Recently, the summary phrase I use most often to characterize the state of my business is, “I have never had more prospects or fewer clients!” I remain optimistic because I have had no shortage of sales meetings this summer. My leads have come from my website, my new showroom where the increased visibility has led to many more opportunities and from business networking.
We are two weeks into the attorney review process on a 5,000-sq.-ft. custom home to be built on my client’s lot. This potential project has already been challenging. The opportunity began when an architect I never worked with invited me to bid on the plan. It is an interesting home with an outdoor courtyard surrounded on four sides by the home.
When I met with the architect to pick up and review the bid plans, he told me there would be five other builders bidding and I would only get to meet the prospect if my bid was selected out of the first round of cuts. I told him I felt like I was being asked to go into a pitch black batting cage and hit a home run. He replied that his client was too busy to attend six builder meetings so I could either play by his rules or not play at all.
The plans subsequently sat on my office floor for the first three weeks of the four-week bid window. In the final week, I committed to the bid deadline and spent 100 hours of my staff and my time in assembling the bid. I decided I would not attempt to compete on price partly out of frustration with the process and because it was a complex design. I put in all the costs I knew I would need to cover construction and profit. I ignored the reality that this would be a super competitive bid process and that other builders were hungry to win this commission.
One week after I submitted the bid, the architect called me and confirmed what I already suspected would be the situation: My $1.6 million bid was not only high but was “a few hundred thousand dollars more than the lowest bidder.” But then he said something I did not expect: “The clients want to meet with you because they want to understand what you’re thinking and why you believe the project will need that budget.”
When I made my presentation two weeks later, I brought in my estimator and custom selections manager. In preparation for the meeting, we created a report showing the prospects both value engineering ideas and scope-of-work suggestions that gave us the chance to trim the budget by $175,000 without significantly altering the plan. I also presented a flow chart showing the timing and steps needed to get the house under construction by this fall and closed in by winter. I also used the opportunity to explain the benefits of building open-book construction management and how doing so would give us the best opportunity to further trim the budget. I went into detail and examples of how open book creates a win-win for the client and builder.
The other builders have since been told that I have been given the job. If the prospect’s lawyer approves the agreement, I anticipate I will be breaking ground by the time this column is printed.
Although it is as difficult as it has ever been to be a custom builder, I urge you to keep doing what you know instinctively is the right thing for your business and your client. Hopefully your reward will be an ongoing profitable custom building business. Good luck.
Jay Grant, president of Grant Homes, a residential design/build firm in Mendham, N.J., focuses on building luxury custom homes and renovations/additions. He is the recipient of more than 20 industry awards including best website for granthomesusa.com. Grant is available for business consulting. Send email to email@example.com. Read past columns at rdbmagazine.com.