Bismarck-Mandan Home Builders Association

March 2013Issue 3

Building Buzz

What’s Inside:2 Permit Report

3 President’s Letter

4 Calendar of Events & 2013 New Members

5 Membership Highlight Timber Ridge Plumbing & Heating

6-10 News & Events March Education February Fun Night Recap Spring Parade of Homes

11 City Beat Civic Center Public Input Meetings

12 National News Credit, Appraisals & Supply Hurt Jobs, Housing

13 Business Buzz Business Model Benchmarks

14-15 NDAB News

www.bmhba.com

Come Bowl with the Builders on

March 19Page 6

Largest Home Show Yet Has Record

AttendancePage 8

February 22, 23 & 24 | Bismarck Civic Center

How do we DESIGN a new

kitchen?

Whatever your home needs,You’ll fi nd it at the Home Show!

See pages 25-32 for a convenient pull-out section of Home Show maps and a listing of exhibitor booths!

Why don’t we REMODEL the

bathroom?

What color could REFRESH

these walls?

Where could we add more LANDSCAPING

to increase our curb appeal?

Should we BUILD or buy?

$2.00 OffADMISSION

See coupon on page 4 or online at www.bmhba.com

36TH ANNUAL

Admission$5/day adults

18 & under FREE

Friday: 3 pm-9 pm Saturday: 10 am-5 pm Sunday: Noon-5 pm

Page 2 March 2013BMHBA Building Buzz

Building BuzzPublisher/Editor:

Roxanne JacobsonLayout Editor/Writer:

Chelsea Gleich

Published by the Bismarck-Mandan Home Builders Association2600 Gateway Ave., Suite 1

Bismarck, ND 58503Phone: 701.222.2400 Fax: 701.250.9730

Like Us! www.facebook.com/bmhbaFollow Us! www.twitter.com/bmhba

Your membership is three-in-one: BMHBA, NDAB and NAHB

Scan to visit www.bmhba.com

Bismarck-Mandan Permit Reports Through January 2013BISMARCK - monthly/yearly permit reports can be found at www.bismarck.org

Permit Type YTD 2013 YTD 2012New Residential Single Family Detached Single Family Attached Duplex 3 or 4 Unit 5+ UnitResidential GaragesNew CommercialAlter Public

13/$2.232M12/$2.032M0/$0M0/$0M0/$0M1/$.200M0/$0M4/$5.203M1/$.006M

5/$1.507M4/$.842M0/$0M0/$0M0/$0M1/$.6652/$.005M8/$.335M2/$.026M

MANDAN - monthly/yearly permit reports can be found at www.cityofmandan.com

Permit Type YTD 2013 YTD 2012New Residential Single Family Two Family Condos ApartmentsRemodel and AdditionsNew CommercialAlter Commercial

4/$1.04M4/$1.04M0/$0M0/$0M0/$0M21/$.337M0/$0M3/$.137M

2/$.480M2/$.480M0/$0M0/$0M0/$0M8/$.082M0/$0M2/$.138M

Professionals building our community through promotion of home ownership, education and legislation since 1958.

March 2013 BMHBA Building Buzz Page 3

As I have mentioned before, I am truly excited to be your president for 2013. What I would like to do is talk about a couple of things I have been thinking about. First and foremost, I’m asking for your feedback. What I’ve noticed is there are a lot of new and seasoned members who want to get involved. Many of them just don’t know how. A great way to do that is to get involved with our committees. At a recent board meeting I shared with our board

that I’d like to jump start our committees. Following is a list of our five committees. I have spoken

to many of you in the past month. If I haven’t reached you, please review the list and let me know your status: whether you would like to stay on a particular committee, change committees, add another, or don’t have time

anymore. Additionally, if anyone sees a committee they would like to get more involved with please let me know. The more the merrier. I understand everyone is very busy, so not everyone who is on the committee is able to attend every meeting. Therefore, it is always nice to have a long list of people who are available to help out. Anything is appreciated.

Lastly, what I really want to do is help our communication within the association. You’re going to see me take on a few different avenues to help facilitate our communications. Everyone should know what’s going on within our association. This will be my pledge; I will work hard for you to help improve our communication. When we meet with the city, chamber, and legislators and agree to support them and their issue we will communicate that to you in a timely manner. If you have any ideas, please let me know. I would really like to hear from you. The only bad ideas are the ones that are left unsaid. My cell phone number is 471-8842, and my office number is 255-7727.

A Word from Our President:Open Communication & Involvement Are Key

Eric BrendenBoard President

Events Committee:Melinda Lloyd, NDG&TBarb Bakken, American Bank CenterBrandi Duchsherer, Prairie Aire HomesDana Schlomer, Schlomer ConstructionKevin Fischer, Kevin Fischer Const.Lisa Liken, Capital Credit UnionLyle Forderer, Premier AudioMarc Menge, BNC National BankNadine Schaff, American Bank CenterNatalie Friesz, BNC National BankPaula Haider, Haider Glass SpecialtiesShane Gaffaney, Allied Building ProductsGail Jacobson, Security First BankDenese McLeish, NDG&TLisa Johnsen, Dakota Community BankTammy Skogen, Gate City BankSara Cripe, Blend Home Design

Governmental Affairs Committee: Chad Moldenhauer, K&L Homes Dana Schlomer, Schlomer ConstructionDave Patience, Swenson Hagen & Co.Todd Brady, Miller InsulationVance Vetter, Vance Vetter HomesEric Brenden, Northwest ContractingJeff Sattler, Sattler Homes

Home Show Committee:Erik Kees, Fargo Glass & PaintBill Schmid, Townsquare MediaBlair Ihmels, Acme ToolsGreg Zenker, Ferguson EnterprisesJan Frohlich, Leingang Home CenterRandy Tank, Great Plains RehabShane Gaffaney, Allied Building ProductsJarred Roloff, Paramount BuildersKay Pfeifer, Kamrose ConstructionLeanne Holzer, Capital Credit UnionMary Kingsley, NDG&TShirley Johs, Keller Hearth N HomeTom Haider, Haider Glass SpecialtiesKevin Seidel, SSS ConstructionTim Lingelbach, Gutter TopperSuzy Franklin, Capital Credit Union

Membership Committee:Jessica Cottingham, Cottingham Ins.Paula Haider, Haider Glass SpecialtiesKaren Boelter, Gutter Topper Marc Conrad, Sign A Rama

Parade of Homes Committee:Bill Schmid, Townsquare MediaColby Well, Well Built HomesDeb Luptak, Redford Signature HomesVicki Moran, Hallmark HomesGeris Hopfauf, Hopfauf Custom BuildersMarc Menge, BNC National BankNatalie Friesz, BNC National BankKerri Burrows, Hebron BrickKevin Fischer, Kevin Fischer Const.Mary Kingsley, NDG&TMeghan Aberle, Western SteelScott Duchsherer, Prairie Aire HomesSean DeVault, Armor InteractiveErik Kees, Fargo Glass & Paint Eric Brenden, Northwest Contracting Art Goldammer, Red Door HomesBridget Gerhardt, Bridget’s RoomKaren Boelter, Gutter TopperKay Evenson, Kamrose ConstructionMary Miller, Majestic Homes

We want YOU to join a committee!Call the office at 222-2400 to sign up.

Page 4 March 2013BMHBA Building Buzz

BMHBA Welcomes New Members in 2013

We would like to thank our new members for joining us, and welcome them to the association. If you know any of these members, please encourage them to get involved

and attend BMHBA functions with you.1st Choice Homes

Lori Doerr & James Michela of Bianco Realty, Inc.

Central City Remodelers

Jackie Andahl & Robin Gates of

Century 21 Morrison

Copper Ridge Design & Builders

Eide Bailly, LLP

Horizon Framers

Hot Spring Spas & Pool Tables 2

Kamrose Construction

Lexar Homes

OM Contracting

Property Resources Group

Regal Home Solutions

RHR Construction

Rick Slavik Construction, Inc.

Rusch Homes, LLC

Super Homes, Inc.

Timber Ridge Plumbing & Heating

Calendar of EventsMarch 5: Extended Energy Tax Credits Lunch-n-Learn at Eide Bailly

March 13: NDAB Safety Training

March 19: Bowling with the Builders at Midway Lanes

March 19: BMHBA Board Meeting

April 12-14 & 19-21: Spring Parade of Homes

April 23: BMHBA Board Meeting

May 16: Spring GMM at the Seven Seas

May 23: New Member BBQ at the BMHBA Office*All Board Meetings are held at the BMHBA office

2013 Board of DirectorsPRESIDENTEric BrendenNorthwest ContractingPhone: (701) 255-7727

PAST PRESIDENTChad MoldenhauerK & L Homes, Inc.Phone: (701) 258-4584

SECRETARY/TREASURERGreg ZenkerFerguson EnterprisesPhone: (701) 663-2446

BOARD MEMBERPaula HaiderHaider Glass SpecialtiesPhone: (701) 250-6787

BOARD MEMBERMinda LloydND Guaranty & Title Co.Phone: (701) 663-5362

1ST VICE PRESIDENTVance VetterVance Vetter HomesPhone: (701) 751-8218

2ND VICE PRESIDENTDrew KnutsonKnutson Homes, Inc.Phone: (701) 258-3464

BOARD MEMBERScott MoranHallmark HomesPhone: (701) 471-7634

BOARD MEMBERMike HopfaufHopfauf Custom BuildersPhone: (701) 663-7691

BOARD MEMBERC.J. SchorschFleck’s Furniture & AppliancePhone: (701) 323-0891

March 2013 BMHBA Building Buzz Page 5

Membership Highlight: Timber Ridge Plumbing & Heating Is a

New Company, But Not New to the IndustryTodd Backman founded Timber Ridge Plumbing &

Heating as of January 1, 2013. This new endeavor is just another step in Todd’s career in construction/plumbing, however.

“I have 16 years experience in the plumbing industry and an additional 10 years in construction,” says Todd. He has been self-employed for 6 years.

According to Todd, the goal of this new company is “to provide quality plumbing at affordable rates; provide excellent customer service and have a company that my employees can grow in.” As a business owner, he is focused on building long-term relationships with his customers and employees.

“Our goal is to grow in the community and establish a name that people can rely on and trust,” says Todd. To help build that reputation, Todd has taken on employees who, along with himself, have many combined years of experience in all aspects of plumbing and heating.

The industry is very generous right now for those in this industry and Todd is looking forward to being able to offer needed plumbing and heating services through his 11 employees in his new venture at Timber Ridge.

Timber Ridge Plumbing & Heating has access to a wide variety of products through their wholesalers that their customers can choose from. “We do a lot of bathroom remodels that are including custom showers with multiple showerheads, steam showers, etc. As far as kitchens, the farm-style sink has become quite popular as well,” Todd says.

The biggest challenge for Todd is that the cost of materials continues to rise. To compat this issue, “we spend a good amount of time researching prices and trying to find the best deal so we can pass that on to our customers,” Todd says.

Looking for a plumbing and heating contractor to fill your residential and commercial needs? Call Todd at 751-4131 or email him at timberridgeplbg@midconetwork.com.

With over 16 years in the industry, Todd Backman founded his new company, Timber Ridge Plumbing & Heating in January 2013.

Want your company to be highlighted? If you haven’t been featured before, email chelsea@bmhba.com and find out how your company could be next month’s member highlight!

Page 6 March 2013BMHBA Building Buzz

Strike! Come Bowling With the Builders on March 19

Sign up to be an Affiliate Member

for only $50 a year!

Call the office at 222-2400 to find out more.

Do you want to list more than one

contact person for your company on our

website?

Do multiple employees want to receive

information from us?

BMHBA News & Events

We liked the competitive spirit behind the board chili cook-off at February Fun Night so much that we thought it’d be fun to get everyone in on the game. We invite you to join us for the first-ever Bowling with the Builders event on March 19. The three-hour event will be held at Midway Lanes in Mandan from 6 p.m. to 9 p.m.

Admission is $25 per person. Members can sign up individually or as a team of 4-5. If you sign up individually or as a smaller group, you will be placed on a team. The night includes two games of bowling, shoe rental and pizza for the players.

Please RSVP by March 15. If you like to register, contact the office at 222-2400 or email chelsea@bmhba.com.

Get your game face on, and we hope you’ll join us for Bowling with the Builders on March 19!

Special thanks to our lane sponsors!

Allied Building Products

Hopfauf Custom Builders

K & L Homes, Inc.

Kevin Fischer Construction

Knutson Homes, Inc.

North Dakota Guaranty & Title Co.

Northwest Contracting

ProBuild

Schlosser Excavating

Starion Financial

Your Name Here! Call 222-2400 to sponsor a lane.

But hurry, only 2 lanes left!

March 2013 BMHBA Building Buzz Page 7

Just in time to file your taxes, join us for a tax tips lunch-n-learn geared toward home builders on March 5 from 11:30 a.m. - 1 p.m. at Eide Bailly. The cost for the event is $15 per person, and lunch is included.

Thank you to Tonya Schlaht, CPA for presenting this course. With over eight years of public accounting experience and an emphasis in business, individual and non-profit taxation, Tonya is a licensed CPA and manager at Eide Bailly in Bismarck. She is experienced in tax consulting, research and tax compliance for contractors, auto-dealers and tax-exempt organizations with a specialization in low income housing credits.

This course will review how builders, remodelers and/or consumers can take advantage of newly extended energy tax credits including the Existing Home Retrofit Tax Credit, New Energy Efficient Home Tax Credit, Residential Energy Efficient Property Tax Credit and the Energy Efficient Commercial Buildings Deduction. Tonya will also go over some tips and tricks for builders and remodelers when filing their taxes to make sure they are getting all the credits/deductions they are eligible for.

If you would like to attend this valuable lunch-n-learn, contact the BMBHA at 222-2400 or email Chelsea@bmhba.com.

BMHBA News & Events

Member Minute: BMHBA Members Making Headlines

Kupper Chevrolet’s David Hanson AwardedKupper Chevrolet Fleet Manager, David Hanson has

been named one of General Motor’s highest performing Fleet Elite participants for 2012. Out of more than 260 Fleet Managers in the country, Hanson earned the prestigious distinction for a strong commitment to excellence and an unwavering dedication to the business customer. Hanson has been employed with Kupper Chevrolet since 2005.

Bianco Realty AwardsBianco Realty has named Shirley Thomas and Dave

Hoerner Associates of the Month! Thomas and Hoerner had the most closed sales at Bianco Realty for the month of January 2013.

Extended Energy Credits: Tax Tips and Tricks for

Home Builders

Free Safety Training Offered to Members from NDAB

In conjunction with the local associations and North Dakota Workforce Safety & Insurance, the North Dakota Association of Builders is offering free safety training courses to members throughout the state. The local courses will be offered on March 13 in two sessions, 8 a.m. to noon and 1 p.m. to 5 p.m.

The morning session will be Trenching & Excavating. This course will provide the participants with the “do’s and don’ts” of soil classifications and the proper protective systems such as sloping, shoring, benching, and shielding, that are used to protect employees while working in and around trenches.

The afternoon session will be Forklift Operator Training. Designed to meet OSHA formal instruction training requirements for operators of powered industrial trucks, this course includes safe operation, maintenance, protection of personnel, load center, unloading and unloading of trucks, and more. This course is classroom content only. It does not include operations certification.

Bismarck-Mandan will also host an OSHA 10-Hour Construction Course on October 16 & 17 that is free to members, as well.

The Bismarck-Mandan courses will be held at the North Dakota Safety Council Office, 1540 Burnt Boat Drive, Bismarck. To register, download a registration form at www.ndbuild.com and return it via email to Doreen@ndbuild.com or fax to 701-222-3699.

Submit your company achievements to Member Minute

by emailing Chelsea@bmhba.com

Page 8 March 2013BMHBA Building Buzz

Largest Home Show Yet Brings in Over 6,500 Attendees

KUNTZ & SONSTRUCKING, CONSTRUCTION & LANDSCAPING

- Black Dirt, Scoria, Fill Dirt & All Types of Sand & Gravel

- Rip Rap

- Demolition Work

- Sand & Gravel Hauling

- All Types of Trucking

223-4761Cell: 226-7761

Five p.m. on February 24 marked the close of the 36th Annual Home Show. For the past 35 years, we at the Bismarck-Mandan Home Builders Association have fuliflled our mission of promoting home ownership and our members through the annual Home Show. This year was no different. Featuring over 350 booths and 180 professionals, the 36th Annual Home Show was the largest show to date.

We are proud to announce that attendance is on the rise again for this year. Over 6,500 tickets were sold that weekend.

Thank you to everyone who came out to support your fellow members and the association at the show.

Also, special thanks to our returning and new exhibitors. We are happy to be able to help you promote your businesses in our community.

We’re already looking forward to our 37th Home Show in 2014. Mark your calendars for March 14-16 at the Bismarck Civic Center. Contracts will be sent out to secure spaces in next year’s show in October.

Custom Kitchen Cabinets, Counter Tops, and Furniture

Dale J. McKnight701.794.3678

2150 31st Ave. SWCenter, ND 58530

Friday: 1508 Tickets SoldSaturday: 3328 Tickets SoldSunday: 1724 Tickets SoldTOTAL: 6560 Tickets Sold

Spring Parade of Homes | April 12-14 & 19-21

Fall Parade of Homes | September 26-29

Home Show 2014 | March 14-16.

MARK YOURCALENDARS!

The first joint event for the Bismarck-Mandan Board of Realtors and the Bismarck-Mandan Home Builders Association was a great hit. February Fun Night attendees enjoyed drink samples of the newest and greatest Jerome Distributing products and homemade chili. Chili contest participants included BMHBA Board members and select realtors. Thank you to everyone who made a pot of chili to share with all the attendees. It’s always great to see all the different recipes everyone can come up with. Congratulations to our 2013 Chili Champion, Lore Bruner from Century 21 Morrison Realty.

Congratulations to our door prize winners for the evening: Harold Harter, Brian Ibach, Bill Schmid, Tom Todd, and Dale Pahlke. And, special thanks to Jerome Distributing for providing the prizes, samples and hosting this great night at their facility again this year.

Thank you to all the BMHBA and BMBOR members who attended this fun event. We hope to continue this great collaboration with BMBOR in the future.

March 2013 BMHBA Building Buzz Page 9

BMBOR and BMHBA Members Enjoy Friendly Competition and Networking at February Fun Night

Firecrackers1 1/2 C. Canola Oil1 Tbsp. Crushed Red Peppers1 Pkg. Buttermilk Ranch Dry Mix4 Sleeves Saltine Crackers

Mix oil, red peppers and ranch mix in 2-gallon Ziploc bag for 5 minutes. Mix in saltine crackers. Flip every 5 minutes until absorbed.

Below is the recipe for the chili crackers at February Fun Night. Back by popular demand...

Top Right: Lore Bruner accepts her Chili Champion award for the best chili. Bottom: BMHBA and BMBOR members get to know each other while enjoying some Jerome Distributing products.

Page 10 March 2013BMHBA Building Buzz

Isn’t that what we’re always searching for - the right design element, the right layout, to get our homes one step closer to perfection? The Spring Parade of Homes offers a showcase for local, beautiful, new homes from builders in our communities. Each home is unique and each home has the potential to be your “perfect” home.

We hope you’ll plan to join us as we take a tour around Bismarck-Mandan visiting over 25 new homes, taking in the latest and greatest in home building and, hopefully, finding that perfect idea, color or builder to make your dreams come true.

The Spring Parade of Homes is set for April 12-14 and 19-21. The Parade hours are 6 p.m. to 8:30 p.m. Friday, 11 a.m. to 5 p.m. Saturday, and noon to 5 p.m. Tickets will be available for purchase at the homes and the Spring Parade of Homes magazines will be available on April 8 at local grocery stores.

If you would like to enter your home in the Parade, contact the BMHBA office at 222-2400 as soon as possible.

For more information on this great upcoming event, visit the Parade of Homes tab on www.bmhba.com.

The 2013 Spring Parade of HomesIn Pursuit of Perfection

March 2013 BMHBA Building Buzz Page 11

City Beat: Public Input Meetings Set for Civic Center Issue

specializing in normal and geothermal systems for new construction

www.a1heatingandair.org | 701-751-4200Find out what we can do for you.

Visit 122 Mandan St, Bismarck | Call 258-4400

Building a New Home? Get 35% Off Lighting at

There has been a lot of discussion lately on whether or not to expand the current Civic Center and/or build a new events center in North Bismarck. The original expansion plan for the current Civic Center was defeated by a popular vote this past June. Since then, the city commission has developed smaller scale plans to enhance the current facility. The current plan presented by Jeff Ubl of Ubl Design Group includes an exhibit hall expansion and renovations of the east and west wings of the arena. The cost for that project would be $30,638,500.00.

Another proposal presented by JLG Architects was to build a new events center in North Bismarck. The land would be donated to the city by Dr. Ron Knutson and the land surrounding would be sold for commercial and residential use. This proposal presented at February 26th’s city commission meeting is set to cost approximately $150 million.

The Bismarck-Mandan Home Builders Association encourages a productive dialogue on this subject. The board of directors would like more information on the

economic impact of expanding the current downtown facility versus building a new facility up north before they support or oppose either project.

To get more information on this issue and to share your opinion, please consider attending the public input meetings on this subject. The public input meetings are set for March 4 from 5:30 p.m. – 7:30 p.m. at the Horizon Middle School Cafetorium and March 5 at Wachter Middle School Cafetorium from 5:30 p.m. – 7:30 p.m.

Page 12 March 2013BMHBA Building Buzz

National News: Tight Credit, Flawed Appraisals and Erratic Supply Chain Hurt Jobs, Housing

The budding housing revival driven by pent-up consumer demand still faces a number of obstacles, including tight credit for builders along with a stretched lot and building supply system in many markets that are barely keeping up with demand. The precarious support system to housing could threaten the fragile housing and economic recovery now under way, according to the National Association of Home Builders (NAHB).

“I talk to many of our builder members who are expressing increasing frustration that they can’t get access to construction loans to develop lots in markets where demand is on the upswing,” said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. “Not only is this keeping workers sidelined, it is frustrating potential home buyers and slowing the recovery.”

With the peak spring home building season just weeks away and inventories of new homes at or near record-lows in many markets, builders should be ramping up to meet demand and create new jobs in markets across the nation.

“Though some metros are still struggling to recover, conditions in a growing number of markets are improving, and those are the areas where we should be hiring construction crews at a healthy clip,” said Judson. “Unfortunately, new-home production is facing a number of obstacles and failing to bounce back at a more robust rate. Builders can’t obtain financing to construct new homes and developers have not been able to restart the lot production pipeline because of the lack of credit, which is contributing to buildable lot shortages in some markets.”

Meanwhile, creditworthy borrowers can’t obtain mortgages, inaccurate appraisals are leading to cancelled home sales, and rising building material prices and spot labor shortages are pushing up costs and slowing completion times.

After years of sub-normal household formations brought on by the Great Recession, more and more buyers are now facing a challenging reality as they venture into the housing market.

Banks, appraisers and regulators swung the pendulum too far and have failed to return to normal business practices. Signs of production bottlenecks are cropping up in some markets. With new-home inventories already at razor thin margins, this is exacerbating a lack of available new homes in many metro areas at a time of growing demand.

“With the severe declines in housing over the past

years, many building material manufacturers such as drywall producers and lumber firms had to close plants and cut back production dramatically,” said NAHB Chief Economist David Crowe. “Now, with the NAHB/First American Improving Markets Index showing that many housing markets are on the mend, the supply chain is starting to strain. Producers are reluctant to expand while credit remains tight and the most recent result has been skyrocketing prices.”

Builders have to absorb these added costs by cutting back on other areas, including hiring. Further aggravating the situation is the long lag time for developers and builders to acquire, finance and develop lots, which is also putting a damper on residential construction employment.

To get production back on a firmer footing to meet rising demand, spur job growth and move the economy forward, NAHB is urging financial institutions and regulators to ease tight credit conditions that no longer reflect today’s economic realities.

Moreover, policymakers and appraisers also need to confront a flawed appraisal process for home buyers and home builders. NAHB recently unveiled a white paper, A Comprehensive Blueprint for Residential Appraisal Reform, designed to get all stakeholders in this debate to come together and enact reforms in appraisal practices and oversight to ensure that appraisals accurately reflect true market values.

“Restoring the flow of credit to home builders with viable projects and fixing the residential appraisal process will not only help to put America back to work, it will strengthen communities across the land and provide badly needed tax revenues that local governments need to fund schools, police and firefighters,” said Judson.

March 2013 BMHBA Building Buzz Page 13

By Bob Whitten, SMA Consulting, info@smaops.comSome of the most frequent questions builders ask regarding

their business include:• When do I need another construction manager? • Can I afford a model home? • How many people do I need if I double my revenue?Financial benchmarks can answer all these questions and

become a foundation for your operational business model for years to come. In this message, you will find ways to not only answer these types of questions but also a means of making budgeting much easier. Benchmarks and the Financial Business Model

One of my primary goals when working with a client is to help them establish their own financial business model. The business model includes the concepts and operational goals needed for the most direct path to long term success of any organization. The financial business model represents the “numbers” side of the model.

A business model, to be valid, must be three things: sustainable, scalable and replicable. This means that you can:

• Meet the results year after year (it is sustainable), • Scalable means you can apply the same model as you grow

or contract the business (raise or lower your revenue) • The model can be replicated geographically if desired

(think McDonalds or any other successful franchise). The financial business model is the set of benchmarks

that when met and maintained produce the best results in profitability and operational efficiency. They produce that “sweet spot” of results which are sustainable, scalable and replicable. Operational Benchmark Examples

There are some basic benchmarks that are fairly consistent with all successful homebuilders. Others are specific to the company and their way of doing business. With time and experience, you will be able to firm up your company’s specific business model benchmarks. Some of the benchmarks that are consistent between builders are the ones that can address the questions at the start of this management message.

As an example, a construction manager’s salary (bonus included) and salary related burden (payroll taxes, etc.) should cost you 1.5% of the revenue he produces (houses he constructs). This means an employee with a $60K annual cost in this position should produce $4 Million in homes. Now in your business model this may be 10 - $400K homes or 20 - $200K homes or even 4 $1 Million homes, but the benchmark is pretty consistent as an average.

So if the company was going to do $12 Million in revenue and their average cost per construction manager was this $60K number, then your company would need and be able to afford three construction managers (sometimes referred to as superintendents). This is then one component of your business model.

Can you see how this would make decisions (especially

correct and valid business decisions) easier for the business owner or manager? You have a time tested business model principle to fall back on.

Another example benchmark helps answer the question of “when can I afford a model or a second model in a single location?” This benchmark has a little more range of correct answers, but depending upon your volume, model home expense should be .5% to 1.0% of the sales revenue generated by the model homes. The smaller the volume of the builder the closer the correct benchmark is to 1.0%. The national builders typically use a benchmark of .5% or sometimes even a wee bit less.

The model home expenses to be considered within this benchmark are:

• The interest on the model construction loan (or lease amount if sold and leased back)

• The utilities of the model home• The cleaning, landscape maintenance and possible snow

removal contracts for the model home and parking lot. • The expenses of maintaining the sales office within the

model home (not the salary of a salesperson). Copier, phone line, paper and office supplies are included here.

So a company with a single model home with $35,000 per year in overhead expenses related to that model home should be producing $3.5 Million (thus the expenses would be 1% of the revenue) or more (less that 1%) of revenue through that model home. How Benchmarks and the Business Model can Benefit Your Company

Once you have a reasonable set of benchmarks established for all areas of your business and have a staff that is trained to understand the benchmarks and the resultant business model, you will be surprised at how the decisions become easier. You will also find that it is easier to push management decisions down to lower levels within your company and thus save yourself time and frustration.

A great example of this is in budgeting. The budget, in many areas, becomes a by-product of the established benchmarks.

During my days as a builder, my most consistent benchmarks helped the company build 500+ homes per year much more easily than what we experienced building 50 homes per year. I knew how many employees it took to maximize volume and profitability and keep the turnover (from employee burnout) low. I knew that it took 7000 annual model home visitors to make 700 gross sales and 590 net sales. How many new customer registration cards would you have professionally printed each year if you knew these numbers? When would you reduce/increase advertising? What would be your monthly traffic registration goal on average?

All these operational questions can be addressed by the numbers or benchmarks that comprise your business model. And, the answers can lead to quicker (and easier) business decisions.

“How Much Should I Spend On ____________?”

Page 14 March 2013BMHBA Building Buzz

March 2013 BMHBA Building Buzz Page 15

www.ndbuild.com North Dakota Association of Builders March 2013

Williston Area Builders Association eo@willistonbuilders.com 701-572-5744 willistonbuilders.com

The 3rd Annual Home Show is April 5-6, 2013 at the Raymond Family Community Center. Registration information is available on our web-site.

Safety training classes will be of-fered in the areas of Defensive Driv-ing (March 5) and Forklift Operator (March 6).

Bismarck-Mandan Home Builders Assoc. Roxy Jacobson, Executive Officer 701-222-2400 bmhba.com

On March 19th, the BMHBA will be hosting a Bowling with the Builders night at Midway Lanes. You can sign up individually or as sign up a team. This should be a fun event to kick off the 2013 Spring Season.

Safety training will be held on Wednesday, March 13th on trench-ing and excavating (am) and forklift operator training (pm). Register by contacting NDAB or the HBA office.

Dickinson Area Builders Assoc. Irene Schafer, Executive Officer 701-483-0044 dickinsonareabuilders.com

Dickinson Area Builders enjoyed a very informative general member-ship meeting on the 13th at the Elks. We had City of Dickinson represen-tatives attending, and sharing up-dates on what is happening in the City.

Our Home Show is sold out with

over 80 exhibitors. Plans are moving forward with a new Rec Center addi-tion, which will give us more space.

Doubling our space for Home Show 2014 would be nice; however, we can certainly expect to double our space for Home Show 2015.

Plans move forward for a good atten-dance at our Safety Training ses-sions on March 6th. Supervisors Safety Development (am) and CPR/First Aid (pm).

Minot Association of Builders Vicky Flagstad, Executive Officer 701-852-0496 minotab.com March 12 General Membership

Meeting hosted by new member Hirshfields, Inc. at their new store – 921 20th Ave SE.

38th Annual MAB Home & Garden Show at the State Fair Center, with 116 exhibitors registered.

CPR/First Aid Training on March 25th at The Vegas from 1:00 to 5:30 p.m. – free to members

Forx Builders Association Betty McDonald, Executive Officer 701-746-4536 forxbuilders.com

Karl’s TV & Appliance sponsored a new event for our members. They did a Builders Before Hours from 7:00-9:00 am, with a wonderful breakfast of made-to-order omelets and all the fixings. It was a great way to start the day and to network with other members.

Scaffolding and fall protection safety training will be held March 5th at

Muddy Rivers downtown. Structural Materials will host Build-

ers after Hours on March 14th from 5:00-7:00 pm. They have been a sponsor for several years and always do a superb job.

April 12-14 are the dates for our Home Show at the Alerus Center.

Home Builders Assoc. of Fargo-Moorhead Bryce Johnson, Executive Vice President 701-232-5846 hbafm.com

March 14 the HBA will host a key-note and networking social for its General Membership Meeting. The keynote will be “The End of Work As We Know It: How Y Will Change Eve-rything,” addressing generational shifts in the work force and offering tips to adjust and thrive.

The HBA of F-M will offer power lim-ited technician continuing education for those licensed in Minnesota March 8. It will also offer the OSHA 10-Hour Construction course March 20-21 in conjunction with the North Dakota Association of Builders and Workforce Safety & Insurance. This month’s lunch and learn will be “Ice Dams: Science, Solutions & Educat-ing Homeowners” on March 26.

The HBA of F-M remains very in-volved with the codes adoption proc-ess within the city of Fargo to up-date from the 2009 to the 2012 In-ternational Residential Code. Prob-lem areas include a requirement for drywall on ceilings of unfinished basements (fire blocking) and exces-sive energy code requirements.

Around the State

Builders across the country continue to face an uphill bat-tle when seeking accurate valuations on new homes, but tak-ing pro-active steps to engage and communicate with lenders and appraisers can help raise awareness and address this problem.

While incremental progress has been made in the past cou-ple of years on improving the appraisal process, problems continue to affect sales of new and existing homes.

In many markets, sales of distressed properties continue to exceed new home sales, so finding suitable comparables for new homes can be a challenge.

Meanwhile, some big appraisal management companies (AMCs) that focus on quick turnaround and the bottom line are promoting the use of appraisers who are willing to work for the lowest fees rather than appraisers who are the most knowledgeable. What Should the Builder Expect from the Appraiser?

Appraisers provide an opinion of market value, so the best strategy for builders is to learn as much as they can about

the process and insist that their homes are reviewed by indi-viduals who are the best qualified to assess their worth. Ap-praisers should have a knowledge of the geographic area, un-derstand the types of materials that go into construction and be aware of energy-efficient and green building applications.

It is also important for builders to share data with their appraisers. Builders should provide all relevant data to ap-praisers – plans and specifications of the property, informa-tion on how their product differs from their competitors, de-tails on materials that were chosen and the buyers' reaction to products selected. Further, builders should give appraisers all pertinent comparables in their area and be available for on-site meetings.

Provide the best and all relevant sales data before the ap-praisal is completed. Keep a detailed record of data provided to the appraiser (email, notes in calendar, etc.). Communicate with the appraiser first. Build a relationship with the ap-praiser and appraisal community and be willing to engage the appraiser to assist you in your efforts.

Working with Appraisers: Suggestions for Builders

35

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