January/February 2009
Builder Profile Knutson Bros. II
So You Wanna Be a Remodeler?
Learn the Steps to Success
Delivered to you as a benefit of membership
features
January/February 2009 Volume 26 • Issue 1
Capitol Corner...................................................................... 5 Senator Dave Hanson (D) 30th District show how politicians are crossing party lines and staying committed to working together.
Renewable Resources........................................................ 11 Construction industry finds ways to re-use building supplies, reduce landfill waste and recycle landsite materials.
Builder Profile.................................................................... 14 Cindy Knutson-Lycholat, CGR, CR, CAPS of Knutson Bros. II sets the bar high for Wisconsin remodelers.
12
From Builder to Remodeler.............................................. 17 Tips on making the transition from building to remodeling and staying compliant with ATCP 110.
departments President’s Perspective................................................................................. 3 Not Looking Back Executive Viewpoint...................................................................................... 4 Where Do We Go From Here? Member Advantage....................................................................................... 6 Voluntary Payroll Deduction Programs Government Affairs....................................................................................... 8 The 2009-2010 WBA Legislative Agenda Local Happenings........................................................................................ 12 Photos and details of WBA local association events around the state. News & Events.............................................................................................. 19
Wisconsin Badger Builder, (ISSN 004-232) is a bi-monthly publication of the Wisconsin shelter industry. It is the official publication of the Wisconsin Builders Association® (WBA) and is published by WBA, 4868 High Crossing Blvd., Madison, WI 53704. Periodicals postage paid at Madison, WI 53701 and additional mailing offices. All advertising is subject to acceptance by the Wisconsin Badger Builder editorial review committee. The publication of any advertisement is not to be construed as an endorsement of the product or service offered. The contents of all material available in this publication are copyrighted by WBA unless otherwise indicated. All rights are reserved by WBA, and content may not be reproduced, disseminated, published or transferred in any form or by any means except with the prior written permission of the Wisconsin Builders Association®. POSTMASTER: Send address changes to Wisconsin Badger Builder, 4868 High Crossing Blvd., Madison, WI 53704. SUBSCRIPTIONS: Subscriptions available through membership in the Wisconsin Builders Association®.
2
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
14 Mission Statement
The Wisconsin Builders Association® (WBA) is a 501(c)(6) non-profit trade organization recognized as the building industry’s professional authority, dedicated to the creation and preservation of safe, affordable, quality housing opportunities for the people of Wisconsin.
Vision Statement
WBA’s role is to drive good housing policy at the state government level, and assist with it at the local level as needed, and to promote membership, education, public relations, and the sharing of information among locals while supporting their varying needs.
Motto
“Dedicated to preserving and promoting the American Dream”
Senior Officers 2008 President: Jason Steen, Osseo (Chippewa Valley) President Elect: Doug Scott, Janesville (South Central WI)
Not Looking Back
Treasurer: Jim Kubasta, Oshkosh (Winnebago) Secretary: Don Esposito, Madison (Madison Area) Immediate Past President: Mark Etrheim, La Crosse (La Crosse Area) Associate Vice President: Greg Schaffer, Madison (Madison Area) Associate Advisor to the Senior Officers: Julie Meyer, Racine (Racine-Kenosha)
Area Vice Presidents 2008 Southeast Area Mark Benkowski (Metropolitan) Darryl Spang (Racine-Kenosha) Northwest Area Clint Doege (Heart of the North) Monica Sommerfeldt Lewis (Chippewa Valley) Southwest Area Tom Thompson (La Crosse Area) Steve Treu (La Crosse Area) Northeast Area Mark Bootz (Brown Co.) Scott Browne (Brown Co.) South Area Brian McKee (Madison Area) Greg Schaffer (Madison Area) East Central Area Tracy Royer (Valley) Stan Martenson (Valley) North Area Pam Jewell (Golden Sands) Mike Richie (Wausau Area) East Shore Area Gary Roehrig (Sheboygan Co.) Sean Kelly (Mid-Shores) State Representative to NAHB Wayne Foster (Metropolitan)
by Jason Steen, WBA President here is a reason windshields are bigger than rearview mirrors. As my time serving as your president comes to a close, it is tempting to do a retrospect of where we’ve been. But I’d rather think about where we are going. I have seen tremendous strides taken in areas that have been of concern. Communication between the members is continuing to improve by utilizing available technology and a revamped Web site. Data from two audits have supplied us with information that not only identifies our strengths, but gives us firm direction to shore up our weaknesses. In tandem with the audits, members committed their time and energy to write a strategic plan for WBA that will carry us forward for the next three years. All of these efforts are focused on continuous improvement, and I firmly believe that is exactly what is happening. This is a very dynamic association, with members who are involved and passionate and committed to working together to move forward with one voice and one goal: to grow. Having unity in our attitudes, our direction and our agenda will carry us through the certain storms that are ahead with the legislative battles on the horizon. Our Government Affairs team worked for months to gather your input on what issues are important to you before they put together their ambitious agenda for the 2009-2010 session. An overview of the issues we will be supporting is later in this issue in the Government Affairs column. This is an excellent example of the power and importance of getting involved. The issues the GA team will be supporting come directly from members for the benefit of members and the housing industry as a whole. Our experienced lobbyists are focused on our mission to advance the housing industry for members and consumers through advocacy and involvement in government. They are prepared to work with both sides of the aisle, and their
T
President’s
perspective
It is a no-brainer that we are stronger when we are positive and working together. Every time we get together, whether it is on the local level at a General Membership Meeting or in a larger group with the board of directors, is an opportunity to move forward. experience and connections will be a huge asset for getting the voice of the builders and associates heard in the halls of the capitol. They know working across party lines is not just reasonable, it is a true necessity built upon the spirit of cooperation and compromise. This same attitude should be the foundation of our entire association. It is a no-brainer that we are stronger when we are positive and working together. Every time we get together, whether it is on the local level at a General Membership Meeting or in a larger group with the board of directors, is an opportunity to move forward. Serving on a committee is your opportunity to be heard. Meetings are your opportunity to welcome newer members and invite them to be involved. Networking events are your opportunity to connect and increase your business. Community projects are your opportunity to give back and gain twice as much in return. These are just a few of the myriad of opportunities that are presented to you as a benefit of membership. I truly believe membership makes a difference and your voice, and your positive attitude, will make the most difference of all. X
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
3
WBA Staff
4868 High Crossing Blvd., Madison, WI 53704 • (608) 242-5151 Executive Vice President: Bill Wendle, ext. 11 bwendle@wisbuild.org Director of Government Affairs: Brad Boycks, ext. 16 bboycks@wisbuild.org Director of Political Affairs: Kate Easton, ext. 15 keaston@wisbuild.org Director of Development Council: Pat Stevens, ext. 22 pstevens@wisbuild.org Director of Membership Services: Jane Witt, ext. 17 jwitt@wisbuild.org Director of Safety and Education: Cindi Gruebling, ext. 18 cgruebling@wisbuild.org Director of Communications: Annie Rubens, ext. 19 arubens@wisbuild.org Director of Accounting Services: Kathy Johnsen, ext. 12 kjohnsen@wisbuild.org Accounting Assistant: Mark Nelson, ext. 25 mnelson@wisbuild.org Administrative Assistant: Kimberly Fay, ext. 10 kfay@wisbuild.org
WBA Insurance Services Chief Operating Officer: Karl Johnson, ext. 23 kjohnson@wisbuild.org Sales & Service Associate: Megan Taylor, ext. 24 mtaylor@wisbuild.org
Editor...............................Annie Rubens
Published by
Publisher............................ Kevin Naughton Supervising Editor............ Jennifer McDermitt Graphic Designer...................... Jason Gabel Advertising Sales Manager........ Brenda Poe Advertising Sales..................Keri Gustafson (800) 935-1592, ext. 133 kgustafson@printcomm.com
4
Where Do We Go From Here? Executive
Viewpoint
by Bill Wendle WBA Executive Vice President he election is over, and WBA needs to get down to the new business at hand. Our number one challenge in the short term is to simultaneously deal with new legislators and find ways to thrive financially as a state association in an unstable housing economy. Many of you know I have taken on a year-end blitz to get out to locals and link their boards with WBA efforts both legislatively and internally. I have found the effort very rewarding and want to thank the locals that have found time for me to speak to their members. In many cases, locals have hosted groups of senior officers and those sessions have been very informative and beneficial to all. Any local is welcome to contact me to arrange for a visit by the senior officers or myself. This month in my message I want to focus on the WBA budget. I want to say right off that you are welcome to call me directly if you have any question about the WBA budget or the process. No question is too small or too detailed to have a direct dialog with members. The budget that will be presented to the WBA Board in February is a document that is better understood with some history and facts. Our budget process normally begins in March of any year for the following year. The WBA committees and other companion groups like Building a Better Wisconsin make budget requests and forward those to the WBA Finance Committee. If you want to know who is on the Finance Committee, see www.wisbuild. org on the “member’s only” side under Committees & Council Chairs. The first draft of the 2009 WBA budget was developed based on Committee and staff input at the Finance Committee meeting on May 13, 2008. This budget
T
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
draft was balanced based on the assumption of income from 9,000 members. The Executive Committee on June 12, 2008, directed the Finance Committee to redraw the budget, adding assurance of staff continuity and program growth to the budget. They further directed at that meeting to reduce the member assumption to 8,500 members for 2009 and incorporate use of WBA reserves. To accomplish this directive, the Finance Committee met July 10, 2008. The second draft budget was presented to the WBA Board for review on July 24, 2008. No WBA Board action was taken at that time. Unforeseeable external factors then began to play a major role in the internal considerations of the budget. First, the mid-September stock market rollercoaster started. This was closely followed on Oct. 31, 2008, by bad news from the Department of Commerce, Safety & Buildings decision, citing a budget shortfall, to cancel our $50,000-$100,000 contract to provide training that we had just agreed upon in June of 2008. Internally, WBA Insurance Services continued to experience contraction with members merging corporations, dropping benefits and in some cases ceasing operations. All of these factors contributed to the loss of equity in WBA as a consolidated corporation. By the WBA Board meeting on Oct. 23, the cumulative impact of these factors had taken its toll on WBA. The Board directed that the Finance Committee redraw the WBA budget again for approval on Feb. 6, 2009, for the 2009 fiscal year that will start Jan. 1, 2009. WBA was directed to conduct operations for January and February of 2009 at 2008 levels. This is essentially a continuing resolution to not increase any expenditure and Continued on page 7
Committed to Working Together Capitol
corner
by Senator Dave Hanson (D) 30th District s of this writing, voters are going to the polls. By the time you read this, the elections will be over, and we will have a new president and new members in Congress and the state Legislature. Will Barak Obama be our next president? What will the margins be in Congress? Will Democrats take control of the Assembly? What will happen in the state Senate? While I cannot predict the outcome of these elections, there is no doubt that regardless of the outcome, we will have big challenges to face at the local, state and national levels. Whether it’s energy, jobs, the housing and financial crisis, health care or the large deficits we’re facing here in Wisconsin as well as the federal level, the challenge is great, the stakes are high and the issues not easily resolved. For this reason, it is in all our best interest to commit to working together to solve these problems. Our future and fate as a state and nation are not about the ownership of ideas, but on finding common ground amid our shared values. If an idea is good and it will help lead us out of these challenging times, it doesn’t matter if it’s a Democratic idea or a Republican idea. The only thing that matters is that those who are elected to serve these next years remember why they are here: to represent their constituents and do their level best to do what can be done to help them strengthen their families, improve their standard of living and achieve their version of the American Dream. It is only natural in a two-party system where both parties have strongly held convictions about the government’s role in such issues as tax and economic policy, health care, protecting the environment and education, that there will be disagreements. Some will be more vocal than others and at times may be difficult
A
Last Spring I convened a roundtable to discuss the housing and mortgage crisis. It was well attended by representatives of the industry, including your association, as well as realtors, mortgage brokers, bankers, credit union reps and consumer advocates. to resolve. All the more reason then that leaders on both sides should look beyond the rhetoric to find creative solutions that will benefit all the people. I know that if we try, it can be done. Senator Cowles, Representative Kaufert and I worked together last session to close a loophole in our tax laws referred to as the Newark Decision that, if left in place, could have resulted in billions of dollars in property being removed from the local tax rolls shifting millions of dollars in property taxes from some businesses onto other businesses (who didn’t benefit from the loophole), homeowners and local governments. It was a complex issue and a difficult process that took a lot of time and a great deal of effort to resolve. But we succeeded in large part because although our parties’ approaches to tax policy are different, we all saw the need to change a policy that was inherently unfair and detrimental to our state. Last Spring I convened a roundtable to discuss the housing and mortgage crisis.
It was well attended by representatives of the industry, including your association, as well as realtors, mortgage brokers, bankers, credit union reps and consumer advocates. Despite many of these groups having different viewpoints and opposing perspectives, it was an honest, thoughtful and productive discussion that I am hopeful will help us create new policy to help restore the housing industry and protect homeowners and consumers. While reversing the Newark Decision is only one example, there are others including ethics reform and the Great Lakes Compact that prove what can be done when leaders are able to find common ground. We will need to continue that effort regardless of which party controls our government. Because issues like the housing crisis and the others I mentioned are so great, they will need the best possible ideas, regardless of where they come from, to resolve them. Dave Hansen was first elected to serve the 30th Senate District in November 2000. In November 2002, he was elected senate assistant minority leader by his colleagues. In November 2006, Dave was elected senate assistant majority leader. Senator Hansen currently serves as senate assistant majority leader and senate vice-chair of the Joint Finance Committee. X
Capitol Corner is a regular feature for Badger Builder. In this space, a Wisconsin legislator will provide perspective on an issue. Each guest columnist is offered the opportunity to select their primary issue of concern and present their views independent from any guidelines imposed by the Wisconsin Builders Association®. The views expressed by the columnist are solely their opinion and do not necessarily reflect the views of the WBA, NAHB, the locals, or the members. The Badger Builder editorial department welcomes reader feedback to the issues featured in this section in the spirit of promoting continued discussion on the important issues affecting our daily lives. To submit comments, please send them to Badger Builder Editor Annie Rubens, arubens@ wisbuild.org. Only comments in writing will be considered for reprint.
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
5
Voluntary Payroll Deduction Programs: A Win-Win Situation for Employers and their Employees Member
Advantage
by Karl Johnson, Chief Operating Officer, Wisconsin Builders Insurance id you know that, according to a report given in June of 2008 by the United States Department of Labor, total compensation (wages, salaries and benefits) for civilian workers averaged $28.48 per hour worked? Wages and salaries, which averaged $19.85, accounted for 69.7 percent of these costs, while benefits, which averaged $8.84, accounted for the remaining 30.3%. These benefits include everything from group life and health coverage to annual bonuses, pension and profit-sharing plans, tuition reimbursement, paid vacation, holidays, medical leave — even free parking. Providing employees with these perks is like giving them a “second paycheck” for each actual paycheck they receive. Unfortunately, that “second paycheck” goes unnoticed by most employees. Employers may be paying more and more each year, but the real value of those payments is not perceived by employees. Little wonder then, that employers are increasingly looking for ways to cut benefit costs. But there’s a slippery slope here: Employers still need to attract and retain valuable employees, and a good benefits package is key to that aim. That is why Voluntary Payroll Deduction (VPD) programs are rapidly gaining in popularity among business owners. These programs — which enable employees to purchase individual life insurance through the convenience of payroll deduction — are helping employers supplement their benefit packages with no direct out-of-pocket cost to themselves except the cost of administration. Since the coverage offered under these
D
6
plans is individual-employee-owned, it is also individual-employee-paid. Employers simply apply the administrative procedures they’re already using for other payroll deductions to enable their employees to create a disciplined, relatively painless insurance protection program. VPD programs can provide real value to employees for a number of reasons: • All employees can participate. Unlike many individual life insurance plans, VPD programs often have fairly simplified underwriting requirements. As a result, they are offered to all active employees equally and voluntarily chosen or declined. The opportunity to apply for insurance is open to all, and the decision to apply is made individually by employees. • Employees like the ease and convenience. The majority of employees view payroll deduction as a good way to obtain insurance. Since they don’t have to write out a check to pay, the buying experience is relatively painless; and because they don’t have to remember to pay, it’s easier as well. • These plans fill a definite need. According to the most recent research from the Life Insurance Marketing Research Association (LIMRA), only 36 percent of workers had a life insurance policy through their employer, and while 60 percent of people have some coverage in total, face amounts — and, therefore, insurance protection — had declined. Additionally, many insureds have no dependent coverage, and 80 percent of employees can be expected to outlive the group term life insur-
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
ance offered by their employers. The security of a life insurance policy that offers the opportunity for cash value accumulation can be the perfect solution for many of today’s workers. • Policies purchased under a VPD program are portable. Employees own their own policies and can take the coverage with them if they leave their jobs for any reason. Of course, this is also true of any life coverage purchased through the plan on spouses, children and grandchildren. For all of these reasons, VPD programs may greatly enhance the morale of employees even when there are few employee benefits. The employer is making insurance coverage conveniently available to employees at a competitive price. So, what’s the catch? Just one: employers should be prepared to allow their employees some small amount of time during the work day to meet with the insurance company’s agents. This demonstrates the employer’s commitment to the program and gives the agent a chance to explain the features and benefits of the plan. It’s also an opportunity for the agent to explain to the employee how the VPD plan supplements the existing companyprovided package of employee benefits — that “hidden paycheck” that is all too real to the employer and all too unknown to the employee. To find out more about offering VPD programs to your employees, or to learn more about what WBA Insurance Services adds to your membership, call Karl O. Johnson, chief operating officer of WBA Insurance Services, at (888) 678-3015 ext. 23 or e-mail kjohnson@wisbuild.org. WBA Insurance Services is a whollyowned subsidiary of the Wisconsin
Builders Association ® created more than 15 years ago to not only provide quality insurance programs to the members of the WBA, but also to provide a form of non-dues revenue for the WBA. WBA Insurance Services was created by members and is overseen by a board of directors, also made up of members. We truly are YOUR insurance agency. To serve the members of the Wisconsin Builders Association ®, WBA Insurance Services has collaborated with select agencies throughout the state. These agencies are also members of their local association just like you. X
executive viewpoint
Continued from page 4
leave committee budgets pending. The Finance Committee was given a directive to develop a WBA budget that uses up to $100,000 in reserves and base it on 8,000 members. That budget, or one similar, is the budget that will be presented for WBA Board approval on Feb. 6, 2009. Concurrent with this budget process in 2008, your WBA staff have cut expenses wherever and whenever we have direct control of them. You saw at the WBA golf outing fewer than ever WBA staff, and you will see that same kind of reduc-
tion at the 2009 WBA convention at the Grand Geneva Resort. Again, because I have been asked, this is to reduce cost of overnight stays; it has no impact on individual income. WBA staff is being asked to re-evaluate all travel, particularly out-of-state travel. We have taken a hard look at all operating costs and have changed vendors in many cases. WBA employees will be taking a cut in the design of our health insurance, increasing co-pays and deductibles. We as your staff have always been vigilant with your money; we now will up the effort to make your dues go even further. X
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
7
The 2009-2010 WBA Legislative Agenda Government
Affairs
by Brad Boycks, Director of Government Affairs e worked very hard on this year to start the strategy and planning process early to create and approve the WBA Legislative Agenda for the 2009-2010 session. This agenda includes important issues identified by the Government Affairs Committee and the Development Council. The process was designed to include as many opportunities as possible for member input. We initially asked committee members to give ideas for the agenda at the April 2008 Government Affairs (GA) meeting. We then held a joint planning session between the GA Committee and the Development Council in June. Notices were put in the Friday Update, and members were called a number of times. Finally, local GA staff and executive officers were sent a copy of the draft document before the Oct. 23, 2008, GA meeting to review and provide additional input. We synthesized all of the terrific input we received regarding hot button issues and devised the following list of issues we will be supporting during the upcoming legislative session: • A commitment to energy efficiency and a green building agenda: Incentives for Energy Star rated materials Loans to improve energy efficiency of existing homes and small multifamily units Monitor the task force on global warming’s recommendations • Property tax relief and a more equitable tax structure • A balanced approach to resolving issues that come up during remodeling work by working with the WBA Remodelers Council to make improvements to the ATCP 110 rule.
W
8
Thank you to all of you who let us know what issues are important to you so we can continue to be an effective voice for you at the Capitol. • Ensuring efforts to restrict the markup of “professional fees” from municipalities to builders and developers are being followed and are effective. • Changes in Wisconsin tort system to ensure fairness to all litigants. • Efforts to increase and expand the use of Tax Increment Financing (TIF) to spur development. • A measure that calls for the installation of CO detectors in all new homes in Wisconsin. • A proposal to exempt from the sales tax items used for “shelter” in Wisconsin. • Provisions that would require, upon annexation by a city or village, the county shore land zoning ordinance would not apply to the annexed land. • Department of Commerce efforts to do more credentialing and applications online. • Determination of the ordinary high water mark by counties and the DNR (2007 AB 543). • Restrictions on the use and sale of fertilizer containing phosphorus (2007 SB 197). • Stormwater Ponds: Transferring responsibility of management of ponds to municipalities. • Property Taxation of Lots: Support ways to minimize the value of lots for property tax purposes.
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
• Impact Fees: Pursue beneficial changes to the impact fee law, including but not limited to, providing incentives to local governments to comply with the impact fee statute, and clarifying the requirement to consider housing affordability in the needs assessment. • Limit Development Moratoriums: Support limiting the ability of local governments to impose development moratoriums. • Comprehensive Planning: Support legislation clarifying the “consistency requirement” contained in the comprehensive planning statute and other provisions. • Wetland Delineation/Identification Bill: Work to improve a proposal allowing landowners to pay a fee to DNR for a third-party confirmation of wetland delineation and to mesh the Wetland Delineation Assurance Program with this proposal. • Land Use Objections in Extraterritorial Plat Review Jurisdiction (2007 AB 423): This would change current law so that cities could not object to a plat based on land use in the extraterritorial plat review jurisdiction. • DNR Green Tier Program: Support reauthorization of the Green Tier Program and other improvements to the program. • Uniform Development Standards: Support efforts to create uniform development standards. • Restrictions on Local Delegations to Land Trusts: Restrict the ability of local governments to allow land trusts to negotiate conservation easements and stewardship plans on behalf of local governments. Thank you to all of you who let us know what issues are important to you so we can continue to be an effective voice for you at the Capitol. X
Construction industry finds ways to re-use building supplies, reduce landfill waste and recycle landsite materials. by Jennifer McDermitt ccording to a recent statecommissioned study, construction and demolition waste is piling up in state landfills, accounting for nearly a third of all garbage. The Department of Natural Resources hired a consultant group last year that combed through 14 landfills statewide to see what exactly Wisconsin residents and businesses are throwing away. According to the report, untreated lumber takes up the most space of any waste material in landfills. At more than
A
600,000 tons, wood is responsible for nearly 13 percent of all trash in landfills. Roofing shingles, with a six-percent share, are the third largest waste material, while bricks, rocks and building stones are the 10th material with a 3.5 percent showing, according to the report. And while the information garnered from this could further tarnish the industry’s reputation in the eye of the public, the truth is, most builders are aware of this fact, and many are taking steps to reduce landfill waste, re-use building materials and implement recycling prac-
tices on their sites, taking “green building” to another level. “It’s estimated that around 40 percent of materials that end up in landfills could be re-used,” said Terry Warren, executive director for the Barron County Habitat for Humanity. “That’s a pretty staggering statistic when we realize that with minimal effort, we can make a major impact.”
A Win-Win-Win Situation When Warren heard about other Habitat for Humanity locations opening Continued on page 10
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
9
recycle, re-use, reduce
Continued from page 9
retail businesses that sell donated building materials, appliances and furniture, she wondered if the builders and residents of Barron County would support such an operation. She never could have imagined the level of support and enthusiasm that she would receive. Only open since February of this year, ReStore has been meeting and exceeding its monthly overhead from the very first month. “We approached the members of the Heart of the North Builders Association and asked them if they would be willing to donate materials to ReStore, and we were overwhelmed by the response,” said Warren. “Builders told us that they are heartbroken to throw away leftover cabinets or lumber, but they hate storing it all themselves.” Habitat leased a 9,000-square-foot building and filled it almost instantly. Restore picks up donated materials five to seven times a week, but it also receives several drop-off donations. ReStore’s customer base is as diverse as the donations it receives — it sells to college students, property managers, low-income families, and homeowners tackling their own remodeling projects. Warren says the best part of ReStore is the fact that it is a win-win-win situation. “The money we raise builds more Habitat home, the donations we receive keep useable materials out of landfills, and it is another way for volunteers to work with us. The idea is spreading like wildfire in other communities!” she said.
‘That Mantle Was Once in the Front Yard’ Everyone loves to have a conversation piece in their home: the lamp that came from Italy, the vase found in China, or the chandelier from a Parisian flea market. How about the fireplace mantle that was once a tree in the front yard? That’s what Ray Burgan, owner of Enterprise Wood Products, provides homeowners. Burgan’s company offers an innovative service that allows homeowners to save money and be “green” in the process. “We take the trees from a homeowner’s property and turn it into hardwood flooring, paneling or home accents,” said Burgan. “Using wood from the homeowner’s land greatly reduces new timber 10
that needs to be cut, as well as energy to harvest the lumber and transport it.” A tree must be cut, kiln-dried and millworked before it can be made into products for the home. Burgan offers all these processing services and works with the homeowner to design custom wood products specific to their project.
It’s estimated that around 40 percent of materials that end up in landfills could be re-used. That’s a pretty staggering statistic when we realize that with minimal effort, we can make a major impact. — Terry Warren, executive director for the Barron County Habitat for Humanity. “We created a sort of niche market for ourselves, because it became difficult to compete with the big guys like Lowes or Home Depot on lumber alone,” he said. Burgan also feels good about re-using wood, as many forests are being harvested faster than they can be regenerated. He said, “Wood is now increasing in value, making it more expensive. Making good use of the trees on your property is great way to reduce unnecessary harvesting.”
The Silent Watchdog The best way to recycle is to do it onsite, before it can get whisked away to the landfill, but sometimes it isn’t always
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
convenient for builders to implement onsite recycling. Thankfully, due to the increased popularity of green building practices, several companies have been created to offer onsite recycling and materials disposal, making it convenient and easy for builders to do the right thing. Construction Site Recycling in Appleton is one of the companies in the state offering these services, and manager Tim Gambsky says that builders are embracing the idea. “We bring separate containers to the site for all the recyclable materials like wood, cardboard, plastic, sheet rock and brick. We then bring the materials back to our facility and process them. The wood becomes wood chips for home heating, mulch or an erosion control product, and the rest is recycled and re-used as much as possible,” said Gambsky. Gambsky says homeowners like to see the recycling bins on the site, because it makes them feel good about the building practices of the company they have hired. Builders like the service not only for the green aspect of it, but also because it serves as a “silent watchdog” for sub contractors and employees. “People are much more conscious of what they throw away when they are putting it into recycling bins and know it will be sorted,” said Gambsky. “They are more likely to find uses for re-usable materials on site if they know someone at our facility is going to see it. It creates a level of accountability.”
A Labor of Love and a Love of History Pat Drury of Drury Designs Custom Homes has two passions: history and custom home building. Thankfully, he has found a way to use both while also making good use of renewable resources. “I just feel that Americans are too quick to tear down history versus taking the extra steps to preserve it,” he said. Drury’s reputation for historical preservation led officials at St. Norbert College in De Pere to think of him when they decided to tear down two historical buildings on the college property to build a new library. Drury was given “first dibs” on the homes, and he quickly assembled a team to tear out the hardwood floor, cabinets and pillars. “All those materials would have gone into a landfill, but I used them in buildings on my development,” he said. “The wood is beautiful and gives character to
my homes that you can’t recreate with new timber.” Unfortunately, Drury’s passion is not always appreciated by city officials, and he has been forced to fight many battles to continue his work. Drury purchased a historical building in Mercer County and was told that he would have to demolish it immediately. Drury fought long and hard for historical status and finally won. While examining the site, Drury found old brick under the building, which he used to build a wishing well on one of his developments, Olde School Square. Another building Drury purchased for re-use caused considerable headaches. The grainery in Reedsville had gorgeous pine timbers not available today, but the 150-yearold wood wasn’t grade stamped because they didn’t do grade stamping at that time. Drury spent countless time and money taking the wood to the USDA Forestry Department in Madison to have it stamped, but despite his efforts, the state would still not accept it. Drury was able to use some of the other materials to build a corporate office on the Olde School Square development, but he hopes to change the mindset of municipalities to avoid future problems. “The state needs to become more understanding of people who are trying to do the right thing and re-use these materials,” he said. “This is a labor of love, not a money-making operation, and I wish it was more accepted.” Drury hopes a list is someday compiled of people who re-use building materials so building inspectors have someone to contact prior to a demolition. He said, “It would only add a week or so to the process if they call someone like me to come out and look at a property to see if anything can be salvaged. It’s a simple step and look what can be gained.” X Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
11
Local Happenings Northland Skeet Shoot Group: Daniel Roth, Greg Roth, Kevin Wohlford, Ed LaBarre, Jim Dohm, and Tim Wohlford.
Madison Area Robin Pharo, Healthy Homes/Green Built Home™ Wisconsin Environmental Initiative; AnneMarie Dresen, AnneMarie Design, LLC; Abe Degnan, Degnan Design Builders, Inc.; Dave Borski, Madison Gas & Electric Co.; Myles, George and Jennifer Thornell Timmer; MABA President Vic Pulvermacher, Pulvermacher Construction LLC; and Denise Matyka, Project Home Inc.; celebrate the unveiling of the GreenBuilt Home Makeover.
HBA Fond du Lac & Dodge Counties Fond du Lac and Dodge Counties annual induction ceremony. First Row (L to R): Steve Parnell, past president; Dean Kranig, treasurer; Greg Feucht, president; Darryl Reetz, vice president; Paul Schaefer. Second Row (L to R): Jason Karst, Lorelei Hasenohrl, Paul Ewerdt, Jason Now, Claudia Beaster-Christie, Kim Schmitz. Not Pictured: Dave Cook, past president; Harry Reinhold, past president; Mike Wirtz, past president; Mitch Kahl; Ann Schneider.
12
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
LaCrosse Greg Stellrecht, Beaver Builders Supply, picks up one of the items sold at the La Crosse Area Builders Association’s annual Building Materials Auction. The event raises money for the association’s Building Careers Grant program that purchases tools for area high schools construction programs.
Headwaters
St. Croix Valley HBA October General Membership Meeting
Whitetails Unlimited Banquet: On Thursday, Oct. 2, Headwaters Builders Association co-hosted their fourth annual Whitetails Unlimited Banquet at the Whitetail Inn in St. Germain. The event drew over 100 guests who participated in a number of games and raffles, as well as a silent and live auction. Headwaters receives a percentage of the profits from the event, which is then used to fund our scholarship program.
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
13
Builder profile
Knutson Bros. II Sets the Bar High for Wisconsin Remodelers After by Nancy Davis ntuition might not normally be an attribute associated with a remodeling contractor, but it is something that Cindy Knutson-Lycholat, CGR, CR, CAPS, has used in her role as owner of Knutson Bros. II, a successful East Troy remodeling company and the 2006 NAHB Remodeler of the Year. Knutson-Lycholat learned the business from her father Charlie Knutson, founder of Knutson Bros. Builders in West Allis, Wis., as a young adult in 1977. In 1994, she and her husband, Gerry Lycholat, teamed up, and it has been a match made in remodeling heaven. The other essential piece is Debbie Berndt, who keeps it all together as the company’s office and production manager. “If it weren’t for her, I wouldn’t be able to do what I do. She runs the shop when we’re gone over the summer,” she said. Knutson-Lycholat received hands-on education as a mason, carpenter, demo person and more working for her dad. It Continued on page 16
I
Before
We just had the best year in five years. People are tired of waiting for the economy to settle, and they are saying, “Just fix my house.” As the housing market is tanking, people are staying put and remodeling. — Cindy Knutson-Lycholat, CGR, CR, CAPS, 14
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
Advertise Your Business in Wisconsin Badger Builder Call Keri Gustafson: (800) 935-1592, x133
TODAY!
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
15
Builder Profile
Continued from page 14
taught her how to be a better designer and to understand the business inside and out. Charlie, the first chairman of NAHB’s Remodelers Council, died in 1996. Though her reputation for on-time and on-budget quality craftsmanship has spread, the company has stayed small on purpose. Like many of the best remodelers, KnutsonLycholat believes that her business should reflect her personal goals. “Whatever your business needs, you need to have a budget; you need to understand your lifestyle. That is what we do,” she said. Improving the remodeling industry is one of her personal goals, and she demonstrates this by being on the road many weeks each year on behalf of industry association work. She wants to help raise the level of professionalism in the remodeling industry and to help dispel the myths surrounding remodeling.
Business Quick Facts Knutson Bros. II • Years in Business: 31 in the industry, 14 as Knutson Bros. II • Local Association: Lakeland Builders Association, Walworth County • Association Involvement: NAHB Remodelers Council Director, CAPS Board of Governors, Remodeler 20 Peer Group • Awards: NAHB Remodeler of the Year 2006, WBA Remodelers Council Whole House Remodel Project Award 2007, Numerous Chrysalis Awards including Wisconsin Remodeler of the Year, WBA Hall of Fame • Best Thing All Year: “Every year on the Winter Solstice, we invite all the people who work on our jobs — or anyone who has helped us — to a party at our house.” 16
Make Connections, Be Present, Know your Job Developing relationships with subs, suppliers and homeowners might be crucial, but nothing is more important, she said, that a good relationship with local zoning officials. “The hardest thing to do is to get a permit today. We have good relationships with our municipal leaders,” she said. Being active in the state and local builders association is the only way to find out what’s going on in the industry, according to Knutson-Lycholat. “I belong to Lakeland BA, and my primary reason for joining was to find subs and suppliers. Also, I knew I wanted to be a national director with NAHB. That’s where I get to know people around the country and find out what’s happening nationally on issues,” she said. “You have to show up, put in a little effort and reach outside your box, but it is vital,” she added. “My other advice is, don’t remodel the way you build houses or you’ll lose your shorts. People should realize that remodeling is a service industry. Builders sell houses, remodelers sell a lifestyle change,” she said. Long lead times and a solid schedule of 8 to 12 jobs per year keeps Knutson Bros. II’s volume just under $1 million a year by design. “We just had the best year in five years. People are tired of waiting for the economy to settle, and they are saying, ‘Just fix my house.’ As the housing market is tanking, people
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
are staying put and remodeling,” said Knutson-Lycholat.
Marketing Strategy Fits Personal Goals Knutson-Lycholat cultivated a vacation home niche when she realized the advantages of catering to out-of-town clients. They are not on the jobsite everyday and are not living with the inconveniences of a remodeling project. And because the clients own at least two homes, they are able to afford quality design and construction. A final advantage is that Knutson Bros. II is able to supply a steady stream of work to subs during the slower winter months. To reach the well-to-do Chicagoans and other second-home owners in the region, they developed a successful direct mail marketing program along with strategically placed billboards. “Remodeling is a service-based business, not a productbased business,” Knutson-Lycholat said. “And you need to market well to maintain your presence in the marketplace.” Her dogs are also part of her marketing campaign. Spot the Dalmatian and Hunter the Redbone Coon Hound show up on the Web site and are present at meetings in her home office in East Troy. She said, “We try to make remodeling fun, because it’s not. We come in and wreck your house, turn your life upside down and then you pay us for it. We use the dog theme so people can have a chuckle with us.” X
So You Wanna Be a Remodeler? by Megan Taylor, WBA Remodelers Council staff
A
s the new construction of homes has slowed, many builders in the state of Wisconsin have begun taking on remodeling jobs. In addition, many of the technical skills required for home building translate well into remodeling. The WBA Remodelers Council wants to make sure that members of the Wisconsin Builders Association® are aware of how to branch out into remodeling while complying with the stringent home improvement laws in the state of Wisconsin known as The Home Improvement Practices Act: ATCP 110. Many remodeling contractors have struggled for years to comply with the paperwork-intensive ATCP 110 regulations. These rules and regulations seem to have many loopholes and traps for trustworthy contractors. ATCP 110 requires carefully worded contracts, specific and inclusive change orders and many other protections for the consumer. ATCP 110 covers misrepresentation, fraud, delays, non-payment and other violations of the business relationship between the contractor and the customer. The Home Improvement Practices Act: ATCP 110 affects anyone who is described in Wisconsin Administrative Code § ACTP 110.01(2) as “remodeling, altering, repairing, painting, or modernizing non-commercial property or the marketing of additions thereto … ” This law does not apply to contractors working on new homes or commercial buildings. While paying close attention the requirements of ACTP 110, you also may need to fine tune your business skills and the way you communicate with your customers and subcontractors.
of your company, even though they aren’t actually on your payroll, so it’s extremely important that they have the following qualities: honesty, integrity, a good attitude, a sense of humor, courteousness and a professional appearance. Take the time to do background and security checks, in addition to checking references, to make sure that you select the best sub contractors in your market.
Efficient Scheduling Is Critical With their truncated schedules, remodeling projects often necessitate scheduling subs tightly and sequentially; the work of one depends on another. No matter what you’re building, it is vital for them to stick to a production schedule you establish. This is especially crucial in remodeling, because clients who experience any schedule disruptions first-hand will tell their friends and neighbors about them. Continued on page 18
Set Yourself Apart First of all, you may need to re-establish your credentials with your customers, because your company will be serving a different role. You’re not building them another house — you’re remodeling it. Your customers must be confident that yours is the best company to perform this service — or other remodelers will take that business away from you. To set yourself apart from the competition, tell prospective remodeling customers about your company’s community service, awards, board positions and certifications — such as CGR (Certified Graduate Remodeler). For information about earning a certification, check out the Designations page on NAHB’s Web site.
Job Site Etiquette Remodeling trade contractors spend countless hours in close contact with the client’s family. They’re an extension Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
17
remodeler council
Continued from page 17
Pricing Differences Remodeling projects cost more to build than new construction, and you must price jobs accordingly to cover your overhead as well as the direct expenses (which often involve extra time, labor and other costs) associated with this type of work. The mark-up on remodeling jobs is typically 1.5 times the job cost (or 50 percent). This excludes appliances and fixtures, which are hard to make a profit on. The mark-up includes production
MARKETPLACE
management, design fees, permits and everything else. That leaves a gross profit of 33 percent to cover overhead costs of 25 to 30 percent. You also must account for the fact that crews are less efficient. Available work hours are often shortened and site access is more limited because the client lives there. Quality standards are also different because what you build on the remodeling project must dovetail with the existing structure — and that involves painstaking work and attention to detail.
The WBA Remodelers Council wants to make sure that members of the Wisconsin Builders Association® are aware of how to branch out into remodeling while complying with the stringent home improvement laws in the state of Wisconsin known as The Home Improvement Practices Act: ATCP 110.
Ramp up Communication Know that many consumers are apprehensive about remodeling because they can’t read building plans, the reputation for the cost of projects exceeding expectations and they’ve heard about crooked contractors. Help allay prospects’ fears by stressing your company’s focus on communication. Whether you and your staff e-mail clients, call them on the phone, or leave them notes at their home, communicate with your clients daily. Stress the importance of client communication to your staff, subs and vendors so that everyone who works with your clients keeps them informed about their aspect of the project every step of the way. 18
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
Marketing to and Working With Remodeling Clients
To remodeling clients, the project is their home, not a work site. Win their trust by demonstrating that you know the difference. Let clients know that: • Your company puts its clients’ safety first. • Some dirt and dust is inherent with all remodeling projects, but your company does its best to maintain the cleanliness of its clients’ homes. • Your field crews and trade contractors are forbidden from using alcohol, tobacco and illegal substances on the job site (as well as showing up drunk or high) and from bringing firearms to the site. • Your company adheres strictly to a production schedule, just as it did when you first built their home. Clients will be glad to get information about their project before they even ask for it,and will tell all their friends about how pro-active your company is. Before you know it, referrals will start pouring in. You may even consider giving past customers who send you referrals some kind of small gift, or, certainly at the minimum, a thank you.
The WBA Remodelers Council Is Here for You! The WBA Remodelers Council is looking out for you and protecting your interests with important issues such as ATCP 110. Members receive up-to-date industry information, education and certification as well as suggested contract language. Join the WBA Remodelers Council! Membership can help you avoid costly mistakes as you learn from the experience of other remodelers from across the state and the nation. For more information about joining the WBA Remodelers Council, contact Megan Taylor, at mtaylor@wisbuild.org or (888) 242-5155 ext. 24. Excerpts for this article provided by NAHB. X
Installation
General Membership Meeting
Local Association
Parade of Homes
Home Show
Golf Outing
BBW
Brown County
Showcase of New Homes March 7-8 & 12-15, 2009
Jan. 15-18, 2009
July 15, 2009
Home & Garden Show - Feb. 20-22, 2009
July 9, 2009 Home Builders Invitationallocation TBD
2nd Tues.,
Sept. 2009 TBD
2nd Thurs.
Central Wisconsin Chippewa Valley
June 6-14, 2009
Door County
May 8-9 & 15-17, 2009
March 27 & 28, 2009 Stone Harbor Convention Cntr Sturgeon Bay
Fond du Lac & Dodge Counties
Parade of Homes July 15-19, 2009
March 27-29, 2009
Golden Sands
June 5-8, 2009
Feb. 28 & March 1, 2009, Holiday Inn & Convention Center
3rd Wed., no July, Aug.
Sept. 16, 2009 July 21, 2009
Sept. 15, 2009
April 21, 2009
3rd Tues. 2nd Tues., Wed., Thurs.
Headwaters Heart of the North
Feb. 28 - Mar.1, 2009
La Crosse Area
June 20-21 & 24-28, 2009
March 13-15, 2009
Lakeland
July 25-26, Aug. 1-2, 2009
Home Expo March 28-29, 2009
Madison Area
June 13-28, 2009 Parade of Condos April 25-May 3, 2009
March 6-8, 2009
Manitowoc County
June 18-21, 2009
March 27-29, 2009
Metropolitan
Aug. 22-Sept. 13, 2009 Spring Tour of Homes & Condos April 18-May 3, 2009
Jan. 8-11, 2009
July 22, 2009
Nov. 15, 2008
2nd Thurs.
Sept. 15, 2009
3rd Tues., 3rd Wed.
July 2009
1st Mon., Nov. 4th Thurs., no Nov., Dec.
June 15, 2009
Mid-Shores
2nd Tues.
Mid-Wisconsin
Feb. 6-9, 2009
2nd Tues. 1st and 3rd Tues. (Sept. – May), 5:30 pm Social, 6:00 pm dinner, locations vary throughout our 5 county region
Northland Area
Racine-Kenosha
Sept 5-6 & 12-13, 2009
Sheboygan County
Sept. 11-13 & 18-20, 2009
South Central Wisconsin
June 11, 2009
3rd Wed., no Dec., June
Dec. 11, 2008
April 3-5, 2009
June 17, 2009
March 18, 2009
3rd Wed.
Feb. 27-28, Mar. 1, 2009 Holiday Inn Express
June 19, 2009
4th Tues., no June, July, Aug.
July 20, 2009 New Richmond Golf Course
3rd Tues.
South Western Wisconsin St. Croix Valley
Spring Tour of Homes Feb. 28Mar.1, Mar. 7-8, 14-15, 21-22
Home & Remodeling Show March 14-15, 2009, Hudson Sports & Civic Center
Valley
Winter Wonderland of Homes Feb. 21-March 1, 2009
Oct. 2-4, 2009
April 7, 2009
First Tues.
April 18-19, 2009
April 17, 2009
3rd Thurs.
Wausau Area Winnebago Wolf River rev.10/31/2008
April 17-19 & 23-26, 2009
Feb. 13-15, 2009 April 3-5, 2009
June 23, 2009
2nd Wed. October 13, 2009
2nd Tues.
Continued on page 20 Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
19
News from around the state Continued from page 19 Local Association
Local Board Meeting
Other Events
Education
Brown County
1st Wed.
Central Wisconsin
2nd Tues.
Chippewa Valley
4th Tues. every other month
See calendar at www.cvhomebuilders.com
Door County
1st Wed.
Continuing Ed offered during some GMM’s
Fond du Lac & Dodge Counties
1st Tues., no July
Golden Sands
3rd Tues.
Headwaters
2nd Tues., Wed., Thurs., before GMM
Heart of the North
1st Thurs.
La Crosse Area
3rd Tues.
Building Education Day-Nov. 5, 2008. Lunch n’ Learns Feb. 26 & April 30, 2009
Lakeland
2nd Wed.
Lunch ‘n Learn-last Tues. of month
Madison Area
3rd Wed.
See calendar at www.maba.org
Manitowoc County
2nd Thurs.
Metropolitan
2nd Wed.
Mid-Shores
2nd Tues.
Mid-Wisconsin
3rd Tues.
Northland Area
3rd Wed.
Racine-Kenosha
1st Wed.
Sheboygan County
1st Tues.
South Central Wisconsin
2nd Tues.
Annual Seminar Series
Homes of Our Own April 28-May 1, 2009
Clay Shoot April 25, 2009
Week of March 23 7th Annual Associate Night
Bowl-a-Thon, Feb. 2009. Build PAC Auction May 28, 2009
March 5-6, 2009 Builder Education Seminar April 9, 2008 UDC Training Quality Inn, Rhinelander
Awake to Learn seminars the 2nd Wed. of month Commerce Approved 12-Hour Course DVD available to HBA members for $150/nonmembers for $225 at MBAonline.org.
Education opportunities for credit follow GMM meetings dinner Bowling for Scholarships, Feb. 2009
Monthly Monthly
South Western Wisconsin St. Croix Valley
Bi-monthly, one week before GMM
Valley
Last Tues.
Wausau Area
3rd Tues.
Annual Party - Jan. 17, 2009
Winnebago
2nd Wed.
Awards Banquet Jan. 9, Clay Shoot May 21, Elections May 13,
Wolf River
4th Tues.
Holiday Party Jan. 10, 2009
Holiday Banquet Dec. 16, 2008 R&D Banquet Hall, New Richmond
Various -- visit vhba.com for schedule
rev.10/31/2008
20
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
14
Important Principles
to Survive and Thrive in Today’s Market
by Bob Schultz, MIRM, CSP t was only a few years ago the housing market was so great that people were lining up to buy homes, and prices were increasing as often as every day or even every hour, but now the market is in such a mess that the entire economy is suffering. What happened? How did we go from an incredible market to being in the bind in which we find ourselves now? To understand that, first we need to take a look at what factors contributed to the great housing market to begin with. From 1992 until 2001, we had a good, solid market. Then, in 2001, the Federal Reserve lowered interest rates in anticipation of a recession. From that time through the last quarter of 2005, we enjoyed the lowest interest rates, on average, that we’ve had in 50 years. Baby boomers began to move through the market in abundance. A huge influx of new immigrants needed new homes. With the widespread use of the Internet, we began to live in a “connected” society, which allowed many people to purchase homes in multiple locations without having to worry about proximity to an office
I
building. Construction and land costs increased rapidly, causing a sense of urgency. Investors and “flippers” moved from the stock market to real estate and new home sectors. The economy was good, and people perceived it as such. Financing was abundant and cheap. Demand began to outpace supply, and the press incessantly touted a “hot” housing market, further driving a great sense of urgency. All of these factors worked together to ultimately create “irrational exuberance,” to use a term coined by Alan Greenspan in reference to the late 90s tech stock craze. We ended up with an inflated market that inevitably had to return to a normal state at some point. And the worst part is that our industry became so wrapped up in the grand euphoria of what was going on that many “successful” companies didn’t do the things they needed to do to ensure long-term success. As long as sales were coming in — and they were — it didn’t matter if salespeople had a process, if builders were getting maximum ROI, or if profit and revenue were being lost because of inefficiency. In the crazed market, it didn’t matter. In the wise words of Bill Gates, “Success is
a lousy teacher. It seduces smart people into thinking they can’t lose.” The good news is that many of the factors that drove the hot market are still in place. Interest rates are still low, baby boomers are still moving through the market, new and more affluent immigrants are arriving in the U.S. every day, and we live in an even more “connected” society. For those builders who are willing to undergo the transformation necessary to survive and succeed in this market, the “land of milk and honey” awaits. This too shall pass. When the current crisis is over, market conditions will be similar to the way they were before the big boom. Those of you who are left standing will be in an enviable position then. It will be a time for the re-emergence of the entrepreneurial builder. Many small- and medium-sized builders will have an opportunity to fill vacuums left by large builders who, troubled by difficulty adapting and bogged down with loads of inventory and too much land, will pull out of their markets. To succeed in today’s market conditions, you must accept that the way you see it might not be the way it is. You Continued on page 22
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
21
important principles
Continued from page 21 must be ready, willing and committed to immediately embark on a course of transformation. Here are 14 principles that I recommend for those who want to survive and thrive: One Eliminate confusion. Buyers, builders, and salespeople are confused. It’s your job to make sure that buyers become “un-confused.” Explain to them why the best time for them to buy is now. Give them confidence in today’s market. In order to do that, you must have confidence in today’s market and in the homes you’re selling. Stop worrying about the things you can’t control, and learn to control the things you can control. You can control customers’ perceptions of interest rates, your sales organizations, what you put in newspapers (advertisements and positive press releases), and the environment the customers enters. Two Simultaneously increase revenue and reduce costs. Do it without sacrificing integrity, quality, or sound business practices, and to wisely invest human and financial resources for maximum ROI. Three Understand where you are now. Evaluate your organization. Each individual on your team must have the right attitude, knowledge, skills and habits. Just one “bad apple” can have a negative effect. Four Hire and retain only the right people. Use a methodical process of elimination, not instinct, tuition, or feelings. Always top-grade, build bench strength, and never be “held hostage” by someone who won’t play by your rules. Ask yourself this: knowing what you know now about the attitude, knowledge, skills and habits of each individual on your sales team, would you hire that person again? Keep this in mind: You don’t find great salespeople. You create them. Five Assess your market position. Know your competition and your competitive 22
place in the market. Evaluate your Web site, marketing and advertising program for cost efficiency, effectiveness, and maximum ROI. Six Don’t overpay for under performance. Compensation (especially in sales) should be targeted to production goals that are congruent with pre-determined levels of profitability. Compensation should be about you, the builder, first and foremost. Seven Provide proper staffing. You are in the retail business, not the real estate business. Just like in retail, you have to be open for the convenience of the customer, not the convenience of the company. Provide adequate representation for traffic generated during retail hours. Many salespeople have opinions and render them frequently about how you should run your sales operation, particularly about your hours of operation. Unless they are ready, willing and able to sign and personally guarantee your company’s construction and development loans, their opinions are unlikely to represent your best interest and are of very little value. Eight Establish and maintain a culture of continuous sales education & training with high accountability. Set criteria, implement with a passion, and hold salespeople accountable. Remember, transformation does not take place overnight; it takes place over time. Nine Inspect what you expect through sales-performance management tools. Be willing to be “unreasonable” in your expectations. Don’t focus on increasing your traffic without first creating a profound transformation in the sales organization. Ten Don’t go crazy with buyer incentives. There is a difference between a discount and an incentive. Don’t follow the herd with a knee-jerk reaction to the marketplace. Incentives should always be strategically structured and create a sense of urgency. If you must provide incentives, create them through a solid strategy.
Wisconsin Badger Builder • January/February 2009 • www.wisbuild.org
Eleven Develop a passion for the critically important business numbers as if they were about your favorite team or athlete. You can’t manage, and therefore can’t improve, that which you don’t measure. Additional sales and revenue are not driven by increasing traffic alone, but rather by a greatly improved sales process. Twelve Improve your sales conversion ratios before anything else. Before you invest precious dollars in attempting to drive additional traffic, take a hard look at what you’re doing with the traffic you already have. You must invest in improving your employees’ sales and negotiating skills so they can effectively convert the traffic you already have into profitable sales before you invest in more traffic. Spending more money on advertising and promotions to provide more traffic to salespeople who do not consistently demonstrate a proven sales process only gives them more chances to fail. This is a very common and very costly mistake. Thirteen Study the resale market. Your biggest competition is the resale market — used homes. With the excess of foreclosure sales currently on the market, you have more competition than ever before with 60 to 80 percent of residential real estate sales in your marketplace probably not involving your company or any other builder. Know your competition, and know where you stand in your market. Fourteen Take action! It’s not enough to know what you must do — you’ve got to create an action plan, put it into place right now, and follow through with each step, constantly monitoring your progress and making adjustments as necessary. Bob Schultz, MIRM, CSP, is founder of New Home Specialist Inc., a full service management consulting and sales training compan, producing books, manuals and systems for home builders, developers and Realtors®. For information about how to increase your revenue, visit www.newhomespecialist.com or call us at (561) 368-1151. Editorial thanks to the Florida Home Builders Association and Bob Schultz for their permission to reprint this article. X