Builders and the organizations that support them such as homebuilders associations, subcontractors, bankers and insurers need to adopt a new outlook and a new business model, says Channing A. Pfeiffer, Chief Executive Officer of the Tidewater Builders Association. There’s a “new normal” in our industry, and we need to adapt, he says.
Bonded Builders Warranty Group values local HBAs. That’s why each month, we highlight one local or state association. Our goal is for Bonded Builders News to be a forum to share what’s effective in terms of being a part of a successful and thriving local HBA. This month, we feature the Tidewater Builders Association, based in Chesapeake, Virginia.
Tidewater Builders Association was founded in 1953. Presently, there are about 700 members based in the South Hampton Roads and Eastern Shore area of Virginia, about 100 miles east of Richmond and about 200 miles south of Washington, D.C.
While TBA’s primary mission is like that of hundreds of other HBAs around the country — to support the industry’s relationship with government, to educate members and encourage standards, and to provide networking opportunities and marketing support — what makes TBA truly stand out is its business model.
“In most homebuilder associations… 70 to 90 percent of the annual revenue comes from dues,” Channing says. “At TBA only 3 percent of our annual revenue comes from dues. That’s because we own insurance companies, a publishing business… that type of thing. Like most associations TBA is a 501(c)6 non-profit, but we own for-profit companies.”
TBA’s for-profit services reach well outside the local area. Insurance is available throughout the state and printing and publishing services are available anywhere.
In addition to insurance, publications and printing services, group purchasing and discounts on everything from office supplies to vehicles, TBA also produces industry events and consumer trade shows, including Spring and Fall Homearama, which give builders an opportunity to include their homes on self-guided tours, and the Mid-Atlantic Home and Flower Show.
Channing says that while TBA has a long reach for a local association, its model of generating revenue can and must be replicated elsewhere.
“The challenge to all of us is to keep recreating that business model… finding the vacuums, filling that niche out there with a single-shot approach to figure out where the business is and go get the business,” he says.
“Dues are not going to pay the freight for an association,” Channing says. “It’s just not going to happen.”
Channing says the time is now to do the spade work. He says builders and associates need to work together to create associations with a longer reach and better funding; otherwise they will wither in the vine.
“We need to be out there making sure we are diversifying our financial base. And when we diversify our financial base in a way that meets members needs and saves members money at the same time, we can produce a bottom-line profit for the organization,” He says. “I think the day is gone when people do business with the association out of loyalty. It’s far too competitive out there. Whatever we do has to be best price, best service, 24/7.”
Channing says transforming local associations requires three key things:
1) People need to make the existential leap of faith and realize that when the market comes back, it’s not going to be what it was. There is a restructuring demanded by the new normal and the old business model that many HBAs use is just not going to work going forward.
2) There will always be downturns, but if you have a diverse revenue stream that’s not dependent on dues, you can still offer the key services local builders need like governmental relations and education. If an association’s budget is mostly dues-based, your only choice is to cut services and cut staff in a downturn, creating a spiral downward.
3) Associations need to be creative. They need to think outside the box and find services that they can provide by themselves or in partnership with others to sustain a non-dues income level. Dues can’t be the major revenue producer they have been in the past.
“We know that if we are going to protect and represent this industry, we have to have top flight staff. That means paying top flight staff,” Channing says. “If you’re going to do that, you have to create the revenue base to make that happen. It needs to be run like a business, not a non-profit.”
For more information about Tidewaters Builders Association, visit www.tbaonline.org.Share