Transparency in Building Is a Good Path to Follow

You can trust clients with information—they just want to see where their money is going

By Andy Stauffer

You may have heard the now-legendary story of how in the late 1970s, a young Steve Jobs took a “field trip” with a few Apple engineers to Xerox’s Palo Alto Research Center. He was somehow able to convince Xerox to show him all the highly-secret technology they’d been developing. As a result, the legend goes, Apple took Xerox’s best ideas—icons, the mouse, the graphical user interface, and more—and added them to every Apple computer, making Apple the world’s largest computer company, and making Steve Jobs a billionaire.

This story sounds apocryphal, but it’s mostly true. One’s knee-jerk reaction might be to criticize Xerox for foolishly sharing their secrets. Xerox learned a hard lesson about how transparency can kill a business, right? Perhaps… but keep reading.

I have my own story of a visitor that came to my office and transformed my company as well. For my first ten years building custom homes, I would give prospective clients a firm, fixed price proposal with just one final number for the cost of their home. They could either take it or leave it. I figured since I’m a fixed-price builder, I shouldn’t need to show the client any budget items or break down all the various costs that go into the home’s overall number.

This generally worked well for me, until one day, when a potential client came into my office the day before our scheduled contract signing. He showed up, unannounced, and told me “My wife and I are still planning on coming in tomorrow and signing your contract. But would you mind giving me a total breakdown of all costs, for every line item?”

I carefully considered his request in the context of the great rapport we’d built over the previous few months, and I decided to break my rule for the first time in ten years and “show him the books.” I printed off my spreadsheet of all costs for the project and sent it home with him. The next day, he returned, handed me back the budget I had given him, and signed the contract, as promised. I couldn’t resist asking: “So… what was it you were looking for, exactly?” The client responded with a remarkably concise and simple answer: “I just like to know where my money is going.”

This was my “light bulb moment.” It was such a reasonable request, so I asked myself, “Why had I held everything close to my chest in a secretive manner for so many years?”

Fear. That’s why. I had a cynical perception that my clients couldn’t be trusted with this information. I was afraid that they would use my numbers against me, tearing apart every single item in my carefully-crafted spreadsheet, poke holes in my calculations, and price-shop me against everyone else in town. And worst of all, they’d see my profit and overhead.

However, I learned, those fears were, for the most part, unfounded. Since that light bulb moment, I’ve transitioned into being a “fully transparent” builder. I’ve found that clients are actually respectful and appreciative of my open-book approach. Most people wanting to build a home are reasonable folks, and almost nobody would begrudge a builder his profit. They know I’m in business to make money, just like they are.

Now, I do take some precautions in my transparent process: I only meet clients for budgeting meetings at my office, using my computer. I show them the entire spreadsheet so they can see how much of their money is going towards roofing, framing, etc., and yes, even my profit. If they have questions, they are welcome to ask, and since I’m sitting there with them, I can give answers with full context. Most importantly, I’m able to tell them how I arrived at those numbers.

So far, this open-book form of transparency hasn’t come back to hurt me. I would encourage other builders to try to offer at least some level of transparency to clients. Your business model may differ from mine, but at the end of the day, we all work with the same currency: trust.

Still wondering what happened with Apple and Xerox? As with most legends, there’s an important back story: the reason Xerox agreed to show their secrets to Steve Jobs is that Xerox had just invested $1 million in Apple. After Apple folded Xerox’s inventions into their products, Xerox made $17 Million on Apple’s stock when the company went public the very next year. Not a bad deal!

I’m still waiting for my $17 million payday, but I’ve definitely seen this approach to transparency boost my bottom line. I hope it can for you as well.

Andy Stauffer is the President/Owner of Stauffer and Sons Construction in Colorado Springs, Colo. For more information, visit www.staufferandsons.com.

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