Sunday, July 21, 2019

Modular Question of the Week

These should not be simple “Yes or No’ answers. Your responses will show up in the comment section below.


Some of the questions will be tough and or directed to certain regions but be assured they will be relevant to what is happening today.

This week’s question:

“As a modular home builder, are you concerned about the condition of the carriers used to transport your homes?”

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.

Friday, July 19, 2019

Thinking Outside the Offsite Construction Box

With the UK and Scottish governments keen to tackle the housing crisis – and setting stretch targets for the number of new homes – institutional investors have pricked up their ears to the potential earnings from offsite construction.

Currently touted as the ‘wunderkind’ of offsite construction is modular – or if you are of a certain vintage – an updated prefab for the 21st century. Whichever term you prefer, modular construction means three-dimensional homes built in a factory and shipped to the site almost fully made. Assembling involves fitting the modules together, connecting services and adding the finishing touches.


Several financial investments have accelerated the buzz about modular. In April Goldman Sachs dropped a cool £75m into a UK modular housing manufacturer TopHat. Then Japanese housebuilding giant Sekisui House took a 35% stake in Manchester-based Urban Splash.

Most recently Places for People confirmed the purchase of 750 modular units from Ilke Homes, with financial backing from Homes England.

However, while the buzz is getting louder, it’s worth bearing in mind that the current capacity of the industry is tiny – around 8,000-10,000 homes, with fewer, actually delivered. Modern methods of construction as a whole, according to the National Homes Building Council, accounts for 15-20% of new-build homes, while modular itself probably accounts for less than 5%.

Click Here to read more

Thursday, July 18, 2019

Available Modular Industry Acquisition Opportunity:

#213755 – Modular Residential/Commercial Structures Manufacturing Company –


This company has been in business for decades and has an excellent reputation within its market area. The plant production capacity is approximately $50M in potential revenue, without additional CAPEX.

The land and buildings have been recently appraised and there is room on the property to double the plant square footage. Mid-Atlantic/Southeastern Location.

We will be hosting plant tours and management presentations on-site in the coming weeks.

If you desire additional information on the attached opportunity, please contact Mark R. Sage, Managing Director, Wyndham Capital, LLC at msage@wyncapital.com or (727) 481-8435 direct.

Wyndham Capital is a M&A intermediation firm that has represented the sale of seven Modular and HUD Code manufacturing businesses since 2006. For more information about our firm, please access our website at www.wyncapital.com.

Wednesday, July 17, 2019

Builders Need to Help Their Customers Keep a Secret

It’s not often that one of your questions for a home buyer is “Have you ever thought of having a secret room?” in your new home.


It sounds like a crazy suggestion but you will be surprised how many will think about something they want to keep away from prying eyes. If you ask, they might just take you up on building one for them.


It could be as simple as secret walk-in closet or as elaborate as a prepper shelter in their basement. Maybe they want to tuck their gun collection behind a normal looking bookcase.


I remember building a humidity controlled secret room for a woman that collected very valuable antique Teddy Bears and another home where the husband wanted a hidden staircase from his Den on the first floor to the Master bedroom on the second.


Even though both of these projects didn’t cost me anymore than ‘time and materials’ I was able to get a premium price for them. It’s super tough to add a secret room after the house is finished.

If asking that simple question about a secret room gets you the house contract over one of your competitors, wouldn’t that make your day!

Tuesday, July 16, 2019

Weekly Survey Feature Added to “Modular Home Builder” blog

As we all know, very few modular home builders actually get a chance to share their triumphs and frustrations with their fellow modular home builders simply because there is no real place to do so anonymously. God forbid any builder would actually put their name to a frustration hot button.


Starting today Modcoach is adding a weekly question about what is happening in and to our industry that you can answer "anonymously". These will not be simple “Yes or No’ answers.

Your responses will show up in the comment section below.

Some of the questions will be tough and or directed to certain regions but be assured they will be relevant to what is happening today.

Here’s this week’s question:

“How are your state’s modular building codes restricting your sales?”




Monday, July 15, 2019

50 Best Practices for Modular Home Builders

We’ve all watched as modular home factories and builders have closed their doors over the years. Some were due to the 2008 Housing Recession, some due to retirement or death but most of them closed up shop simply because they didn’t follow some simple rules for staying in business.


You are probably following a lot of these Best Practices already but it never hurts to read through this list and find a couple more that you could add to your toolbelt. Staying in business in the construction industry, on-site, prefab and modular, is not for the faint of heart. It’s hard work but knowing what you don’t know is the best way to stay in business and make a profit doing it.

Here are 50 Best Practices you can use right now.

Planning
  1. No Sound Business Idea: Without a sound idea, how will you develop your business plan? Just saying you want to become a builder isn’t good enough anymore, you’ve got to have a good idea why you are in this business.
  2. No Business Plan: Oh no, Mr Bill! Say it ain’t so! Without a solid business plan, there is no way that you will ever be able to turn your business into a successful operation and prepare to crash and burn.
  3. Market Research: If you don’t know your market, do you really know your business? You can’t be everything to everybody.
  4. Bad Timing: There is a right time to start a new business, and a wrong time. If you roll out your business while the market is in this recession, you may fail before you ever even get off the ground.
  5. Good Location: Location is everything. If your office is going to be in your home, make sure the neighborhood reflects your business. If your neighborhood is not attractive, save up and rent an office or showroom somewhere else.
  6. Choosing Suppliers: There are great modular home factories, good modular home factories and there are some that are just hanging in there. Choose the one that closest mirrors who you are marketing to.
  7. Don’t forget the Competition: Every business and every concept has competition. If you do not recognize it, you are missing something important. Identify your competition can help keep you inn business.
  8. Choose the Right Type of Business: Sole proprietorship, partnership, LLC? Choosing the right business form is vital.
  9. Seek Advice: It is important that you turn to successful people for advice in the planning process of your business; otherwise you will not be successful. If you were going to market to seniors, seek out builders that already are successful selling to them
  10. Do You Really Know Construction: Simply put: If you’re not skilled in all phases of construction and sales, prepare to crash and burn.


Personality
  1. Are You Mentally Strong: It takes a certain attitude to be a successful modular home builder. Do you have what it takes to lead rather than follow.
  2. You’ve got to be Analytical: If you can’t take an analytical approach to the decisions you make and try to rationalize things, you are just kidding yourself.
  3. Be Self Critical: As a modular home builder, you need to be willing to self critique. A business owner who is not critical of his or her self is an unsuccessful one.
  4. Lack of Desire: You may be working for a builder right now and think that you can do that because he looks successful and everybody knows he’s an idiot. I want to make money. That’s no reason to start a business. Desire is a burning thing in your chest and without the desire you will crash and burn.
  5. Low Motivation: Just like desire, motivation is critical for business success. If you are lacking motivation, perhaps you are in the wrong business. Get Motivated or get a job at WalMart.
  6. Over Confidence in Expansion: While expanding may be a necessary part of business, if you become over confident in your ability to expand, your business will surely flop. I have seen many builders get into the restaurant business because they like to eat and think it would be easier than building houses. Putting up another model home in a remote area might be just as disastrous.
  7. Assuming: A lot of builders make assumptions about the business and guess what? They’re usually wrong. Get the facts and stop making assumptions.
  8. Failing to Take Responsibility: When you are an entrepreneur, you have to accept responsibility for failures in your business; you cannot simply shirk them off onto someone else’s shoulders. Building someone’s home is a lot of responsibility.
  9. Procrastination: If you procrastinate, or are lazy, or otherwise simply cannot get things done, you are NOT suited to be a builder.
  10. Being Overzealous: OK, you’ve opened your doors, advertised and you’re going to build 50 homes in the first year! Yep, that’s a real possibility!

Finances
  1. Not Having Enough Money: Cash is KING! You’ve got to have it in savings or lines of credit. If you are not prepared financially, you will sink.
  2. Credit Rating: You will run across situations where loans and other assistance is required, but if your credit is destroyed, your business will crash and burn!
  3. Control Your Spending: Overspending on your credit card, for example, without any thinking or research can have a serious negative impact on your financials.
  4. Budgeting: Budgeting is a vital part of running a business smoothly, so make sure yours is good! Poor budgeting will prevent you from getting a handle on your finances.
  5. Unrealistic Targets: If your financial targets are unrealistically high and you continue not to meet them, your business will never succeed. You need to realistic in setting goals.
  6. Be Organized: When it comes to financials, organizing is absolutely vital. Keep yourself organized and keep your financials in order and you will succeed.
  7. Be Honest: To yourself or to your employees, dishonesty can destroy the financial standing of a business.
  8. Taxes: Pay your taxes as often as you can. Work out a basic plan, stick to it and always be honest about your taxes if you want to prosper.
  9. Discounts: Work with your vendors and ask about discounts. Some offer them if you pay your bills within their terms. Think of a missed discount as an expense.
  10. Set Goals: Plan how many homes you can build and set your business goals accordingly. Review the number of homes being built and adjust your goals to meet the new numbers.


Advertising
  1. TOMA: Top of Mind Awareness. Create ways that people will think of you first when they are looking to build a home.
  2. Update Your Website: There is nothing older than yesterday’s news and if your website still has offers and open houses from 2007 on it, get on the ball and update it.
  3. Word of Mouth: Word of mouth is actually a powerful marketing tool. What are you doing to spread the name of your business?
  4. Choose the Right Advertising Medium: Advertising is everything. Choose the right medium or your business may flop. Hard. Remember, 90% of all new home buyers start their search on the Internet.
  5. Advertising Budget: Stick to a budget when you pay for advertising. Do not go over your budget no matter what.
  6. Track Your Advertising: If you have a website, consider adding “Site Meter”, a free widget that will tell you how many people are visiting your site and what they are viewing. If you can’t track your advertising sources, you’re doing something really wrong.
  7. Picking the Wrong Modular Factory: Is your modular factory doing what it takes to bring you leads and training? If not, they’re the one you need.
  8. Choose a Memorable Name: “Jack’s Houses” may be an accurate statement, but will it really draw customers to you? Your name is half of your branding. Can your customers remember your name?
  9. Business Cards: Carry business cards at all time and be prepared to pass them out at all times.
  10. Poor Business Cards: Forget cheap business cards. Buy nice, legible and attractive business cards. Don’t print them on your computer, that is so tacky!

Networking
  1. Rabbit Hole Syndrome: Detaching yourself from the people around you is an excellent way to destroy your business.
  2. Talk With Other Builders: Networking is a powerful part of business. If you fail to network effectively, you will surely crash and burn. Get on the Internet and find builders like yourself and find out what they are doing to battle this recession. Join your local NAHB chapter.
  3. Good Employees: Pay close attention to who you recruit and hire. Recruiting is an art: look for employees that will stay for the long term. Don’t forget, if you hire someone and you get the feeling almost immediately that it isn’t going to work out, get rid of them…fast.
  4. Don’t Badmouth Your Competitors: You don’t have to like your competitors, but you do have to cooperate with them. Remember, what goes around, comes around!
  5. Offer Your People Benefits: Offering benefits to your staff is the best way to keep them around. If you don’t offer any incentives, they will go on to bigger and better things. Not every benefit has to cost you a lot of cash. Buying a gift card to Olive Garden for one of your employees and their family will go a long way. Happy spouse theory.
  6. Staying Informed: Stay informed with what is current in your industry, or your competitors may pass you by.
  7. Keep Things Fair: Keep things fair with your competitors. Don’t steal ideas or products. Respect one another even if you are competing.
  8. Cold Calling: Cold calling is not the answer to networking. Meet your prospects in person first. If you really think cold calling is the answer, get the ultimate list…The Yellow Pages! Surely someone in it wants a home.
  9. Don’t Get Too Personal: Getting to know your prospects and customers is a great way to spread the good word, but getting too personal can be a deal killer.
  10. Don’t Drink at Work!: Just because there is alcohol in the office or in your vehicle doesn’t mean you have to drink it. Never drink around prospects, customers or your employees. One slip of the tongue can cause you to crash and burn!


Saturday, July 13, 2019

11 Mistakes Modular Factory Sales Managers Make When Hiring New Sales Reps

Let’s face it. Hiring a new modular home factory sales rep is usually nothing more than a crap shoot. Many sales people simply don’t work out or perform as expected. This is largely due to the fact that many sales managers make a variety of mistakes when hiring sales reps.


Here are 11 of the most common mistakes modular factory sales managers make when hiring new sales reps.

1. They conduct low quality interviews. Most sales managers have never learned how to conduct a high-quality interview. This isn’t their fault; it’s just that most companies do not teach managers how to conduct great interviews.

2. They fail to ask tough, probing questions. Most hiring managers ask questions about work history, experience, and general performance. However, they neglect to ask questions about gaps in a candidate’s resume and they are uncomfortable asking probing questions about previous performance especially if the candidate worked for another factory. You would be surprised how many under qualified reps get hired simply because the sales manager has no training in place for “new to modular” candidates.

3. They get mislead by candidates who interview well. Many sales people have a tremendous ability to “smooze” and make a great first impression. This often leads to the sales manager to feel good about a particular candidate. However, just because you like someone does not mean they will perform well once they are hired. The sales manager relies on their gut feeling and most times their gut is wrong.

4. They do not check references. Checking references is not an enjoyable task especially when you have a multitude of other tasks demanding your attention. Connecting with previous employers, especially if the candidate is still working for a competitor, is a challenge and many managers don’t want to appear skeptical so they neglect this step in the recruiting process.

5. They do not consider the type of sales person they need for their specific sales environment. For example, most modular home factory sales managers require a sales rep to make dozens of cold calls but if they hire a someone who is not proficient at this, that rep’s results will be less than satisfactory.

6. They don’t ask candidates exactly how they will achieve results. Once again, this requires that you ask probing questions to determine exactly how the potential employee will generate the sales that you require. This is especially important if the candidate has worked in the modular housing industry before.

7. They talk too much during the interview. Conducting an interview means giving the applicant sufficient air time. Too many managers talk about the company and their goals instead of asking questions and allowing the rep to talk. The general rule of thumb is to make sure that the candidate talks at least 70 percent of the time.

8. They hire to “fill a gap.” It is not uncommon for sales managers to race through the recruiting process in an effort to quickly hire someone because they need a rep in place. After all, hiring reps is seldom a task that managers enjoy. In these situations, managers focus on the positive aspects of the applicant and neglect to see their possible shortcomings. This often leads to “hiring remorse” once they discover that the rep is not entirely suitable. A bad decision in hiring a new sales rep can cost you builders and millions in repeat sales.

9. They allow interruptions during the interview. Sales managers have dozens of tasks and projects on their plate at any given time and often allow other staff including their assistant to interrupt them during an interview. Effective interviews must be conducted without distractions and interruptions.

10. They only interview people who have industry experience. Many people are fully capable of performing well in modular housing industry providing they are suitable fit to your particular sales environment. Industry experience brings baggage and preconceived idea. Candidates who do not have modular experience often bring a new perspective to the sales role. But they will fail miserable without organized training.

11. They do not get second opinions. Interviewing a sales rep requires more than one perspective. Effective sales managers get other people in the company involved in the interviewing process and they compile all of the feedback before making a hiring decision.

Avoid these mistakes and improve your chances of hiring a top performing sales person.

5 Etiquette Rules for Successful Modular Factory Sales Reps

Etiquette isn’t reserved for just everyday social events, it needs to follow you when you talk with your builder by phone, text, email or in person. No matter how long you’ve been working with your builder, always remember to say “Thank You”, “Please” and “You’re Welcome”.


You have to remember you are on the end that receives the order and the money from the builder, not the other way around.

Care About Your Image
Dress appropriately for your sales position and your factory. I remember going to one of my builder’s jobsites to go over a small problem he was having. It was a very hot day in Virginia so I wore old shorts, a rather crude Tee and ratty looking sneakers. It turned out his customer was there to learn the solution to the problem but once she saw me refused to shake my hand. Lesson learned the hard way.

If your factory has paid for shirts or tops to be worn when you are on the road, wear them. Regardless of how you dress, make sure you are clean and well groomed. Before you walk out the door to go to work, look in the mirror and determine whether or not you look like someone you'd want to do business with.

Listen and Address Your Builder's Needs
It's annoying to most Builders when their salespeople doesn’t listen to them. Don't assume you know what the builder is looking for or interrupt as they try to explain their needs. Modular home salespeople need to give builders AND their builder’s customers the feeling that they care, and it's your job to help them with solutions to their problems.


Don't Try to Be Your Builder's Best Friend
While you need to get to know your builder, also know where to draw the line. Surely as the sun rises every day, one of these days you will have to tell your ‘best friend’ “NO!”

‘No, you can no longer get any discount’ or ‘No, we can’t have your house delivered when I promised’ or ‘No, you didn’t order your house in time to beat the increased pricing and there’s nothing I can do about it’.

Also don't assign cutesy nicknames to your builders, tell them company secrets, or say more than they want to know about your personal life. Too much personal information can make your builder uncomfortable.

Be Truthful
Never misrepresent anything you are trying to do on their behalf with your factory. Lying will only come back to haunt you later. As soon as your builder finds out you're lying, he's likely to leave and never come back. Trust is essential when selling.

Don't Make Unrealistic Promises
If you can't deliver something on a certain date, don't pretend that you can. Let the builder know when you can have his house ready and offer to find a solution if that is a problem. Making unrealistic promises will break down all trust that you need to build a strong builder base.

Thursday, July 11, 2019

Thermal Bridging in Foundations and Footers

Exposed concrete foundations are notorious for glowing yellow on thermal imaging. All that concrete acts as a highway for heat to leave the building, and should be given as much attention as windows, balconies, and the rest of the building envelope.

Let us join the chorus of builders in emphasizing that it’s not just about heat loss.

When you have an uninsulated basement wall or slab, yes, you’ll certainly see lower interior temperatures. But the direct result of a lower interior temperature is not just a cooler space, it’s also an environment where condensation is likely to form. And no one wants a damp, dank, musty environment at the base of their building.

Recap: What is thermal bridging?

Thermal bridging (also called a cold bridge, heat bridge, or thermal bypass) is the movement of heat through a material that’s more conductive than the air around it. Thermal bridging can account for heat loss of up to 30%, so you can imagine the importance of addressing this when constructing your foundation! (Brush up on Thermal Bridging 101 here.)

Which materials act as heat highways, you ask? Steel, concrete, and wood (core construction materials) are prime offenders – and can’t really be avoided when building. But you CAN take into account some design considerations that will minimize thermal bridging, if not stop it in its tracks.

We’ve covered how windows are a prime offender for thermal bridging in your home, and we addressed some design considerations for decks, cantilevers, and balconies. Now, let’s drill down into foundations and footers. Challenges for foundations

If you’ve ever had a basement, you may have noticed that any musty smell becomes stronger in the summer months. That’s because the warmer, more humid air is coming in contact with cooler surfaces that are below the dewpoint of the air inside (more on dewpoint in a minute). Particularly guilty are rim joists, as they tend to run colder.

In a two-story home, basements can account for 10-30% of the home’s annual heat loss in winter – more for a single-story building. Let’s take a look at what’s happening where.

Heat loss
All the cement, studs, and supports that go into shoring up a foundation are perfectly primed for thermal bridging if you don’t take the necessary steps to insulate and construct appropriately.

You might think, “heat loss, no biggie for a basement.” But it’s not just about reducing energy bills and keeping temps comfortable. As we mentioned, because thermal bridging also moves condensation and wetness along those pathways, enter the potential for expensive damage due to moisture and mold.

CLICK HERE to learn more from the AE Building Systems blog