Minuscule as It was, It was the Catalyst for Change...
Last, we ended with two early learned lessons: Pivot and Meet or Create a Market Need. Did we know this back then, or was it simply a natural progression? I lean towards the latter because I don’t believe much thought was given to the subject back then. But that didn’t stop us.
While working with these builders and general contractors − and one personable enough to sit with us at lunch − we became evermore acquainted with the woes suffered by the custom or independent home builder. In summation, this boiled down to what is referred to as industry fragmentation. It was also a sector well known for a minimal level of sophistication.
For example: Instead of installing a Site Phone (this was long before the invention of Cell Phones), our friendly builder would make the 8-mile round trip to a local Denny’s Restaurant, where he would 'hold court’ and make pay-phone calls. It caused him much grief: He missed site inspector visits, which delayed crucial mortgage draws. Supplier agents that dropped by weekly would be missed, and if site crews (left unsupervised) had a question, they waited hours until the Boss finally returned.
We solved the ‘site phone’ issue immediately, calling upon the local Telephone Company, which offered a unit that could be plugged in every morning and stored away at night. Sinking a utility post, attaching a half birdhouse cover to fend off the elements, and ‘Wala’, the site had communication. This was a big deal then, but it only addressed one of the independent building sector’s many challenges.
As minuscule as this issue was, it was the catalyst for bringing about a little bit of "disruptive local industry change". It took eighteen months, but the highly disorganized Builder group's nature and need were now exposed, understood and ready to be dealt with − if only for the select few that appreciated our work.
Against the prominent builders, many independents suffered a considerable disadvantage. And most certainly, all faced limited purchasing clout, unable to compete with the regional, national or even international construction company counterparts. The answer was simple: combine and streamline purchases, bring organization, make bulk buys where possible, and ensure everything was well coordinated. This was Pivot #2, which sure beat 'swinging a hammer' or digging drain-tile ditches.
So inspired, I organized Findex Purchasing Services Limited as my initial response. It started as a ‘one-man show’, just a tiny purchasing agency. With a few builder-contractor relationships already in hand, this was not a hard sell. Whether they chose the whole plan (as an exclusive ’outsourced' purchaser) or only used it selectively when they couldn't secure a better price, most quickly accepted the common-sense proposal: “You stay on-site, supervising your trades... And I'll hustle for the best deal! Pay me 3 to 6 percent of the purchase price, and I'll guarantee a savings of at least ten!"
Although inefficiencies remain, compared to today, the lack of organization then was simply mind-boggling. It was common for suppliers to favour larger projects, not delivering on time, or short-shipping the smaller builders when supplies ran low. Sending culls or poor-quality goods, hoping no one would notice, was another problem. To top it off, all this came at vastly higher price-point levels. Of course, today, exciting devices, Apps and project planning technologies serve to level this playing field.
And there was the opportunity!
The need was apparent, and in response, our service program soon gained market acceptance, quickly maturing into a 'subscription’ business model. As a "buying service", it guaranteed improved efficiency and better pricing, or you didn't pay!
Every builder-subscriber first approved a "Notice of Appointment", an instrument that was unique to the industry. This document confirmed Findex as an authorized Purchasing Agent, authorized along with a credit profile, allowed Findex to buy on their behalf. [Yes, this did convey an abundance of trust.] Once tested, Findex became the 'support office' for what steadfastly become an increasing number of BC Lower Mainland ('smallish') builders [although one, more for convenience than price, was building 100+ homes per year].
Next time we'll touch upon the 'entrepreneurial' aspect of this activity and take a look at the elements that made the unique business possible.
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