Thursday, May 27, 2010

SELLING, BUILDING, SELLING..THE CYLCE CONTINUES

It doesn't matter if you are a modular builder or a site builder, you know that selling and building homes is cyclical. Building season is here but so is the selling season.

If you custom build homes you are aware that from the time of the first contact to the day you start the house an entire year could have passed. The actual building time is a relatively small part of that process. But did you realize that two building seasons and two selling seasons also happened over the course of that same year.

BUILDING SEASONS:
Using the northern half of our country as the example, the first houses of the new year are built when the first robins are sighted and the second wave before the first penetrating frost. These houses were sold between 6 and 12 months prior and during construction a lot of your time is eaten up with visiting jobsites, ordering inspections, meeting with your customers, working with subcontractors and actual physical work at the jobsite.

Your Spring start homes have people that want to move in before little Johnny gets out of school and they take their vacations. Your Fall start homes are people that want to be in before Thanksgiving.

If you only did 2 houses a year, one in each season, this wouldn't be a big problem, but we both know you won't make very much money on two 2,100 sq ft homes unless your Michele Kauffman who sells homes for $250 -$350 a sq ft. Let's assume your building 8 homes this year, that means that ideally you should build 4 in the Spring and 4 in the Fall. Like that ever happens!

Building 8 houses puts a lot of pressure to meet both the customer's goals and yours.
I remember hearing of one builder that knew he couldn't get the family in before Christmas but bought a lighted tree (powered by a generator) and a present for each member of the family (5), bought some sandwiches and other goodies and put them in the unfinished living room of their new home. He took them to the house about a week before Christmas and gave them a holiday that they still talk about to their friends. I really hope this isn't an urban legend!
Pressure and how you deal with it can make the biggest difference.

Building modular homes gives you a huge advantage over site builders in the time needed to set and finish homes as well as controlling costs and usually making more profit.

SELLING SEASONS:
As with building seasons, there are two selling seasons. The first is February through June and the second is July through November.

The people in the first season of the year want to be in by Thanksgiving and the second season people want to be in before school is out. YIKES!

But here comes the rub. Did you notice that the building season and the selling seasons happen at the same time? It's like the guy that had a bad furnace and a teenage daughter, when he watched one, the other one went out!

And to make matters worse, the buyers hold the timeline when it comes to signing the contract and starting the house. If they drag their feet in the design stage and again in the financing stage, your starting date keeps getting pushed back. Who do you think they will blame for not getting into their house on time...you got it...YOU!

So what is a builder to do to keep projects on schedule, market and sell homes and finally to make sure everything is going smooth at the jobsites? That's easy, they just have to clone themselves into 3 or 4 new people.

Not! What has to happen is delegation! If you a sole proprietor, the job is difficult but not impossible. You need to hire one good supervisor or one good sales/office person. And when I say good, I mean someone that can think ahead and with your best interests at heart. They are out there, especially in today's job market. Experience is the key here. Hire the best you can afford for the position, give them your guidelines and let them go. You must monitor their activities but that's a lot easier than doing everything yourself.
If you have built your business by being good at helping people realize their dream of home ownership and getting them to sign a contract for their new home, then that's what you need to continue doing. If you being "hands on" in the field is what brings customers to your business, then stay there and hire the best sales/office person you can find.
New housing starts appears to have hit bottom and predictions are that late 2010 and early 2011 will see things going back up. If you want to be part of that, you've got to plan right now for it. And cloning is not the answer.

11 comments:

Anonymous said...

Coach, when is the best time to buy a factory produced home? The winter of course. That is when plant production is historically at its lowest levels. The plants all need business and you are more apt to get a "deal" than during the busy summer months when it is hard to get a house at any price.
One of our problems in manufacturing, as with real estate in general, is how to fill in the sales valleys and smooth out the mountaintops to get an even production level. The answer of course is a well planned marketing plan - something unfortunately the majority of modular operations have long forgot. Until the current recession (talking about homebuilding) most modular operations simply road the market. When it was good - they prospered. When it was bad - they suffered. As a sales and marketing person I have beat my head against the proverbial stone wall trying to tell owners of modular operations what they needed to do to improve their business. (Coach, you know what I am talkinga about as your business is improvement of sales.) No one would listen and now they are suffering.
Tell me one modular operation for whom you have seen any advertisements or promotions. Tell me one modular operation you have seen out in the marketplace. Oh, some may go for a show here and there, but who even knows they will be there. They do not even promote their special events beyond sending a notice to their distribution network. I repeat what I have often said about the industry problems - WE HAVE IDENTIFIED THE ENEMY AND IT IS US!
But it can change, but change must start with the decision makers. Those who hold tight to the purse strings.

Coach said...

I agree with you about modular companies stepping up and going mainstream but there is one little thing that needs to change before any will do it.

The modular builder has to become loyal to a factory and not jump from manufacturer to manufacturer. The problem is two-sided. Builders can't believe what the factory tells them and the factory can't trust the builder to stay loyal.

It's a Catch 22 that needs addressed quickly if our industry is to capture a bigger share of the custom home market.

Anonymous said...

Coach, have you thought about why a builder will jump from one manufacturer to another? I have and I think a lot has to do with loyalty and support from the manufacturer. Plus, another main reason is IF THE MANUFACTURER SELLS TO A BUILDER BASED UPON PRICE to keep that builder they must always be willing to meet or beat the competitor manufacturers price.
Loyalty is a two way street and many modular companies do not practice what they preach. They are very often guilty of back dooring a builder by selling to other builders in their back yard. That does not build loyalty.

Elkhart said...

You are overlooking a couple of things. The reps are usually more interested in taking you out to eat and talk sports than helping you with your business. I don't think any of them have formal mod sales training. Most can't even tell you about how your house is built in the factory.
The other thing is that a bond has never been formed between the factory and the builder. If it isn't the builder jumping ship, it is the factory constantly changing territories and sales reps. A builder needs to keep looking for factories so they don't get ignored.
The first anonymous said you should buy from the factory during the winter when business is slow. It's slow in the factory because its slow for the builder too. Unless you are building spec homes, you can't dictate to a customer when to order a house. And who is going to pay for storing the house at the factory for 3 months until the last snow?

Frank at ProBuilt said...

Elkhart, I couldn't disagree with you more. Sure there are some bad apple "sales" reps out there but I cannot remember when the last time I was taken up on helping to provide and develope a business plan for a builder. It is a two way street, the builder has to be willing to accept constructive criticism. Over the years I've invested in myself and acquired a lot of formal training not to mention the training I received thanks to the manufacturers that I had worked for. Unfortunately I have never seen a bond formed with the manufacturer because the relationship needs to extend beyond the salesperson. There are many ways to accomplish this but you need to have the support from every department to make it work.

During the winter months successful builders still have a strong back log of orders, I can think of quite a few off the top of my head who fit into this category. This goes back to having a strong business plan in place to be able to carry you through these months.

Elkhart said...

Frank, Frank, Frank. Maybe in that wonderful world you live in where everything is coming up roses and builders have a backlog of homes to build but in mine I struggle every month to make ends meet and I've been doing this for a long time. Recession is not happening in your area? ANd I suppose your factory is running at capacity?
If it's winter I better have put enough nuts put away to tide me over until spring or i'm dead.
You may be the exception to the rule when it comes to helping your builders. Most of the sales guys I had were simply order takers and sports talkers. If I ever thought oneof them could actually help me with my business I would like that but I never found one. None of them had ever owned a business before and could not relate to my situation.
You are right about the bond needing to be formed with all the departments in the factory not just sales. But have you ever tried to get some of them to answer thier phone so you could talk to them. If i hear that you are in today but away from your phone one more time, I'm gone.

Anonymous said...

Elkhart you are 100% correct. Modular manufacturers talk a great game but when it comes to the rubber meeting the road they come up short! Frank at ProBuilt talks a good game, probably from his indoctrination by the company owner, but they alas also come up short.
I served a long tenure in the PA market as President of modular operations and I can tell you it is not difficult to set yourself apart from the competition. We did it with field based sales reps whose job was not just to sell orders but to promote our company. And they did it by face-to-face meetings with members of our distribution network. Plus, they MADE VERY DELIVERY of every house they sold. That was a major part of their job description. This caused the builders to believe in them and our company. After all most purchasers only get to know their sales rep. He is the face of the company.
How many of you have seen the President or GM in the field meeting their builders? How many of these top executives really know the members of their distribution network? Oh I am sure they may meet them when the come to the plant, but how many of them make an effort to go to the builders office, model home, or home to meet them on a personal basis, to take time to find out what his company is doing right and wrong. How many of them develop any type of relationship with their distribution network. Have you ever seen one ride along with a sales rep. I bet you seldom or ever see the Sales Manager ride along with a sales rep.
This is a major flaw in most operations. Top exec's sit in their big office shuffling papers and acting like big shots when their primary job is to HELP SELL PRODUCTS. I have found my best job as President was to help close deals, even if it meant spending time in the field.

Anonymous said...

Coach, I just found this on the web and thought you might want to find it and possible post on your blog. Basically it is a PR piece on Sheri Koones new book.

You'll Never Look at Prefab Homes the Same Way Again
What words come to mind when you think of a prefabricated home: Tacky? Low-rent? Run-of-the-mill? Down-scale?

While some stereotypes may have been justified in the past, a new generation of prefab homes blows these preconceived notions to bits.

In her latest book, "Prefabulous + Sustainable" author Sheri Koones demystifies and dispels negative myths about prefabricated houses by profiling 25 unique homes, showcasing how factory-built homes can be greener, more efficient, sturdier and more cost-effective than site-built homes.

For example, the house pictured left is Tucker Bayou, a modular house located in WaterSound, Florida by Haven Homes. It not only features contemporary luxury, energy efficiency, a down-home feel and a comfortable design with a traditional Southern fa├žade, but the house was “modularized” in just several hours

Anonymous said...

to the anonymous past President of a PA modular company and Elkhart. You are so right about salesman. If they show up at my office they usually just want to talk for a bit and then leave. If I have a house plan to review they will stay a little longer. But for the most part they can't wait to get going. I had a salesman that would show up around lunchtime and want to take me out to his favorite bar for something to eat. When I told him I was too busy he would make some excuse to leave early and I wouldn't see him for 6 months. I never gave him an order because I had another factory sales guy that at least showed some interest in getting an order and not eating.
And as far as meeting the factory president or sales manager, that only happened when I went to the facotry.
I finally found a good modular company in PA after 5 years of trial and error and the rep is OK.
I built 11 homes in 2008, 6 in 2009 and this year I will build 9. Even though the president of my factory has yet to call or visit me and I only met the Sales Manager twice, the rep keeps his word and the houses are well built.
Another thing that bothers me is all the sales guys and girls calling me trying to get me to give them a house to quote. They always want to know what price they need to beat. There isn't a week goes by without at least one salesman calling wanting to send me something or drop in to see me. I'm taking the word modular off my website and maybe they will stop calling. Why don't they call builders that don't use modular yet?
I would like a factory to be involved in helping me with my business but based on the salesmen I met I wouldn't let them help me estimate a garage. They wouldn't know how and will probably never be given any training by the factory they work for.

Anonymous said...

Last Anonymous - unfortunately you found the real world of modular housing the hard way - by doing business with run of the mill modular operations.
Too many modular companies do not understand their success is the success of builders like you. They do not understand they must invest in YOU. An investment in time and energy to help you be successful. An investment in demonstrating to you they have your best interests at heart. And for a builder like you who builds in thick and thin times warrants a call and correspondence from the TOP EXECUTIVE to see what they can do to help and thank you for your business. The TOP EXECUTIVE should make a special effort to stop by and see you to personally get to know you and see what he can do to help you to keep your business on an even keel or perhaps to help you grow, if that is what you want.
If we would see companies practice these basic business principles we would not face losing good builders like you. At the least we would keep the bad taste from forming like it has done to you.
I congratulate you on your success and hope you keep using modulars are your building alternative.

Anonymous said...

As a manufacturer - or more aptly, a subcontractor to our builder - it is frustrating to read about the issues here. I empathize with the builder, and also understand the factory perspective. Our little business is trying to be better, different, reactive. In the past 18 months, we've made over 70 changes to production to build a better house. Many suggestions came from our builders, others from drivers, others from set crews. We pay to have new builders (sales and service people) spend 2 days with us to learn the people, culture, and finally the product. We've developed training for sales, service and set crews - all very well attended. Yet - we're still asked to meet the lowest priced competitor who doesn't invest in helping the builders. Worse, too many times price wins. It would be wonderful to find some reasonable medium, but until that happens, our business well keep trying.