Forced to More Sales vs Forced Sales

Do you run your modular factory or home building business
like the rabbit or the turtle? Your answer says a lot about your future in the
modular housing industry.

“Grow or Die” might fit certain aspects of our lives but it
can be devastating in modular housing business.

There are modular factory owners that model themselves after
the rabbit. They push for more sales hoping to expand their territories. They
use tactics like huge discounts, sometimes as high as 15%, to acquire new business
while neglecting their regular builders. Some hire every sales person that is
available with a pulse and flood the market, having them hop from one area to
the next and never building a good relationship with any prospective home
builder.

There are modular home builders that hop from one market
scheme to another in relatively short time trying anything to get a sale. Some
will undercut their competitors just to make a sale and find out later that
they won’t be making money on a house, then only working on the house during
the down times and using less than expected building practices.

The “rabbit” business model will soon grow tired and have to
rest for a bit, probably because they have run short of cash to continue. Rest
too long and the rabbit will never want to hop again.

In the modular home industry, think less like a rabbit and
more like the turtle. If we were selling instant homes like McDonald’s sells
burgers, the rabbit model just might work well but in our industry things tend
to go in slow motion.

For the factory trying to bring in a new to modular builder,
that first house could take a year to get ordered. How many factory sales
managers have the patience to wait that long? Now add in the time needed to
produce the home in the factory and the 3 months for the house to get finished
and it could be up to 18 months before the builder turns over their first
modular home to their customer.

For the modular home builder, unless you live in an area hit
by a natural disaster or in a state that recently discovered huge natural gas
deposits, attracting a home buyer, working with them to write a contract and
then actually ordering the home from the factory and finishing it could take a
year or more.

Neither of these scenarios lends itself to the “rabbit”
model of doing business. Owners get frustrated, sales managers begin yelling
and screaming, sales reps begin searching for a new factory to sell for and
builders, tired of being asked when they are going to have an order ready begin
looking at going back to site building.

For our industry, the “turtle” may be the best option. If
that sounds passive and wimpy, consider the turtle’s approach to growth takes
greater wisdom, humility, and restraint than the rabbit’s and that the rewards
are more attractive and dependable.

Real growth is more
builders and their customers wanting more of what your factory offers. Any
other drivers like pricing, gimmicks, discounts, marketing gimmicks are
ultimately destructive. 

Both the factory and the builder need to focus on their
customer’s needs, working to create the healthiest company possible, one free
of politics and confusion that choke off teamwork and innovation. Keep
communications lines open. When you do
these kinds of things, growth will occur naturally but only if it’s meant to
be. You will be forced by your customers to grow your business.

However, some factories and builders simply aren’t meant to
be bigger than they are. There is absolutely nothing wrong with that. These
companies tend to be busy, happy and profitable without worrying about
continued growth.

When you are forced to take the rabbit approach in the
modular home industry by any means necessary, either because impatient owners
are demanding immediate results or because of a changing market conditions, be
careful you aren’t swallowed up by another company or worse, forced to close
your doors. Be grateful you aren’t at one of those rabbit companies (and if you
are, you deserve sympathy, not envy), because they are anything but role
models.

I have been asked what I think of Excel Homes’ growth by
acquiring All-American Homes, Mod-U-Kraf and most recently Keiser Homes in Maine. My answer is that
because they have used the “turtle” approach to modular home manufacturing,
they have been forced by their customers to continue to grow. Maybe the turtle
should be Excel’s mascot?

I look around our industry and see a lot of turtles but
there are some rabbits also. Only time will tell if any of those rabbits will
ever win a race.