With the recent closings of modular building companies around the country, perspective business owners may wonder what does it take to own and operate a successful modular company. Although there may have been some legitimate reasons why the owners chose to close their doors, it is important for interested buyers and operators to know if there is a silver lining behind the clouds.
The following is a list of factors that perspective buyers may want to avoid if they decide they want to reopen one of these modular plants or open a new one.
Not Enough Money
This is the issue that will not only prevent an individual from opening a modular company, it will prevent them from opening any other type of business also. It does not matter how much you think it may cost to reopen a modular company, you will likely need at least three times the amount. This will give you the financial cushion you need in case there are any downturns in the housing market while you are opening your business.
Even though you will be competing against companies that are larger and more established, you do not have to act like it.
If you were to purchase a smaller modular company that did not have a lot of production capacity, you should not think small. Instead, think of your modular company as a company that offers customers personalized service, the type of service they would expect from a boutique.
If your company could attract quality builders who pride themselves on quality workmanship, potential customers would take notice and your sales would rival those of larger companies.
Owners Who Are Not Dedicated
When lenders are considering approving financing for any business, especially a modular company, they want to ensure the owners and management team are dedicated to making sure the business is a success.
Most management teams work very hard to keep the bottom line looking good to investors and lenders. This means that if you decide to purchase one of the modular companies that have closed, you need to be prepared to face the challenge by jumping in with both feet.
Remember, it is your money. So, why would you hand over control to someone who does not have a vested interest in the company?
Next to money, this is often one of the top reasons why these types of companies go out of business. When an owner notices that sales are slowing down, they will attempt almost anything to keep revenue coming in.
For example, a few years ago, modular companies noticed a decreased in residential sales, but an increase in commercial sales. Those who jumped on this bandwagon soon began sales were slowing in that sector. However, the companies who refocused their efforts on the residential sector saw increasing growth.
The moral of this is to stay with what you are good at, even when the market trends down.
Running a modular company takes dedication, patience and persistence. Avoiding the above-mentioned pitfalls can prevent your modular building company from going under before you get it off the ground.