After thirty years of walking into a modular factory, I ask myself the same question: Is this place truly a small business, or is it more like a hobby that just happens to produce a few homes? The answer isn’t always as obvious as it seems. Production volume, financial planning, and even intent all play a role in defining what a factory really is. And when it comes to survival, the difference is everything.
The Small Business Factory
When a modular plant is building three or four ranch homes or two or three two-story homes each week, it’s operating like a small business. Dozens of employees are on the payroll, materials are moving in and finished homes are rolling out, and the line is humming most days. The factory is carrying the weight of regulatory compliance, inspections, taxes, and supply chains while meeting the demands of multiple builders or developers.
At this scale, the numbers can work. Volume spreads overhead, and even modest margins can start to add up. If the owners have a solid business plan and a marketing strategy that keeps builders in the pipeline, the factory has a legitimate chance to grow. But here’s the catch: without those plans in place, the factory quickly stalls. Volume alone doesn’t guarantee survival. Without discipline, focus, and the ability to adapt, even a small business factory finds itself struggling to cover costs and retain talent.
The Hobby Factory
Now picture a plant producing just three or four homes a month. On paper, it looks like a business: the company is licensed, workers are employed, and homes are being built. But in practice, it operates more like an expensive hobby.
The economics simply don’t work at this level. The insurance bill, the mortgage on the building, the utility costs, and the payroll all arrive on time, regardless of how many homes ship out that month. When the line only moves a few times in thirty days, the very advantage of modular construction—efficiency through throughput—disappears. Unless the homes are luxury builds with enormous markups, margins collapse, and the operation limps along as little more than a workshop.
The Brutal Truth
What makes the difference between a business and a hobby isn’t just production numbers. It’s the plan behind them. Factories that succeed know their markets, secure commitments from builders before the first panel is cut, and put as much energy into sales and marketing as they do into production. They plan for years ahead, not just for the next few orders.
The ones that fail rely on hope. They assume that orders will appear if the product is good enough. They lean too heavily on a single customer. They confuse passion for planning and enthusiasm for strategy. I’ve seen more than a few of these so-called factories close their doors within two years, and too many others plateau because the owners believed that production alone was the path forward.
Asking the Hard Question
So here’s the question worth asking: if a modular factory is producing just a few homes each month, is it really a business—or is it a hobby dressed up as one? And more importantly, can either model survive long-term without a clear business and marketing plan to push beyond the startup phase?
The brutal truth is this: without a strategy, the size of the factory doesn’t matter. Whether you’re producing four homes a week or three a month, the clock is already ticking, and it always runs out faster than you think.
If your factory fits the hobby model today, what’s your plan for turning it into a real business tomorrow?
Bill Murray, experienced Advisor to the Offsite Construction Industry
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