There’s an old saying in the modular construction world: “If you want to end up with a small fortune, start with a large one and open a factory without a plan.” It gets a laugh at conferences, but the punchline hits a little too close to home for more than a few owners quietly watching their bank accounts shrink.
By year three, reality starts to set in. The fancy renderings have faded. The factory floor is scuffed and tired. Your GM has been through two operations and three project managers. And while your machinery is cutting panels at a record pace, your sales team is cutting corners just to keep cash flow alive.
If this sounds familiar, don’t worry—you’re not alone. But you should worry if you’re still telling yourself, “We just need one big contract to turn it around.” That kind of thinking belongs in Vegas, not in a high-overhead, logistically complex, razor-thin-margin business like offsite construction.
Year Three: The Hangover After the Party
The first year? Pure adrenaline. You’re launching! You’ve got ribbon cuttings, press coverage, maybe even a visit from a state senator who still calls it “prefab.”
Year two? You’re scrambling. Tweaking production lines, fighting for permits, navigating code compliance, explaining to a developer why their “affordable housing” project costs more than they thought, and begging your bank for a bigger line of credit.
Year three? That’s when the lights come on and the music stops. If your factory still isn’t making money, that’s not a rough patch—that’s a warning flare. This isn’t a storm you’re weathering. This is the iceberg. And unless you’re planning on going down with the ship, it might be time to admit the hard truth: you didn’t have a good business plan—or any real marketing plan—when you started.
“We Thought the Units Would Sell Themselves”
Bless your heart.
So many factory owners open their doors believing the world will beat a path to their modular doorstep. “We’re cheaper! We’re faster! We’re better for the environment!” But they forget the most important part—people don’t buy what they don’t understand.
Without a strategic marketing plan, complete with defined buyer personas, a realistic sales funnel, and consistent outreach, your factory is like a fully loaded semi-truck with no GPS. You may have all the tools, but you’re still lost.
But Wait, There’s Less!
If you built a factory before building a plan to fill the factory, that’s backwards. Production follows demand—not the other way around.
A good business plan asks hard questions:
- What product are we building?
- Who are we building it for?
- What are they willing to pay?
- How will we find them, convert them, and keep them?
And here’s the kicker: your plan needs to work even if the market takes a dip, interest rates spike, or your first two clients vanish with unpaid invoices. If your entire business model depended on one unicorn developer, guess what? You’ve just built a very expensive garage.
Sell It or Shut It Down?
No shame in closing the doors. It’s far better to pivot—or exit—gracefully than to let a poorly planned factory bleed you dry for another five years.
Selling is also an option. There are always dreamers out there (some of them just got a government grant!) who think they can make it work. Maybe they can. Maybe they’ve got the plan you didn’t. That’s okay.
In fact, if you’re reading this and nodding along—go find them. Call your broker. Sell the assets, pay off what you can, and walk away with dignity and your sanity.
Final Nail: Plan First, Build Later
The lesson? Offsite factories don’t fail because of bad weather, fussy clients, or even a shaky economy. They fail because the owners didn’t treat it like a real business from day one.
So here’s your checklist before you ever raise a wall or plug in a CNC machine:
✅ Real business plan, with pricing, cash flow, contingency
✅ Strategic marketing plan, not just a logo and a website
✅ Clear buyer pipeline—before the factory opens
✅ Team members who know the industry (or are willing to learn)
✅ Advisors who tell you the truth, even when it hurts
Otherwise? Enjoy your small fortune.
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Gary Fleisher, The Modcoach, writes about the modular and offsite construction industry at Modular Home Source.
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