TWELVE STEPS TO SUCCESS IN THE COMMUNITY DEVELOPMENT BUSINESS
Sunrise Company has consistently dominated the recreation-oriented community development business in the Palm Springs desert resort area for 45 years and has maintained an average market share of 50%, even though there were as many as six competitors in the marketplace at any one time. Listed below is the checklist to ensure that any given project maximizes its market share and sales rate. High market share is a result of giving consumers the best product (both housing product and community amenities), the best location and the best value for their money.
- Have sufficient debt and equity resources to carry the project through to fruition. Staying power is the first requirement for success — without it, projects that might have been successful fail. Do a “worst case” financial model to be sure you don’t run out of cash.
- Identify unfulfilled demand for a specific housing product. It is not sufficient to say that there is a housing shortage in the United States; rather, you must identify a need for a specific housing product in a specific location. In describing the unfulfilled demand for the specific housing product, you must be able to describe the housing product in sufficient detail for an architect to design the product. Otherwise, you are just generalizing. This includes the size of the lot, size of the home, number of bedrooms and bathrooms, whether it is a one story house or two story house, has a two-car or three-car garage, the quality level of the specifications, the sales price of the house, etc.
- Select the best possible location for the project in comparison to existing and potential competition. Be sure that everyone else is at a competitive disadvantage to you and not vice versa.
- Create a superior land plan including the appropriate recreational and other amenities. The objective is to maximize the residential lot values in the process by creating the maximum lot premium potential.
- Create a superior housing product. This includes not only the internal function of the house, but also the building and landscape architectural appeal.
- Establish sales prices so that the consumer receives the best value in relation to the competition. The consumer has a perfect mental computer and is able to weigh the trade-off between quality and price. The maximum market penetration is typically not achieved by delivering the highest quality or the lowest price, but is the result of a delicate balance somewhere in-between.
- Don’t do low profit margin projects. Between the initial feasibility studies and the completion of the project, some unforeseen bad things will happen — unanticipated costs, cost increases, slow sales, downward pressure on sales prices, etc. A high profit margin is a shock absorber that can absorb these unexpected negative effects and still allow the project to succeed financially. A high profit margin is an insurance policy to assure financial success!
- Merchandise and market the project professionally and aggressively to maximize sales in a minimum time frame. The faster the project sells out the less risk you take and the more money you make.
- Build the project on schedule, within budget and maintaining proper quality control.
- Service the customer after the sale, professionally and expeditiously. Customer satisfaction is paramount, not only to minimize future problems but to maximize referrals. A satisfied customer is the cheapest and best form of advertising.
- Provide project and financial management that adhere to the highest professional and ethical standards. Management reporting and control systems must be accurate, consistent and timely.
- Exceed Customer Expectation.