How to Win In the Housing Recovery

Will home builders be able to take advantage of the slow climb uphill in the recovery of the housing market?

Certainly, a valid question and definitely one that you must explore if you’re a builder.

There is a definite up trend taking place with the national builders. Over the past year, homebuilder stocks have risen 80%. That’s at least five times the S&P 500 indexes for the stock market.

What is happening is being fueled by low interest rates, a dwindling supply of homes that now represents only a five-months supply versus the 11-month supply of a year ago. Under these circumstances, it is reasonable to expect this trend to continue.

Nevertheless, what about the small local builder?

If you look behind the fog of economic recovery, low interest rates make affordable homes more attractive to younger buyers. Let me explain.

If you’re a young couple, say between 25 to 38 years of age, both fortunate to be working, presently renting, owning a home is becoming extremely attractive for this simple reason. With low interest rates, a starter home with a price tag of $125,000 to $150,000 is cheaper than rent. If they are even close in the same amount, it makes good sense to own over renting.

For the local builder, this is your emerging market.

When You Want to Quit and Walk Away

Last week while doing my coaching calls; I suddenly realized that I was hearing the identical problems from my clients. The irony was; they weren’t the same size businesses. One was in a few hundred thousand dollars in Sales, while the other was in multi-million dollars in Sales. They were both stressed out, overwhelmed and ready to call it quits.

This got me thinking. Even though we may not be doing the exact same or have the exact same size business, we all share in the feeling of being overwhelmed and stretched beyond our capability.

Sometimes in our business lives, we actually think it would be simpler to run away. That giving up would be easier than following through with our responsibilities. In both cases, my clients were having trouble dealing with deadlines, making sales, and the constant barrage of requests from employees and clients that wanted more from them in time, energy and resources.

Both wanted to escape from handling their duties, from the managing of their businesses. It was becoming too much. To quote one …

“I just want it to end. If I shut down the business, maybe I’ll be better just taking care of myself and my family. Maybe we could buy a farm and live off the land.”

I smiled on that one, since I too had had that same thought many times in my career.

I remember being a kid and going up to the farm in New Hampshire. It was a dairy farm set up in the mountains. I use to love going in to see the cows. They were jersey cows, and I had given many of them names since they had such beautiful personalities. Those were the good old days. My Dad and I would go hunting, fishing or just hang around the farm. Not a care in the world.

Just the rewinding of that memory makes me feel better.

However, that’s not what I’m trying to express here.

Just last week, I had one of my coaching clients tell me that I gave him back the, deep down, desire to enjoy his contracting business again. That same feeling he had when he first started his business over 10 years ago. He too was thinking of the final solution strategy to his business, shutting it down and walking away.

However, he didn’t. Although he was going through tough times, he decided not to give up.

If you study some of the great persons of our times, you will find one common fact among them. They’ve all failed, some miserable, but they didn’t quit.

Now I know, for a fact, that the desire to quit, to walk away is immensely strong sometimes. We’ve all had those days when we think “Enough!”

The truth is, you can’t because you still have too much to do. Instead, you have to work on your problems. It is there that you will find your solutions.

In fact, if you did walk away, you wouldn’t be really free. You’d just feel like it.

Why? Because what you gained in freedom, you will lose in value and worth. What I mean is that what we do is add value to other people’s lives.

It’s not about us.

It’s about what we give to our clients and customers when we deliver them the product or service they wanted. We provide the solution to their problems or bring value to their lives when we provide them with what they wanted. It’s all about fixing someone else’s problem.

No matter what your business problem is, no matter what hurdles you feel you can’t overcome, or what obstacle has you down, or how frustrated you are with your business problems; remember, it’s not about you and your problems. It’s about fixing someone else’s problems. It’s about bringing something of value into another person’s life.

When you come to terms with that, you’ll find the worthiness and the energy to continue forward. Because one grateful customer, one glowing testimonial, one sincere word of thanks will keep you going through thick and thin.

And when you keep going, you’ll keep delivering. As you provide that solution, you’ll grow and become better. As you get better, you’ll help more people. As you help more people, you’ll hear more positive feedback. And that provides the spark that you need to keep going, the hardest times, and through the slow grinds.

Never stop. Never quit. Never give up. And never listen to that little voice that says it is time to quit.

If there is one thing that I have learned in my career it is this. There will always be difficulties, but the quickest way to rid ourselves of them, is to take positive action to keep ourselves moving forward.

After all, isn’t that all that really matters?

Lead and Asbestos: Common Renovation Hazards in Older Homes

In an uncertain economy, more homeowners choose to renovate their existing homes than relocate to new dwellings. Home renovations can make houses more livable and increase their resale value. Houses that were built during or before the 1970s, however, harbor potential health risks for the people who live there.

In 1977 and 1978, the United States government banned the use of asbestos and lead in insulation, paint and other construction materials. Before then, they covered practically every inch of American homes. Renovation projects in older homes could introduce toxic particles into the air, which could lead to serious health conditions.

Wise homeowners hire a home inspector to evaluate older dwellings and identify potential hazards. When identified, these dangerous materials are best removed by a professional contractor or building abatement company. Large renovations, especially in older homes, are not the best do-it-yourself (DIY) projects.

Lead Exposure

Common home renovation activities such as sanding and cutting can disturb lead-based paint. The hazardous paint dust and chips can be harmful to humans and pets. To protect homeowners from potential health risks, the Environmental Protection Agency (EPA) passed the “Renovation, Repair and Repainting Rule” in 2008. It calls for certified renovators for projects that involve lead-based paint.

According to the Mayo Foundation for Medical Education and Research (MFMER), lead poisoning can be hard to detect. Even people who appear healthy can have high levels of lead in their bloodstream. Lead poisoning can cause high blood pressure, reproductive disorders, cognitive problems and mood disorders in adults. In children, high lead levels can lead to learning disabilities and stunted growth.

Asbestos Exposure

Asbestos exposure is another potential health risk during home renovations. Asbestos is a strong, fibrous mineral substance notable for its heat-resistant, flame-retardant properties. Most homes built before the late 1970s contained asbestos materials for insulation, flooring, roofing and more.

Solid asbestos that is still intact is generally safe. However, frayed or crumbling materials that contain asbestos are highly toxic and hazardous to health. Lung cancer and mesothelioma are the worst-case scenarios. Both of these cancers are life-threatening diseases with high mortality rates. Yet, even minor asbestos exposure can cause asbestosis, pleurisy and other respiratory problems.

Minimizing the Risks

Fortunately, homeowners can minimize their risks for lead and asbestos exposure during home renovations. The Centers of Disease Control and Prevention (CDC) and the EPA have produced a number of safety guides for DIY renovators. Many are available online.

Practical steps include wearing protective gear, isolating construction areas with heavy plastic and misting walls before sanding and scraping. Homeowners can reduce the movement of airborne particles by shutting off their heaters and air conditioners during demolition and construction. If there are any known toxins they should only be handled by a professional.

Article written and contributed by Brian Turner

Are You Ready to Take Advantage of a Flood of Work as a New Administration Revs Up the Economic Engine?

Or . . .  Will Your Construction Business Become a Martyr to this Double-Edge Sword?

It has been six long years. Contractors all over America had found themselves sitting on the side-lines as a dismal economy ran rapid over their businesses. Big businesses swimming in an ocean of cash along with wealthy investors also sat anxiously, waiting for a rising tide of confidence and economic certainty. Ready to pounce on the best opportunity, if the right moment presents itself.

 For the last four years, none of this has happened. Instead, we saw astronomical unemployment numbers as if launched from the shuttle, reaching for the stars. Big, fat, over-bloated government turning out endless pages of regulations suffocating any chance of recovery, doubling of fuel, never-ending rise in material costs, and foolish spending that ram-rod trillion dollar deficits every year of this present administration. Now, we are faced with increased taxes and no plan to stem this rising tide of economic failure.

 Meanwhile, America waited.

 This November could be the beginning of a bright, prosperous sunrise. A new beginning. Fresh policies, ideas and initiatives that can get America back to work. I believe we are on the edge of an emerging dawn, a change that will prove itself in the best interests for a free-enterprising America. It won’t be easy. It will take sacrifices, but it is emerging like the rising sun, ready to spread warmth and certainty over our land.

 However, we can’t ignore the wrath and damage that have been inflicted upon our industry. And this is the true message for this blog.

 As a business consultant to contractors, I have seen my fair share of financials and heard the stories of financial horror many have suffered. Fortunes have been withered away. Savings depleted. My message hasn’t wavered, and it is still the same. Reduce your debt and build your cash reserves. The message stays the same, and the reasoning is simple.

 One major obstacle for many will be their ability to finance new work. With low or no cash to fund it, many will be forced to sit on the sidelines as an up tick in the economy gets started.

Some will foolishly cut their prices to get the work. I strongly advise those who think this is a valid approach without trimming expenses, to reconsider this action.

Money will not be freely handed around. In fact, due to the last six years, it will be coveted by those that have it. Expect some difficulty prying it from their fingers.

However, there is the other sharp edge to the double-edge sword. I can say it in one word: LABOR

With the scarcity of work, many skilled workers have left for other jobs in either other parts of the country, or in other industries. Some, actually many, have simply retired. Getting skilled or adequately train workers will prove in itself a major hurdle for many owners of construction companies.

I strongly urge those of you who recognize this upcoming problem as I have, to find a way now to stem this troubling problem. Locate resources, even work with them in training young workers to enter our industry.

No matter what you may want to think or believe, you can’t be part of a recovery if you don’t have a cash reserve and a workforce.

Take action now, because after November 6^th, if a real change takes place, you may get benched.

 

 

FIVE Top Reasons Why I Believe Fuel Costs Will Skyrocket Shortly!

NOTE: I originally wrote this to my Golden Hard Hat mentoring members last month. I've been informing them to update their fuel pricing index in all estimates to cover the oncoming increase in fuel. I'm now sharing this with you with hopes you may find it of value to you and your construction business.

Before the holidays I emailed all of you and suggested that you increase your fuel index price for fuel consumption in your estimating. Fuel pricing dropped at the pump but barrel costs still hovered at the $100 per barrel. However, I emailed you again and told you I thought this was temporary and to keep your higher price index for future estimates. The reasoning was that this would cover future jobs when pricing shoots up. This still holds true.

Crude pricing is based on supply and demand. Raise the supply or lower the demand, and prices retreat. The opposite holds true.

As we look around us, the global economy is in a state of disarray. Some Europeans are seeing riots in the street and severe cutbacks. Something we should watch closely, since we are also in the same state of disarray.

With all the major events happening and the fact that any one or two can cause the price of oil to go up, we need to take a prudent position and cover our bases. If we are wrong, we can also, and very quickly, change positions.

Here are the FIVE top reasons why I believe we will see a sharp rise at the pumps sooner than we can imagine.

#1 The “lack of” value in the U.S. dollar: Bad outcome

Much to the great dismay of some oil-producing countries, oil is priced and traded in U.S. dollars. Everything else being equal, the price of oil varies in relation to the fluctuation in the value of the dollar.

The two are inversely correlated. When the dollar is up, oil is down. The reverse is also true. The dollar will likely remain the primary money this year, given all the issues in Europe, and to a lesser extent, Japan, and the BRIC who would want it changed to some other currency or precious metal.

The fact that crude prices are up simply highlights the complex interactions of the many factors that affect the price of oil. However, the runaway and ill-thought reasons for printing money without anything backing it will in fact come back to haunt the Fed and our delicate economic system. See Figure 1, the FRED Graph and note how many dollars have been recklessly printed during the Obama Administration to fund his progressive agenda.

Each time the Fed print dollars, the value and/or buying power decreases.

Figure 1

#2 U.S. Fuel Supply: Bad for us

Because of the recession in our economy, fuel demand in the U.S. has dropped. The result is that now for the first time in history; U.S. refineries are exporting more oil than they are producing for domestic consumption. This is happening for two reasons. One, domestic demand is down, two, foreign demand and the pricing is better.

In the past, jet fuel was always the leader, however, that has changed. Now, gasoline and diesel are leaving our soil and heading overseas. The other main concern is that our fuel storage or supply for these grades of fuel is pathetically low and one catastrophic event or run-on will raise panic with our system.

#3 Iran – Mideast Powder Keg: Bad for everyone

No doubt about it, Iran and its saber rattling is enough to start a stampede of panic within the world markets, let alone if it finally owns a nuke!

Grant you, the U.S. Fifth Fleet would make a quick disappearance act of the Iranian Navy, but there would be a cost. Imagine if they are able to sink ships and block the Strait of Hormuz? Imagine for one minute if they elect to set off a “dirty” bomb, not a nuke in some large city somewhere in the world. They can easily do this using a third party terrorist organization. This could be forced upon them by the sanctions that Obama is working on.

What if, Israel decides its safety is in great danger and they need to strike, what will that do to the flow of oil from the Mideast to the world? This situation could explode at any moment. We're talking about Ahmadinejad here, and a country whose desperation level is growing by the day.

#4 Our National Debt – Really bad for us

The debt that has been recklessly and thoughtlessly run up by our politicians is unforgivable. Imagine for just a moment this scenario. For every dollar you need to spend, you have to borrow fifty cents from someone. Could you survive?

What about if you had to borrow half of every dollar you owe on just the interest on the funds you borrowed 30 years ago, 10 years ago or even last year. Could you do it? Not one dollar going to pay off the principle. Just the interest you owe.

What about if the bank or person who always lent you the money, suddenly decides that it is not in their best interest to lend you anymore. What would happen to you?

That is the situation we are in at this present moment. Our country now owes more than it brings in, more than the entire country produces, and with a staggering compounding of interest, it can’t keep up.

Our country is bankrupt and the present group of politicians is more worried about re-election than fixing their problem. Sooner or later, that person who lends to the government will say no more and then pricing will go through the roof, the dollar will crash, riots will erupt in the street and a complete breakdown will take place in our system.

However, the right change in the mindset of Americans and its leaders can quickly put this on the right track. Hopefully, they see the light at the end of the tunnel, stop the spending and running up deficits and come up with a plan to payoff this debt.

By no means am I “chicken-little” here, however, it deserves our attention and we should all be closely monitoring what is happening and have a strategy in place in case all hell breaks loose. Meanwhile, it does have a profound impact on the pricing of commodities such as oil, as it plays out.

#5 Oil Reserves – Someone is missing the boat here!

We have a lot of problems in our country at this time. One is jobs, and the other is the economy besides what I’ve already mentioned. It behooves me that any politician or leader of the world’s greatest nation would ignore the fact that we have enormous gas, oil and coal reserves in this country. We should be drilling for oil not trying to capture the sun or wind and lining the wallets of our cronies with taxpayer’s monies instead.

We also have easy access to oil from our great friend Canada who wants to ship oil to us. The proposed Keystone pipeline would create jobs, bring billions into our economy, solve one of our pressing oil problems, and release us from some of our foreign oil dependency. Instead, this president would rather lend money to Brazil for deep water drilling (which he refuses to let happen here without stringent and almost intolerable procedures and barriers), and then buy the oil from Brazil. Makes no sense whatsoever to me, but who am I.

America has more oil than Saudi Arabia, who is running out and a lot more natural gas than we could use in the next 200 years or so. Yet, it remains untouched because of progressive policies and the whacko environmentalist.

Meanwhile, we as business owners must recognize that anyone of these ‘things’ could have a profound impact on the price of oil. In the ‘micro’ view of things it would be prudent to use a higher price for our fuel needs in all future estimates. I might also be considering storing fuel to handle the short-term panic if it happens. Your choice.

Let’s cover our bases and watch things play out. If it changes for the good, we can always reduce the index.

Also, have you caught my radio show every Monday from 12 noon until 1 PM? If not, go to: http://tobtr.com/s/2771393