When Being Number One Isn’t Good

It is not uncommon for builders to want to be in first place on the “top 100 builders in America” list. It’s good to strive for the top slot. However, it’s best to strive for the top-100 list of builders who make the most profit … not those who sell the most housing units.

Let me ask you this: Which builder is better off … one who sold 500 houses in one year and broke even … or a builder who sold 50 houses in a year, but made a healthy profit? It’s possible to be the top builder in your region or in the nation and be teetering on receivership. It’s also possible to be the 50th builder in number of homes sold, but first in profitability.

Winning the title without showing any profit is like running a race without a finish line. There is no closure. You just keep going and going … discounting … offering incentives … negotiating … selling your homes for less than you know they’re worth.

End the cycle. Step off the treadmill. Get back to making a profit. And the most direct way of doing that is to harness your spending and halt discounts. It’s better to drop a few spots behind on the list … to lose a few sales if necessary … and be profitable than to be number one and not keep your profit margins intact.

What’s important is not how many houses you sell, but how much money you keep from the houses you sell.

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