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7 Things Every Residential Construction Business Needs To Be Successful
Many factors need to be taken into account when developing land, so if you want to run a successful residential construction business, your company needs a wide range of skill sets.
It may appear as simple as buying land, building houses, and making a profit, but many other factors could make the difference between success and failure. Here are 7 things every residential construction business needs to be successful.
A good land portfolio
If you intend to have any longevity in this industry, you need a decent land bank. One site may keep you going for a little while, but what will you do when it's complete? The planning process can take a long time, so you may need to start buying land a good 6-12 months before you intend to develop it.
Form as many contacts as you can and keep on the lookout for land opportunities. In a good market, land values will rise, so even if you do nothing with it for a while, you could still be making money.
Functional house type designs
Your standard house type designs may play a fundamental part in your success. Customers want a home that flows well and ticks most if not all of the boxes in terms of their dream home. Spend some time with your design teams to discuss floor layouts and trying to ensure that the designs are well-considered.
Customers will look for ease of use, functional space, and storage may also rank highly on their list of essentials. It's all very well designing a property that looks nice on the outside, but if the interior is disjointed and the layout doesn't work, it's unlikely to attract many buyers.
You are only as good as your weakest link, and so you must have a team of specialists working for you or with you to make your business a success. You may, for example, encounter issues with contaminated land or run into drainage problems when groundworks start. Having a professional engineer on board should minimize the obstacles that you may face and make things a lot easier to deal with.
Every successful company needs to make money, so having an accountant on board to keep track of your costs and income should help you on your way to being profitable. You will need a host of different skills in place, so make sure they are all accounted for, and it will help to make your business a viable one.
Stand out from your competitors
Many landowners will sell their land in phases to different developers, so there may be times when you are selling homes right next door to your competition. That's why it's crucial to stand out and make customers want your homes rather than theirs.
A simple way to do this is by having a better specification. Many builders sell their homes with hardly anything included as standard which results in customers shelling out for extra sockets, fitted wardrobes, upgraded internal doors, and such like. Having a superior standard specification but keeping prices competitive could sway a customer to reserving with you over anyone else, so it's worth thinking about.
If you feel that this could inflate your sales prices and have a detrimental impact on sales rates, then another option is to offer various non-financial incentives to customers who you know are looking around. Whether it be free flooring or upgraded kitchen cabinetry, a little sweetener could be all they need to sign up with you rather than the developer next door.
Health and safety policies
Health and safety are crucial in any business, but few more so than the construction industry. It has one of the highest fatality rates, and so must be taken seriously. On-site staff must be given a formal induction and made aware of all health and safety restrictions and procedures on-site.
PPE gear should be worn at all times, and any site visitors must sign in and out. This is to make sure that in the event of an emergency, everyone is accounted for. Traffic management plans are needed to avoid collisions and ensure that staff and customers are kept safe at all times, and safety signage must be erected, where necessary. Health and safety is a serious matter and one which should never be ignored or take lightly.
Making a profit
If you want your business to grow, you need to keep a close eye on the figures. Being profitable should be your primary goal, so it's crucial to know how your business is doing at any given time. At the beginning of every financial year, you should create a forecast of where you see your business going within the following 12 months.
Keep track of costs and unit prices and if you feel they are too high, have your commercial department renegotiate with suppliers to get better deals. Make sure staff are working to their optimum levels and, where necessary, set targets and KPI's to keep staff motivated and working to full capacity.
Every penny will affect your bottom-line profits, so it's worth monitoring and analyzing once in a while to see whether money is being wasted or whether systems and procedures need reviewing.
You could have the best development, the ideal location, and the most perfectly designed homes, but if your sales team aren't up to scratch or don't have enough experience, none of it will matter.
More often than not, they will be selling a product that is not yet built, so make sure your employees know how to sell off-plan. Selling a home with nothing more than a specification and a set of drawings isn’t as easy as it sounds, so you need people that know what they are doing and know the industry.
Make sure your sales teams have as much information available as possible, and it will make the process a lot easier for them. The more detail they have to give potential customers, the higher the chance of securing that all-important sale.
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DISCLAIMER: We hope whatever you find on this site is helpful, but be cautioned that it may not apply to your own situation, or be totally current at any given time. Idea Cafe Inc. and all of its current and past experts, sponsors, advertisers, agents, contractors and advisors disclaim all warranties with regard to anything found anywhere on this family of websites, quoted from, or sent from Idea Cafe. and its related sites, publications and companies. We also take no responsibility for comments published by others on these pages.
TRADEMARKS: The following are Registered Trademarks or Servicemarks of DevStart, Inc.: Idea Cafe®, Online Coffee Break®, The Small Business Gathering Place®, Take out Info®, Biz Bar & Grill®, Complaint-O-Meter®, A Fun Approach to Serious Business, CyberSchmooz, and BizCafe.