79 Examining Your Home Builder Business - Erik Cofield Sep 22 2021

Greg Bray: Hello everybody, and welcome to today's episode of The Homebuilder Digital Marketing Podcast. I'm Greg Bray with Blue Tangerine

Kevin Weitzel: and I'm Kevin Weitzel with OutHouse.

Greg Bray: We're excited. I did today to welcome to the show, Erik Cofield. Erik is an executive business coach with The Association of Professional Builders. Welcome, Eric. Thanks for joining us today.

Erik Cofield: Thank you very much. Good to be here.

Greg Bray: Well, Erik, for those who don't know yet, why don't you give us a short introduction, help us get to know you a little bit better.

Erik Cofield: My name is an Inigo Montoya. You sold my house. Prepare to build. No, I'm just kidding. My name is Erik Cofield.

I've been helping builders with business processes for 26 years. I've sat on both sides of the desk as the COO of what was at the time, the most award-winning design-build company in Houston. I was in senior management with BuildTopia and CoConstruct and I bought and sold my own little companies, helping builders.

So being on both sides of the desk, I think gives me an interesting, multiple perspective as I try to help builders with their businesses.

Greg Bray: Well, Erik, we need to get a little more personal. That was very business, but we need something that not everybody knows about you.

Erik Cofield: Well, there's a lot. I'm complex. I speak Norwegian. My wife's a Norwegian citizen. I'm Norwegian-American. I've studied both Viking history and native American studies. Not that that did me much good in life. The first house I actually built myself, was a dog house at my house in Lake Tahoe.

It was so big and so well built that the people that bought my house had to accept the dog house because at the time they didn't even have a dog. We couldn't get a forklift up the side of the mountain to move it, but it was a fantastic dog house for my Malamutes. How's that?

Kevin Weitzel: That's pretty good. It's a little known fact though that although Norwegian sounds like a Swedish chef, it is not actually Swedish chefs. Swedish chef is a made-up language.

Erik Cofield: Yes, Swedish chef, and so is Rose Nylund on The Golden Girls. My wife has confirmed that for us.

Kevin Weitzel: Really?

Greg Bray: We're going to have to have all kinds of references for our audience who's under age 30. They're not going to know what we're talking about.

Erik Cofield: It's actually very easy in many ways. I'll say two phrases and then I'll tell you what it means in English. So one is ................................means where can we go to dance? ............................ means would you like some milk chocolate? It's not that hard to get some of that from there.

Kevin Weitzel: It's just like a Norwegian. Wait, it is Norwegian.

Greg Bray: So Erik, you talked a bit about your experience in a variety of areas in the home building industry, what kind of got you interested in home building as a field in general, kind of early in your career? What pushed you in that direction?

Erik Cofield: Well, my dad always wanted to be a home builder and he was the type of guy who could just build anything just from his head. I was not. I like blueprints.

Decades ago, when I had long hair and looked like Thor, no, I never looked like Thor, I was running a technical services company in Houston and they had a parent company in Florida that I went to do some business analysis work for. That company sold websites to builders, and at the time I remember a virtual walkthrough with something like $50,000 or something. It was crazy, very different time, but I realized early on that although I knew nothing about construction science, really at the time, I was far ahead of the builders in terms of business acumen, marketing, best practices, business management principles in general.

I realized I could make a great living, helping builders especially with business process, and so I've done that now for 26 years. I'm actually pretty proud of the work that I've done for builders because when you help them with their business, it helps them in their personal lives as well.

So I had my own consulting company for years, and I joined APB, The Association of Professional Builders, as an executive business coach, because it was a perfect match for me. After all these years in my own one-man show consulting company, I was trying to create checklists and scripts and calculators and all this resource and content, but APB had a vast library already created, and I have known them for a long time from my days at CoConstruct, so it was kind of natural for me to join APB. I can't believe how fast the 26 years have gone, but here I am.

Greg Bray: Well, Erik, tell us a little bit more about what The Associated Professional Builders offers and some of the services and things that go along with that coaching that you've been talking about.

Erik Cofield: Oh, okay. Sure. So, as I mentioned, I knew them from my days at CoConstruct and we'll call it APB for short. The folks that own APB, at the time took CoConstruct into about a thousand builders into Australia and New Zealand, and it was just doing extraordinary things for the builders.

Now I was busy at CoConstruct, but I understood that they were really helping the builders impact really every discipline of their business. So still today, what APB does is help custom builders and remodelers or small-volume builders really systemize their business. They go through every discipline of the day in the life of a builder.

When I say builder, I mean a builder or a remodeler. So over more than 10 years for over 2000 builders in five countries, they have really been helping builders overcome the challenges that are innate into this industry. They operate in Australia, New Zealand, United States, Canada, and the United Kingdom.

Really it's all about tested and proven systems and protocols with predictable outcomes that help builders succeed because they felt when they started that the consumers deserved a better experience than a lot of builders were delivering, and builders had challenges and couldn't deliver a world-class level of service if they were working on tiny margins.

So because the folks at APB were in the middle of doing marketing and some other things, they were communicating with consumers and with builders and they understood, Hmm, there's some challenges here that systems and processes would overcome.

Many, many years ago, and I don't know how many thousands and thousands of dollars they invested, they've created all of these solutions, systems, processes, protocols, every checklist, template, calculator, I mean, anything you can imagine. So that's what I do. It's a real joy because all I do, I'm not in sales. I don't do marketing. I don't do anything other than what I really love to do, which is help builders run a better business. So it's kind of a dream job now after 26 years.

Greg Bray: So are you tasked with opening the Norwegian office?

Erik Cofield: I've told them that I will control the Scandinavia region for APB.

Greg Bray: All right. We'll watch for that.

Erik Cofield: You're joking, but you know, throughout Scandinavia, English is really the language of international business, and so if you went into Norway today, even people that are 80 years old speak English.

So it's not so far-fetched. I already manage some customers in the UK. So it's just a little bit more water to go over.

Greg Bray: Awesome. So, Erik, you're talking with the builder, you're getting ready to start that coaching process, what are the things that you do first when someone's saying, hey, I need help, I want to get my business running better? What do you even start within something like that?

Erik Cofield: You have to ask questions. You have to ask really good questions because everything is customized to each builder. Now there's a lot of common challenges that builders face, and it's surprising to many to understand that a custom builder or remodeler in Albuquerque, Aberdeen, Auckland, et cetera, they all have many of the same challenges and issues.

Now there's local things like permits and fees and regulations and things that are different, but really what they're facing are many of the same things. It's not so much the builder as it is the nature of the industry. So you always start by asking a bunch of good questions. The biggest challenges they face universally, globally, the first one I would say is communication, both internally within their company, externally to their trade partners, and definitely with their prospects and customers.

That category of communication is a big challenge. I think a lot of builders are structuring their marketing outreach, sort of like cooking pasta or dodge ball, in that they're just throwing messaging out there. They're using advertising dollars like crazy, but the content is just very haphazard.

It's not focused. Not to pick on builders, but many of them don't do enough due diligence in the very beginning to really study and learn and know who they're dealing with and what will work and what are the processes, and so forth. So communication is the first challenge. Another company problem that most builders have is that whether they outsource to a company like yours for web development or some other company for something else, a lot of them try to do things on their own.

They think, they plan, they act from their point of view. A lot of them are more engineer-type of personalities, but the business owners of construction companies globally are pretty much universally not like their average customer. So one of the first things that I convey to the builders that I coach is after asking a lot of questions and so forth is that you're not the same as your customer and therefore your website, your ads, your Facebook posts, Google, everything has to be related to the potential customer and not you.

So if I was showing them a website and I said, hey, does this website look great and the builder said, yeah, that's exactly what I like. Who cares? Is it exactly what you're potential customers like? That's the better question. Are you crafting your outreach to your potential customers in a way that is helping them?

You got to help the builder reverse engineer their outreach so that it's not about them. They've got to craft everything about their potential customer. Really another big challenge that every builder in the world has is their biggest competitor is no decision. Prospects who make no decision are the ones that cause most of the unrealized revenue loss in a building company.

This challenge can be overcome by fixing the first challenge, which is the communication. There's always builders you start talking to them and you realize that they just want to do things on their own and they're not really wanting help. Hey, it's their life.

It's their journey. It may take them longer. They may make costly mistakes, but that's their choice. That's their journey. Money replenishes, time does not. Some builders just have to take their own path, but what I always start with is asking questions to really understand who they are, and what they want to get out of their business because at the end of the day, their business has to serve their purpose and build their quality of life.

Greg Bray: So Erik let's unpack the communication and that target audience a little bit more. I think you're hitting on something that really does apply, not just to builders, I think to all companies. We all tend to see the world the way we see the world. We all look at things and go, I like that, so everyone else must like that. Can you imagine if everyone thought that sideburns were as important as Kevin did and what would happen to the world? You know? It would be an interesting place for sure.

Kevin Weitzel: Oh Greg, it would be a much better place let me tell you.

Greg Bray: So Erik you've identified to me that I might be being a little too myopic in my messaging, my marketing, and I'm not seeing the way my buyer might see it.

How do I figure that out? How do I find out what it is that my potential buyer is connecting with and where do I go to start trying to turn that around in your opinion?

Erik Cofield: Well, one of the things that every builder could do, at least if you have any customers, I mean, if you're not like a brand new builder, you could go to the customers that you have had relationships with, whether you built them a custom home or a new kitchen or whatever, and you could just ask them why did they choose you and those kinds of questions. If you are talking to your former fantastic customers, they are probably very much like your prospective fantastic customers that you want to go get more of. So understanding their reasoning, their motivation, why do they choose you, that kind of stuff, I think that goes a long way to understanding these are the customers that I've helped.

How did I help them and how can I help more customers like them?

Greg Bray: Do you have an example that comes to mind of a builder who really embraced this and changed how they were doing their messaging and what types of results they saw from that?

Erik Cofield: Well, I wouldn't name the builder. Yeah. I have probably 40 of them.

The builders that I work with want change. They are coming to us and they are hungry for doing things a better way, whether that's making more money, increasing their average contract value, raising their gross profit margin, whatever their issues are, they are already designed to want to do better.

So when we start talking with them and we convey the APB protocols for every aspect of their business, marketing, sales, HR, construction, finance, you name it, they start putting in place the protocols, which ultimately are all interconnected. You can start from the point of marketing and getting a customer all the way through to warranty, but that entire day in the life of the builder really is capable of being systemized in some way or another.

So for a lot of builders, they will say to us things like, I'm spending money on ads, but I don't really feel I'm getting enough customers. When you dig deeper, their ads, maybe aren't very good, or maybe they are ads are good and then the people come to their website, their website is really bad. Bad, as in horrible bad.

When we show them the right path of how things would naturally flow through their whole business, so you've got all of the aspects of getting good leads in the first place. That would be your website, lead magnets, Facebook, Google, Instagram ads, messaging, content management, videos, blogs, all of that stuff you could, and should be doing now that lead comes into their sales system? How is that being handled it? Do they have a CRM system? Are they pushing out automated emails or is someone getting that email for that new lead, and then what they're doing it manually or if they're not even contacting them very quickly, or do they have a qualified discovery and qualification process?

So you really got to get into the details with each and every builder, because what we do is customize for each and every builder. Globally, they have the same challenges, but how they are operating their business is not necessarily that standard. So in terms of marketing, nobody needs a scheduling system if you don't have customers.

So really when you back up, part of what we do that is more critical for most builders is help them get the right customers in the first place. If your ads are sending you a hundred customers a week, a hundred prospects a week, well, that's great, but really how many are qualified? If you're getting a hundred prospects a week and you're disqualifying 98 of them, you've just wasted a lot of time. Not to mention the money that it costs you to get those 98 disqualified leads.

So it's communication. It's asking questions, it's understanding what they're doing, and then helping them create a strategic path to change their processes. Almost every builder really could benefit from a revised marketing strategy, I would say, an enhanced and corrected and revised marketing strategy.

Kevin Weitzel: So, Erik, I got a question for you. Do you have anything in your contract when you're working with builders that there's like a, you're not gonna hurt their feelings clause, or they're not gonna get their feelings hurt because you're going to give them some pretty harsh truths.

Erik Cofield: Kevin is actually a great question. I don't think we have that in the contract exactly, but we certainly do talk to them and instead of saying your website's junk, I would say there are things that you could do with this website to make it more engaging, motivational, captivating, and convert more prospects into leads.

In my earlier comment, not every builder wants help, right? Some of them are just destined to take their own hard uphill, both ways kind of path. Early on, the way I ask questions and I start to understand where they are is I do a business strategy session with them, and that can take 90 minutes. It gets pretty deep and that's a one-on-one business strategy session.

In that business strategy session, I ask them things like, is it okay if I'm honest with you and will you be honest with me because there's no point in you telling me about your business if you're going to try and BS me and say how fantastic and wonderful you are, and I'm going to BS you and say, well, you should be selling $500 million worth of business. That does not help anybody.

So I really try to establish that connection and that rapport based on honesty, accuracy, trust, respect. All of them are working hard. They're working long hours. They're putting a lot into their business. Many of them, especially the ones that come to us, are not making the money they should be making.

If you look at the statistics and metrics of the builders who've been in APB for a year or whatever, and these builders who are coming to us, who may have been building for 20, 30 years, if you compare what they're making and how they're doing things with the ones that have been in our system and been members for a while, there's a big difference.

So ultimately my goal is to help them get from point A to point where they want to be. It is true that they all want to make more money, but that's not necessarily done the same way. Really, it's not about the more money, it's what the money can do for them in their life.

For example, it's much better to build 10 homes a year at a high-profit margin than 13 homes a year at a lower profit margin. So we go through some math and some metrics and some numbers in terms of what they're doing, what they want to achieve. I have had a builder say, well, I want to go from a 10 to a hundred million next year.

Okay. My first thought is 10 to a hundred million in revenue. That's a lot, but if I just said, no, you can't do that, that would be really narrow-minded and myopic. So I'd say, okay, well, great, what's the average contract value of your house? This is a real-world example, 15 to 20 million.

Okay. So we're talking about five houses next year. Yeah. Okay. Well, that we can do, but if they're not reasonable, then I am the first one to say, I don't think that I am going to be able to help you get that result in one year. Maybe in two or three years. I just tell them. I'm honest with them.

When we get deeper into the relationship and we talk about marketing and what they're doing, I don't really do website analysis projects for builders, but I certainly take the APB protocols of what elements have to be in a website to convert it, to capture, to engage, to motivate, to convert. I will just tell them, here are the elements, and here's why they work.

They're smart enough to know. These builders are not dumb. They're smart enough to know, hmm, yeah, I don't have that. Hmm. Yeah. I can see your point. So you don't have to beat him over the head and say, this is junk. You have to just convey to them that they are in a position to make a decision to convert more leads to prospects if they so choose to do so.

Kevin Weitzel: I like to eat. I'm really good at, like really, really good at eating, but I would never think about opening a restaurant just because I don't know the first thing about opening a restaurant. How often do you run into builders that are really good at the building portion? Their fabrication is fantastic, the processes are really good, but they're just really not good at running a business. How often do you run into that? Is that part of what you do at APB is you actually teach them?

Erik Cofield: We absolutely teach them how to run a better business, but it's rare that they are one-dimensional like that. Most of them know how to build a house. We don't teach construction science in terms of how to prevent moisture penetration to the construction project. It isn't that they are fantastic at building, but they're horrible at running a business, it's really, they have strengths and weaknesses, like all of us.

So where they are mostly weak, not that they're doing a really bad job, they're just not doing as good of a job as they want. Like I said, some of them have been in business 30 years, so they're making money, they're profitable, but they're struggling. So, they're not making what they should be making.

So we just sort of help them lift their company. It's not really usually the case that builders are coming to us that they don't know anything about running a company. There are new builders that come to us and maybe at that time they've been in business a year and their revenue is kind of like a million dollars or something low, but look, they got that far, right. They got to at least a million dollars. They started their business. So they're not really horrible or one-dimensional. They just need help in some of the areas of building their business and that's where we come in.

Greg Bray: So Erik, I know you primarily work with owners. Do you ever end up with kind of that top lieutenant instead who can see the weakness in the owner, so to speak? Again to Kevin's point, they're good with construction, they're okay with running a business, but I think a lot of them then when you start talking about marketing and lead generation and some of these things that becomes a whole other area of expertise that a lot of them have not spent a lot of time studying and working at.

They're smart people. They can learn it if they spend time. We could all become experts in something if we dedicated the time to it, but we only have so many hours to go around. So you get that top lieutenant or even someone who's been tasked with get us more leads, help us sell more. They can see the weakness and they need help convincing that owner, hey, we need to maybe use an agency or, hey, we need to try something different or, hey, we need to redo the website because it's 10 years old and they can't get budget to do it. How do you break that type of log jam in thinking with an owner and help somebody in that direction?

Hopefully, that made sense. That was kind of a long-winded question.

Erik Cofield: We often talk to others in the business other than the owner. However, by the time they come to me, so there are membership success coaches that they would talk to initially and that owner would make a decision to join the APB and they would get a tremendous amount of value just at that level.

Where I come in as a business coach is really to talk to the builders who say, look, I've been getting all this great value from APB, but now I understand that there's this whole other level called mentoring, I want to know about it. That's where I start engaging with them. I don't typically talk to the non-owner initially.

Let's say they say, yes, we want this stuff. We want the help. We want to do things faster and we don't want to make costly mistakes and we want to be part of the mentoring program. Great. So now they're in the mentoring program. That's when I start talking to the bookkeeper and communicating the work in progress accounting adjustment, or I start talking to a project manager or someone else that the builder wants me to talk to.

Maybe the persons handling the marketing and that's when you get into discussions with people who work for the owner who really get it, and then they do sometimes ask for our help to convey to the business owner that he or she has to make some other decisions.

A classic case was I was talking to a bookkeeper about the work-in-progress accounting adjustment calculator that we provide, and I was saying, these margins are not where they should be. You started out great at a 35% gross profit margin, why is it slipping? We got into some conversation and she said the name of the owner.

She said he's just afraid to charge more. I said, okay, well then since we also talk about leadership, what I will do is next time I meet with him, I'll start working with him on what his feelings and thoughts are as to why he can't charge the same price as every other builder should be charging.

It really doesn't matter where you are. No builder is going to convince me well, but Kansas City is different or Albuquerque is different. They all have differences. Certainly, there's less production builders in Albuquerque than there are in Houston and things like that, and I understand that, but there's no reason a builder can't succeed and get to the standards, the global APB standards if they're willing to make those changes.

So it is true that sometimes what we're doing with the owner of the company is more of a leadership kind of helping them overcome their fears. There's not really a protocol for that. You just have to have a conversation with them, and help them understand the data so that they can make data-driven decisions.

It has happened many times where a builder says, oh, I just signed my first contract at like 35% gross profit margin. They're excited and I'm happy, and it's a huge win. What happens is when they get to that point, whether it's like, oh my gosh, a lead just converted on my website, my brand new website.

How long did that take? Six hours. That's fantastic. Whether it's something really kind of small or huge like a customer just signed a five and a half million dollar remodel that was his first project going out on his own. So I share that joy with them, but once they get to that level, you just can't unlearn it.

You just don't go back to typing on a manual typewriter. We all move forward. Change is the only constant, I guess.

Kevin Weitzel: For our young listeners, a typewriter is a telephone that you type on with more than just your thumbs.

Greg Bray: We're definitely showing our age here in this episode, all kinds of references. I'm going back to that Princess Bride quote at the beginning, wonder how many people picked up on that. So, all right. Erik, we really appreciate you sharing so much of your insights and ideas with us today.

Just a few questions here as we wrap up. If we could get from you one homework assignment, one thing that a builder could do tomorrow, to check something or to move things forward, or just one thing that they ought to take a look at, what would you put out there is that one thing that they could do to move their business forward?

Erik Cofield: Well, I would say asking for help is a sign of strength, not a weakness. So globally, if they look for something to change their business, they should understand that they don't have to do it on their own. That's going to be a longer path. I think the best thing that they could do, and it takes a little bit of time, but the best thing they could do is physically write out, sort of flowchart, the day in the life of their company.

I'm not talking about every nuance. If line 10 equals this, then go to line 27 and there are some sort of program, no. I'm just talking about writing out what happens in their business. Then if they could look at that globally, they would see where they're not as effective as they could be.

They would see what parts of their business could be systemized from the very beginning. They just need to do some analysis. They have to understand what they're doing every day and their whole business operation, and then dig deeper into the pieces of their business. Ultimately when you look at the business operation, it is just like a puzzle.

It is a series of little mini-puzzles that all put together, create the business. So their marketing is a little mini-puzzle. Their sales is a little mini-puzzle. Their construction management, it's a little mini puzzle and these things can and should be interconnected with either systems that are automated or at least a set of standardized processes, standardized proposal templates, standardized scripts, standardized steps so that everyone is moving the ship in the same direction. So that would be my first suggestion to them.

I think that was three suggestions, but anyway.

Greg Bray: Great advice. Understanding how to map that out and see what's happening. So, Erik, if anybody wants to connect with you, learn more, have a conversation. What's the best way for them to get in touch?

Erik Cofield: Our website AssociationofProfessionalBuilders.com.

My email is e.cofield@apbbuilders.com. e.cofield@apbbuilders.com. I'm likely not the most available person or necessarily even the best person to talk to. I'm not in sales. I don't have all those answers and so forth, but if they just go to our website, they will see a tremendous amount of just complimentary resources.

If they'll spend some time on our website, five minutes, they'll know that they want to contact us. Anybody's welcome to email me as you know, cause I've known you for so long, I'll talk to anybody. I've never met a stranger, but that doesn't mean I'm necessarily the best person for what they're trying to research or find out.

Greg Bray: We'll definitely put some links to the website there in our show notes so folks can find it easy. Thank you Erik so much for joining us today and thank you, everybody, for listening to The Home Builder Digital Marketing Podcast. I'm Greg Bray with Blue Tangerine,

Kevin Weitzel: and I'm Kevin Weitzel with OutHouse. Thank you.