Here's the scene: Lunch with two co-workers, a key customer, and his son. The dad was a contractor who builds 18 to 25 semi-custom homes a year and uses almost all of our installed services. Nearing retirement, he's looking forward to spending time with his wife at the beach house. His son, around 27, is moving quickly into the leadership role. When he does, things will begin to change. I wanted to find out how they'll evolve. As father and son described their career paths, I got my answer.
Dad began his career working as a carpenter while going to school, as many builders do. He finally received his degree in business, at which point–other than a few seminars and such–his formal education stopped. He had a successful business, was building and selling houses, taking care of his family, and all was good.
The son, meanwhile, doesn't seem like he will ever be happy with the status quo. At 18, he won his general contractor's license. Then he received his real estate license. Now he can build houses and handle their sale without third-party intervention. After that, the son realized there were a few more pieces of this professional puzzle he needed, so he became a licensed insurance broker.
Now he's in his late 20s, taking over his dad's business and running his own company, building homes right beside his father. He can secure the property, build the house, arrange its sale through his own real estate company, and insure the project from start to finish. He's not only saving a considerable sum of money, he's also ensuring all of the profit possible is funneled into his business, not someone else's. The son jokingly said he was thinking about approaching the banking authorities to inquire about a banking license so he could arrange financing.
This young man could well be the face of our future builder/customer. He's young, aggressive, well-educated, understands all of the intricate pieces of the construction business, and is taking control of his and his family's destiny as much as he can. But he does share one trait with his father: He's a strong proponent of dealer-installed services.
He said he's simply too busy to manage the day-to-day activities on a jobsite and that it made perfect sense to turn that task over to someone else. He wants to remain engaged in the selection of the various parts and pieces of his business and run it just that way–as a business. He seeks to manage all of the different phases of the process that he can to maximize profits and efficiency.
When asked about the difference in job costing–purchasing material and labor separately, vs. turnkey–son and father had essentially the same answer. They said they had looked closely and concluded that, due to efficiency and accountability, it was less costly to build their style of house with installed services than to source the material and labor separately. And both saw value in how we had set this account up so that they essentially get the entire house built (less mechanicals) for what amounts to no more than five purchase orders. This further reduces accounting and bookkeeping expenses for the builder.
Father. Son. Old School. New School. Soon, you are likely to sit with a new generation of builders who bring to the table a much different set of experiences. But if you can provide the services they want, the youngsters are likely to find you're just as valuable.