126. The SORCI 2024 Report Insights With Russ, Sky & Andy

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It's incredibly important to see, okay, where do you sit in general across all of these builders? But is that normal for your country or are you a bit behind? Is that normal for the size of your building company as well? So you can just see so many different data points.

Welcome to Professional Builder Secrets, the podcast for building company owners wanting to grow safely and securely. I'm your host, Will Blunt and today I'm joined by Andy Scudder, head coach at apb. Andy, welcome to the show.

Thank you, Will. Thank you for having me. Nice to be here.

Oh, great to have you as always. And we've also got co founder of apb, Sky Colday on the on the call.

Hey Will, how you doing?

Very well. And finally, Ross Stevens, the other co founder of apb.

Hey Will, how are you going today?

Very well, very well. Well, thank you all for coming. Today we're talking about Sourci, which is the state of residential construction industry Report. Russ, do you just want to explain briefly what that is?

Yeah, it's a comprehensive survey of residential builders in Australia, New Zealand, Canada and the United States that looks at how these builders are operating in terms of their marketing, their sales, their operations and their financials. And we've been compiling this data now with the, with the help of our industry partners, companies such as buildertrend, buildxact, Houzz for the last four years. And it's enabled us to establish industry benchmark and also identify trends that are happening within the industry. And this year, with over 1800 builders taking part, it's, it's become a very comprehensive and detailed study of the industry. I mean, these guys, they answer over a hundred questions in order to fully complete the survey. But for those builders that do invest that time in completing the survey, they are now able to perform a self audit on where their business is at and also how their building company compares to other building companies in the industry.

Sky, why is Sourci important for builders?

Well, I think like building on what Russ has said because we launch it in two parts, right? The first big part of Sourci for us is the survey. So we do this at the end of a calendar year. So this most recent one, we launched the survey at the end of 2023. And as Russ has mentioned, we've surveyed over 1800 building company owners. So that's like gathering the data and then as soon as we, like, shut down the survey at the end of the year, by the time we collate all of the data and put it into a report, it's not just data for data's sake, by the time we publish it. So this year is the 2024 report. We publish it for every. Every builder can download this report. Literally go to the website, hit download, you can grab the PDF and see, see all of those numbers that Russ was talking about in, you know, sales in a building company, financials, operations, how much you pay yourself, everything. And it's so important for builders to go and download this document now because even seeing the history over four years, you can see what is changing in the industry, but you can also see what's not changing. You can also see how it differs per country. Because I think, you know, surveying an industry, it might not be too unique. Surveys have been done before by many other associations, other companies that have economists in there, they're trying to get data about the industry all the time. Like, that's very common. But what's pretty magical about the APB Sourcey report is that we're surveying builders across multiple countries. And then when we report on that data, you as a builder in Canada can see, you know, how do you guys rank compared to the builders in the US or how about those builders in Australia or the builders in New Zealand? So it's incredibly important to see, okay, where do you sit in general across all of these builders? But is that normal for your country or are you a bit behind? Is that normal for the size of your building company as well? So you can just see so many different data points.

I think as well, there are a lot of myths out there that are simply not based on fact. So by compiling the data, we've been able to dispel a lot of myths, specifically around margins and advertising. But I think another thing that this survey also reveals is the systems that builders are using for managing their leads, their projects, and also their financials, which is always good to see.

And I mean, I'll be selfish on this one. We see the reality that builders are going through on an ongoing basis. And we often sit back and say, well, why is that happening? What's behind this? And naturally, because we humans, sometimes we Guess. But we come up with our best theory on what's happening. What I love about Saucy is Saucy comes out and says, okay, stop guessing. This is why. And I mean, I've only scanned the data. I haven't gone into it in a lot of detail. But I'm sitting there going, okay, that's why that's happening. That's why that's happening. And what it does is it gives us. When I say us, I'm talking about the builders and us as the apb, this wonderful insight into. I thought this might be what it is. And now I can deal with fact. It is. And because it's fact, I can now plan. I'm not guessing. I'm working with data. It's a, it's a really. In terms of a confidence builder, having this data at your fingertips is invaluable.

And it's no longer like an opinion piece either. It's no longer, this is what we're like. Because everyone puts through their. Like they, they hedge their bets for the year. Economists do this all the time. They just, they, you, you talk enough, you throw enough out like something's going to happen, you're going to be right sometimes if you can say, enough. This isn't speculation. This is why this report is so valuable and so good. It's because all it is doing is reporting on the data that's actually come through. So there's no opinions as to why something has happened. It's actually there. And as the owner of a building company, you no longer have to have an opinion about what you thought happened last year and really in the industry, because you'll be able to see in black and white. Well, didn't happen to the rest of the industry. It might have just happened to you. Because on a scale of how many builders we've surveyed and actually participated, here are the trends. Here's actually what happened. Here are the results. Here's what people pay themselves. Here's the different technology, different building companies use. And you know what? I'm in the minority because I'm not using anything, for example. So it just takes a lot of personal opinions, even like those personal biases that we all have, just completely removes it because you get to see it in black and white. No, I'm not part of that statistic. Or I am.

I think it allows builders to see the gaps, doesn't it? In their own business as well? In business, it's what you don't know that you don't know that will bite you, especially in this industry, there's a lot of icebergs in the water. And yeah, it's easy to be head down, bum up and just get very focused on what needs to be done in your building company because we know builders are extraordinarily busy. But unless you get your head up, put the binoculars on and look ahead, you're going to run into one of those icebergs. So I think having a survey like this that almost forces you to look at all areas of your building company and then allows you to compare it with others, that's a really important thing for any business leader, I think.

And the fact that this year's one, we're in our fourth year, so the 2024 report, this is the fourth report being published. This is really cool now because you can actually go back and the report is referencing prior year's surveys and actually telling you as well. So you don't need to go back and read prior reports. We've actually added into the commentary. Well, this is, you know, the biggest marketing challenge, for example, builders struggled with in 2023, which by the way, it was or was not the same compared to the year before or the year before that. So we're actually able to bring up data from previous years and you can completely see the trend, which makes it even more interesting as we get into our forecasts for. Okay, what does 2024 look like? It's not based on any opinion other than what has happened and what is the data showing us? It's moving pretty cool.

And you know, we've, we've said the word a couple of times. I just want to underline it. We're talking about trends and you know, with, with all of our business coaching clients and our, our elite mentoring clients, we regularly run SWOT analysis. SWOT Strengths, weaknesses, opportunities and threats. And even though the opportunities and threats portion of that exercise is outwardly focused, it's only outwardly focused in their kind of immediate out outwardness. The beauty of making it a SWAT analysis where we add the trend on top of that, that we put that second T in there that now gives it real punch in terms of not only am I aware of what's going on in the business and around the business, I can also see what's happening statewise, nationally and globally because that's going to predict where things are likely to go in terms of your own business. So it's a, I mean this, it's, it's invaluable. I, I get goose pimples when I read the data and Just literally look at the value that this gives to a builder now. It's, it's a, an incredible tool.

Andy, I'd like you to expand on how the insights from the multi year trends from this report. How has that helped you and your coaching team be better at serving builders?

Oh, it's, I mean we, we are constantly measuring and talking about what every coach is experiencing with every client all the time. That, that conversation literally amongst the coaches happens every day. And what, what happens traditionally is we'll see a little bit of information come from one coach and it's kind of in isolation and then the same message comes from another coach and another and we start to see something develop and go, okay, how are we going to address this and get on the front end of it to be proactive and give people a viable solution? What happens with this kind of thing now is we don't only predict what's coming, but we can see the positive effect that those solutions have had in certain areas of the industry. And I mean, whenever we were in a public setting, we often share the fact that when Russ and Sky started this crusade, people would get up and walk out of presentations and laugh at the data that they were quoting because people didn't believe it was even possible. But to now have four years worth of proof, and that's what it is. It's unbiased, completely objective proof. It's not an opinion. It's now proven that is invaluable in terms of coming up with solutions that are globally going to improve the industry for builders and consumers, which as everybody knows, because you listen to these, that's our mission.

Yeah, the proof is a big one, isn't it? There's a lot of things we say and like Andy mentioned, builders would walk out, out because they maybe didn't want to hear what we had to say early on about the margins that were possible. Because to accept what we were saying as being true would be to accept they'd wasted a large part of their working life working for little more than a wage. So, yeah, and you can understand that mindset as well would have been very frustration, frustrating not to have come across this information earlier. But there's a lot of other things we say that may be more detailed. You 3% of revenue needs to be reinvested into a building company in advertising and marketing. Been saying this for a long time now. Now we have detailed proof that clearly demonstrates 3% is the magic number. When we, when we take that data, the builders are spending 3% and we overlay it with profit margins, we can see absolute proof that this is the way forward. However, I'd also, you know, counter that to a certain degree with there are always exceptions to the wall. You will hear from competitors, other builders, that maybe they do generate a lot of referrals and they'll be quite proud of the fact they don't advertise. There are always exceptions. But again, we've been able to to prove with data that even those guys are not achieving the same level of margin that the guys that reinvest in. But regardless of the area of the report we're analyzing, there's always going to be people that sit outside the kind of norm. And when you hear that, I think in a one to one conversation it can lead to the impression, well so and so is doing this, maybe I should do it as well. But when you can look at that in the context of what the industry is doing, it can really help you make a much better informed decision on, on what you're going to do in your own building company.

And it gives you confidence when it's builders like you as well. Because this is the kicker with, with the sourcei report, the only responses that we keep and publish in the report are all of the same caliber building company. And by that I just mean it's the owners and directors that actually answered the questions. So it's the owners, directors, presidents that actually run the building companies that were able to answer the questions so that we could get real data. And of the 1800 Odd Building Company owners that did respond, they were across the US, Canada, Australia, New Zealand. And almost 2/3 of the respondents predominantly focus on building new homes. That remaining third predominantly focus on large scale renov projects, large scale remodeling projects. So there's no tiny jobs in here. It's not, you know, even like no subcontractors, no handymen. It's the caliber of building companies that we're serving are all around the same caliber. So proper new home builds, proper remodeling projects so that you know, when you're looking at the data it is comparable, like it actually is valuable because really you're only as good as the data you look at. So if you're making a decision and making a call on what to do and what to change your building company, if you're comparing your custom new home building company, you build 20 brand new homes a year, but you're comparing it to data in another report where they're doing much smaller bathroom projects and churning them out every week. It's not actually a good comparison. So that's why we've been really, really specific on the data that we've actually published in the reports each year as well.

And I, I mean, Russ alluded to this. I think it's important just for everybody listening and watching to know that through the partners that we bring into the sourcy process, we don't just survey APB members. You know, the thing is it's easy for us to be watching the trends of our members and you know, you can get very inwardly focused on that. And sky mentioned biases can easily form if you, if you kind of just looking at one piece of the data. But the beauty of this is it's everybody, its members and non members. And what that does is it improves the quality of the data significantly because it's completely reality for every one of those builders. And that just adds to the value of what we're talking about here.

Sky, can you expand on the process of the survey a little more like the detail that goes into this study?

Yeah, I mean, our poor team have to work on it, I think like nine out of the 12 months in a year, really, because the amount of time and effort that goes into even preparing the survey, survey and I suppose being in year four now, it's almost like sourcing never stops. Because by the time we're, you know, at the, at the start of a calendar year, right. We're very much into publishing and editing mode where, you know, we've created the commentary by that point. But it's, it is checking, checking and rechecking every bit of data, making sure it's completely correct. Re looking at every pivot table that has been built just to get to a point that we can put it into a design and make it then more palatable for someone not to just read a whole bunch of boring statistics like what did the graph look like? But even at the start of the year, when we're in that mode, it's constantly going, okay, well how could we have done it better for next year? So we're already refining the next year's survey questions so that they can either be clearer or identify even more important data. Because whatever we wrote in this year's commentary is, okay, what do we want to know specifically next year? How could we refine the next year's questions? So really, from about the middle of any calendar year, those questions are getting rebuilt. And it's nothing too fancy not to make it sound super boring. It is a survey of 100 questions. So we have to use a survey platform. And that's how we collect all of the data. And it's logged per respondent, essentially, so that we can always go back and then we verify. Okay, well, if they said this at the start and they're giving a different answer over here, that data probably doesn't sound correct in general. So we're verifying that. Revenues always match up to what they said at the beginning. But by the time the survey launches, we don't just go out to our database, as Andy has mentioned, we connect with a whole bunch of different industry partners to actually bring this report to life. So while yeah, at apb, we've commissioned it and we're spearheading the initiative and launching it, we link up with a ton of industry partners to promote this. Not only the survey, but then the report by the time it launches. So we've got partners, as Russ has mentioned, like Buildertrend, Buildxact, Houzz Pro, CB USA, Custom Builder Magazine. We've got build tools, we've got HazardCo, Builder, Price Wonder, Build Points Build, and all of these industry partners, of course, they have their own database of clients, of course, as we do, but you have your own database of builders that you're in contact with and connected to so that by the time the survey launches, this survey goes out to as many building company owners in the industry, so we can get as many respondents as open for a very select period of time. It's a short window that the survey is open. Then we close the survey. So there's a lot of reminders, you know, you can actually fill in your answers for, you know, in this example, it was 2023. We want all your 2023 data. We close the survey and that's when our team really get to work. We get to work analyzing every bit of data we have to clean it. As mentioned, if, if you're not a building company owner and you're not doing new homes or major remodels, we will exclude that just so what we do publish in the report is as valuable and relevant as possible. After we get done cleaning and writing our commentary, we've got some sponsors that also include commentaries as well, and we've put all of that together. Then we get into publishing and finally launching the report, which is what you guys can actually download as a PDF. And we've made it this way so you can download it for free as well. So you can get a digital version. So a ton goes into it. But as, as Andy has even mentioned, I think the value of it's not even Just any member or any builder in our orbit. Because you're probably listening to something like this podcast, reading blog articles, you would have heard this 3% rule. We're able to prove that number from builders who completed the survey, who were not on our database, who were connected with an industry partner of all these four degrees of separation. So it's a huge initiative, it takes a lot of time, but every time it gets published they're getting bigger, better, even more well received by the whole industry.

I think it's important to note as well as part of this ongoing process of making this survey better year on year. One thing that we're very mindful of is the commitment of builders to take part in this survey because there is a big benefit for them because like I say, it's a self diagnostic tool, but it's still a big commitment of time to respond to these questions. So it's an ongoing strategy or an ongoing target of ours to make that as easy as possible for the builders. So I think when we talk about 116, 117 questions, it is that we ask the builders on this survey that can, that can kind of conjure up a vision of something that's quite daunting and quite boring. But with modern software it's a lot easier these days to, to make answering of those questions a lot faster and easier. And part of that process is, is giving like builders like multich answers and blocks that they can click on which would, you know, avoid them having to do free typing in all the way down 100 odd questions. But part of the ongoing process is then looking at those responses and refining those blocks as well to make the data more and more relevant. So yeah, this is an evolution and this is why it just gets better year on year.

And we can also promise that it doesn't get longer each year. Actually we do really try and follow a one in, one out kind of question. So if we have added a question one year, we gotta think, okay, what can we remove? Because when we first launched the survey it was taking 10, 10, 15 minutes for any builder to actually complete. And we've managed to maintain that as well. So still, you know, simplifying the questions, trying to get more clarity questions. But we did remove some as well. If we thought of a better question so that it, we could so easily blow this out. We could ask you guys like 500 questions, we would love that, but I just don't think anyone would complete it anymore.

Yeah, and it is, I mean new things come along, new questions that we, we Kind of need to know the answer to. With COVID and the explosion in construction costs. Yeah, it was important to know, you know, who had cost escalation clauses in their contract, who was using fixed price versus cost plus. So a lot of these things, they become more topical and, and they get introduced into the, the survey.

We never had a mental. Well, I was going to say we never had a mental health question until the 2022 survey, I believe. So we first reported on it in 2023 because to be honest, it wasn't too relevant until those subsequent years with everything that was happening in the industry that we were able to report on. So we were able to add a question of has your mental health improved, deteriorated or stayed the same in the last year. And because it was the first time we asked it two surveys ago when we asked it again, report in the 2024 report and say whether it changed from the previous report. So it can just really build on that based on what's happening.

And I mean you, you stole exactly what I was going to say. My. The point I was going to make is it's dynamic. It's not, it's not the same thing every year that doesn't keep up with what's happening in the world around us. All of those real factors influence the way the questions are put together so that they relevant. And I'm sure that the viewers and listeners will want to know that I run my, my, I guess my fashion world exactly like this. You know, every new piece of clothing I buy, I get rid of something in my closet before that goes in. And I've learned that just from the saucy survey. I knew that would be important for people to understand that.

A good example of a question that was added in the 2023 survey, so you'll see it in this year' it is again all these questions that to be honest, even we wanted to know as a team so we could better write commentary on the builders completing this survey was last year we sat back and thought, okay, when we ask a builder, how big is their team? Let's just try and get a little bit more specificity. So a brand new question that we were able to add for this year's report was all of your carpenters, do you as a majority employ them? Are they on your payroll? Are they all subcontracted or is it a mixture of both? And we were able to add that question so we could suddenly now understand what is the structure of each building company that's answering these questions now as well. We've got questions on whether you are in partnership with family or you employ family or family have nothing to do with your building company. So we could then report on, well, in this industry, what percentage of family businesses like who's involved. So it's been quite fascinating to even see the profile develop over the years with more pertinent, more specific questions.

Okay, enough about the process. I want to hear some of the juicy stats that came out of this year's survey. Russ, do you want to kick us off? What's one of your biggest insights from the 2024 source you report?

I think topical wise optimism is back. There was a large percentage, I think it was in the region of 77% of builders expecting to grow in 2024. But probably more importantly, about half of all builders surveyed expected to achieve 10% or more in net profit from the projects that they're delivering in 2024. And that for me is massive. You know, especially in the context of the ongoing profit challenges that builders have faced in the last few years. And we go back further, maybe it was more of a mindset challenge, you know, before COVID about reaching that magical 10 plus net profit. So that to me is a, is a massive shift in the mindset of the industry that, that half of builders clearly believe in that they can achieve these double digit net margins which are essential for a building company. I think about half of builders as well expected to give themselves a pay rise in 2024 as well. So that was nice to see. So yeah, for me this year it really was the optimism standing out. And I mean, apart from that, I think there's been some similar things. Marketing remains yet again a missed opportunity. And yeah, I think we were saying the same thing after last year's survey, that builders are simply not making the most of the opportunities available to them. I think probably the surprising thing this year was so many builders cited that generating quality leads was their number one biggest challenge, which hasn't really been the case over the last couple of years with the COVID boom. But it's come to the back to the top now generating quality leads. And that's both from a marketing perspective, but also interestingly from a sales perspective as well. And yet despite that, so few builders are using a CRM or even the ones that do have a CRM are sending out regular emails. So few builders are doing content marketing or posting regularly on Facebook. So on the surface, the number, number one challenge for a residential building company is very, very easily solved. You know, because the, the solutions are well documented and out there. But, yeah, unfortunately, yeah, marketing does remain a missed opportunity for the vast majority of builders.

He was really, like, polite as well, because I would definitely would have said my favorite stat out of Saucy this year was actually like a confirmation bias because we've done episodes on this topic throughout 2023, and it was the difference between fixed price contracts and cost plus contracts. And because in the survey, we were able to ask questions, what kind of building contracts do you use? And then later in the survey, we were asking a lot of questions about markups and the margins they're achieving. This is where the data mining just takes a while because we're trying to compare all these numbers. It was proven, and this was, this was wonderful. Again, so you know the answer to this question, what contract is better? Well, what does it mean for your building company? Over four times as many builders using fixed price contracts were able to apply a proper markup of over 33% compared to builders who were using cost plus contracts. So it was just like a nice bit of proof. Again, we've, we've talked about this. We, we coach and train our builders in setting up contracts like this. But. But the data proved it and showed it. And it's not a select little bit of data of just our members. This is a lot of the industry that we were able to prove, which was pretty cool.

And I mean, I think it's awesome to think that by understanding the data, you get both pieces of the puzzle in your hand at one time. So you think about what Russ was talking about, for example, around Facebook, knowing that it is so underutilized. That's the challenge, is the opportunity for everybody that recognizes it as an opportunity. So it's, it's literally in the same stat you've got. It's a problem. But let me make it a problem for other builders. I'm going to jump on this opportunity now before they catch up, you know, which is. Which is a fantastic tool to have. I personally, I, I looked at the planning stats and I looked at how few builders are. I think the stat. And Russ, you'll probably know it better than me. I think it was something like less than 25% of builders are actually allocating time in their week to work on their business. And I mean, I had this conversation with a builder yesterday. He wouldn't go on site and start building a house without a plan. I mean, I asked him that. I said, would you Would. He's. All this planning stuff, it just takes too long. Would you start a house without a set of blueprints? No. But you'll do that with your business. Oh yeah, never thought about that. So, you know, again it's, it's, it's being able to literally see those things in black and white. That is amazing.

Yeah. And I think another thing that has continued unfortunately, probably similar to the, the marketing is that so many builders are looking at inaccurate financial reports. And, and again, once again we've been able to prove as well that this comes down to a lack of understanding of the work in progress calculation. And, and you might have heard us talk about this before, but we asked builders if they are calculating work in progress and sadly, probably about half of builders I think from memory aren't. And we ask them if they understand the work in progress calculation and about half a builder say they do. We then go on to test those guys with another question to see if they truly understand the calculation. And that's what trips us. But you know, a lot of guys, I mean obviously a concerning stat there is half of builders openly admit they don't understand this calculation, which means they can't produce accurate financial information. But when you go a step further, maybe it's even more concerning the amount of builders that believe they do understand how to do this calculation but are calculating it wrong. Because you know, at least the, the other set of builders, they, they know what they don't know, that these guys are literally don't know what they don't know because they are looking at incorrect information, believing it to be correct. So that's an area concern. 92.4% of builders looking at inaccurate financial information in an industry of high revenue and wafer thin margins, that is a recipe for disaster. And it's probably the number one reason that we see so many building companies go under. It's a combination of positive cash flow, not, not understanding their finances and getting into trouble. And by the time they realize they're in trouble, it's just way too late. The hole is simply too deep.

I think it also highlights as well that like now the data is there. And this is what's amazing about them reading the report. If that's the data and we know the failure rate of building companies in this industry, suddenly it then it must trigger in your mind, okay, this isn't something can just abdicate. To my accountant or my bookkeeper, it's clearly not that understood because even in that question it's like, you know, do I do, do I calculate a work in progress figure? One of the answers there is, you know, my accountant just does it and that's still not proving that you can run a professional building company because it's, there's no guarantee that they're the ones staying in business because that part of it has been abdicated or really I suppose like, lot of builders think they're delegating the financials part of their building company, but they're really just abdicating. If you can't keep your finger on the pulse, if you don't understand what it should be, you can't really manage it very well. And that's, that's the, the, the, the bottom line of how worrying that stat is. 92.4%. It was crazy.

Yeah. And the reason you can't abdicate responsibility for this calculation and delegate it, delegate it to your accountant is because the accountant simply can't calculate it, provide him with the relevant information. So saying that your accountant does it, you know, is. Yeah, that is not a solution.

And I think we've proved that even understanding what those words mean. Accountants mean one thing and we mean something else. And if you're having an eye to belly button discussion with your accountant, you're in trouble.

You're talking at cross purposes, aren't you? Yeah, they're talking about a very different calculation applies to manufacturing.

Yeah, yeah. So interesting.

Great visual.

Well, sky, there are a number of questions about sales in the survey. What were your biggest insights from those?

Oh, it's, I suppose what's, there are a lot of stats obviously in the sales section there's a lot of questions. Sales is a huge topic over the last few years in this industry. Unfortunately sales have been quite easy to, to achieve. They've, they've landed in, in a lot of builders laps because there's just been such a demand. But now when you can see leads starting to drop off because you know, whether we're not marketing and a lot of the data proved that still, like I think 38% of builders still weren't using any kind of paid advertising yet. Their biggest challenge was generating quality leads. Then begs the question, how does that affect sales? Well, of course it's going to affect sales, but what' so interesting about it is the systems that builders had in place to try and combat it. They, they actually just weren't there. I think it was something like 65% of the builders who are not using a sales process, anything that's documented to follow. They also don't know their net profit margins. So it's not just one category that you're having a problem with. It's bleeding into so Many different parts of the building company. So. So not having a sales process and anything systemized in one side doesn't necessarily mean they were better in other areas. So it was just down overall. And I think when you compare it to the survey data from the last few years, you could see that it didn't really generate enough of a need because the leads were there, the sales were there, and unfortunately not even in this industry. I'd just say a lot of people in business think, okay, if you can have the sales and marketing, the money will take care of itself, the margins and the profit will be there. And it's really been able to prove that that's not the case. So I think just the lack of systems in the sales side still, even though that it was highlighted that it is a major problem that they need to focus on it. So, yeah, not enough systems in the sales side of the building company.

And I think it's. The data has clearly shown once again as well that a documented sales process that is the key component if you want to achieve a higher conversion rate and higher margins as well on your projects. And it kind of reminds me of how we really got started with apb, because originally we were a marketing agency generating quality leads for builders. And one of the things that half the builders were saying were the leads were great and this has solved their problem. But something the other half of builders were saying was the leads are rubbish. And it made no sense because we were providing the same service to both sets of builders. But when we dug into it, we realized that the builders that were saying the leads were rubbish, what they lacked was a documented sales process. And this was why they weren't converting the leads. And it's why they then blame the leads as being a problem. I think even if you go back to the data in this year's survey, number one problem in both marketing and sales, quality leads, you know, it's there. Again, the perception in sales when you're not getting sales is that the leads are rubbish. So that was why we then launched ACRIS sales training, because we knew the documented sales process for builders. We knew what it looked like, what builders needed to be doing with these leads. So we launched dedicated sales training that would then enable builders to take these quality leads and turn them into. Into contracts. And really that was the first step for APB before, yeah, builders with intel. And that's great. I've got the leads, I've got the sales, but I've still got no time. And I'm, you know, my margins are Terrible. So, yeah, that's why we launched apb, which was full blown business coaching.

And if you think about it, that's one of those stats that makes you almost go. If you don't have a documented, repeatable, professional sales process in place, maybe you shouldn't be advertising advertising. Because if you're spending money to bring a whole bunch of people into an environment where you're just going to frustrate them anyway, maybe you should fix the bucket first and then put some water in it.

You know, a leaky bucket analogy. Literally, you just like, you just, you're just giving money away.

Like, why?

All right, there's, there's so many stats in this report and we can probably speak for hours on this. But one thing that came out of the report I'm interested to hear more about is looking forward as well, the trends that are happening in 2024 and beyond. Beyond. And how builders can use this information to actually get ahead. So maybe I'll throw to you, Russ, to kick this off. What are you seeing coming out of this research which is setting builders up for the next year and beyond?

Well, I think you've really got to look at history to get an indication of the future. I mean, history, it doesn't repeat, but it rhymes. So when you know what you, you want to get out of 2024 and beyond, obviously it all starts with a plan. It's exactly what Andy's been saying. We've got to have a plan in place and that plan will reveal what needs to be done and where the weaknesses are. So armed with that information, the data makes it very clear what builders need to be doing in the future. So that is probably the number one thing, because I think every building company is individual. There's no doubt from what we're seeing in the data and what we're hearing from builders as well, that the boom is over, there's a slowdown in leads. I don't think we probably need a survey to tell us that every builder knows this. They're also seeing that it's harder now to get those leads across the line. But really this is no different to the pre Covid days. Leads were a lot more difficult to generate, inquiries were difficult to generate, and the opportunities that were generated were harder to get over line. There were objections. That's something that disappeared from our vocabulary in the industry over the last couple of years, wasn't it? Was objections. And we saw that in the data as well. We saw the use of an objections manual clearly decline over the last couple of Years. Well now it's time to hunter out of the drawer, you know, blow the dust off and, and get reintroduced with your objections manual. More importantly, start practicing how to overcome objections because you don't want to be practicing in game time. So I think a lot of the like the, the trends that, that we are seeing that, that we will see is more of a return to pre Covid days now. Sure yeah this game is hard odd but that's a good thing because yeah there's not many, not many builders that are geared up to do it. Well, that makes winning so much easier.

Andy sky, anything to add to the look forward.

I'm gobsmacked. It doesn't repeat. It rhymes. Man, that is, that is gold. Ignore everything else that Russ has said for this last 40 minutes. Just remember history doesn't repeat but it rhymes. That's beautiful. No, I mean Russ is right. I, I mean does it do, does the trend look different to what it has done? Its nuance is different. But once again I think what it, what it says is one builders are generally positive and optimistic. I mean the beauty of what the challenges show is that none of them are not able to be overcome. Like literally there's nothing in there that you look at and you are. We can't confix that. I mean literally if we just go back to what we said earlier, get your sales process worked out and then start advertising, that's going to bring you your leads and that's going to solve the problem. So I think that for me is the biggest thing is that that it hasn't brought up some. Anything that we going we can't fix that. Everything that currently needs to be fixed we have a solution for. It just needs to be implemented.

That's, that's exactly what I was thinking. It's interesting like coming full circle because this was at the very top of the episode talking about the optimism is the trend. That's wonderful. But look a little bit deeper. Between the last two years surveys we have more builders working longer hours. Like that number increased. So if we have now more builders working over 60 hours a week, yet there's all this optimism for 2024 of what's going to change. As the owner of a building company reading this data, what we first need to ask is well how am I going to change change? Because if we're already working longer in the last year and you know, I think there was a little bit of disappointment in a lot of people's numbers for last year. As, as a whole, you know, there's definitely percentages there that were winning, which, which was amazing to highlight. If we're suddenly now more optimistic for next year, what does change? Well, that's when you need to look at where you sat for every other benchmark and sort of work out the difference. Were you one of those builders without a repeatable sales process, an objections manual, you know, not the margins that you wanted to achieve. Optimism is good, but unless you have a plan, it's just not going to happen or achieve so. So that you have a better result in the upcoming survey. That's what I would focus on. Optimism without a plan is just a bit of delusion. So you want to be able to win.

And I mean again, just to. Let's go with the Lord Loop. They were optimistic when they filled out the survey. Now that they see the results now, not so much anymore. You know, I've got a lot of work to do now. But again, keep that in context. It's. It's work that can be done and the, the guys that have grown year on year are demonstrating that if you do the work, you will get the result. It's not a, you know, it's not some sort of weird paranormal thing that's happening. The guys that are putting in the sweat are getting the equity out. At the end of the day, it's as simple as that.

Yeah, it's not a bad thing, you sitting down and actually working longer hours this year if it's to a plan so that your results are better at the end. You know what I mean? It's just, it's forever if you don't have a plan and you're just being reactive.

Yeah, working. Working longer on the right things is a good thing.

Yeah.

You know, working longer to improve something that doesn't. Doesn't even need to be there. Not so much go and watch Tiger Kings rather.

Okay, Russ, where can people get their hands on the 2024 source you report?

Well, it's available as a free download for builders and, and also anyone else with a vested interest in our industry. It's been very popular report with service providers to the industry as well. But we'll be putting a link in the show notes or you can jump on our website and download your own free copy. What I would advise is or recommend is certainly downloading that, printing out plenty of copies and circulating it to all the other builders in your area and that way you can all rise together. Or if you think this information's just too valuable, you might want to just keep it to yourself. But yeah, it's very, very useful information for builders, so I'm sure the other builders in your area would like to see as well.

Perfect. Well, yeah, as you mentioned, that'll be shared in the show notes, but Russ Sky, Andy, thank you so much for coming on Professional Builders Secrets today and sharing some insights about the 2024 Sourci report.

Thanks for having us.

Thanks Will.

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