ECONOMIES OF SCALE
Just like Walmart and DR Horton get pricing advantages because of their sheer volume, You too can take advantage of having more than 1 project going at a time. Even if you have NONE-ONE project, THIS PRINCIPAL still applies, and will help you go FURTHER FASTER.
Here is a map of everything we have under construction right now
While we are pretty spread out as a whole, and some days are challenging to tackle having enough people to handle inspections, check on job sites, ect. Nothing makes our project manager AND checking account smile more than when we have multiple job sites in the same general area!
Not only do we save on gas, but sometimes the stars align and we can roll our subs from one house to another to another and get special pricing and preferred placement on their schedule!
Take the first few days of this week for instance, we have 4 projects in the beginning stages ALL within a few miles of each other that ALL needed some machinery work, and not just one machine but 2 different machines for various odds and ends on each project.
1. At our "Diary of a Pop Top" house we needed to demo the existing landscaping and a portion of the driveway and carport.
2. At our "Other Pop Top" House we have to remove the driveway, EXCAVATE the ENTIRE side of the house to REPLACE an ENTIRE wall of the foundation, along with demoing a FOREST of BAMBOO, and clearing way for footers for a front, back, and 2nd story addition.
3. At our "Busy Intersection" New Construction house, we need to tidy up the dirt and concrete in the crawlspace and also try and find our sewer tap.
4. And at our "OMG this is the BIGGEST project we have EVER done and it BETTER sell FAST" New Construction house, we also have to find our sewer tap and demo a bunch of existing landscaping.
Since we are paying by the hour for this machine work, and they can get multiple projects done in one day, we are saving MEGA BUCKS vs having these things done at different times where we would most likely be charged an ENTIRE day for something that may just take a few hours.
So how do you take advantage of Economies of Scale if you are just starting out or investing in a new area you aren't quite established in yet? NETWORK and PARTNER with people who HAVE SCALE.
Many builders "and SMART investors" form "Builder/Investor Buying Groups" where they share subcontractors and suppliers to increase their collective purchasing power and CLOUT when it comes to having their jobs done when they want them.
If I just had one kitchen sink to replace, the plumber may "get to me when he can", but if my team and I can keep a few of his crews busy month after month after month, I can pretty much count on him replacing that sink for me anytime I need it.
And Remember, Economies of Scale applies not only to purchasing power, but KNOWLEDGE too! As you build your team of contractors, real estate agents, private money investors, mentors, and partners. FIND PEOPLE with SCALE, and SCALE your business EXPONENTIALLY!
