Competitive Advantage & Spry Street Smarts

In homebuilding we beehive cluster among companies most similar to ourselves and wrongly expect to magically outperform the group. It is far too easy to loose when we follow behind the more pioneering companies in a single segment, and should look for opportunities to step out, pass, and move in front the pack with aggressive courteousness.

Answer this… have you ever been behind a slower car on the freeway and passed on the right instead of the left? Surely you know it is not very safe, and the driving handbook says you should always pass on the left, BUT someone was probably in the left lane, and the right lane was wide open. Congratulations, you understand competitive advantage, and aggressive courteousness, better than you thought.

First, competitive advantage is not merely doing what you are best suited for; rather it is being better at spotting gaps in traffic (so to speak) so you can get from point A to point B faster than the beehive cluster. If you can do so without endangering yourself, or breaking laws, then you are on the right track.

Secondly, stop thinking size equates to advantage – be proud that you drive a car instead of a semi-truck. You would only loose in a head-on collision, but traveling side by side is a different story where the spry, decisive and nimble will win. Be confident in your potential for success, dig deep and look at where your organization has been able to spot opportunities and act on them quickly in the past, and keep going in that direction.

When changing lanes have you ever put your blinker on only to watch the gap you were moving into get closed tighter? It almost tempts us to ignore safety and jump lanes without using the blinker at all. Actually, there is an exact length of time that perfectly warns the other lane you are coming over that doesn’t allow them time to accelerate and close the gap. That sounds horrible, but 93% of those in Marketing have figured out how to be aggressively courteous in this way. We even conclude with a polite courtesy wave at the end of our lane jump.

This aggressive and courteous attitude is how we should run our homebuilder marketing and sales programs. Plan on changing lanes, so to speak, with each new community you build. There is no need to reinvent the entire wheel, but changing just one significant thing about how you market and sell will keep your competition on their toes. The more they watch what you are doing the more they will question what they are doing. When doubt creeps in it adds a tone of desperation to their program, and decreases the value perception with the prospect.

Being spry can be one of your greatest assets when up against bureaucratic Goliath companies with a corporate office three states away. To pass on the right lane they would need to hold meetings, create a process plan, find budget allocation, and receive final approval from multiple levels of managements etc., but for a David company you can move on opportunity gaps as soon as they present themselves – take them!

Smart Can Still Outsmart Big

There are numerous homebuilders that have tried and failed to gain a competitive foothold in their market, and all have one thing in common – they think of themselves as builders.

Many small to mid-size builders pour their heart and soul into delivering a quality product worthy of their name; only to find out that nobody knows they exist, or even cares. Sales fall stagnant and they are compelled to price away their entire profit margin. If they could turn back time what should they have done different? Marketing.

What transpires next (without the sling of marketing), is a painful right-of-passage for some builders. Goliath competitors are fierce opponents causing smaller competition to shy away to a niche, or become completely discouraged and fold.

The surviving few are David companies – who have a clear plan of attack, confidence in their vision, and can amp-up their marketing message so it is louder than a solo squelch.

In the biblical account of David and Goliath; the Philistines and the Israelites are pitched against one another in war. Goliath demands a one-on-one fight to the death against any challenger from the other side. The young David takes the challenge, and does so with only a sling, and 5 smooth stones. Goliath’s complacent assumption of an easy hand-to-hand combat is rudely interrupted as David delivers a fatal blow to the forehead with a single stone.

In every market area there are Goliath homebuilder companies: well-known local builders, builders with the financial capacity to self-fund their projects, builder/developers that can capitalize on two profit centers rather than one, and national builders that carry a diversified multi-market portfolio that protects them from local market anomalies.

The great majority of homebuilders today are David companies, BUT all is not lost. These smart homebuilders are the ones that continually look for ways to market themselves better, and act upon opportunities quicker than their lumbering competition. Smart can still outsmart big in the homebuilding industry exactly as it did in biblical times.

Home Values Soar Near Better Schools

One way to stay on top of soaring land and home prices is to evaluate school rankings. Builders may want to make more concerted land acquisition efforts in such emerging areas, and a relocating buyer may want to run the numbers to anticipate the value benefit to their family.

I've found that families willingly over pay to get their kids into better schools, and though it costs more to live in such areas, property values do climb predictably. Those that originally overpaid for their home may find the greatest returns when they go to sell.

My favorite school website is www.schoolmatters.com. Enter State, Zip, and Distance then look for "Advance Search" link, and enter the same figures along with the grade your oldest child will be in next year (or for builders enter the average age of the oldest in your target segment). Lastly, click "sort by" twice to see your best options up top.

If you find strong elementary schools in areas with average high schools don't worry - in 7 years those are the kids that will populate the senior high. Just like buying stock - these are buy low sell high emerging growth areas, and a great location for new construction investment.