Master Isn’t Always Right
As you may or may not know Woolworths, who owns Masters Building Supplies, has just announced they are planning on selling their stake in Masters due to its huge losses before it takes the whole Woolworths empire down. Now, we are new home builders and Masters is in the building supply game so what can we learn from their failure?
Overall Masters were actually cheaper then Bunnings. I think we can learn from this that the majority of consumers today don’t care if the product is one or two percent more expensive as long as it represents better quality, better service and more convenience.
This fits in well with one of the core mission statements at Stroud Homes, ‘Be to building what Apple is to Computers’. We are 1 to 2% more expensive on our homes, yet we are 10% better in quality, service and convenience.
Now that we’ve proved this to the Sunshine Coast community, with almost 20 homes being built last year with zero defects, (check out our licence on the QBCC), people want their new home to be built by us and people who didn’t use us wish they did.
Masters tried to diversify too quickly. They had a much larger range of product with the inclusion of things like white goods and in house installation teams rather than getting the basics right first. Don’t get me wrong, diversification and expansion can be a good thing, however, like all of the finest things in life they need to happen at a pace where the quality of service and product is not being sacrificed.
The ultimate disaster you hear of in the building industry is the builder going under halfway through building someone’s house. There are four easy ways to assess how a builder runs their business and if a builder runs their business well you can safely assume the builder will also be running their finances well;
1. QBCC Search
The number one way to avoid a cash strapped builder is to research the builder using the tools available to all members of the public on the QBCC website.
The QBCC actually monitors the builder’s business financials to ensure that it is not putting itself at too much risk. Get the builders licence number and type it into the licence search section on the home page of the QBCC website. Stroud Homes Sunshine Coast’s number is 1284666.
The builders licence number by law must be displayed on business cards, signs and website however if you cannot find it on any of these locations ask the builder directly for it. If the builder refuses to give it to you that is your first warning sign and you should strongly consider not using this builder.
The licence search will tell you how many homes per year that particular builder is building and will also tell you how many defect notices have been issued to the builder. If the ratio of defects to houses built is very high you can assume that they are not running their business very well and therefore are probably not running their finances very well either.
2. Talk to a subbie
Find a subbie that is paid directly by the builder and have a chat. It is important that the subbie is not just a worker working for the subbie as in this case they would have little to do with the builder.
Find a Subcontractor on a building site or ask the builder for some numbers, once again if the builder is reluctant to give you these numbers this is a massive warning sign.
When you talk to the subbie ask these two questions;
The subbie’s responses are important as they are the ones doing the physical construction of your home. If they are happy they are going to produce higher quality work. Furthermore, happy subbies are another sign of a well run business. The happier the subbie the better run the business and its finances.
3. Ask the builder for referrals to customers
Ask your builder for references from customers that they are building for currently and that they have recently completed a build for. This is a great way to get an insight into the business and how it is running. Again, happy clients will mean a well run business with well run finances
4. Have a look at the builder’s sites that are currently under construction
This does not mean walk all over their sites as this is a massive safety risk but you can get all the information you need from a simple drive by.
Are their signs straight and plumb? Is the rubbish in the bin? Is there a bin? Has the silt fence been maintained? Does the site look presentable? All of these questions point towards the builder being organised and running a good business which relates directly to running good finances.