Saturday, July 20, 2019

Is There an Answer to Shortage of New Modular Home Builders?

When you drive around your town these days you will see a lot of new stores popping up selling everything from cheap, inexpensive merchandise like Dollar General, to organic makeup kiosks and even stores selling imported olive oils. New food stores like Pizza, sandwich shops and even a couple of Thai Noodle places are filling empty storefronts.

What is interesting about most of these small stores is that they are franchised. I’ve talked to a couple of franchisees and learned that many of them are owned by people that were downsized, couldn’t find employment that would pay near what they needed to live on and decided to buy a franchise.

You have to ask yourself why someone who was in management at Capital One, a police officer or truck driver would suddenly give up those professions and suddenly sell organic makeup, buy a portable dog washing truck or make sandwiches for the Millennial crowd. The answer is quite simple.

They all found a franchise that appealed to your interest. They simply pay your franchise fee, find a good store location with the help of the franchiser, buy their store fixtures and opening inventory and after a couple of weeks training, marketing and advertising their business with the franchiser's help they go to work for themselves and become independent and wealthy. What could possibly go wrong?

Now let’s compare that to someone that lost their job, has $200,000 in their 401K and wants to build modular homes as a business.

First, there are no franchisers at this time offering custom modular homes dealerships. There is nobody that will help select the right location for either a model home or design center. Nobody to give advice on what your model home or design center should include and definitely nobody is out there that will give a “new to modular” builder any kind of intensive two week training. And as we all know, there is no help with marketing and sales.

At best, a factory rep will give you a sample kit to stock your display room with enough crap to maybe fill one wall and out of date literature books. They will also give you a tour of the factory and possibly introduce you to some management people but don’t count on it.

You will definitely be introduced to the factory Chief Financial Officer who will require you to fill out an intensive credit application and make sure you understand their payment terms that always favor the factory and what will happen if you fail to meet any financial obligation to the factory. As for marketing and sales training, it is almost non-existent.

One does not need a construction background to be a successful modular home builder. You can buy that expertise. What it does require is a good solid working knowledge of the entire process from birth to death. That comes with proper training and continuing education.

Now let’s go back to the person that bought the organic makeup franchise.

For her $50,000 investment she got a week of training with 7 other people in California with hotel and meals included. She met every single management person. She sat in on several roundtable discussions about marketing and closing sales along with help from her regional franchise representative in choosing the right location based on the demographics of the people in the area.

Opening Inventory was included in the franchise fee as were a basic fixture setup. She was told it would take approximately 78 days from the time she inquired about the franchise until she was ready to open her doors. Business will slowly gain traction and she is confident that she will be in the black soon. She is completely happy with her life choices and couldn’t have done it without the franchiser’s help.

Related Article: Is Training an Expense or an Investment? by Jerry Rouleau

Looking back at all my Builder Breakfasts, all the conferences I have attended over the years and all the modular home builders I met while working at factories across the Mid-Atlantic states, very few of them are now under 50 years old. And those that were under 50 usually came from a home building family or construction background.

Today finding a young new home builder is like looking for real chicken soup in a vegan restaurant. There just aren’t any to be found.

We all talk about the future of single family modular housing but without the things a franchiser can give a “new to modular” home builder, why would anyone in their right mind put their life savings on the line to become a modular home builder

Will anyone step up and take this huge bull by the horns and wrestle it to the ground? Let's hope so.


Anonymous said...

When you consider the majority of NAHB members are over age 50 and the lack of interest in millennials for investment of time or money in the trades the fact that recruitment for the home builder profession is difficult is not surprising. Although there are several Home Building franchises available for site builders ( Both in the top 100 of national builders ) there are none specific to modular construction. The biggest challenge I see for new to modular is the ability generate enough on your lot buyers and/or enough capital to build additional spec product. Beyond the training and initial support the franchise marketing side will be a major factor for success.

Bill Murray said...

Having been intimately involved in the industry for the past 35+ years, the maintenance and growth of a manufacturer's distribution base has been a predominant and ongoing challenge since the onset. Have to wonder what has changed? If sales managers and/or sales people don't change with the times (think web based marketing/sales) beyond simply recognizing the importance of web based methodology the results will be less than desired and needed. Kind of Einsteins definition of insanity I think?
That said sales and marketing in my humble opinion remain a people business and I suspect that the basic tenets of successful sales and marketing still remain the same. There is, again in my opinion, no substitute for face to face, windshield time in the pursuit of new business. I fail to believe it isn't out there(new business)......its just not coming to you you've got to go after it. Nothing new about that?