Latest / The Good Builder Podcast / The Daily Dose #285 | Why "Quality, On Time, On Budget" Is Killing Your Margin
Transcript
- Aaron Ng (00:39) quality, on time, on budget. If that's how you describe what makes you different in the market, I've got a bit of bad news for you. That's how every builder in your local area and probably around Australia. describes himself to the market. And in a market that is getting tight and all the things that are happening right now being the same as everyone else is probably one of the most dangerous places you can be. Today, we've got three huge stories for you and a few others that we're gonna throw in there that have been breaking over the week. We're gonna talk about the NCC in Victoria, mental health and what good actually looks like in the industry. And then we're gonna go deep on UVP, which is just what I talked about. What separates you in the market? Your unique value proposition, how to find it, why, how, and where do you use it? It was a big contributor to the success of Avondale Homes when I was there, where we hit about 24 million in about three years because we had a real difference in the market and we focused on a specific niche of customer and we're very, very clear on who we served and what we did. So we'll talk a little bit more about that. We've got a lot to talk about today, so we better get into it. Good morning and welcome back to the Good Builder podcast. It is Friday. I hope you guys are enjoying the new format. I hope you don't mind that we've moved to Monday, Wednesday and Friday. I think it looks like we're getting a lot more people being able to catch up and listen to the episodes that we've put out previously because we're on to about 290 maybe, I'm not too sure. But today we're gonna hit three headlines for the week and then deep dive on UVP and how to set yours up for you and set yourself up for success. It's a very cool little thing that you need and every business needs it to know what they do different to everybody else. Now, before we start, I just want to give a big shout out to My Construct, the major sponsors of this podcast. They are absolute legends. And if you didn't hear the podcast last week, they just did a pretty cool integration with BuildGrid The other one and the monthly sponsor of our pod is pay.com.au. A big shout out to those guys and they've given 20,000 bonus points to anyone who signs up to their platform. You can pay your bills and invoices and banking and stuff through there. And what happens is you earn bonus points that you can collect and use on trips and travel and different other things for your family, your misses, your kids, whatever. there's a whole heap of things that you can reward yourself with. All you gotta do is head to pay.com.au forward slash TGB. There are terms and conditions and they're all there. Now we better get into it because we've got a lot to talk about and there has been some really interesting news actually over the week. Firstly, you probably all heard about the RBA. They've lifted the basis points 0.25 again. So that pretty much wipes out everything that they took away last year and we are back to square one. but we'll see how that all plays out. We've got a little piece on the site that I'm not focusing on today, but it talks more around, I wonder what this is gonna do to the customer sentiment out there because I heard from a few builders, a few of you out there that when the straight-off Hormoz got hit and build costs went up and interest rates went up, that the next week it was pretty quiet in terms of inquiry and stuff like that. So that's gonna be interesting how that plays out. Now on the flip side, some other breaking news, which again, I've got three other. articles that I'll talk to is that Bilt and Bunnings have done a bit of a deal. So Bilt do modular construction and they work in the high-rise and apartment space and I think we're going to do a bit of an article on it but I think they can cut construction time by about a third and also the affordability factors that move into it. So that is going to be another little interesting thing that is going on in our industry and I know that Bunnings have already partnered with a modular granny flat type builder and they're using or selling those products out there in the public. It is a really interesting time in construction and there's a lot of focus and a lot of focus on how we do things differently. So very interesting. Speaking of doing things differently, the biggest guys that are doing things differently in Australia is Victoria and we've got a bit of an article called Victoria versus the rest of the world, which is not what it really. sounds like because we love Victoria but the NCC 2025 compliant split has happened and Victoria have picked up the code. Now Victoria went live on the 1st of May 2026 and NSW, Coins and ACT everyone else deferred to May 2027. The NT actually also went but South Australia and WA still haven't confirmed. master builders have actually had something to say about this and they called the timing in Victoria picking this up as extremely disappointing and I reckon they're pretty right. What it actually means for Victorian builders is lead free plumbing applies from the 1st of May regardless of when your permit was issued or contract signed. If your plumbing is roughing in after that date, materials have to comply. Apartment builders, new waterproofing rules for you guys, class two balconies and podiums are live now, and you've got to recheck your detailing. Now the tricky bit here is the multi-state builders. If you're a New South Wales builder like Aubrey Wodonga that I used to go in, GJ Land and those sorts of places there, and you're going across state borders, you're gonna have to make sure that you have two compliance spec sets for your builds. And that's something you have to remember. We'd love to talk to a builder out there and see how this has impacted their business right now and... what they're finding with the new changes. Now the other thing for Victoria builders is looking ahead, Vick builders are gonna absorb a bit of costs now on top of everything else that is going on in the market, which is. as Master Builder said, extremely disappointing. But for you guys out there, maybe the best advice is try to build up a real compliance advantage, you know, by 2027 in a year, get used to it, get all those things going, you know, when New South Wales and Queensland catch up. And I'm sure we're going to have a few Victorian builders on the podcast and we're gonna be chatting about, you know, how it's affected their business there. If you head to the website, we've got the article up live, there's a lot more detail there. And I think that's a really important one for Victorian builders out there and the rest of Australia. Go and see what's going on. Go and see the changes. It's all on the website, goodbuilder.com.au. Now the second story that I want to highlight today is the number that should really stop us in our tracks. And we haven't talked too much about this for a while, but we need to bring it back on the agenda. And that is on average, construction workers still takes their own life every two days in Australia. not per week, every two days. So when you're having a look at that, that's actually about 180 people per year. And this was actually found out by peer reviewed research by the University of Melbourne, which was commissioned by the legends of mates in construction. And it was just published in April. So we grabbed it and we want to feature it. We want to put the spotlight back on, you know, what's going on out there. And there seems to be. still a lot of support and help that's needed. And we love the guys from TX and the work they do there and trade mutton obviously makes in construction. The good news is that overall rates are slightly declining, particularly in Queensland, Victoria and SA and makes in construction is part of the reason why. The harder news is that rates are rising in workers aged 15 to 24. And that's exactly. cohort that we're trying to recruit into the industry. while we're getting better, we've got the younger generation that are still rising in terms of this horrible statistic that sort of affects more than you think, you know, the families and everyone as well. Now we're going to talk about and I am going to get somebody on the podcast, we're going to talk about a few things that don't trigger anyone out there, but the Loneliness is the single strongest predictor of the risk. They feel isolated, they feel alone, they feel like they don't have support. And that's why organizations like TX and Mates & Construction are so important to our industry. Now we have written a little article about this and we had put together a few things from the Maxxing Construction and a few opinions from us about how you can try to support some of those in your teams, maybe even some of that younger generation. And here's what we think could work for you guys out there. And we know a lot of you guys do it out there, but I think it's good to have the conversation and put the points back up on the agenda again. It all starts from the top. Workers take cues from leadership on whether it's acceptable to talk about mental health and if you talk about it, they will. So I think having an open workplace where you talk about it. We saw the Hopkins guy, he's such a legend, doing mates on crates and he's really pushing that there. I think that sort of stuff, having those open conversations in public and he's not scared to do it, which I absolutely love, is very cool. You know, put the helpline numbers around. We've got them all on our site. We've got them on this article that I'm talking about right now, but I'm about to give them after we sort of talk through some of these tips. The other thing is just remember your apprentices are most at risk. So formalize some mentoring check-ins. Formalize just basic check-ins. They don't have to be too formal either. Go to golf, do something like that. Take them out for the day and know a bit more about them than just the work. that they actually do. think that's really important. And the other one is, which was really interesting, was try and pay your subbies on time. The research found that late payment is a driver of financial stress, which contributed to the crisis. So paying on time is one of the most concrete things that you can do in your control builders out there to help with all of this sort of stuff. Now there are a bunch of support resources and I did want to name them right here on air. that you can go and reach out to if anyone out there needs it. So you've got mates in construction. It's a free 24 seven hotline and you can reach them on 1300 642111. Then we have TX we've done a bit with those guys. are absolute legends. We love them. Free phone and text counseling for tradies Monday to Friday, 8am to 10pm. And the number there is 04888469888. So that's 0488846988 and then of course there's lifeline and that is 13 11 14 24 7 Anyone out there that needs to have a chat really go and have a chat or have a chat to your crew I'm sure everyone's open to doing that So we thought we'd put that back on the agenda But it's really good to see that we are seeing a bit of a decrease in you know what's happening out there in in terms of construction workers and suicide rates and things like that All right, now onto something that's a bit less heavy than what I just spoke about. And that is why the best builders often come through the side door. And this was a result of my chat with Tom Sachs, actually, the Stroud homes block your Valley franchisee. And he was a very interesting chap. Mate, you were awesome. I love my chat with you, Tommy, if you're listening, we had a really great, it was actually really logical what he came back with. And I just love that whatever was put in front of him, he found a way through it and pushed through. But very logically and very smart, he's a very smart guy, very switched on guy. Now, if you don't, if you didn't listen to the episode, we dropped it on Wednesday and his path was a bit different to most builders. So he wasn't really a chippy. He was actually tree lopping. So he was working in wood in some sort of manner. And then he went as a commercial, he worked in commercial concrete and steel estimating. And then he went into a franchise and none of it was really planned. He kind of went with the flow and enjoyed the journey of his life, which I think was pretty cool. Through COVID and Home Builder, the supply chain collapsed. His approach was really simple. He had some really good advice for everyone out there. And it was just accept the price rises, get the jobs ready before calling the subbies in, pay them on time and build a reputation worth showing up for. And he did that. for his reputation and now he's flying. He lost a bit of money. Of course he made a bit of money, but you know, he took it as and paid respect to his trades. And if you'd listen to the podcast, he doesn't lose many people, Tom, they're very loyal to him. And he's obviously a very good leader. His view on what separates builders who survive from those who don't is it's not skill on the tools. It's actually understanding the numbers. And he talked a lot about cashflow and being profitable and all that sort of thing. And the last thing, that he talked about, and I beg you to go and have a listen to the podcast, because it was a very cool one, was these three things that make a good builder. And in the order of leadership, knowing your numbers, and then knowing how to build. And that was really interesting, especially coming off the back of that mental health article I just spoke about, and we're talking about it starts at the top, and how Tom had sort of identified that in a way, without any formal training. I asked him when I first met him actually before the podcast. What do you, you do you have an edge? You're a GM, you were a GM. Did you do a university degree? Not that that matters, but I was wondering, were you sort of in this great? No, he didn't do any of that stuff. And mate, he's 10 times smarter than the man I am. So it was very cool to meet you, Tom, and you gave us some very cool lessons. You know, there was some other really cool things that came out of the podcast. And this is a few of them that we picked out, especially from his chat with us. And number one sort of people in this industry sometimes when they come in and they learn the industry from the ground up and then come through because they have different perspectives can bring a lot to a business. that is very interesting. ask a lot of questions like Tom did. You can see he's a very curious guy and he was talking about his relationship with the franchise that he was working with. And they also pay attention to a lot of answers because they've never been in this industry before. So that is very cool. We thought that was a very cool lesson and a good conversation point that he brought up. The other thing is know your markup versus your margin. There's a lot of content around this, but they're not the same thing. Most builders go under because they don't quote properly. not because they couldn't build and that was from Tom. So very good advice. The other cool thing was building network you can call on independent builders. You know, it's a really hard game and I think it's the hardest game, riskiest game out there. And if you've got a network, you can always have some support if you're going through something and that was something that Tom said, Stroudhomes really delivers for him. both from a business perspective of getting websites ready and marketing ready and then from that support perspective from other builders that are building designs and going, hey, have you built this before? How'd you do this? How'd you do that? Things like that. So I thought that was a very cool lesson from Tom. And the last one from Tom that I think I pulled out from it was higher for character and not just background. And I think that was really cool. But Tom spoke about his wife, Jenna, who came from social work and now she's doing a bit of the sales and things like that. and creating genuine friends and relationships with clients. And you know, sometimes, you know, as I said, coming from a different industry, having a different skill set can bring a lot to your business. So I thought that was pretty cool. So that was a very cool podcast. We've dropped an article on Tom, go and check it out. A very worthy read if you've got a bit of time today. Now we're gonna get deep into something that I wanted to talk about for a little while and end the pod with a bit of information around. UVP. I started the podcast with a little dig of quality, built on time and built on budget. And that is because that really isn't something that separates you in the market. And I wanted to tell you today about what a UVP is. So a UVP is a unique value proposition, three letters that get thrown around in marketing decks all over Australia, but ignored on most building sites and actually ignored in most businesses I've been in actually. And it's a very specific, honest reason why a client should choose you above the builder down the road. It's not your tagline, that's one thing. It's not your values. It's not we care about clients. It's every builder sort of says about that. It's what's true about you that isn't true about anyone else out there. And a good example of this is what we did actually at GJ Gardner Homes. And we were really big on UVP then, but what we thought about a UVP was not only did it have to separate you from the person down the road, it actually had to be measurable as well. So you could actually prove it out there. And that was the most trusted campaign. You probably heard me talk about that a little bit, but what we did. was try and harness as many five-star reviews from clients as we absolutely could, put them up on product review, and then we had a measurable stat that said we are the most trusted builder in Australia. And as I've talked about before, it was a contributor to that $700 million growth that we achieved in 12 months. And that is why I think UVP is so important. As I said in the beginning of the podcast too, we've also done it in businesses that I've been involved in like Abandonell Homes, and again, success in that business was around this UVP being very unique in the market, being able to prove it. Okay, now there's a few things that you can do to test whether you have a good UVP. You can do the brochure test. If your competitor could copy and paste your tagline onto their website tomorrow, it'd still be true. You don't have a UVP, you have a brochure. What this means for you guys out there, quality on time, on budget is a commodity. Brochures compete on price, that's why so many builders are stuck in the margin of hell, because you've got no point of difference. It actually helps you sell your homes with more margin. A real UVP specific, it's provable and it's aimed as I said before. It speaks to a particular type of client and not everyone in the market either. As I said with Avondale Homes, we were talking to luxury acreage builders that wanted to spend over 1.8 million. That's what we wanted to get. And we were very specific about the designs we delivered and how we spoke to that market and how we told them what we actually did. Now three reasons why a UVP actually matters in 2026. Number one, the market's pretty brutal right now. So as I've put out there before and a lot of the reports we put out there in terms of customer sentiment, it's never been worse. I think for 20 years, we haven't had a worse customer sentiment toward building. So people are very risk adverse. The market's brutal, insolvencies are at record levels. The builders surviving aren't the cheapest. They're the ones with the clear reason to be picked by the clients and a UVP is one thing that'll get you out of the price comparison. You can show them you're gonna do something different. So that's reason number one. Reason number two, clients are vetting harder than ever. As I said, they're more risk adverse than ever. We put out a ton of content around this. We keep telling the market, this is what's going on. Before they call, they are checking your website reviews, company history, socials, And if you don't speak to them and you're not memorable to them, you're lost in all of that search. So that's number two. Number three, this is the reason I want you to really hear, the UVP is actually the things that define the builder that you are. So I'll say it again, your UVP is a thing that defines what kind of builder you actually are. Most builders never sit down and actually sort of say, what do I stand for? What kind of work do I do? What do I want to be known for? doing the UVP work isn't a marketing exercise, it's actually a business exercise if you ask me. It asks the question, what separates you from everyone else in the market and how can you prove it? When you know what you stand for, what you do, every decision gets easier, what jobs to take, how to price, and what clients to take on as well. So that's very, very important for everyone out there. I'm gonna show you how to find yours in about five different ways in a two. very interesting and you can pick one this week and do the work and don't try and do all five. Just try and pick one of these but as I said, I'll put all of this up on social so check out our social so you have it all written down. Number one, you can look through the client lens, ring your last five happy clients and ask one question. Why'd you pick us over the other ones you quoted? Don't lead them on, don't put words in their mouth, just ask them. The answers are almost never what you'd guess. and that can be your raw material. And we used a lot of that at GJ Gardner Homes. Number two, the niche lens. Who do you do your best work for? Sloping blocks, heritage builds, knockdown specific in a particular corridor or region or suburb, second time builders who got burnt the first time. Who do you actually serve? The other way that you can have a look at your UVP is the process lens. Have a look at your build process. Find the one to two things that you do that no one else does. I saw Enduro builders talk about air tightness of their homes and writing it in their contracts. That's a real point of difference. And that is, you know, something that will certainly sway a client to build a passive house or healthy home with them rather than anyone else. So those sorts of things are very cool. And that is a really good example of a process lens. Number four, another way you can have a look at it is your proof lens. Pull your numbers, your bills last year, your average bill time, your defect rate, your repeat client referrals as a percentage of your revenue. All these things can be used as a UVP. Another good example is the GJ Gardner UVP actually for New Zealand. And it was nine out of 10 of our clients would refer them to their closest. friend or family. Now that's pretty powerful and that's what they strove for and that's what they used in the market. The fifth way is the personality way that you can have a look at how you differ in a personality sense from other builders. Sometimes your UVP is the builder, your story, your standards, your no bullshit communication style. Brand led builder businesses are very hard to copy and if that's you, you lean into it. So that's a really interesting one and I know there's a few guys out there that... Now once you've got it, you've got to know how to use it. And there's basically three places that you should use it and where it should live. Number one, your website and socials. Land in one sentence, try and find out that thing that makes you different to everybody else in one really easy sentence. Like I had the GJ's example, stick it at the top of your homepage, use it in your bio, repeat it in all of your content, pretty easy. Place number two, you got to use it, your sales conversations. When a prospect asks why they should pick you over the other quote, your UVP is the answer word for word. So it's building into your sales process. If you're winging every sales call and trying to make up a new thing every time, you're not attracting the right client, you're definitely losing jobs that you should be winning. Place number three, your operations. UVP isn't just outward facing, it has to be true on your sites, in your sub-e relationships, and in your supplier choices. So you've got to live it. If you tell the market you pay your trades on time, you've actually got to do it. So the UVP and operations have to match. And that is why I say that the UVP isn't just a marketing exercise. It's actually a greater business exercise. Now done properly, UVP is gonna become the filter for the entire business. The right client finds you, the wrong ones go elsewhere. Margins recover, referrals lift, the work gets better, and you know what you're gonna do. Now, That is the podcast episode for today. And if we were going to leave you with a couple of action items from today, because this is what we're doing the Friday plus to give you some really interesting things that will change your business. Here's what I would do. Don't write your UVP from your desk, mine it from your market. Call your past three clients, ask why ask question, write down what they actually said. And that is what can start the discussion with the rest of your business, your partner, whatever around what your UVP is. I hope you liked today's episode. It was pretty action packed actually. A lot of things happening in the market, in the industry, a lot of big news coming through and we hope that UVP thing helps you because I think it's the most important thing in any business. If you did, please like and subscribe to our channel. Please let us know how you like the new format, Monday, Wednesday, Friday and please let us know if you'd like to jump on the Good Builder podcast, you can jump on the website and apply. Thank you and we hope you have a great weekend. And once again, we'll be back on Monday with Emily. See you later.