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Growing a Business

January 01, 2002
January/February 2002
This article originally appeared in the January/February 2002 issue of Home Energy Magazine.
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        A business that is exploring new technologies and attempting to provide new products and services encounters obstacles—and rewards.That is what we discovered when we founded our home design, construction, and materials distribution business, Stitt Energy Systems, Inc., in 1978. Our staff began as three family members and a couple of part-time workers.Twentythree years later we have 12 employees and provide materials and designs for 20–25 homes each year.
        We view ourselves as partners with the client and the builder, sharing the mutual goal of providing a comfortable and energy-efficient home. Our success in achieving this goal can be measured by the HERS ratings we have received. Many of the homes we help design and build, such as those that are required to be rated in order for the home buyer to receive an energy efficiency mortgage, undergo HERS rating. Of the 34 homes that were HERS rated from 1988 to 2000, all were given five-star or five-star plus ratings. Our company has received recognition among its peers, and ten of its homes have received National Energy Value Housing Awards from the National Association of Home Builders (NAHB) Research Center.

Early Decisions

        So how did we get here from scratch? To lay the foundation of our new company, we purchased some property near Rogers,Arkansas, with an old house on it.The house seemed like a good potential office for us, but first it required renovating and updating.After weatherizing, caulking, adding a sunroom, and doing a lot of general sweat equity updating,we made this house into our sales office—as well as our design center and accounting department.Over the years,we painted, guttered, roofed, landscaped, updated the electrical system to accommodate computers, replaced the old floor furnace with an energy-efficient furnace and air conditioner—and the list goes on.The building has been used for various purposes, and currently serves as offices for our accounting, field services, and building component sales departments.
        In our second year of business,we built a second home.We put it up right beside our office to demonstrate many of the energy efficiency features we wanted to include in the homes we design for our clients.This superinsulated, 2,300 ft2, two-level house has no installed heating system (we use the sun and wood for heat) and the air conditioner is only 1 ton—about one-third of “normal” size.While some of the building materials have changed, and some of the technology has improved—think about how much better windows are today—the most important feature of this home, passive solar orientation, is a concept that has not changed in the 23 years since the first house was built.
        But back to the beginning of our story. In 1978, there was little awareness in northwest Arkansas of the use of passive and active solar energy in housing. Proven and available conservation techniques in construction were not practiced by many of the contractors, builders, or subcontractors in this region, and the public did not think that such things were valuable.There was a great need for creative products, as well as creative marketing and salesmanship.
        Nevertheless,we achieved early success because we chose to represent one of the major packaged-home companies. The name was well known, and its advertising was beautiful and effective. As we sold those packaged homes,we encouraged the buyers to include energy-efficient features, such as passivesolar orientation (see “Energy Efficiency Can Take Compromises,” p. 44).Many of our customers were unbelievers when we told them how low their utility bills could be. Often it was not until their own experience validated our promises that they not only believed but also became our best advertisements.Many of our homes are built as a result of referrals by satisfied clients.

Evaluating New Technologies

        At some point in the history of building materials, a milled 2 x 4 was the cutting edge of technology;PVC pipe and drywall were radical advancements; and who knew you could build a house out of concrete sandwiched between the same stuff that keeps your coffee hot, expanded polystyrene? If you believe all the ads, it seems that there is always something new and better coming onto the market.
        A challenge that we faced, and continue to face, is the research and evaluation of new technologies and materials as they come on the market.We have learned from our experience that some new things simply don’t live up to the claims, or may not be the best choice for a particular situation, or may not be the most cost-effective choice for a client. The technology’s reliability must be considered, along with the payback time for the customer.The effect of constant change on the design team and on procedures and procurement systems for our company must be acknowledged. Some standardization allows us to operate more efficiently for our homeowners and more profitably for our investors.
        Our approach to new materials and methods is to get firsthand experience with them. Sometimes that means going to the factory or to a job site.When we built our own home,we dubbed it the research house and included a lot of new things—just to see if they worked or if the installation was as easy as the salesperson claimed. Firsthand experience of a product or installation gives us a much more credible position from which to encourage clients to include that product or method in their new house.
        When we began to consider using structural insulated panels (SIPs), for example,we researched the various manufacturers, visited with their representatives at the international builders show, and contacted installers around the country (see “The Lowdown on Structural Insulated Panels,” p. 38).We wanted to know about the engineering that went into the creation of the product and the quality control that was part of the manufacturing process. We were also very interested in the kind of training and support we would receive if we specified the product in our building designs. As we narrowed our search, representatives from our design and field services departments visited the factory to see, firsthand, how the product was made and to meet the people they would be working with. After this research was done and the track record of various companies was considered, our choice was made.
        But that was just the beginning. Next we had to integrate that product into our regular design process and then into the procurement and delivery process. We had to know what other materials this new material would require in order to function, and what materials we would no longer need to order. Our computerized design libraries had to be updated to show this material, and the detail portions of our plans all had to be changed.
        Then we had to convince homeowners that a new building material was structurally sound, energy efficient, and a good choice for their new home. We had to teach the builder how to install this new product. Because we had done our research,we knew that the manufacturer would stand behind us and help with this training.
        Without this innovative attitude, however,we would never have made SIPs, insulated concrete forms (ICFs), or low-e windows part of our standard specs. Change for the sake of change is not part of our plan, but change to achieve a more energy-efficient or costeffective structure is part of our business philosophy. One example of this philosophy in action is our own home.We live in a passive-solar, two-story, 3,300 ft2 home built entirely out of ICFs. Our monthly utility bill over the last 36 months has averaged $61.66 (at about 7.5¢/kWh) or 825 kWh.Another example is the model home that we recently had built in a nearby town. This nearly 1,800 ft2 home, built of ICFs and SIPs, is so efficient that, for this home,we are guaranteeing in writing that the average monthly bill will be no more than $41 (around 545 kWh). Most of our homeowners can report similar savings—a fact that was really brought home to some of them last winter when their neighbors’ bills were extremely high, while their own bills remained relatively low.
        Our materials package today includes ICFs and SIPs, along with energyefficient windows and doors, roof ventilating systems, and other insulation. Many of our homes include solar waterheating systems and other energy-saving features.Along with the materials and design,we make sure that care is taken during construction to install all the components properly, and to seal cracks and possible air leaks.

Selling Energy Efficiency

        Our model home demonstrates that an energy-efficient house can be beautiful, built in any style that will complement an existing neighborhood or conform to the customer’s sense of beauty.Once that light bulb (a compact fluorescent, of course) goes on over our customers’ heads, very often they proceed to create an energyefficient home that they, and we, can be proud of.

Orlo Stitt is president of Stitt Energy Systems, Inc. and is president of the board of directors of Energy Rated Homes of Arkansas, a division of Energy Rated Homes of America. Mary Stitt is a vice president of Stitt Energy Systems.

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