If there's a recession on, these Victorian builders don't know about it. They have stopped advertising and expect revenue to almost double over the next two years. What's the secret?
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Entrepreneur: Jan Gyrn, Director
Company: Modscape
Business type: Manufacturers of prefabricated modular sustainable housing
Founded: 2006
Employees: 5 full-time, 3 casual and up to 30 subcontractors
Turnover: (2007 - 2008) $5M
Head office: Brooklyn, Victoria
Contact details: +61 3 9314 7769 E: info@modscape.com.au W: www.modscape.com.au
The Modscape Story
After eight years running their own project-management business - Gyrn and Larkey - Jan Gyrn and Dan Larkey decided to develop a new business in sustainable, prefabricated modular housing. The pair teamed up with Stefan Seketa and Paul Fellows to start Modscape in 2006. Gyrn says: "My father is Danish and I was always interested in European prefabricated buildings. Dan and I shared a passion for sustainable housing."
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Key learning points:
- Skill sets - Just because you know how to do one role - such as a project management - in a complex business like construction, don't assume that the rest - such as marketing or sales - must be easy.
- Subsidy addiction - Modscape is not dependent on government subsidies like the First Home Boost to keep it going. It sells because it is highly cost-effective, flexible and responsive to customer needs. But aren't those the ingredients to almost all business success?
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Gyrn and Larkey met while they were working for Multiplex as project managers on large commercial developments. They are directors of Modscape (with Seketa and Fellows) and also still run their project-management company. Gyrn says: "At the moment we are completing the west tower of the Southern Cross project in Melbourne which is worth $140 million and will house the new Australia Post head office."
Gyrn says: "Before we started Modscape we spent more than three years researching and analysing the market; we were interested in what was happening in housing overseas." Modscape combines prefabricated modular housing with modern design.
Gyrn says: "We blend sustainability with crisp architecture. We use structurally insulated wall panels and double-glazing on the windows, which give better thermal performance than a brick house. Every part of the building can be recycled." Building many modules in one factory also lessens the impact on the environment as Modscape can control material usage and minimise waste.
The Challenge
Selling a completely new model to the market.
The Solution
Modscape's combination of modular, prefab housing and environmental sustainability was a new market offering. Gyrn says: "We had competitors in each of those three areas but no one was offering exactly the same thing. Selling was always the biggest challenge; it should have been easy but it was difficult because there was nothing else like it on the market."
Gyrn and Larkey understood how to sell project-management services but they soon discovered that their new product required a new approach. Gyrn says: "We had a crash course in marketing and advertising. The website for our other business was something we referred people to; the Modscape website needed to drive customers to us."
Gyrn designed Modscape's first website and worked on its search engine optimisation (SEO) to direct online traffic to the site. How did it go? Gyrn says: "Not well. We recently had our website rejigged and paid a web consultancy, The Refinery, to sort out our SEO. More than 80% of our business comes through the website." As a result traffic has increased by more than 100%.
Gyrn says that when they started Modscape, they sought advice anywhere they could find it. "We had a friend who worked for Lonely Planet and asked him how they got their books out there. Any advice about selling products was useful."
The team set themselves six months to sell their first project - and did it in four months. Gyrn says: "Our first customer was a woman who worked for The Greens. She heard about us through some architects and really believed in what we were doing."
To get their business going, the Modscape team were prepared to try any project that came their way. Gyrn says: "Our first three projects were really challenging: a beachhouse with a concrete floor, a 10-module property to be transported to the Kimberley region and a modular home to be placed atop a seven-storey office building."
Modscape met all these challenges and decided to leverage off them. Gyrn says: "If you looked at how many hours we spent on each of these projects they probably didn't make a lot of money but we knew that each one provided a story. Word-of-mouth has had a huge impact."
Modscape employed a public relations company, Pinnacle Communications, to create a media kit and attract publicity. Gyrn says: "On our first project we heavily discounted extras such as the decking and finishes so that the home would look really special in photographs."
As a small business the Modscape team have felt drawn to working with other small businesses such as The Refinery and Pinnacle. Gyrn says: "There's a natural synergy when you're dealing with the owner of the company; there's more personal investment - we're all growing together."
The Federal Government's First Home Owner's Boost will end in 2009, cutting away some of the stimulus to building. What effect will that have on Modscape? Gyrn says: "Very little. We've only built one home for a first-home buyer; it hasn't been our target market."
The Result
Modscape is building modular lodges for the Peninsula Hot Springs Resort in Rye (Victoria). It also has five other commercial projects including low-rise apartments in various stages of development. Gyrn says: "Our backgrounds are in the commercial arena; it makes sense to apply this design to these projects."
Modscape's turnover leapt by 300% in the 2007-08 financial year and is on track to reach more than $15 million this financial year and $25 million in 2010. Gyrn says: "We have more than 40 projects a year at the moment; we don't need to advertise anymore."
The business has provided great personal satisfaction for the directors. Gyrn says: "To be able to create something from nothing, from the start to the finish, is rewarding. To think that we could build a house here [in Victoria] in a factory, then transport 10 different modules 4700 km into the Kimberley along dirt roads, across creeks crossings - and it worked. It's fantastic."