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July 2020 #12252 Page #92
Are You Prepared to Build a Modular Factory?
By Gary Fleisher
O
ver the last couple of years, a lot of new modular home factories have either opened their doors and are taking orders or are in the process of opening.
It’s inevitable that many businesses fail in the first 3–5 years for a myriad of reasons, mostly from being underfinanced and/or poorly managed, so some of these new modular factories will be no exception. But that doesn’t have to happen, especially if you’re well prepared and know the basic points needed to at least have a fighting chance of success. Here is a list of 17 points you need to add to your company’s playbook. There are probably more, but these should get you started on the right path. 1. Determine the type of factory you want to be. Sounds simple, doesn’t it? It isn’t. Will it be a direct to builder factory; one that sells to builders and retail customers; a factory that only sells to the builders that invested in it or maybe a factory that specializes in a certain type of building envelope such as affordable housing or hotels? 2. Develop a Break-Even Analysis to determine if your factory can actually make money. Many people jump into a new business with hopes and dreams only to find out that neither of these actually puts money in the bank. Preparing a break-even analysis costs very little and could mean the difference between long-term success and short-term failure. 3. Prepare a Business Plan. No matter how many times you hear me say it, this is the most important part of any startup. In fact, it is the most important part of any modular business. If you can’t write down what you are going to do in an organized fashion with measurable benchmarks along the way, you are simply going to be on a fast track to ruin. 4. Find a source of funds. Unless you and/or your fellow investors are putting in all the money needed to open and maintain the factory until it becomes profitable, you will need to find someone with money who wants to invest in your dream. Investors want to see a Business Plan and a BreakEven Analysis. Go back and re-read steps 2 and 3. 5. Develop a Marketing Plan. Who is going to buy your homes? What is your target market? How far will you deliver your homes? Where will you advertise? Don’t wait till the last minute to get started on this. This is how you begin growing your business.
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