After watching too many respected modular factories walk the Seven Stages of Slow Suffocation, you’d think someone would have invented a cure by now. But here we are—2025—and the pattern keeps claiming victims. Katerra isn’t the first, and it won’t be the last.

Half the factories that look “fine” today are mostly being held together with Excel spreadsheets, duct tape, and hope.

The good news?
The industry can break the cycle.
The bad news?
It requires doing a few things that modular owners hate more than paperwork.

Here’s how to stay off the insolvency list.

1. Stop Saying Yes to Projects That Can Kill You

The modular industry has a chronic disease: Yes-itis.

A big-name client comes calling, flashes a complex project, and suddenly the factory is agreeing to things it can’t actually afford to deliver. The press release always looks great, but the first invoice doesn’t.

Factories need a new rule:
If the cashflow model doesn’t work, the project doesn’t happen.

Yes, it’s hard to say no.
Yes, it feels like leaving money on the table.
But saying yes to the wrong project is how companies end up filing Notices of Intention while insisting they’re “just in a temporary crunch.”

You want to break the cycle?
Start with the bravery to walk away.

2. Cashflow First. Everything Else Second.

Modular factories don’t die from lack of work; they die from lack of cash.

The biggest myth in modular is that backlog equals safety. No—liquidity equals safety.

There are three cashflow rules modular companies must adopt:

• Get deposits, not promises.
  “We’ll pay on delivery” should be a red flag, not a selling point.
• Never accept payment terms longer than your supplier terms.
  If your client pays in 60 days and your supplier wants 30, congratulations—you’re the bank.
• Model cashflow weekly, not monthly.
  Modular companies suffocate in the gaps.

Breaking the cycle starts with knowing exactly when the oxygen runs low—and fixing it before the alarms go off.

3. Manage Change Orders Like Your Life Depends on It

Because it does.

A modular project without change orders is like a Monday without coffee: impossible.

The problem is not the changes—it’s the tracking. When a factory doesn’t price, approve, document, and collect on changes properly, it bleeds to death by a thousand cuts.

Better rule:
No approved change order, no change.
And yes, that includes small ones. Especially small ones.

4. Banks Aren’t Your Enemy—Unless You Ignore Them

Banks don’t like surprises.
Lenders don’t like friction.
And both lose their patience the moment covenants get close to tripping.

The factories that avoid collapse are the ones that communicate early, even when the news is bad.

Call it a preemptive strike.
Call it a courtesy.
Call it survival.

Because when lenders trust management, they give breathing room. When they don’t, they accelerate the fall.

5. Fix What Really Runs Your Factory: The Front End

Most modular collapses have nothing to do with production.

They start months earlier—during quoting, estimating, scheduling, and engineering.
Get those wrong, and the production line becomes a very expensive theatre where you perform mistakes in real time.

Factories need to tighten:

• estimating accuracy
• contract reviews
• design freeze discipline
• project launch procedures

You break the cycle by getting the front of the business right—not by hoping the back can save you.

6. Understand That Growth Is Not a Strategy

Modular companies often assume that if they grow fast enough, the problems will magically shrink behind them.

History says otherwise.

Growth multiplies problems.
Growth magnifies mistakes.
Growth accelerates the suffocation.

Before adding capacity, headcount, or square footage, every modular company needs to answer one question honestly:

Is our current system profitable at today’s volume?
If the answer is no, doubling that volume won’t fix it.

7. Do the One Thing No Modular Factory Ever Wants to Do: Ask for Help

Consultants, advisors, turnaround experts, fractional CFOs, outside estimators—call them what you want. But factories that survive rough cycles aren’t too proud to bring in someone who’s already seen the warning signs.

No one ever regrets calling before the collapse.
Everyone regrets calling after.

Breaking the Cycle Begins With Admitting It Exists

The modular industry has a pattern.
A deadly one.
But it isn’t inevitable.

You break the Seven-Stage Cycle by being more disciplined, more selective, more honest—and more prepared—than the companies that followed the pattern before you.

If the industry keeps treating insolvencies like lightning strikes, we’ll keep getting hit.

But if we finally admit the storm is predictable…
We might actually learn how to avoid it.

Our ultimate goal at Offsite Innovators is to grow our industry…we need your help.

If you’d like to explore this further, connect with Bill today.

Bill Murray, Co-Founder of Offsite Innovators