It’s hard to believe it but this week we had to make the heartbreaking decision to wrap up HUCX, our prefab building company. After 10 years of effort we simply can’t make enough money to be sustainable. This is the hardest decision we’ve ever had to make but we need to make it now while we still have choices over what happens next.
I liken the experience to breaking up with a partner who you still love but you know you can’t be with. It’s the right thing to do for our family and our future but it feels so unbelievably sad. We're in mourning. While it’s easy to romanticise the idea, the reality is that with over heads of $20k per month, we simply can’t survive with the size jobs we’ve been doing. We need to pivot now while we still have our reputation, dignity and family intact.
Remember earlier this year when we moved factories and we managed to justify renting a larger, more expensive one? It turns out that the months of downtime it took us to physically move and renovate the new factory was too much for us to weather. Sadly, we never recovered as we’d hoped with multiple jobs being delayed and timelines blowing out.
Saying that cash flow killed us is an understatement. Cash flow obliterated us.
It doesn’t matter how incredibly innovative, important or necessarily your product is, if you can’t afford to run the business then you can’t be a business. The ATO really doesn't care if you have a great story to tell and believe me, I’ve tried to explain our grand plans to disrupt the affordable housing industry with our incredible product but alas, the computer says ‘no’.
We’re still reeling about just how quickly this has come about.
Up until a few weeks ago, even a few days ago things were looking good. There are jobs on the horizon and we’d had two jobs out the door. Unfortunately due to the nature of prefab, we have to front the full cost of the job unless clients are willing to pay 100% up front. This isn’t just a problem for us, it's a problem for all modern methods of construction with standard home loans from banks designed for traditional building milestones (slab, lock up etc) and not for 100% off-site construction. The risk of banks loaning 100% up front with nothing in the ground to show for it is a real problem. Us having to front an entire build before we get paid is a real problem.
The saddest thing for us right now, (other than sinking everything we’ve had for the last 10 years into this business) is letting people down. Our staff, the most loyal people we could ever have wished for. Our families and friends who have been so supportive. Architects and builders who want to work with us and our product. People who generously promote us as an up and coming Ballarat business. Everyone who believes in us and the kids.
Explaining to the kids that we can no longer build our home and will be selling the land to cover costs is devastating. I can’t even write it without my eyes welling with tears. Luckily they’re forgiving and understand that by not having a factory, they might gain parents who are less distracted. Less preoccupied by things they can’t control.
Just because this is the best decision for us today, doesn’t make it an easy one to make. The fact it has been so hard is testament to how much we have put into making HUCX work. I’ve written about ‘sunk cost fallacy’ before but this is some next level shit however I strongly believe we had to come this far to know when to stop. We had to travel on this path to get to whatever is next.
We tried our best.
I doubt anyone would argue that fact. We made 100’s of mistakes but we also created a customisable, prefab building system that could potentially make 1000’s of sustainable, insulated and affordable homes for families like ours. Who knows? In another timeline we might have got investors in early and made it happen. Jobs may have gone more smoothly and not taken more than 18 months to get started. We could ruminate all day about what went wrong but that isn’t useful.
Now, we need to be strong. We need to focus.
We need to face the consequences of our actions as well intended as they were. We’re doing our best to work with existing clients to reduce costs and impact on them. We’re organising how to sell everything so we can cover costs and make sure that everyone is content. We need to pay special attention to our amazing staff who were more worried about Matt than they were about losing their jobs which shows how compassionate they are. Words will never be able to express what their faith in us has meant. This conversation would’ve happened years ago if it hadn’t been for their unwavering support.
As for the next steps, honestly, we’re not sure what is going to happen. We need to take things one step at time whilst trying to do everything as quickly and painlessly as possible. There is nothing worse than a long, drawn out break up. Now the decision is made, we need to take action. The next few weeks are going to be tough but Matt and I can do it. We’ve been doing ‘tough’ for 10 years, physically, financially and mentally. In fact, in committing to this path, we’re both feeling lighter which is why we know it’s the right decision.
I’m looking forward to recalibrating our family and seeing where we next pop up for breath. Fingers crossed we arrive at Christmas without a mountain of debt and our reputations intact. This isn’t the end for us. Far from it. Hopefully without the stress of running the business, Matt will be able to take our software to the next level and that will be where we make our impact.
Participating in Future Shapers this year has taught me that I can make an impact in so many different ways. With or without a prefab building company. I’ve also learnt that good leadership isn’t about having the winning team. Making this heartbreaking decision to stop now will make us better leaders in the future and set us up for whatever is next. If the obstacle is the path then we must be on the right track because this is hard.
