Thursday, January 26, 2017

Why Some Modular Home Builders Fail to Grow

There’s more than one way for a modular home builder to fail. They can stay in business but fail to reach their potential, or fail to get beyond mediocrity, or just fail to grow. Failing to grow is not necessarily a problem — if the builder is happy with where the company is.

But there is an uncomfortable place between big and very small, where the builder is still doing a lot of the work and still not making much of a living. It’s a feeling of going nowhere slowly.

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There are many reasons some modular home builders grow and others hit a wall. There are external factors like market size, competition and demand. But there are also internal factors that have to do with operations and leadership. In every industry including modular, there are builders that grow and dominate, while others stagnate or shrink and ultimately fail.

Here are a few factors that separate the two:

Being Complacent. How driven the builder. A small modular business is usually a reflection of the owner’s needs, desires and personality. Some owners want to take over the world, and some are happy just making a living. Still others just want to golf as much as possible. There’s nothing wrong with that unless you want your business to grow. Being complacent puts your business in neutral while others begin passing you by on their way to success.

Bringing on the right people. You cannot build a modular home business without the right people. This requires both a great hiring practices and the stomach to make the changes that become necessary as the business grows. This is easier said than done — especially when it turns out that people who were “right” at the beginning are no longer “right” in their roles as the company grows.

What good are high standards? It’s not enough to have high standards without implementing the control systems that assure those standards are met. Without the controls, builders will have good intentions accompanied by bad results.

Your customer attitude. Not the customers’ attitude but the company’s attitude toward its customers. Few things are more destructive than employees and subcontractors who regularly dismiss difficult customers as “crazy” and conclude that there is no way to make them happy. Subcontractors, paid by the builder are often abuse to the homeowner and disrespect the builder to the homeowner. The problem is that most crazy customers have sane friends, and word of mouth travels fast these days. Faster than a Trump Tweet.

Hating Change. It can be both a blessing and a curse for small modular home builders. New technologies can do many wonderful things but can also be overwhelming and expensive. Occasionally, they can be nightmares. This might be one of the biggest differences between running a large company and small one. Watching new housing regulations and codes being forced on our industry can be very difficult for a small builder. But there’s not much choice; the market does not stand still.

Stubborn Attitude. It was stubbornness that helped get the business off the ground, get through the learning curve, survive the housing recession and factory closings and cope with every problem along the way. At some point, though, dogmatic adherence can limit a builder’s ability to adapt to change and get to that much-romanticized next level. Policies and strategies that might have worked when you had 2 employees can be a detriment when you have 10. What happens to that stubborn attitude when the need to start hiring higher-priced personnel who have different expectations than a $12-an-hour employee.

I’m the Leader and don’t you forget it. Being a leader includes vision, courage, fortitude and attitude, all of which has formed your business. And don’t forget the biggest secret of all, the passion for being a modular home builder. It is the real secret: passion is critical, but it can’t make up for deficiencies in the other categories. We have all seen many builders fail in business, and they were all passionate. It is not enough.

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