Happy New Year.

The dust hasn’t yet settled from the residential real estate correction and we have begun to discuss a similar correction in global commercial real estate markets.  Already we are being sold by numerous outlets on the business potential of “green” products, alternative energy and sustainable construction being the “Next Big Thing”. 

We all want a differentiator for our businesses.  We all want to have that one special thing about our companies that helps us to market and define our niche or specific position in the marketplace. It may be tempting to jump on the the bandwagon and market ourselves as green constructors.  But there is a proven folly in chasing bubbles.  When they finally slow down enough for you to catch up with them, they pop - and leave us with nothing.  My careful market research has uncovered that anything that grows beyond what fundamentals say they should or becomes the next big thing before it is proven as viable eventually deflates.

I am not preaching that we stop pursuing education in sustainable practices, LEED accreditation or building science.  I firmly believe it is best to build energy efficient structures and reduce the amount of waste, energy and materials that goes into each one.  This practice is called stewardship and should be another differentiator for our organizations.  What I am suggesting is that a better understanding of building technologies and practices should be a part of our overall strategy for our companies, and not the main focus of our efforts.  Being certified green by an agency may gain you a customer lead or two.  But instilling sound business, marketing and trade fundamentals into your organizations, along with keeping abreast of and becoming expert in bleeding edge technologies will be the method of differentiation that we all seek.  Believe it or not, a company built on excellent business principles and sound management is in a very unique position that should be a huge part of your marketing plan.  Especially in our current market.  The marginal operators are ripe to be sent packing to different pastures.  There is one thing I have learned through the years and that is that recessions correct inefficiencies and weed out poor performers who make poor choices.  Unfortunately, this deep recession has removed even decent companies from the marketplace.  But those that have survived thus far should realize that sound business processes are the reason that these organizations are still around.  Not luck, not timing, not an expense account from Aunt Mildred (although these things are nice).  Don’t be afraid to market your permanence and position in the marketplace. Being on top of new technologies is a no-brainer.

So go ahead and chase new opportunities all you want.  It is incredibly important to be diverse and seek new avenues of growth. Your organization may make some money in the process.  But don’t ever forget to follow sound fundamentals and never, ever, never betray your core business.  Watch your debt load, be mindful of overhead and discretionary spending, don’t ignore staff training, define your market niche and keep abreast of new technologies.  These items have helped to define successful companies for generations and will define them for generations to come.  Chasing bubbles never has and never will.  Market corrections make certain of that.

Like many of us that grew up in a rural setting, I have had a fascination with alternative energies for nearly as long as I can remember.  My neighbor had a well with a pump driven by a windmill that worked up until the late 1980’s.  We often lost our electricity service in the winter and used an old generator to run a few lights and the refrigerator.  More often than not our Franklin Stove was supplanting the hot water heat system in the old homestead during the winter months, and our house had a rainwater cistern directly outside.

As a rule, rural folks tend to live “off grid” more than suburban or urban folks. But we were just doing what we were supposed to: conserving, collecting, harvesting and operating as independently from the “city” as we could.  We were probably considered by many to be rural “hicks” back then - but in many cases that very lifestyle would now be considered “Green”, and we would be pretty hip!

Things go in and out of style.  Some of us build our businesses on capturing the “in” thing of the day and make a decent living at it, for a while.  But those businesses must constantly strive to remain on the cutting edge of trends and fashion.  The point of my short post here is that I don’t think the “Green” cause de jour will stick around forever.  But I do think that sound, fundamental building practices that are enhanced by the green movement will remain with us and improve over time.  Air sealing; improved insulation practices; non-toxic paints and coatings; conserving and reusing resources where possible; alternative energy sourcing, etc. - these items will never be a fad.  I firmly believe that energy conservation and materials will be the focus and primary growth trend in our industry for the next few years.

Let’s face it.  Home equity is tapped out and used up.  Easy credit was last year’s method of madness for homeowners to expand their home to luxury status.  All based on the now faulty premise that home values won’t deflate.  If we want to remain successful as viable building entities, we must stay as “trendy” as possible without ever forgetting our primary focus – being known as experts in sound building practices while providing exceptional counsel for our clients. 

Our average job sizes will most likely get smaller and our profit margins will probably take a hit.  But those of us that make a determined effort to stay informed of the latest news in building science while honoring the time honored fundamentals of sound construction and design will find a new market or adapt to an evolving one.  Sound building practices and wise counsel that evolves with the latest advances in science and technology, delivered at a competitive & fair market value and implemented with exceptional customer service will never go out of style.  The job types and size may change year over year, but the fundamentals of excellence will not.  These fundamentals will serve us in the best of times and the worst of times, and are the premise on which our companies must be built.  In order to compete, our marketing must be focused on the green movement and other trends of the day.  That doesn’t mean that time honored fundamentals of excellence are trendy.  We just have to blend the two – style and substance – into something that the average consumer can get their arms around.  My next post will revolve around some ideas that I have seen work.