Where Homebuilders Should Invest: Stop Spreading It Like Peanut Butter
Imagine you have $100 to improve your homebuilding business. Where would you spend it?
The short answer
Pick the two problems costing you the most. Put $70 of every $100 into the first and $30 into the second, and let the other three wait.
We usually write about how technology can improve your homebuilding operations. This time, we’re stepping back to ask a question that comes before technology: where should you invest to make the biggest difference to your business?
Everyone has a reasonable case.
You could spread the $100 like peanut butter: a little for everyone, too little to change much. But strategy requires choosing where to disproportionately allocate your money and attention—and accepting that some worthwhile requests will wait.
The five buckets
| Bucket | If the builder’s problem is… | The next investment might be… | The measure to evaluate |
|---|---|---|---|
| Sell | Qualified prospects aren’t buying | Clear pricing, product fit, sales responsiveness | Conversion and contribution from additional sales |
| Build | Homes take too long to complete | Scheduling, design coordination, trade readiness | Carrying costs, capacity and cash released |
| Protect margin | Margin erodes after the sale | Estimating accuracy, purchasing, change control | Margin retained per home |
| Fund | Capital constrains growth | Forecasting, lender reporting, inventory discipline | Funding availability, terms and capital tied up |
| Serve | Buyers won’t recommend the builder | Home readiness, communication, warranty resolution | Service costs and referral-generated sales |
$70 · Sell: Start with the buyer
Measure: Conversion and contribution from additional sales
Many builders commit to the lot, select a familiar plan, add their costs and required margin, and hand sales a price to achieve. Reverse the sequence:
- We can acquire these lots
- These plans fit the lots
- Here is our cost plus required margin
- We understand this buyer’s budget
- We know which spaces and features they value
- Here is the price they will realistically pay
Related: The New Sales Advantage Is Context →
$30 · Protect margin: Keep the margin you planned
Measure: Margin retained per home
Getting the price right only matters if the margin survives construction. Your $30 goes to finding where it leaks.
Frequently asked questions
Where should a homebuilder invest first?
In the two problems costing the business the most. Put $70 of every $100 into the first and $30 into the second, and let the other three wait.
What are the five buckets?
Sell, Build, Protect margin, Fund and Serve. Most builders’ problems fall into these five buckets, and few builders have all five at once.
Why not split the budget evenly across the business?
Spreading it like peanut butter gives everyone a little, too little to change much. Strategy requires choosing where to disproportionately allocate your money and attention, and accepting that some worthwhile requests will wait.
How do you measure whether the investment worked?
Each bucket has its own measure. Sell: conversion and contribution from additional sales. Build: carrying costs, capacity and cash released. Protect margin: margin retained per home. Fund: funding availability, terms and capital tied up. Serve: service costs and referral-generated sales.
Name your two.
Assign the $70 and the $30. Decide which measure you’ll evaluate, and when.
That answer should influence where your next $100 goes.
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