Like many custom builders a few years ago, Scott Jerald was struggling to keep his business, ASJ Development (asjdevelopment.com), afloat. He searched for leads while finding ways to meet payroll each month. In October 2008, business slowed dramatically and three cancellations came within one month’s time. Layoffs soon followed, including the release of Jerald’s colleague who moved from out of state to work with Jerald in Georgia. The staff shrank from five to one.
As a builder averaging three to five homes a year, three cancellations was devastating to Jerald’s business; it was time for action. The military veteran recalled his Ranger days and thought, “A soldier always has a plan, a good soldier has a plan B and a great soldier has plan C,” he says. “So I started developing my course of action. I needed to retool my business.”
Jerald looked at his customer base and realized many of them were entrepreneurs — business owners — so he created an advisory board and asked a few of them to become members. “They told me I needed to invest in software, my processes, and logistical systems and combine them if possible,” he recalls.
The solution to Jerald’s problem involved many sub-solutions, so he drew up plans for executing them. He invested in his business as suggested by his new advisers, beginning with accounting software, which he realized was not designed for a home builder.
“I looked at the ease of use, what my accounting costs were, and the fact that at year-end I still had to hire someone to go through my books to get them right. It was inefficient.
I put my criteria together and did a search.
A big item on my wish list was the ability for my accountant to spend no more than one hour to do my tax return. We ended up buying new software that accomplished it,” Jerald says.
The local university provided a critical part of the solution to Jerald’s accounting problems — an intern. He asked for a student chasing a CPA or master’s in finance degree. In exchange, he allowed professors to use his company information as material for a class project. “Now I have a bookkeeper who tries harder and comes to the table with no preconceived concept of how accounting software works. This way, the software is used how it’s supposed to be used,” he explains.
For other staff positions, Jerald took a line-item approach to putting people in place. For example, his quality control manager is a former client who retired from corporate America and needed something to do. As a line item on the budget, the part-time quality control manager ensures subcontractors adhere to agreed-upon performance standards. “He came in without much construction experience, which is good because he goes by the book and you can’t get anything by him,” Jerald notes.
The project manager is a former full-time employee who Jerald converted to a per-project line-item employee. Jerald even helped him establish his own business. He says, “This does a few things for me. It gives me arm’s length should there be an immigration issue. It also meets our IRS standards.”
Most builders think they have a process, but not like the one Jerald established, which brought legitimacy to what he had been doing, he says. After seeing a presentation by Nate Schoen of Custom Builder Management Solutions (cbmssystems.com), Jerald was convinced he needed to implement the CBMS system full-bore. It improved his profits and increased his sales effectiveness.
“Most of my competition builds 3,000- to 5,000-sq.-ft. homes in eight to 10 months. With my new processes, I tell clients that if they go through my process, including how we make selections, I can guarantee delivery two months ahead of schedule from a construction standpoint,” he says. “I tell clients if the project cost is $800,000, take a look at the last two months of construction interest; I can save you that much money or I’ll pay it for you. A lot of that success comes from providing clients an initial questionnaire. And if the plans are in the design phase or they already have a set of plans, we go through each line, spec it out and put it in the contract,” Jerald explains.