Cashflow: How I Wrecked My Business, Screwed My Friends, and Almost Destroyed My Marriage - Part 1comments (7) September 16th, 2011 in Blogs
BY MR. X
A former home builder admits that blaming the recession for his company’s failure would be easy, but looking hard at his own mistakes is a lot more useful
Starting out with the best of intentions
I started my home-building business after burning out as a high-school science teacher. My goals were simple: start a small residential contracting business dedicated to great design, quality construction and green building. My wife was incredibly supportive, yet understandably nervous. Nevertheless she did not, nor has ever, faltered.
Change orders can help avoid dreaded lawsuits
Being a virginal builder, I couldn't convince any sane individual to contract with me to build their home, and I didn't want to build for insane people. My wife and I stretched out on a limb a bit and decided to build a home, my first build, for us. Our plan was to live in the home for a few years, establish the construction company and see what happened. On this first home, I touched every stick and brick myself. And that house was the first in our state to be recognized by a regional green-building certification program. It was a “right time, right place” scenario, and as a result the house garnered a fair amount of media attention and generated interest in our company.
I resisted taking on employees because I really didn’t want to be responsible for other people’s livelihood. But thanks to the publicity, the demand for my company’s services was such that I had no choice. I could no longer be effective without help, so I hired a couple of folks, including the man who would become our general manager. But I stayed awake nights worrying about having enough work and about missing paydays.
My wife and I moved into that first house, and within a year were presented with an offer to sell. The potential buyers had been living in an older home and worried about exposing their child to lead paint. They wanted to build or buy a green home, and I offhandedly suggested they take a look at our place. The deal was done very quickly. The buyers were sold immediately, grew a family in the home and still live there to this day. Since we didn’t even have to list the house on the real estate market, and sold the home for a profit, I realized the potential power of spec building.
Even though that first house wasn’t technically a spec house, it worked out that way, and I was immediately addicted to building spec rather than custom homes. I knew how I wanted our homes to look and how I wanted them to perform. I didn’t want to concede to a client’s agenda. I felt like I could sell any home as rapidly as I could get it built, and that’s what we did for next few years. Up until 2008, we sold every home within two weeks of completion.
Initially making money was not one of my goals. All I wanted was a decent salary for me and for my employees. At that point, being such a small company, We were a very tight knit group. Employees became fast friends with similar goals and motives. We wanted to grow, be the best and save the planet all at the same time. I didn’t care about big profits. As it turned out, this was one of my biggest mistakes.
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