Introduction: Managing material purchases is a critical aspect of maintaining control over budgets, timelines, and quality in home building projects. Let’s dive into the contrasting stories of Bob the Bad Builder and Sammie the Star to see why keeping material purchases within your company is essential for success.
Sammie the Star: Keeping Control for Smooth Operations
From the start of every project, Sammie ensures that all materials are purchased through her home building business. Here’s how her approach benefits her:
Transparency and Cost Control: Sammie explains to her homeowners that this policy helps manage the budget, track expenses, and maintain quality assurance.
Guaranteed Pricing and Quality: By overseeing purchases, Sammie avoids budget confusion and ensures subcontractors use only company-provided materials.
Detailed Records and Budget Clarity: Sammie maintains accurate documentation, tracks expenses against the initial project budget, and communicates effectively with clients and subcontractors.
Timely Payments to Subcontractors: Keeping payments in-house allows Sammie to pay subcontractors promptly, ensuring smooth progress and happy stakeholders.
Business Growth: With her clear process, Sammie finishes projects on time and on budget, leading to repeat business, referrals, and higher profitability.
Bob the Bad Builder: Chaos and Budget Confusion
Bob takes a different approach, allowing homeowners to buy their own materials and pay subcontractors directly. Unfortunately, this leads to:
Budget Disarray: Materials are purchased at varying prices, often without proper documentation. Bob has no visibility into the budget until it’s too late.
Incomplete Records and Mismatched Orders: Bob finds himself dealing with missing information and discrepancies in materials.
Upset Homeowners: Homeowners complain about going over budget, and Bob has no clear explanation for the overruns.
Frustrated Subcontractors: Subcontractors face delayed payments and unclear expectations, leading to strained relationships.
Delayed Timelines and Poor Reviews: Bob spends more time fixing issues than managing new projects, ultimately harming his reputation and business growth.
Key Lessons from Sammie and Bob
Maintain Control: Insist on purchasing all materials through your business to manage costs, quality, and timelines effectively.
Prioritize Documentation: Accurate records prevent budget confusion and ensure smooth communication with clients and subcontractors.
Foster Happy Relationships: Timely payments and clear processes keep subcontractors and homeowners satisfied, avoiding unnecessary delays.
Plan for Long-Term Success: A structured approach leads to repeat business, referrals, and faster project turnarounds.
Conclusion: Sammie’s firm approach to material purchases sets her apart as a successful builder, while Bob’s lack of control causes chaos and dissatisfied clients. Be like Sammie: insist on managing material purchases through your company to ensure budget clarity, quality assurance, and smooth project execution.
For more insights on building a profitable home building business, stay tuned to advice from Jon Markee, your Builder CPA!