INTRODUCTION - Vanderbilt University · Web viewSWOT Analysis S W O T Strengths Weaknesses Opportunities Threats Corporate Mission – Bargaining Power Corporate Values – Employee

Orion R. Bloom -- Shaka D. Dickerson -- Ryan W. Nelson Joseph S. Sansone IV -- Shijia

Sheng

Analyzing Organizational Effectiveness -- LPO 3350 -- PBL II -- Corbette Doyle

COMMUNITY BUILDERS April 2011 -- P g . 1

April 25th, 2011

Table of Contents

I. Executive Summary - - - - - |Page 2|

II. The Unmet Need - - - - - |Page 4|


III. Business Overview - - - - - |Page 6|

IV. Mission Statement & Core Values - - - - - |Page

7|


V. Management & The Organization - - - - - |Page

8|

VI. Goods & Services - - - - -|Page 9|

VII. Industry Analysis - - - - -|Page 12|


VIII. SWOT Analysis - - - - - |Page 13|

IX. Marketing Strategy - - - - -|Page 14|

X. Financial Plan - - - - -|Page 16|

XI. Footnotes - - - - -|Page 18|


XII. Appendices


Executive Summary

Community Builders is a non-profit organization committed to creating sustainable community development, through custom home building. In doing so, we provide resources to low-income neighborhoods in Nashville for building, remodeling, and training.


We accomplish this through a two-part process. First, is through earning revenue through custom home building targeting the $200k to $400k market for single-family homes. The revenue earned through the custom home building is then put back into the company and put towards community development projects (part two). These projects focus on providing resources and


training for remodeling homes in low-income neighborhoods for little or no charge.

Starting in November of 2011, it is estimated that four months will be necessary to secure initial funding and develop our presence in the market. We expect to sign our first building contract no later than March, 2012.


With over 17% of Nashville residents living below the poverty level, Community Builders is designed to meet this need by creating a constant flow of funding to meet the needs of these residents. The Community Builders model creates a community development organization that will not have to rely on grants and donations to fulfill its mission. We will further the name and


reputation of Community Builders through quality workmanship, the use of social networking sites, as well as through our partnerships with other non-profits.

Through a popular and efficient custom home building model, Community Builders can earn up to a 25% margin. This is achieved through several basic, but customizable floor plans that


vary in size. Using established contractors gives us lower costs and a greater area of expertise. Community Builders will have positive cash flow on each home we build provided efficient cost control. Our services extend far beyond those of a custom homebuilder. We contribute at least 30% of our profit and all of our grant money directly to community development. We engage


in a variety of renovation projects in Nashville’s Hadley Park. These projects will vary depending the need of the families.


The Unmet Need

NASHVILLE NEEDS QUALITY HOUSING

Drive around Nashville; this need should be obvious. With the economic dip of 2008 and then the flood of 2009, quality-affordable housing has been hard to come by. Foreclosures are at


an all time high (eight times as high as in 2007), the number of homeless has risen drastically, and the poverty rate continues to increase. In Nashville, 30% of residents are paying an absorbent amount of their income on mortgage or rental costs. Contributing to these high prices are utility bills. Many families consist of single parents or have one parent maintaining an income. Many


parents are forced to work extended hours (60+) just so they can make rent; add in gas and transportation costs, and the financial demands seem almost insurmountable.

Some would say that section 8 housing, or life in the projects, is an option. These are great ideas for affordable housing, but they aren't of standard quality. In 2009, it was estimated that 74% of


low‐income households (63,570) had housing problems, with cost‐burden being the most prevalent problem, followed by overcrowding and substandard conditions.i Living quarters with cockroaches, ants all over, unidentified red spots (usually blood from violence or drug needle use) and in rising cases lack of bathroom plumbing is not the environment a parent wants to


raise their child in. In fact this is not the type of housing anyone would want their loved ones to live in. Just because an individual cannot afford a mansion does not mean the only affordable option should be a shack.

As an individual is unable to make payments people either become homeless or do what they need to make money, joining


gangs and/or participating in the illegal economy. According to an April 2011 article in the Tennessean, unsurprisingly, Nashville’s black community ranks 5th in the nation in murder rate.ii No nation, espousing Christian values, and the wealth of money that flows through like the United States, nor city with numerous stars and world class education, should have citizens (in the thousands)


living in substandard conditions. Even if a family decided to live in the projects, with a waiting list of 3 years for section 8 housing, they would be waiting for a long time.

Something must change. The issue of quality and affordable housing must be addressed in order for Nashville to reach its goal of being a key city in the South. Mayor Dean recognizes the


urgency to decrease poverty and supply the growing demand for housing and community workforce development. Late in 2008 Mayor Dean created a Poverty Initiative to decrease Nashville's poverty rate of 17.9%iii in half in 10 years. In 2010, community surveys reported after jobs, housing was the most direct need for low income families.iv The community is ready for it, intellectuals


recognize it and now government officials recognize it and most importantly are prepared to push the agenda: Nashville needs affordable housing and community development. The city is asking for a solution and this is where we come in...


Business Overview

Community Builders is a non-profit construction company, based out of Nashville, TN, who recognizes the need for quality housing for all. Just as our name implies, we are committed to making our community a better place to live by improving the overall quality


of housing in our neighborhoods. We value stewardship, integrity, quality, community involvement, and excellence because we believe that it is through these values that we cannot only build great homes, but great communities. In this capacity, Community Builders will provide top quality custom built homes at affordable prices to all those in Nashville and the surrounding area.


Community Builders customers will be middle and upper class single-family homes in the $200k to $400k price range.

Community Builders is unique because of our commitment to providing the same quality services, which we provide to our customers, to low-income communities for little or no charge. We will give back ten percent of our net income to partnering with


families in these low-income neighborhoods to improve the quality of their housing. Additionally, Community Builders is committed to providing free Do-It-Yourself workshops, taught by our experienced builders, to the members of these communities. Providing members of these communities with resources and skills to improve their homes, all while maintaining a tight


budget. We recognize that it is through helping our neighbors that we will be able to build a better community here in Nashville.


Mission Statement & Core Values

Mission Statement

“To improve communities, through excellence in building, remodeling, and training.”


Providing these services to low-income families at little or no

cost

Creating sustainable community development, through custom

home building, towards improvement of lower income

communities


Making Nashville and the surrounding areas a better place to

live for all

Core Values


Stewardship - We are committed to using the resources that

have been entrusted to us in the fulfilling our mission and

providing top-quality construction

Integrity - We will strive to build trust with our custom-build

clients and with the communities which we partner with


Quality - We are committed to providing top quality

construction in all of our projects

Community Involvement - At our very core we are about

partnering with the community to build a better place to live


Excellence - We require excellence of our employees in all we

do to further the reputation of Community Builders with our

clients and in the communities we serve

Management & The Organization

Figure 1. Organizational Chart


Board of Director

sCEO

Contract Builders

CFODotted Line:

Outside of Organizatio

n


Community Builders will be made up of a CEO, CFO, and a Board of Directors. Our Board of Directors will initially be comprised three of the co-founders: Orion Bloom, Shaka Dickerson, and Shijia Sheng. The executive level positions will be filled by two of the co-founders: Joseph Sansone (as CEO), and Ryan Nelson (as CFO). We will contract out for builders, who will work at our


sites. Both the CEO and CFO are responsible for managing the worksites and supervising the contractors. As the company grows, we will create a Site Manger position to handle these responsibilities. This Site Manager will report directly to the CEO.


Goods & Services

As a custom homebuilder, we separate ourselves by providing the exact product the customer wants and needs. The customer never has to compromise as they would in buying an older house, or even if they bought a new house from a larger developer.


Goods

Even though we are a custom builder, we keep our costs low by promoting basic floor plans that vary in size. Our basic floor plans are consistent with the most popular house plans on the market. Building off of a basic plan, we can perform any


customization the customer requests. We also maintain a large inventory of other plans if the customer is seeking something different. Given that we aim to please, we are also willing to create custom plans.

Examples of our plans include, but are not limited to:


Small -- 1400sf, 1 floor, 3 bedroom, 2 baths

Medium -- 2800sf, 2 floors, 3 bedroom, 2.5 baths

Large -- 3400sf, 2 floors, 4 bedroom, 3.5 baths


We guarantee that our plans will satisfy homebuyers of all kinds, from first-time buyers, to those looking to build their dream home. We also do any custom work the customer might want, on any of the plans. Additions to our plans are marked up 50%. This is an industry standard that allows us to significantly


increase our margins. This can include anything from different exterior types, to chimneys, to adding large additions.

No matter which plan is chosen, we are confident we can keep our costs low enough that we can mark them up almost 33% giving us up to a 25% margin of profit. Figure 2, below, details the margins we expect to make on each floor plan.


Figure 2. Model Price/Cost Comparisons


Small Medium Large0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

PriceCosts


Services

Our services extend far beyond those of a custom homebuilder. We contribute at least 30% of our profit and all of our grant money directly to community development. We engage in a


variety of renovation projects in Nashville’s Hadley Park. These projects vary depending on need.

Production Process


We keep our costs low, and give ourselves an unlimited range of expertise in our custom homes by contracting out the different sections of our builds. We work with only the best from the site work to the finishing touches. Finding contractors, enables us work efficiently, paying only the people needed to complete the job. To control the quality of our builds beyond our selection of


contractors, we have our own site manager at each of our builds.


Industry Analysis

Figure 3. Competitive Analysis

As depicted in Figure 3 above, our two main sources of threat come from our direct competition and substitutes. These


competitors come from three different sectors: Community Development Corporations, General Contractors, and Custom Home Building. Below is a small list of some local competitors.

Competitor List: Spruce Street CDC New Earth Builders, LLC


Hardaway Construction Company North-Nashville CDC Orion Building Group


SWOT Analysis


Heavy Competition – Both Direct & SubsEconomic Conditions – Housing MarketRegulation – Land & Construction

Partnerships – NP & Communities Market Growth – Continued Development Strategic Alliances –Large Scale Developers

New Company – Lack of ReputationSmall Fish – Lack of Scale

Corporate Mission – Bargaining Power Corporate Values – Employee Culture

THREATSOPPORTUNITIES

WEAKNESSESSTRENGTHS

TOWS


Marketing Strategy

Product

Community Builders’ product is two-fold. The first part is custom built homes, which we provide to our clients. We will focus in the high growth areas surrounding the Nashville area. Our


clients for this portion of our business will be the new families moving to the area who wish to have a new home built.

The second part of our product is what we are passionate about. This product is providing resources and skills to low-income families to improve their living conditions. This would be home


renovations and additions, which we would partner with the family to help them to complete.

Pricing


Our custom built homes will target the $200k to $400k price range. The exact price of our product will depend on the specific requirements of our customers.

The service we provide to the low-income families will depend on the need of the family and the current resources Community Builders has available.


Place

In 2009, 17.3% of Nashville residents had an income below the poverty level. Additionally, 7.6% were below 50% of the poverty level. With so many residents below the poverty level Nashville is an ideal place to further the Community Builders mission of


providing resources and skills to low-income families to improve their living conditions.

As recent as October of 2010, Forbes cited Nashville, TN was listed as one of America’s fastest growing cities. Rutherford, Davidson, and Williamson counties are listed as some of the fastest growing counties in, Tennessee. Being a high growth


area this also makes the Nashville area an ideal place for Community Builders to build new custom built homes, which provides us with a steady flow of revenue to use in supporting our mission.

Promotion


We will promote Community Builders through building a reputation of quality in the work we perform, and in our commitment to our mission of helping low income neighborhoods improve their living conditions.


Additionally, as a non-profit organization we will promote Community Builders through fundraising and partnering with other non-profits in community development.

We will build name recognition of Community Builders through our website, social networking sites such as Facebook.



Financial Plan

Business Model

Community builders will use an efficient and popular custom home building model to fund our community development operations. We sign a contract with our customers, and work


with them to create their perfect plans. With a contract in place, we face far lower risk than building spec homes, without contracts. We finance each house individually, and our cash flow models show that we stand to make a significant profit provided we keep our costs under control. For the construction of our homes, we will contract out all of our work giving us


knowledge and expertise in all areas of home construction while ensuring quality control by providing our own site manager at each build. This is far more efficient and effective than having our own crew. Our costs can be seen in greater detail in Appendix D.


Start-up Costs

There are relatively low start-up costs for Community Builders. Start-up costs include marketing and networking costs (the costs of finding quality contractors), and are covered by our founder contributions. Our founders have contributed $5,000,


which is more than enough to cover these costs as shown in Appendix B.

Cash Needs and Proposed Funding Sources


Our construction costs are covered by construction loans, or holdings companies we may partner with. These loans are given at three different stages of the construction process:

The first loan will be 40% of the total needed and will fund our site work, foundation, septic, and well work.


The second loan will be 40% of the total needed and will cover our lumber costs (including framing costs, doors, windows, and roofing).

The final loan will cover 20% of our total costs and will cover the costs of interior finishes (includes electric, plumbing, appliances, paint, cabinets, etc.).


Community Builders will repay all loans or forms of financing immediately after closing on each house. See Figure 4, below, for a projected growth scale over the first five years. The cash flows models for three different sizes of houses can be seen in Appendices E, F, and G.


Figure 4. 5 Year Projected Growth


Year 1 Year 2 Year 3 Year 4 Year 5$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

RevenueCosts of ProductionProfit Margin


Footnotes

i. Marshall, By Anne. "City's Lack of Quality Low-income Housing Leaves Few Options for Working Poor | Nashville


City Paper." Nashville City Paper | Nashville's Online Source for Daily News. 6 Mar. 2011. Web. 17 Apr. 2011. <http://nashvillecitypaper.com/content/city-news/citys-lack-quality-low-income-housing-leaves-few-options-working-poor>.

ii. Haas, Brian. "Black Homicides Reach 'crisis' in Nashville |


The Tennessean | Tennessean.com." The Tennessean | Nashville News, Community, Entertainment, Yellow Pages and Classifieds. Serving Nashville, Tennessee | Tennessean.com. Web. 21 Apr. 2011. <http://www.tennessean.com/article/20110410/NEWS03/104100348/Black-homicides-reach-crisis-Nashville>.


iii. U.S. 2010 Census Data

iv. Metropolitan Social Services. Housing & Related Assistance: Community Needs Evaluation 2010 Update


i

ii

iii

iv

Documents

INTRODUCTION - Vanderbilt University · Web viewSWOT Analysis S W O T Strengths Weaknesses Opportunities Threats Corporate Mission – Bargaining Power Corporate Values – Employee