Paul Schumacher Storyboard: HBS NEO Dively Award 2017

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NOTES Page 1 After college, Paul decided to return to his hometown of Canton. He wanted to work with his hands, doing fixer-uppers, because he liked the realty industry.

Paul’s parents were in real estate, and they supported his plans. Paul told Smart Business News, “My mom and dad are great role models for a strong work ethic, positive attitude, and to believe all things are possible.”

Paul paid back the $12,000 loan for the lot to the developer.

Page 2 Paul’s big “A-ha!” moment was when he asked himself: “Why live in someone else’s dream home from 30 years ago, when you can live in a brand-new one for the same price?”

The questions Schumacher Homes asks customers really help customers understand in granular detail where their money is going when they make decisions and trade-offs about their custom home. The company is overhauling the program so customers can get an awesome, 3D display of their custom home.

The Schumacher team worked with the top architects in the country to develop hundreds of contemporary floor plans, all of which can be modularized for the customer.

These model homes that are also local design studios are pretty cool. They are fully functioning and open 365 days of the year. Buyers can experience, see, and touch the quality of a Schumacher home. In 2017, Schumacher Homes—always trying to improve the customer experience—totally renovated 40-50 of the model homes.

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Page 3 Paul is a systems thinker. The company has software for customers to select their options, model homes in various locations, modular choices, a committed and flexible supply chain, sales offices in 15 states, and more. Amazingly, the final cost for all homes always comes in within one percent of the estimated cost because of the many systems the company has built in over the years. Plans for the custom homes can be completed in three days. Paul says that every plan is broken down to the last 2x4, square of shingle. He told Professional Builder, in 2011, “We know within less than 1 percent variance exactly what that home will cost, so we can be very aggressive on our pricing to the customers because we know our margins. A lot of small builders don’t know their margins until the last check is written and the home is completed to see what’s leftover at the end.”

During the Great Recession, housing starts declined from about 2.5 million in 2007 to about 500,000 within 12-18 months. In 2009 alone, Ohio had 90,000 foreclosures. About half of all home building companies went out of business in the five years after the recession (from over 98,000 home builders in 2007 to about 49,000 in 2012). Schumacher Homes continued growing through the downturn, but the business certainly experienced difficult days in the 2007-2012 era.

Paul has established a decentralized structure at Schumacher Homes. Each division and market manager is responsible for sales and for her or his supply chain in the particular market.

Page 4 Paul himself certainly works hard, has fun, and produces results. He works out every day at 5 a.m. For fun, he loves the outdoors and traveling, especially hunting trips with friends and family.

Some additional facts about Schumacher Homes. It’s the winner of the 2012 National Housing Quality Award (over 35,000 companies are eligible for the award). The company is debt-free, profitable, and grows organically. Schumacher Homes houses range in price from ~$150,000 to $1 million. (Prices of homes don’t include the cost of the lot, which customers purchase on their own.) As a private company, Schumacher Homes doesn’t reveal precise revenues. It said in 2011 that it sold 500 homes in 2010; it has grown rapidly since then.

Back Page Schumacher Homes emphasizes that it is a family company, built on family values. Paul’s brother and sister, and his parents, are involved in the business, too.

Also, the company’s leadership group is very cohesive—it has been together for more than 12 years.

The criteria for being a Harvard Business School Club of Northeastern Ohio Dively honoree include that the honoree’s company must have achieved rapid growth and solid financial metrics as well as reached a position of significance in the market. Financial metrics include revenue size, revenue growth, and profitability (or, if not currently profitable, demonstration of rapid customer acquisition and a profitable business model in the longer term). Schumacher Homes has definitely achieved this!

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About Paul Schumacher and George S. Dively You may know Canton, Ohio, as the home of the NFL Hall of Fame. Did you also know it is headquarters for the largest custom home builder in the US, Schumacher Homes? This industry-leading company offers a great customer experience, has real heart and soul (appreciated by hundreds of employees and thousands of contractors), and operates extremely well (through its systems mentality and a performance culture). That’s how Schumacher Homes, a family business, has built over 14,000 custom homes since 1992 for happy customers from Texas to Pennsylvania.

The George S. Dively Entrepreneurship Award is granted annually by the Harvard Business School Club of Northeastern Ohio to an individual or company in the region. George Dively, an HBS graduate and entrepreneur who led Harris Corporation to remarkable growth, endowed the award because he believed entrepreneurs were the future of American business. He wanted to make sure that the Northeast Ohio business community celebrates entrepreneurs and their success.

Congratulations to Schumacher Homes for identifying a market need, serving customers well, and growing rapidly and well! It has become a leader in the custom home building industry. And congratulations to Paul Schumacher for being named the Harvard Business School Club of Northeastern Ohio’s Dively Honoree for 2017!

Copyright 2017 The Braun Group. All rights reserved.

Produced exclusively for Harvard Business School Club of Northeastern Ohio.

Written by Anne Brennan, illustrated by Joel Benjamin, and designed by Ben Small.