Friday, November 27, 2015

Industry Round Table Could Change Everything

Prior to 2008 the modular housing industry experienced continuous growth, but after the housing recession many factories succumbed to lesser growth to the point of going out of business or actually ended up closing their doors forever.

Next week a group of the top executives from major East Coast modular home factories will meet for a Round table to discuss the problems currently facing our industry, the overall stagnation of modular housing today and what can be done to once again become a leader in single family home building.

When this Round table happens, there are five key areas that should examined to identify what's going on.

1. A Lack of Information

Problem: If we don't understand exactly what our builders want and work to fulfill those needs, our industry’s growth can stall. Do we really know what's working in our industry right now and what isn't? When is the last time a factory had a conversation with their builders to find out what they're doing right and what needs the builders are having met by competitors?

Solution: First, we should form two focus groups. One should be made up of current builders who do steady business with our industry, and the other should include builders who do not currently buy modular homes or have tried one or two and decided against it. Ask questions to determine why those who buy do, and why the other group does not. Next, use the information you glean from the focus groups to create a survey for all of your current and past builders. Ask them specific questions about what we’re doing right, what we could improve on, and how. Once we have this important information, we need to tweak our industry’s image and procedures to reflect what our builders want.

2. A Lack of Management Skills

Problem: Some modular factory owners never let go of the startup mindset that they have to do everything themselves, and they never delegate work to others or hire additional help. As a factory grows, it requires different skill sets that the owner and top management may not have. Modular factories  require management that can aptly lead their staff to success. Many owners and top management people are very good at what they do but tend to be deer caught in headlights when it comes other areas, such as finance, marketing, website creation and maintenance, social media, builder acquisition and training. If your business has stalled, take a look at your business operations. These are not only problems for each individual factory, they are problems shared by our industry in general.

Solution: If you need people with a specific skill set, but aren't quite ready to hire permanent help, consider using independent contractors or outsourcing certain business functions.

3. A Lack of Capital

Problem: It takes cash to grow a business, and if profits aren't sufficient to fund that growth, modular home factories won't be able to take advantage of opportunities as they arise. This can negatively impact business in many ways, such as the inability to hire new staff to support growth, buy materials for large projects, or not having the capital to expand.

Solution: First, you'll need to understand how much capital you need to support growth. Forecast your income, expenses, and cash flow needs by creating realistic financial projections. Then decide the best way to find the funds, whether it’s from private accounts, a bank loan or line of credit or invoice factoring. When a large project crosses the desk of the top decision maker at the factory, make sure that it is vetted completely. Leave no stone unturned.

4. A Lack of Planning

Problem: If the modular housing industry doesn't have a clear picture of where we want to go, we'll have a difficult time getting there. A true understanding of where our business falls in the marketplace is crucial to growth because without it, we can't set realistic short-term, mid-term, and long-term goals.

Solution: To get a true picture of where our industry currently is, we need to develop a SWOT analysis (strengths, weaknesses, opportunities, and threats). Once we have an accurate picture of where we are, we can begin to develop a plan that will put modular housing back on a growth path. This needs to be done both at the factory level and at the industry level.

5. A Lack of Training

Problem: Our builders are an important part of our success, but if they aren't properly trained, they could be holding us back. For example, they might not be giving their customers the level of service they want, or your salespeople may not be equipped to bring in the amount of business you expect. We need to provide them with the tools and training they need to be the best.

Solution: With the diminishing sales of single family modular homes, many factories do not have the time, talent or financial resources to implement the training necessary to rebuild our market share. We need a collective effort by not only the factories but also the builders, set crews and vendors to really begin to bring back single family modular housing. There also needs to be one point of light that will lead begin to put together this huge undertaking. Be it the MHBA or the result of the next week’s Round table, something has to happen sooner rather than later as there just may not be any later.

There are still a couple of seats available for the Dec 3rd Round table in Lewisburg, PA and if you are a factory owner or member of top management that hasn’t already signed up for this event, please email me for more info or to register for it.


Anthony said...

Can you please let post a summary of what was discussed and how they plan on proceeding after the meeting. I would be curious on what was achieved and how, if any, I could assist with helping our industry move forward. Wishing everyone and their families a Merry Christmas and a Happy and Successful New Year!

Andy said...

This should be a very interesting round table. How much information will these top executives share with each other?

Tom Hardiman said...

We are not asking these companies to discuss pricing or market area served or anything else that could be construed as anti-competitive, as that violates the anti trust laws.

We can and should discuss how we can better collaborate to promote the industry; what the message (or messages) should be; how could we fund an industry campaign; what type of training and professional development is needed; what barriers are in our path towards greater market share and what are we going to do about it. Should be interesting!

Anonymous said...

We can and should discuss how we can better collaborate to promote the industry;
Collaboration should include builders and how they can promote the industry message

what the message (or messages) should be;
A message designed to appeal to today's buyers that changes the tired old points dealing with costs, speed, and empty promises based on today's cost of manufacture and transport

how could we fund an industry campaign;

what type of training and professional development is needed;
Sales training that helps the factory rep assist the builder in market promotion, setting client expectations, and what the factory can and can not or does and does not deliver so the builder can define their expectations

what barriers are in our path towards greater market share;

As PoGo once said we have met the enemy and he is us. Instead of looking outward for market share too much emphasis placed on adding share from other plants - too many plants engage in bid wars that only lead to death spirals and dissatisfied builders and buyers

and what are we going to do about it.
That is the $64,ooo dollar question.

Should be interesting!