Due to challenges in the construction industry over the past few years, CBUSA has focused primarily on expanding our network within markets that were already established. However, with shifts in the economy and opportunities presenting themselves, now is an ideal time to pursue growth into new regions.
To learn more about what the market expansion will look like and where we’re hoping to go, we went directly to the expert on the topic. Bill Smithers, founder and former CEO of CBUSA, shares his insights on the plans for growth this year.
CBUSA is planning to add multiple new chapters across the U.S. in 2023. Why now?
Bill: CBUSA has continued to grow as an organization, but over the past couple years, we’ve focused primarily on expanding our operations in existing markets. The combination of supply chain constraints and strong demand across the industry made for unique challenges in getting new chapters started.
However, toward the end of 2022, demand for housing continued to be strong, and product availability has improved as supply chain capacity has increased. Today, independent builders continue to stay busy, and suppliers now have more interest in working with us to maintain their volume levels. These factors, combined with CBUSA’s growing list of national agreements, make it an ideal time to expand into new markets.
Will selectivity of membership and partners change at all during this growth period?
Bill: We’ve built our reputation in the group purchasing space by being as selective in choosing our customers as we are in choosing our suppliers and brand partners. Even though the number of new builders we’ve added annually has more than doubled in the past two years, our membership criteria remains unchanged.
We’ve always said that CBUSA membership isn’t for everyone – it’s for builders who run their businesses well, have good reputations in their market and pay their bills on time. CBUSA is also for builders who have the ability to see the big picture and understand that short-term concessions from vendors are far less valuable than long-term gains that come from structured purchasing programs.
Our approach to group purchasing delivers results to those who engage in our way of doing business. We don’t come in and change the way our builders operate – we just show them how consistency, focus and structure in certain areas can deliver significant improvement to their bottom line. As our program has continued to strengthen, so too has our ability to bring on the best-of-the-best in each of our markets, which is very attractive to the companies we buy from both locally and nationally.
Why is expanding the network beneficial for builders?
Bill: Our tagline is, “Strength in Numbers. Pride in Independence.” It says a lot about the way we work in the market. It’s no secret that higher volume positions any company for better pricing, but only if it’s effectively leveraged. As we’ve grown, our influence across all segments of the supply and manufacturing sectors has also expanded. Wholistically, CBUSA now has a combined purchase volume of a top 10 national builder.
This means our members can take advantage of the increased volume to buy better while still maintaining their independence in ways that differentiate them to home buyers. This delivers value to everyone involved in the process – builders, suppliers, manufacturers and home buyers. Working together takes effort, but the results are worth it!
How are you choosing which markets to expand to in 2023?
Bill: Our goal for this year is to open five new CBUSA chapters, and we’re already making progress in several of the cities on our target list. To help us identify the markets we believed were the best fit for our business, we evaluated cities based on the key success factors that we’ve learned over the past 20 years. Some of the factors we consider include:
- Buildertrend or CoConstruct use: With 30,000+ users on the Buildertrend and CoConstruct platforms, we’re able to segment these companies by market to determine which cities have the most users who fit our network. Knowing a company is using construction software is a good indicator that they’re business-focused and process-oriented.
- Permit activity: Large metro areas always have a lot of building activity, but we don’t rule out small- to mid-sized markets because they often offer great opportunities for success.
- Brand partner input: CBUSA’s brand partners have been a valuable resource as we’ve looked to expand our operation. We gave them a list of the top 25 markets we were considering and asked them to weigh in on where they were well positioned for serving a CBUSA group and where they wanted to grow their brand footprint. This helped us prioritize our target list.
- Supplier relationships: We’ve developed strong working relationships with top suppliers like Ferguson, Beacon and L&W Supply. These relationships give us leverage when going into new markets.
- Competitive landscape: Part of our success in any market comes from the use of competitive bidding between suppliers to improve buying power for our members. In order for this to work, there have to be multiple vendors in each product category. When the competitive landscape is strong, our approach to material purchasing is very successful.
If builders are interested, what does it take to start a chapter in a new market?
Bill: For builders wanting to start a chapter, it all depends on their market input and their willingness to follow our process in getting their group up and running. After this long, we know what it takes to turn a group of competitors into an effective buying group. Even though every market has its differences, the building blocks for success are the same.
Step one is bringing together good builders – companies with good reputations who run their businesses well and pay their bills on time. Once this core group is in place and understands our launch strategy, we lean on their knowledge of the market to align with the best vendors, trades and suppliers. Once we know we have everything in place and are ready to move forward, we officially launch the chapter in the new market, which is always an exciting time!
CBUSA is adding several national brand partners to the network as well. What are your expectations for national brand expansion this year?
Bill: CBUSA’s national contracts program has continued to expand with the addition of nine new brand partners in the last 12 months alone. The agreements we put in place are focused on categories where there’s a significant amount of spending by our members. Delivering savings in these areas not only improves our members’ bottom lines, but it also makes them more competitive in the market.
Our approach to any new category is to collect usage and spending data from our members. With this member input, we approach top brands in target categories and work with them to develop the most competitive program they can provide. These bids are then evaluated by our team, and a winner is chosen. Members of our Power 30 group participate in the evaluation and final approval process, which helps us to ensure buy-in from the entire network.
Currently, our national contracts team is working on new agreements in key categories like solar energy, flooring and cabinetry.
Are you interested in starting a CBUSA chapter in your local area?
As a member of CBUSA, you’ll save on material costs, have access to our network of preferred local vendors and feel supported by other professional builders in your local chapter. Ask us how to get started today.
