Growing up, you wanted to do things because others did them. Then you might hear your parents say, “If Johnny jumped off a bridge, would you do that too?”

The same idea can be applied to the adoption rate of the Internet as a business tool for homebuilders.

The adventurous companies jumped in early. They read articles that hyped the Internet as the “next best thing.” They were ahead of the curve. Maybe even making the curve. They built web sites and marketed them -- hard and soft, traditionally and online. Many have since found that the online frenzy was overhyped so they scaled back, refined their business models or simply shut down.

Now headlines are filled with the stories of small Internet companies that have come and gone – quickly. Many were launched on the power of a cool name, or built on a great idea. But these companies overestimated the adoption rate of technology by their prospective user and revenue source and couldn’t sustain themselves during the adoption period. No industry has been immune to this mistake.

”In the financial services arena, Internet adoption has not been as rapid as other areas because online financial services are largely paralleled by offline banking capabilities and customers still perceive their services as being competitive. As more users continue to shift to online for these services, the demand will increase. For the homebuyer, the mortgage is the single largest transaction most people will ever make, so you would expect slower and more studied adoption,” explained Scott Slifer, president, Buildnet Financial.

The construction industry has already seen the early departure of companies such as redladder.com, a B2B portal for builders that took a great idea and couldn’t sustain themselves during their client’s technology adoption period. Other related companies have seen problems also. Real Estate.com, Apponline.com, Creditland.com and Mortgage.com all failed, and the plummeting of stock value for FiNet, HomeSeekers and Lending Tree does not bode well.

In the home building and other industries, rumors abound about the next “dot-gone.” Internet layoffs are common, and revenues, much less profits, are scarce or non-existent.

With all this uncertainty, will thousands of additional web sites be built and placed online by homebuilders in the next two years? Will builders adapt web business tools that quickly? They will is they can do so in a virtually risk-free environment. Why? Because not that many people over that period of time are ready to pay for and accept Internet technology when they cannot envision the financial benefits.

But that's enough negativity, because great opportunity still exists because consumers are adopting the Internet. Fax machines were adopted slowly back in the 80’s but now they are a virtual necessity. The same trend is being followed with Web sites and the Internet. You must be online for your customers. Take the positive lessons to be learned from the past and some solid basic guidelines about getting started on the Internet.

”One way for a builder to view the Internet capabilities is that it allows them to offer their potential customers a choice versus the local service. The virtual "always open for business" sign is a large part of the Internet's appeal. As homebuyers become more educated on the home buying process, they will demand immediacy even with a transaction as complicated as a buying a home,” Slifer suggests.

Let’s talk about how home building professionals can use this tool to grow their businesses. From a builder’s perspective, the question is: what do I do, if anything, to take advantage of technology and leverage the Internet?

“For the technology to be a worthwhile investment, it must do the following: 1) sell more homes, or sell the homes faster, 2) expose their homes to more potential homebuyers, 3) decrease their operating costs and make them more efficient in building the homes and 4) provide higher levels of service to their homebuyers,” explained Slifer.

Therefore, those who have waited to ‘jump’ may be in the best position of all in the future

"The e-commerce message for small business today: use the Internet as a tool to make your operations more efficient and help communicate better with your customers,” said Dave Koshork, Executive Vice President, Land America Financial Group, one of the largest title providers in the country. "B2B e-hubs and a small business web site with industry specific content and functionality are the solution."

Words of caution when considering any new business venture: Be smart. Keep your overhead low. Keep your break-even point low.

Questions to Ask

1. Do you already have a web site?
2. If so, what do you like about it and what do you dislike?
3. Are you using the web site for electronic commerce, as a marketing tool, a market research tool, a sales tool or a little bit of all?
4. Who is responsible for the site’s content?
5. Who is responsible for the site’s look and feel?
6. How frequently is the site updated?
7. What is the ratio of graphics to copy?
8. How do you drive people to your site?
9. Who is hosting your site?

Fortunately, communicating online is very simple. Just stick to the basic business benefits:

• Communicate your offer to the consumer
• Create a means to send and collect consumer information
• Offer your customers industry-related content
• Leverage the power of email for a variety of audiences
• Perform back office transactions to maximize your team’s collective talents
• Advertise photos of your projects
• Give the customer what they want and need.
• The online customer wants a local presence. They want to interact with you and use your site to communicate with you.

Future Vision

So what’s in store for the future? Products and services like web sites, e-mail and Internet access will be further “commoditized”. In three years, most everyone will offer functional and content-rich web sites. The playing field will even out for both the biggest players and the mom and pop sites – because the quality of the functionality and content will be high. Given the leveling of the playing field, the savvy small business operator may still offer advantages to consumers via a local, face-to-face presence. We’re still a nation of neighborhoods and we’re more comfortable in our own neighborhoods where “everybody knows your name.”

Even the small business owner can create a better value proposition for the customer by maximizing his or her local presence.

Published: March 21, 2001

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