Industry Voices

Adapt or die… That is the universal ultimatum, and retailers in the factory built housing industry are no exception.

Well, spring is just around the corner and for most of you, the snow is melting and the “season” is about to get under way. You have survived yet another winter and you are most likely looking forward to increased activity. But\ are you really ready? Are you really prepared to harvest as much business as possible over the next 8-10 months or are you going to suffer through another less-than-stellar year? Flourish or perish, the choice is truly yours. In this article I will give you what I believe to be the 5 essential elements for not only survival, but to actually be extremely profitable. That’s right… I said “extremely profitable”.

If history is allowed to serve as a teacher, then I am absolutely convinced that while the overall future of this industry may look a bit more challenging than you would like, there will be retailers who will make as much profit this year as the most successful retailers did when our industry was experiencing better times. Interestingly enough, whether you think this is possible or not, you will be right. What we do know is that we cannot “change” the economy, but we can certainly learn to be profitable within our economy. Some of the retailers, communities and developers that will embrace these 5 principles will have good years, others will have great years, but everyone will benefit.

The Status Quo

Before I share these 5 principles, let me first address what I see that is NOT being done. I see still way too many retailers or community operators sitting with their thumb up their proverbial derriere waiting for things to change. If that describes you, here’s the news… things WILL change… but not in your favor unless you MAKE something happen. Stop living under the illusion that the industry is in dire straights and there is nothing you can do about it. Tough times sometimes build character, but tough times always reveal character.

I see retailers all across the country trying to cut more costs by reducing marketing and advertising, reducing commissions, eliminating sales positions, and further reducing inventory. Understand that you cannot simply “save your way to prosperity”. Your revenues MUST outpace your expenditures and I am quite certain that the majority have cut all of the fat out of your organization and any further cuts will slice too deep.

What I am not seeing are enough retailers focusing on the other side of the equation and doing all that can be done to increase sales, increase traffic, increase conversion ratios and following up with current prospects.

Included in your “growth kit” you will find 2 fundamental strategies and 3 disciplines that you have to master. If you understand and embrace these 5 concepts, you will not only survive, but you will be more profitable than you can imagine at this point. First, the 2 basic beliefs:

1st Basic Strategy: Think Small

What I mean by thinking small is to begin developing and structuring a business model that is based on gearing down your operation to a size that is concurrent with your current market. This restructuring of your business has to be based on what is often referred to as a “break-even strategy”. In other words, it is about putting plans into place that allows your organization to be profitable in virtually any market. Keep in mind that markets have always been cyclical. You can be profitable in any market as long as you are prepared to operate within that market and as long as you know what your fixed overhead is and you know how much you need to sell in order to break even and even make money. If you’re struggling with this issue, I would suggest calling Chad Carr at Rainmaker Software (563-359-4441 or chad@getrain.com). I know of no-one who is as adept and knowledgeable about explaining and helping a retail builder implement this very timely and powerful business strategy.

2nd Basic Strategy: Don’t try to “Save your way to Prosperity”

Understandably, one of the first reactions a small business owner has when times get tough is to reduce overhead. One must realize that reducing overhead without having a plan of how to most effectively apply the money that you DO spend, often does more harm than good. If your cutting out the fat in your organization, that’s great. We should do this regularly. If you’re cutting into the muscle of your organization, that can be detrimental, and if you cut off your legs, that can be devastating. When times are tough, you don’t need LESS advertising, you need more EFFECTIVE advertising. You don’t need LESS inventory, you need less DEAD inventory; you need inventory that has a proven track record. In tough times you don’t need LESS sales people; you need your sales people to be more PRODUCTIVE.

1st Discipline: Prospect Acquisition

It is absolutely essential that you have a comprehensive marketing strategy that will put you and your organization in front of every prospect that is shopping for your product in your market place. I realize that all of you have walk-in traffic, and drive-by is a great source for prospects. Many of you spend a great deal of money on increasing your curb appeal and I applaud you for this effort and foresight.

According to our research 87% + of all prospects begin their shopping efforts on the internet. If you do not have a “visible” presence on the internet, you will never see those prospects unless they happen to drive by your location. Having a website is great for promoting your business on the internet, but in order to drive people to your website, you must MARKET YOUR WEBSITE and most business fail to do so.

2nd Discipline: Customer Conversion

Once you have the number of qualified leads you need, it is absolutely essential that you have a specific, documented and measurable process by which you fulfill the inquiries you get from the internet or via phone calls. Here is what you need:

1. First, you need a process by which you get these inquiring prospects to your store.
2. Second, you need a Sales Process by which you convert the largest number of these prospects into homebuyers. After all, this is the essence of our business.

According to our research, if all other requirements are met as they relate to the sales process, 30% of the prospective home buyer will make a commitment on the very first visit to your location. That means that 70% of the prospective home buyers will either not buy at all, or make a commitment to someone at some time in the future. Your sales people must have the ability to build enough of a relationship and have a specific follow-up methodology in place so that these other 70% of prospects actually will respond when the sales person follows up. There are too many sales people that have all but given up on following up with prospects because their prospects either don’t take their calls, return their calls, show up for appointments and, obviously rarely come back to buy.

Your effectiveness in your follow-up efforts is in direct correlation to your ability to build a strong relationship with your prospect while they are in front of you.

3rd Discipline: Prospect Management

We are living in the Information Age, which simply suggests that he who gathers the most information, who can analyze this information and who can manage this information… WINS. At least they will win more often than those who do not.

We also know that sales people today are busy, or at least they should be. Sales people should only be focused on two things:

1. they should be either in front of a prospect, or…
2. they should be busy trying to get prospects BACK in front of them.

I think you get my drift. Sales people should be selling. As I stated earlier, because such a large percentage of prospects are not going to make a buying commitment until a later time, sales people are required to stay in front of and keep up with a fairly substantial number of prospects at any given time. This is virtually impossible unless you have some type of technology working on their behalf. At the very least, not having such a technology is horribly inefficient. Also realize that sales people by default are only going to keep up with people that they believe are going to buy in the very near future… ones that they can SELL. The rest, I’m afraid will fall through the cracks, not because they’re not going to buy, but because your sales person believes that they’re not going to buy in the immediate future. Again, a good prospect management system will avoid losing prospects and increase your sales. If this is an issue, visit www.getrain.com and you will find some really great information.

So there you have it.

While the industry outlook may be less stellar than we would like, there are few, if any, reasons why you should not be very profitable as long as you plan to be profitable and you position yourself to be profitable. Think small, spend wisely, attract quality leads, sell the ones that will buy today and stay in front of those who are not yet ready to make a commitment. Sounds simple… but rest assured that those retailers, developers and community operators who are going to experience high profitability in the next 2-3 years, and I have several clients that are expecting record years, will be paying attention to the 2 basic strategies and the 3 disciplines I just discussed. They will not perish, but they will flourish… and you have the same opportunity.

My gift to you…

For those who do not have as effective and efficient sales process as you would like in place, over the next few months I will be offering a step-by-step sales training program which will be easy to understand and even easier to follow. In appropriate sequence, with each article I will address one step of the sales process and give your sales people a sure-fired system for closing more deals in less time. If you will print and collect all of these 7 articles and keep them in a binder, you and your sales people will have a brief, but poignant sales methodology in place. Follow it and succeed. This is my gift to you, but what you do with it is entirely up to you.

Conclusion…

The ONLY thing that will bring our industry out of the doldrums is enough retailers and sales professionals just like you will step up to the plate and be committed to doing all that they can to knock every ball out of the park. You and others like you ARE the industry.

I, and many others like me, are deeply committed to helping you prosper and our passion for this industry is as strong as ever… but we can’t do it for you. I know you want to not only survive, but also prosper, otherwise you would not be searching through this highly informative website nor would you be reading this article.

So in 2010, let’s lift the bat off of our shoulders and swing… swing hard and swing accurate… and let’s for once, claim our rightful place in the affordable housing industry.

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John Underwood has been a sales and sales management consultant in the factory built housing industry for over 25 years. During that time, he has helped literally thousands of sales people reach the level of performance they wished to achieve.

He is also the author of “Scratch Selling: 18 Lessons Golf Will Teach You About Sales“, an author for numerous industry publications, as well as a past member of the Executives in Residence program at the University of Arizona where he spoke on sales and marketing issues.

Mr. Underwood is available to work with your retail organization or community to help you build a more effective and efficient sales organization. He currently resides in Naples, FL and can be reached at:

John A. Underwood
380 Stella Maris North
Suite 2607
Naples, FL 34144
Cell: 520-241-9907
Office: 239-393-0465
sellingedge@aol.com

Given the continuing decline of the manufactured housing industry and the related loss of affordable housing opportunities for moderate and lower-income American families, the attached February 23, 2010 MHARR WASHINGTON UPDATE — REPORT AND ANALYSIS, addressing the following issues, is a must-read in order to be fully up-to-date regarding these important matters:

• MHARR And FHFA Officials Meet On Private Financing
• MHARR Members Brief Congress On Pressing Issues
• No Time For More Costly Regulation
• Energy Regulation Catching Up With Industry
• MHARR Refutes HUD Position On Administrator

Click here to read the entire articles

Manufactured Housing Association for Regulatory Reform
1331 Pennsylvania Ave N.W., Suite 508
Washington, D.C. 20004
Phone: 202/783-4087
Fax: 202/783-4075
Email: MHARRdg@aol.com

As an industry we have done a remarkable job of designing a product that consumers need, but what I am seeing is most consumers don’t know we offer that product. The stereotypes of “trailers”, “mobile homes” and “sales lots” drive away many people who could really benefit from what we do. This includes everything from the most affordable housing to amazing estates we all would love to live in. There has always been a lot of talk about doing an image campaign (and the cost) but maybe this is an idea who’s time has come by taking a different approach.

I’ve never been very good at doing what everyone else does – that’s why I became a Lifestylist instead of a traditional designer or merchandiser. Consumers want more than just a decorated house – they want a home that reflects their lifestyle. This takes a little more time and research but it shouldn’t cost anymore – it might even cost less. I also really believe in spreading the word about the great things my clients are doing as well as talking about trends and ideas that can help everyone. I don’t charge my clients for this – I consider it a service and part of my cost of doing business. I also go to trade shows, events and do work in the site built industry so I can bring back more than “what we’ve always done” as an industry.

This week I got invited to a meeting of the Social Media Club of Dallas. In a few hours I met some amazing new people who I was able to share the message of factory built housing to and they shared with me the importance of social media. Social media by definition is the various online technology tools that enable people to communicate easily via the internet to share information and resources. Social media can include text, audio, video, images, podcasts, and other multimedia communications. These include Twitter, Facebook, YouTube, FourSquare and blogs. For $20 (which included dinner) I learned what to expect from these groups and how to make them work for myself and my clients. They shared case studies that had mind boggling results.

What really made an impression is how easy and cost effective it could be if the members of our community came together and started using social media to promote our industry. There would be minimal or no cost and think about what could happen if every person who benefits from being in our industry got on Facebook or Twitter and started telling the world what a great product we provide. Is this the ultimate answer to change our image? With technology changing as quickly as it does it might be the solution we have been looking for. At least we would be doing something and getting our community connected.

Tony Kovach has done an amazing job in a short period of time sharing the message and bringing the community together with his Manufactured Home Marketing Sales Management site. It is always full of great information and he is always updating what is there and keeping the message current. And I think his idea of having a Virtual Louisville Show© is right on trend. I attended most of our traditional shows for the past 8 years and the last two have been painful as far as attendance and sales. We designed some beautiful homes but it was like having a party and no one came. What a great opportunity for the factory built industry with a virtual show to take back our place in the market as an innovative, cost effective and green way to build. I know I’ll be attending this virtual show and will also be tweeting and blogging about it.

Let’s get this party started and get connected. You can find me at:

Twitter: @homeideafactory
Facebook: http://www.facebook.com/pages/LifestylistDesign/104907317529?ref=search&sid=1370651794.2078388608..1 (or search LifestylistDesign)
Blog: www.aboutmodularhousing.com

See you at the show!

Suzanne Felber

We all get just 24 hours per day. How do you spend invest your time?

William Matchneer, HUD’s Associate Deputy Assistant Secretary for Regulatory Affairs and Manufactured Housing addressed over 100 members at MHI’s Winter Meeting on February 2 in Savannah, Georgia. Matchneer outlined the Department’s priorities for the manufactured housing program in 2010 as follows:

• The long awaited proposed rule on the new Title I loan insurance will be published within the next few weeks.
• A Manufactured Housing Lenders Summit hosted by FHA Commissioner David Stevens and Congressman Joe Donnelly (D-IN) will be held to find solutions to the financing issues affecting this industry.
• Action will be taken to protect preemption of the HUD code by publishing a proposed rule on the changes recommended by the Manufactured Housing Consensus Committee (MHCC) and it would be in the industry’s best interest for this to be on a three year cycle of code changes consistent with other nationally recognized building codes.
• Changes to the MHCC by-laws and rules as prescribed by the Federal Advisory Committee Act were finalized to improve the MHCC process.
• Efforts will continue in working with manufacturers to provide technical assistance to update manufacturing plant quality assurance manuals. He emphasized that HUD is not viewing these actions as an enforcement issue, but rather an opportunity for HUD to serve as a resource to assist manufacturers in putting updated quality assurance procedures in place.
• A proposed rule to Manufacturer Inspection and Certification Requirements and Primary Inspection Agency responsibilities (24 CFR Part 3282 Subparts E and H) will be published by this Summer.
• Serious and thoughtful review of all comments submitted to HUD in response to its proposed rulemaking on the SAFE Act will be made. Matchneer encouraged everyone to submit comments to the proposed rule by February 16.
• The non-career administrator position will not be filled in the next few months due to budget constraints. He assured members that we have an excellent industry advocate in FHA Commissioner David Stevens who is a highly regarded official. Matchneer is the industry’s point person at HUD. He knows how critical these issues are to the industry and is there to help. He encouraged members to continue to work through the MHI staff with which he has a great working relationship.

Other topics discussed at the Winter Meeting were weather radios, Energy Star Tax Credit extender legislation, pre-1976 replacement home legislation, FEMA emergency housing and financing issues. The two-day meeting concluded with a meeting of the MHI Board of Directors. Resolutions were passed on the SAFE Act and federal preemption. MHI will be working hard during the upcoming months on these critical regulatory and legislative issues.

MHI is the the preeminent national trade association for manufactured and modular housing industries, representing all segments of the industries before Congress and the Federal government. From its Washington, D.C. area headquarters, MHI actively works to promote fair laws and regulation for all MHI members and the industry. For more information on MHI, visit www.manufacturedhousing.org.

Senior HUD officials, at a December 2, 2009 hearing of the House Financial Services Committee, were asked why the non-career Administrator position for the HUD manufactured housing program — authorized by Congress as part of the Manufactured Housing Improvement Act of 2000 — is vacant and has been vacant for most of the past ten years. When they answered that such “Schedule C” appointees were more urgently needed elsewhere and that manufactured housing did not merit a Schedule C appointee, a Committee member asked whether Congress had been “wrong” or “stupid” to provide for a non-career program Administrator. While HUD had no response, the industry itself had better have a firm grip on why Congress wanted a non-career official to head the HUD program if it is to have any hope of securing such an appointment and the significant benefits that Congress intended to result.

For ten years, the tendency has been to focus on the non-career Administrator as a regulatory position. Thus, Congress — in response to program deficiencies that had been exposed over a nearly 25-year period — authorized a non-career Administrator to ensure a transparent and accountable manufactured housing regulatory program that is responsive to its stakeholders, senior HUD management and the public at large. And while this view is accurate – as far as it goes — it is much too narrow and misses many of the key reasons why Congress concluded that the HUD program must have an appointed non-career Administrator.

In addition to being a regulatory position, the non-career Administrator is, even more importantly, a policy position with critical policy functions that parallel the main goals of the 2000 law — (1) ensuring the fundamental reform of the HUD program; and (2) ensuring the full recognition and treatment of manufactured homes as housing, rather than “trailers,” both within and beyond HUD.

First, Congress correctly anticipated that key reforms of the 2000 law would be resisted by career regulators at HUD. It thus provided for a non-career appointee to head the program and act as a guardian for every other program reform included in the law, in order to ensure their full, proper and timely implementation. Consequently, it is no surprise that, in the absence of a non-career Administrator, the implementation of multiple reform aspects of the 2000 law has been — and continues to be — obstructed, minimized, ignored, undermined, altered, delayed or rolled back. Indeed, the track record of the last ten years shows — as Congress is now beginning to understand — that without a non-career Administrator, the fundamental character and culture of the HUD program will not change and the program reform and modernization envisioned by Congress will simply not occur.

Second, and even worse, the absence of a non-career Administrator leaves the industry and its consumers without a seat at the policy-making table in Washington, D.C. The 2000 reform law established the non-career program Administrator to act as the lead advocate for “the acceptance of the quality, durability, safety and affordability of manufactured housing” under section 620 of that law. This advocacy role extends well beyond the HUD regulatory program — to issues including parity in financing, placement, utilization and acceptance, among others – and was designed to ensure, at a minimum, that manufactured housing and consumers of manufactured homes would have a full and equal place in all policy decisions at HUD and in all HUD housing programs, during every Administration.

Without a non-career Administrator to interface with each presidential administration at a policy level, however, both manufactured housing and the HUD manufactured housing program have effectively been segregated from the senior political leadership and decision-makers at HUD, and frozen out of the mainstream of that agency. As a result, manufactured housing has remained under the control of career regulators and an entrenched enforcement contractor who are not interested in change and are more concerned with the nuts and bolts of regulation rather than effective policies that promote the availability, utilization and financing of affordable manufactured housing. Manufactured housing, therefore, does not show-up, either literally or figuratively, on HUD’s policy radar screen and remains today — as shown at the December 2, 2009 congressional hearing — a second-class “step-child” at HUD.

A small but telling example of this disconnect is HUD’s internet website. The initial page has direct links to a multitude of housing programs, but no reference whatsoever to manufactured housing, no indication that either HUD or the Federal Housing Administration (FHA) even have programs for manufactured housing, and no direct link to either program. Thus, the nation’s leading source of affordable, nonsubsidized housing is not even acknowledged by the primary public information resource of the federal government’s housing agency. And while this might seem minor, in itself, it is a symptom of the broader exclusion of manufactured housing from the mainstream at HUD and illustrates why the HUD manufactured housing program and the HUD Code manufactured housing industry are both in a state of severe decline.

Some may contend that a non-career appointee is heading the program, because HUD’s manufactured housing office falls under the jurisdiction of the Assistant Secretary for Housing. And while, again, this is true as far as it goes, the reality — as confirmed by repeated experience over the course of 35 years – is that these officials, with extremely broad responsibilities, cannot, do not, and do not want to get involved with the unique complexities and intricacies of the manufactured housing program, on a policy or any other level. As a result, the Assistant Secretaries, historically, have simply gone along with the decisions and recommendations of career program regulators and program attorneys within the Office of General Counsel. This is a far cry from the independent, non-career appointee envisioned by Congress, who would be immersed in manufactured housing 24-7, have direct contact with each Administration, and the latitude, freedom and will to alter the status quo as necessary — instead of being part of that status quo.

Similarly, many within the industry a about the importance of a non-career Administrator for the HUD program and the need to fill that position as quickly as possible. Unfortunately, though, except for MHARR – representing the industry’s smaller businesses that are the most directly and negatively impacted by the program’s decline – no one has done any heavy lifting on this issue and others, in fact, are helping to preserve the status quo. And while MHARR will continue to leave no stone unturned in its effort to have a non-career Administrator appointed, others who thus far have paid only lip service to this matter need to recognize the far-reaching negative implications of not having a non-career appointee in charge of this important housing program.

In MHARR’s view, every possible effort must be made to secure a non-career Administrator for the HUD manufactured housing program and bring the HUD Code industry to the policy table in Washington, D.C.

Read MHARR’s latest news release on this subject »

MHARR is a Washington DC-based national trade association representing the views and interests ofproducers of federally-regulated manufactured housing.