In his 47 years as a consultant to the home building industry, Charles Shinn, Ph.D., has seen builders across the country cripple their operations by making critical mistakes and limiting profit potential.
After working with Dr. Shinn, also known as the "Profit Doctor," clients improve their bottom line from an average profit margin of 3-1/2 percent to a whopping 10 to 12 percent.
The Profit Doctor will bring his remedies for improving builders profit to the 2015 Oklahoma Building Summit & Expo as keynote speaker on Aug. 26. Shinn will also lead two breakout sessions later that day.
The Summit continues into the next day with a keynote by Ted Jones, Houston-based chief economist with Stewart Title who happens to be very entertaining.
Shinn created the Denver-based Shinn Group of Companies to help increase the professionalism and management standards of the home-building industry. He focuses on helping builders improve the performance of their company and maximizing total profits.
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Shinn recently took the time to answer questions about his consulting practice and upcoming appearance in Oklahoma City. The following are excerpts of that conversation:
Q: How did you get the nickname "Profit Doctor?"
A: I was given that title by "Builder" magazine probably 20 years ago. It was actually in 2000. They did an article of one of our consulting assignments and at that point the author called me the Profit Doctor. "Dr. Housecall — the Profit Doctor Is In" was the name of the article.
Q: What is the most important educational focus you bring your clients to help them improve their bottom line?
A: I bring in systems and procedures, and management capabilities and cost controls. That's what we've done for the 47 years.
Q: How is your consulting business structured?
A: We do a lot of educational seminars. We have management educational seminars for every discipline that a builder has from superintendent, production manager, estimating purchasing, accounting long - all the different disciplines. And then we have a segment called managing for-profit that is basically for the builders and upper management team. We basically start talking to them about what it takes to put in profits. Our builders earn typically about three times the average builder for profit in the industry. We deal with somewhere between 500 and 600 builders across the country and Canada (among Shinn's past Oklahoma clients is Ideal Homes of Norman).
Q: What are you going to tell your Oklahoma audience in your keynote address?
A: Basically, everything I speak about is how to be in control of your organization, how to gain control of your variances and the money that slipping out of your fingers and how to improve your profitability of your organization - from your relationships with your trades and your vendors to in-house systems; what systems are going to give you the best returns for the dollar and effort spent. That's basically what we do.
Q: The titles of your breakout sessions in Oklahoma City are intriguing: One is "25 ways to improve profitability" and the other is "25 critical mistakes that builders make." What's the general theme of the classes?
A: In order to achieve profitability, you must plan for it. Once the strategy is laid out, you need to compel events to conform to the plan, measure and analyze results, take corrective action when necessary and finally, tighten the plan for continuous improvement - and profit. (Watch for subsequent blogs that detail some of Shinn's talking points).
Q: What is most frequent question you get from your audience when making similar speaking engagements?
A: The most frequent problem I would say that I am asked about is that builders don't believe they can do better. We show them how. Everything that I explain to them is pretty easy to do, but it takes discipline to do it. The average builder in the country makes about 3.5 percent profit. My guys will typically make around 10 to 12 percent. If you have the discipline to implement and to follow what I preach, you can improve your organization tremendously. A lot of times the questions I get are more, "How do I implement this. How do I do it?' And we go through about exactly how you implement all this and how you get it to work. It isn't like overnight that this will happen but it's a journey. I give you the map for the journey, but I'm not going to go from 3.5 percent profit to 12 percent profit overnight. It's not going to happen. So what I'm doing is I'm giving them a roadmap for their organization. It doesn't make any difference whether or not it's a 25 units-a-year builder or 1,000-units-a-year builder. The same principles apply.
Q: What else would you want Oklahoma builders to know about your upcoming appearance at the Oklahoma Building Summit && Expo?
A: I want them to come with an open mind because I will challenge the conventional wisdom. So I want them to come to the sessions with an open mind, and I want a lot of questions from them.