When I told him we would not accept this clause he told me he had done his "Due Diligence" on us and although we had an excellent record of on time completion so had his last builder and he had need to enforce that clause on that builder. In the process he told me the name of the other builder who I happened to know through the builders association.

I called up the other builder and when I asked him about this customer he said "RUN." Turns out the project was delayed because the customer kept changing his color selections while the home was being built. When it was finished the builder had paid him the "penalty" just to get rid of him.  We told this customer we would not be building him a home.

Most of our customers were great.  Living through the bad ones is a nightmare. Identifying a bad one before you get involved is financially rewarding and great for your mental health.

Original Content copyright 2011 Thomas Robinson

Simple Residential Construction Schedule – Tips on Using

Following the instructions in my three previous articles on scheduling you have now prepared a simple and workable schedule for a typical home. This schedule is a starting point. In this article you will learn a few tips on using the schedule.

The first step is it to get it out of your computer and put it somewhere where you look at it every day. I had one manager who kept all the schedules in a notebook.  His projects never seemed to run as smoothly as our other projects. It was hard for me to review his schedules to see where he was on any given day. Keeping the schedules in a notebook was his way of hiding his problems.

Once you add the starting date for your project and have the spread sheet calculate the schedule save it in a separate file then print the schedule. You want to save it because as you will see you want to be able to tweak the master as you work the schedules to continually improve it. Tape the sheets together. I liked to trim the top or bottom of the pages and tape them together so it looked like one long spread sheet.  Tape the reassembled schedule to a large wall or pin it to a bulletin board in an area where it is easily viewed.

As you complete each item on the schedule highlight the item. I liked to do it with an orange highlighter so I could see the marking from a distance but still read the words. Crossing the items off will make it harder to backtrack if you make and error.  Look at it frequently if not daily and update as necessary. As you work the schedule you will discover problems with times it takes to complete items, sequencing and even some items you have forgotten. Make sure you make corrections to your master so you do not repeat the problems.  

Be careful about adding time.  It the roofing is taking five days when you programmed in three why is it taking five when you though it should take three?  Was you assumption wrong or is there something wrong with the planning or even the trade contractor that can be corrected instead of just adding days to you schedule. Remember each day costs you money in overhead and interest.  

Often it is easier to add time than fix a problem. You should also test assumptions occasionally. If you have programmed in three days for the roof can it be done in three. It is harder to spot under scheduled times than over.

If you line up all the schedules of multiple houses on the wall the highlighted portions should create a smooth slope from the oldest project to the newest. This is not a perfect indicator but it is a great way to quickly spot possible problems that need be looked into in more detail.

The more you work the schedule the better it will become. Do not be afraid to add items. One of the fireplaces we offered as an option required a sheet metal cap installed after the siding was complete.  It was difficult to spot from the ground and so on one house we missed it and forgot to install the cap.  During the next rain water showed up on the interior wall. Once we diagnosed the problem we add a zero day work item to our schedule. We also added a zero day item just before our drywall that reminded us to check for the cap.  You can add whatever items you like from inspections to reminders. You can even add an item such as "remind the office to schedule closing." Whatever makes your process better.  

Original Content copyright 2011 Thomas Robinson

Managing Customer Expectations – Homeowners Manual

Did you ever receive a customer complaint and take it to your staff only to get the response from your employee, "Well what did they expect?"  

Managing your customer's expectations will lead to happy customers and more referrals. The key here is manage not manipulate.  It starts with your advertising. Are you promising something you cannot deliver? You have likely heard the adage "under promise and over perform." The problem with this theory is that continued over performance will raise expectations even if you promise less.  Promise what you can do then do it.

Our housing business created a Homeowners Manual that told the customer what to expect from signing the contract to warranty.  To develop our Homeowners Manuals we used a template written by Carol Smith and distributed through the National Association of Home Builders. The template is extremely helpful but needs to be reviewed thoroughly and adjusted to your geographic area and construction methods. You also need to prepare the instructions on the various procedures such as closing to your area. We found that more information we included the better. We even prepared a page with names and phone numbers for the homeowner to contact for establishing utilities, garbage pickup, cable TV and water service. We also included information on the municipality, Park District, school districts and emergency numbers.

The maintenance portion of the manual includes maintenance instruction on everything from vacuuming the floor to instructions on changing the furnace filter. At the end of each section the standards for the work item and warranty for the item is listed. The standards were practical and achievable. All our employees and trade contractors were required to have copies of the Manual available so they knew the standards we had contracted to meet.

Also included was a detailed description of closing procedures. We included a page of contacts the new home owner would need such as phone numbers and address of municipality, utilities, cable TV, garbage removal, emergency numbers and recreational facilities.

We would give the full Homeowners Manual to the home buyers when they signed a contract. We had them sign a receipt. The receipt included a clause that if they found anything in the manual with which they disagreed they could cancel the contract within forty eight hours.  If they did not cancel they were tied into the standards and policies in the manual. We never had anyone cancel their contract. We had happier customers and therefore happier employees and trade contractors.

The template for the Home Owner's Manual can be purchased HERE. You can also email me and I will send you a copy of the table of contents from our Manual.

Original Content copyright 2011 Thomas Robinson

Listening to the Customer

We all believe we listen to our customers. Sometimes we listen but do not hear what they are saying.

In the early nineties, we were building townhome-style duplexes in Hoffman Estates, Illinois. We were just a few miles from the huge new Sears Headquarters facility. We were trying very hard to target some of the employees moving to the new facility hoping they would spread the word about their new home.

Our sales person, Betty, was a seasoned new home sales person and real estate agent. She was very excited when a women being transferred into the new Sears facility visited our project several times. This buyer was considering our project and another in a neighboring town. Our homes were larger and were closer to her work. She said she like our layout better. The only issue is all our units had basements and she did not want a basement.

Betty used her experience to translate that to mean she could not afford or at least did not want to pay for a basement she would not use. Betty reported this belief to the owners of the project who worked with Betty to put together a package of discounts, credits and special financing which eliminated the premium for the basement.  

After several weeks of working with the buyer, Betty received the call she never expected. Her customer had purchased the other home. Betty was so disturbed by the lost sale she went to see the unit that the woman had purchased. It was smaller, it backed up to an arterial road and Betty was certain our layout was better as were our standard features. Worst of all, the unit was more expensive even without the discount package for the basement.

Betty was so confused by the choice made by this customer she was sure she understood, she called the customer to congratulate her on her new purchase and ask her the rational behind her decision. In response the lost customer replied, I told you I didn’t want a basement.”

Betty then asked the question that never occurred to her before, “Why don’t you want a basement?” The woman then explained that Sears has a very good warrantee program on their sump pumps. She worked in the warrantee department and any time there was a sump pump failure she got the call. She had heard so many horror stories about sump pumps she would never buy a home with a basement.

Original content copyright 2011 Thomas Robinson

Buyers are Liars

Early in my career in the housing industry, I was told by a battle worn real estate agent, “Buyers are liars.” My early experience seemed to confirm that remark.

Several years later, I was at one of the presentations at the International Builders Show when Carol Smith, the guru of service in the housing industry said “Buyers are not liars, they just have a different perspective.” This statement is not only more politically correct but it also helps us analyze our customers in a more productive way.

Our customers spend a huge percentage of their savings and income on our product. They expect a lot; often more than is realistic. There is a clash of cultures between the hammer and nail construction industry that is trying to produce an affordable product and the new consumer. The new consumer is well read and informed. They have read magazines and watched TV programs where anything is possible, even if not always affordable. I even had one customer who brought in a CD with sample construction contracts. He informed me we would use one of these contracts for the purchase of his home. I often wondered if he even found a builder to build for him.

No matter how difficult a customer is, no matter how unreasonable, rude, or even stupid, they are still the customer. You are not alone in your frustrating attempts to please them. You cannot please every customer. The only failure in the attempt is the failure to keep trying.

Original content copyright 2011 Thomas Robinson

Simple Construction Schedule - Add Automation

If you read my two previous articles on residential scheduling, Work Items and Create a Flow Chart, you will now have a workable flow chart for your project.  The next step is to automate the process so you can plug in one date and have the entire schedule print out.  In this presentation I use Excel because it is the program I use the most but you should be able to use any spreadsheet program. 

List all your work items on the spreadsheet as they occur in your flow chart.  Add a column for work days and list the number of non overlapping work days required for each item. Do not forget to add the dates you need to order critical items such as windows, doors or other items with lead times. You also need to work backwards and add "schedule" dates. If your electrician requires a week's lead time then make sure you and an item on your schedule.  Add these items in as zero workdays.

When you get to paths on your flow chart that can be worked on concurrently create a continuous path for the longest path then come back and create a second list starting from the first time in the second path.  If you are reading this on my blog you can see the exterior schedule starts after the final clean on the chart but the time line places it after the roofing.    

            

The formulas are relatively straight forward.  The following is a view of the schedule with the formulas. You need to tie the start of the exterior portion of the schedule to the point where the shell is enclosed, in our case the completion of the roofing.

If you would like an Excel copy with working formulas drop me an email.      

You should now have a simple residential workable schedule. In our next article we will discuss how to use this schedule for multiple concurrent homes.

Related articles Create Flow Chart , Work Items

Original Content Copyright 2011 Thomas Robinson

Simple Residential Construction Schedule – Create Flow Chart

In the last article we discussed creating a list of work items for your construction schedule. In this article we will discuss creating a flow chart of your work items. 

Before we begin I would like to make a few comments of commercially available scheduling programs including Microsoft Project. These programs are based on a scheduling process called Critical Path Method (CPM) which was developed prior to the widespread use of computers.  CPM is a great tool.

The programs that are based on the method are complicated to use. When we tried to switch to one of these programs we found we were spending far more time on updating the schedule than working the schedule. The updating process often produced unexpected results. And printing the schedule was time consuming and it was difficult to see the overall picture from the printouts.  The title of these articles includes the word "Simple" and the method I am proposing is far easier to create and control. 

I have always preferred the low tech approach which is writing each work item on one of those little yellow sticky notes and then arranging the notes in the order the work is preformed. If you do this on a large sheet of paper you can then connect the yellow sticky notes with lines and you have your flow chart. The advantage of the sticky notes is you can see the whole project as it develops and move the sticky notes to make corrections and revisions.  

For the purpose of this exercise assume you complete one operation before you start the next. For example, list the rough plumbing; rough HVAC and rough electrical one after the other even though you are likely to overlap these items. In fact I highly recommend overlapping these trades because it will help them work as a team if they know each other.  We will adjust for the overlap as we progress with the schedule.

Construction of the home, of course, does not take a single path from start to finish. When you have completed the roof interior construction and exterior construction take separate paths. Each will have its own path to completion.  In our case the interior took much longer than the exterior

Once you have the entire schedule completed and you are confident it represents a practical schedule go back and add to each box (or sticky note) the number of days each work item should take and in parenthesis or with a different color the number of none overlapping days. 

In the mechanical portion of the schedule the Plumbing, HVAC and Electrical would take fourteen work days if the work items were done one time at a time but can be completed in nine days by overlapping the work.

Next add up the non-overlapping days to complete each item on the flow chart so you have a starting work day for each work item.  In the chart above the start work day is shown in bold just outside the upper left hand corner.

You now should have a practical road map to build the home but you are only half way there. Next you need to make sure all the materials are there when you need them.  Go back to your list of work items and for each work item list any materials that need to be ordered and require a lead time. Some items will be obvious such as doors, windows and cabinets. Some are not so obvious. Do not assume that items performed by subcontractors will be ordered by them. If you use a bath tub that requires three weeks lead time include it in the list.

I recommend you place orders for all critical items at the same time you start the project.  Assuming you order all materials on day one of your schedule are there any items that will not arrive in time to be installed?  When we started to use prefabricated wall panels and roof trusses we discovered that to get the drawing completed, approved by the municipality (many wanted to see design drawings on the trusses), into production and delivered took longer than building the foundation. We needed to order the wall panels and trusses more than ten days before we started the home or we had to wait for the materials.  You can add boxes to your sticky note schedule (blue boxes on chart) if it helps you identify the flow and any lead time problems.  I always add a box for confirming the order of critical item. To determine the start calculate backwards from the day you need to item on the jobsite.

Assuming I have made all this clear enough to follow you should have your complete road map of the construction project for your typical house.  In my next article on scheduling I will address putting this all into an easy and usable format.

Original Content copyright 2011 Thomas Robinson

Simple Residential Construction Schedule – Work Items

The construction schedule is the heart of a housing business. The success of the home and ultimately the business that builds the home is dependent on planning and implementing the schedule. Financing, billing, construction draws, closing, move in, warranty and even quality all flow from a successful schedule. In a series of articles we will try and take you from start to finish on designing a repeatable process of scheduling a home.  We will assume that the reader knows little about the construction process so those of you who have some level of expertise may jump around. As always I appreciate any comments or opinions.

In these articles we will be concerned with the physical onsite construction of a 2,500 to 3000 sf semi-custom home. In this particular article we will discuss making a list of work items to be included in the schedule. In latter articles we will add preplanning and the closing process.

The first step in preparing a construction schedule is determining the work items to be included. Start with your list of trades (subcontractors.) Make sure you include any items you do with your own employees to the list. The following is the list we used in our estimates and invoices, Your may vary depending on your area and how you contract your work. 

501 Excavation
502 Concrete
502A sidewalk
503 Asphalt
504 Masonry
505 Steel
506 Stairs
507 Carpentry Labor
507 Trim Carp
510 Millwork  and doors
511 Windows
512 Siding
514 Insulation
515 Roofing
516 Gutters
517 Drywall
518 Hardware
520 Flooring
521 Paint
522 Mirror
522 Shelving
523 Garage door
524 Cabinets
525 Kitchen top
525 Marble top
526 Appliance
527 Heating
528 Plumbing
529 Electric
530 Lights
532 Sewer Water
533 Other
534 Landscaping

Next look at each trade and divide the trade into trips to the project. For example; in our case our Excavation contractor would clear the site and dig the basement foundation in one trip. He would make a second to backfill the foundation and rough grade the site and a third to final grad the site for landscaping. Try and keep the divisions of work to no less than a day and no more than a week. For example, if you let all the carpentry as on contract and you only break it down into rough and finish the rough may take more than a week. You can breakdown the rough carpentry into frame first floor and walls, second floor and wall and roof framing and sheeting. Breaking down the longer items helps you better manage the project and understand where you are on any given date. Table 1 is an example of the Electrical breakdown.

Table 1

529 Electric
	Electrical Panel
	Rough Electric
	Finish Electric

You should also look at how your trade contractors perform their work. We used several different concrete contractors. One would install the footings, the stone for the basement and draintile with one crew and then the walls with a second. Another concrete contractor installed the footing and foundation walls with one crew then come back with a conveyor he owned to install the stone and draintile. The total time was the same but the sequence was different.  

Now that you have identified the work items you need to identify activities that also require time that are not actual work items. Make a list of required inspections. These will vary from municipality to municipality. Typical in our area was footing inspection after form but before pour, backfill inspection, completed foundation survey, rough framing, rough plumbing, rough electrical, occupancy and final grading, final plumbing and final electrical. The final inspection often required a final survey from a licensed surveyor certifying the location of the house was as planned and that the drainage was properly completed. Each of these items should be treated as a work item.

You now have a complete list of work items which is the first step in creating a simple schedule. In the next article Creating a Flow Chart we will discuss using the work items list into a flow chart to plan your work.


Related articles Create Flow Chart , Add Automation

Original content copyright 2011 Thomas Robinson

Tom and the Bull

The following is a true story. It is does not have the educational value of some of the other articles in this blog but it is fun.

My first venture into residential development involved a beautiful forty-acre horse farm that dropped off to a picturesque creek at the rear of the property. I negotiated the deal and we wrote the letter of intent on a sheet of notebook paper…which for some reason my attorney insisted we turn into a formal contract.

About a week after we signed the contract I decided it would be good to take a walk around the property in the pouring rain to see if it drained. So wearing my brand new red Robinson Development hat and windbreaker, I set out to inspect the farm. 

I first talked to the farm manager who told me to make sure I closed all the gates that I opened because the “livestock” was out. No problem right, a couple of horses, they’re big but harmless.  So I set out in a drizzle, carefully closing all the gates behind me. Fifteen minutes later I was at the back of the property in the pouring rain. I decided the property was draining …… or at least I was as wet as I wanted to be so I turned back toward the barn. It was now up hill all the way. The rain kept falling harder.

           

About a third of the way back through the rain I noticed a separate fenced area that I hadn’t noticed on the way out. In the corner of this paddock was one “livestock” – a rather large bull with enormous horns………… Oh… did I mention my new Robinson Development red windbreaker?

Of course, I was sure that all the other people who were out were carefully closing the gates behind them as I had.

My heart now beating hard in my chest I tried to continue at a normal pace… show no fear, I though. As I got closer, I could clearly see the gate to the bulls paddock…not only was it not locked but it was wide open and there was a clear path between the bull and I. I walked as slow as I dared now my heart jumping out of my new RED Robinson Development jacket.

After what seemed like hours, I got to the gate by the barn and carefully locked the gate behind me. It took a few moments to settle down my heart and to let the adrenalin drain from my system. Once I calmed down, I could now see that appeared to be a low spot in the property over where the bulls stood. Loyal to my mission I made my way through several corals used to exercise the horses; you know the ones with all the torn sod and full of mud.

It took me some time to work my way through the slippery mud and over to the paddock next to the bull. Soaking wet and now covered with mud I came eye to eye with the bull. Not ten feet away were the huge pointed horns and huge brown glazed eyes…of the largest… plastic bull I had ever seen. 

Original Content copyright 2011 Thomas Robinson

Custom, Semi-Custom, Production Homes Defined

Before we can discuss how to build a custom home we need to understand just what a custom home is. The Custom Builders Council of the National Association of Home Builders defines a custom home is a home designed and built for a specific homeowner on a specific lot. There a lot of homes advertised as customs homes that are not. By the above definition if it is already built it has not been built for a specific homeowner. Most of these homes fall into closely related categories semi-custom and Spec homes.


Note that the definition does not address the level of quality in the home. A two bedroom home with a 4/12 roof pitch that is designed by an architect for a specific site and client would be custom. A three story six thousand square foot home with an elevator and seven bed rooms built for a parade of homes and marketed as custom is not a custom home. From a marketing stand point the builder of the second home is trying to present the features of the homes as being of a level usually found in custom homes.


A true custom home starts in the minds of the homeowner and architect and on a blank sheet of paper. The architect and homeowner are not limited in their selections of materials or manufacturers. They can select wood shake roofing, clay tile, architectural shingles or standard three tab roofing shingles. A true custom home is nearly always the most expensive because the homeowners are selecting features and materials often without regard to the cost or more important taking advantage of the efficiencies of production homes where the builder can buy hundreds of sinks, for examples, instead of just one.


A semi-custom home is a home build from an existing plan with modifications, sometimes extensive modifications. In this type of home, if it is being built by a professional builder, it is far more common for the materials to be selected from a smaller group of suppliers and manufacturers with which the builder has a relationship. The builder usually will get better pricing because of the quantity that is purchased. The professional builder will also call on experience to select materials that are cost efficient within the quality level expected, easy to install and likely to create the least call backs.


A semi-custom home is likely to cost less - most often a lot less - for several reason including the design costs less because the plan is available and it is easier to modify than to start from scratch; if a professional builder is involved he is selecting materials that are cost efficient, reliable and available; and the builder has built the plan before and has worked out the bugs in the plan.


A spec house is one built by a builder on speculation that the home will sell. The benefit of this type of home is the builder selects materials and features that the market in the area has selected. For example a fireplace might be added if they are popular in the price range of home being built. The builder can also build the home without dealing with a home owner during construction which reduces delays and changes.


While a production home may not fit in this discussion many production builders will try to market their homes as "custom' while using materials and methods more associated with less expensive homes. The production home will always be less expensive but there will most often be little chance for customization.


In this article we have defined custom, semi-custom and spec home.

Original Content copyright 2011 Thomas Robinson

Doing What You Love

When I started my home building business it was because I loved the process of building homes. I liked meeting with customers and helping them create a plan for a new home. I liked talking through what they needed – some call it sales – and helping them select the floor plan and features their family needed.  I loved helping them establish a plan and setting into motion and interacting with the customer as their dream took shape – some call it building the home - and became reality.

I was terrifically fortunate because I almost always had great customers. The ones I could not make happy I fired. Yes I fired customers more than once.  And I loved introducing the customers to their new home – some call it the final walk-thorough. I even enjoyed helping the customers learn to manage their new home.

Then came my companies growth and over time I became isolated from the customer and the construction process.  The only time I heard from a customer was when there was a problem and they were already angry. Because I was isolated from the customers the ones that I would have fired were now the only ones I was dealing with. The bigger the company got the more of my day was tied up with these customers. They were to be sure a small minority but it is the 90/10 rule; Ninety percent of your problems come from ten percent of the customers.

My employee were doing what I loved and started the company to do and I was handling the problems. So I reinserted myself in the process. I did a preconstruction meeting with every customer. I also scheduled regular interactions during the process so I could talk to the customers; a pre drywall inspection and a final walkthrough. Even if I did not do the entire walk-through I made sure I was there.

And I made sure I visited each construction site every week whenever possible.

I started having fun again. I got to know the customers so if there was a problem they did not meet me for the first time under stress. I could identify customer and construction problems before they became bigger problems.  

You cannot do everything but that does not mean you cannot do some of the things you love. It will keep you excited about your business. If you look back on the early days of your company as the fun times recapture some of that feeling. If you are excited it will show and infect your employees,  venders and even your customers.

Original Content Copyright 2011 Thomas Robinson

Beginning of Phase 2

My goal when I started this project was to complete one hundred original articles on Small Business. That goal has now been passed. Beginning today – I am writing this on January 1, 2011 although it will not show up for awhile – I will shift my focus to include articles on new home building specifically. I will continue to post general business articles from time to time.

I appreciate those who have read these articles and particularly appreciate the comments and suggestions. Please keep them coming.

The Business of Small Business

Calvin Coolidge said "The business of America is business." 

The business of Small Business is business. It is not a hobby, a trade or even a profession. A small business needs to be first about the business and secondly about the product or service that you produce.

If you are the best carpenter in the world it does not mean you can run a successful carpentry business. In fact your skill as a carpenter can be a major detriment to running a company. If you are the best carpenter that you employee and want to spend forty hours a week hammering and sawing or whatever it is a great carpenter does then who is doing the planning, marketing, sales, ordering, bookkeeping and managing that is required to run a business.

Great carpenters, engineers, dentists, lawyers and many other tradesmen and professionals have been the best at their job and able to make a lot of money for their company. Because they were better at their job than their employer they just knew that they could start a company and become an instant success. What they forgot was that it takes more than skill in a trade or profession to run a business.

I know a carpenter, John, who started his business and was convinced he could spend all his time installing custom woodwork and because he had no overhead he could only charge an hourly rate that was half what his former employer would charge.  His plan was to take five of his former employer's regular customers who knew his work with him when he opened his business. 

John started his business and while it was a little slow the first month shortly he was getting regular requests for work. In fact, he was getting too much, more than he could handle.  He called in a couple of buddies who he knew were good carpenters and had them cover his overflow.  These buddies wanted to be paid at the end of the week but the people he was working for only paid at the end of the month… if then.  John was working nights to do the billing and because he was only charging his regular rate while he was doing carpentry he was doing the billing for free. Because he had been a carpenter his entire career paperwork was not his strong suit. He did not know how to prepare and track invoices. The bills were not in the form required by his customers and did not include the information they required.  His buddies quit because he had cash flow problems. He fell behind on his own work because he had to take time during the day to talk to his customers to straighten out the bills. He did not have any idea how to do payroll taxes, buy business insurance or any of the hundreds of other details required.

It was not long before the customers were angry. He was exhausted from working days on carpentry days and on paperwork at night. His business failed but not because of his carpentry skills. It failed because of what he did not know.

If you are going to start a business, start with how you will run the BUSINESS not just how you will make the product or perform the service. Do a business plan that details marketing, sales, accounting systems, cash flow, insurance, purchasing, workforce and management systems required. If you cannot build a plan then you are not ready to start a business.

Try and sell that plan to someone without a vested interest as if they were investing their money. If you cannot sell them then it is likely not a good enough plan. 

Original content copyright 2010 Thomas Robinson