i need these answered below
1. What part(s) of the paper are the most effective?
2. What part(s) of the paper are the least effective?
3. What is the big idea?
4. List the major points of support that demonstrate the paper is evidence-based.
5. Which sentences or paragraphs seem out of order, incompletely explained or otherwise in need of revision?
6. Where are citations needed?
business planproduct
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DWELL Business Plan
Ryan T. Rasmussen
Department of Business, UMass Global
BUSU 640: Capstone
Professor Ginger Silverman
January 28, 2023
Section 4: Strategic Positioning
Strategic Positioning
The ADU marketplace is competitive where existing general contractors are beginning to offer turnkey home remodels to homeowners seeking to expand housing options through both attached and detached ADUs. The marketplace trends indicate that with loosening housing regulations, many ADU providers are also designing prefabricated dwellings offsite in an assortment of styles and sizes. The majority of the ADU marketplace is located throughout the Sun Belts states of California, George, Texas, and Florida. In fact, these states “account for half of the 1.4 million” ADUs located throughout the United States (Freddie Mac, 2022, para. 2). However, ADUs come with a price where they can cost upwards of $400,000 which is well above the national average to build an ADU which is between $100,000 to $300,000. Even though ADU construction costs in Southern California are relatively high based on the national median house price, these prices are only a fraction of the cost when it comes to expansion based on median home prices in LA, Orange, and San Diego counties ranging between $854,000 to $1,165,000 according to the California Association of Realtors (Los Angeles Almanac, 2022). Even though ADU construction is relatively low in comparison to the average median home price, homeowner budgets have been and continue to tighten due to a four-decade inflationary high where paychecks are eaten up at the gas pump and grocery store. With 3.8 million homes needed throughout America (Arnold et. al, 2022), Dwell understands that the ADA market is here to stay as Dwell launches its enterprise. With a housing shortage that continues to get worse throughout California and a need for lending in order for homeowners to afford an ADU, lending institutions are looking at ADU growth as an opportunity to take part in the ADU movement.
Dwell is posed to capitalize on these tremendous growth opportunities as California continues to further restrict local government regulations toward ADUs. Homeowners who tended to move away from urban settings seeking more square footage to accommodate growing families or seeking multi-generational floor plans are now looking at ways to enhance their existing properties due to rising interest rates and shorter commutes to work due to fuel costs and toll road fees. With homeowner budgets tightening, Dwell anticipates its workload to be centered on detached ADU spaces along with existing detached building conversions. These existing tenant improvements will provide affordability options that new detached builds may not offer to all homeowners. As the economy begins to improve, Dwell will be in a position to serve those clients seeking either new detached and attached ADU options that may otherwise be on hold due to 40-year high interest rates.
Dwell has strategically differentiated itself amongst its competitors by reclaiming and repurposing logistical shipping containers. With sustainable design, Dwell’s detached bungalows are fabricated off-site facilitating a project schedule that is efficiently controlled unlike traditional construction that can be thwarted by inclement weather and limited resources. Homeowners are looking to take the “hassle” out of building an ADU which is where Dwell can be successful by having a comprehensive understanding of state and local building ordinances while combining both design, innovation, and construction all within Dwell’s scope of work. By fabricating each personalized unit offsite, homeowners are not burdened by excessive construction noise and balancing their personal lives alongside construction schedules. ADU customers are concerned with the disruption that home construction can cause. They are also concerned with the reliability of contractors trying to balance several projects at the same which typically end in extended construction schedules that differ from the time they signed their contract. Prefabricated, off-site manufacturing is the future of ADU construction as remote work continues to take hold. With the majority of contractors still utilizing traditional on-site building methods, they will not be able to differentiate themselves from other contractors.
Technologies will also play an important role in ADU design and customer needs. With smart technologies such as remote entries, lighting and climate controls, and Wi-Fi, Dwell provides these features standard with each ADU purchase. Individuals who are looking at an ADU specifically for additional space or multi-generational living options demand modern luxury that derives from clean energy. Standard solar panel arrays come complete with Dwell’s ADU package as an effort to provide a net-zero carbon footprint. Other options such as electrical heat pump water heaters and split unit HVAC systems come standard with each Dwell design.
Dwell’s clients are reassured that their personalized dwelling also contributes to the global environment through the recycling of shipping containers. Any portion of Dwell’s shipping containers that go unused due to exterior openings such as windows and doors are properly processed, recycled, or repurposed for other steel products. Dwell’s ADUs come standard with solar roofing solutions and are strategically designed with environmentally efficient materials that help each customer who is looking to achieve sustainability, reduce carbon emissions, and ultimately contribute to less landfill use. As one article puts it, “sustainability can no longer be considered a niche. In fact, consumers demand and expect it from most aspects of their lives” (Miller, 2019, para. 2).
Another competitive advantage Dwell has is that more and more homeowners are spending more time at home due to hybrid or remote work opportunities brought forth by the COVID-19 pandemic. More than ever, as homeowners spend more time at home, they are now looking for ways to make their homes more livable with the space that they already have. With pre-fabricated ADU options that are built offsite, clients will have less interruption at home from project design to project completion.
With softening ADU regulations throughout the state, homeowners are now viewing ADUs as a strategic long-term investment. As property line setbacks become reduced, homeowners are now able to add both attached and detached ADU’s on their existing home lot. Individuals who may have held off on adding an ADU to their property due to affordability concerns or space constraints, are being to realize that rental income derived from an ADU can quickly offset the original purchase price. In fact, studies have shown that properties with ADUs are more marketable and “priced 35% higher, on average, than a home without one” (Realtor Magazine, 2021, para. 2)
Lastly, customers who select Dwell will be afforded a knowledgeable staff that exudes integrity and mastery as it helps its clients consider budget and design as they contemplate and undertake an ADU on their property. Dwell provides a turnkey approach to each of its customers by outlining the critical components required for each specific property. With an understanding that not all homeowners will fit in a one-size fits all environment, Dwell provides its clients with several modular designs in an effort to maximize client requests while working within the confines of each property. Dwell also prides itself on design flexibility as it pertains to its standard model offerings while also presenting customizable floor plans and finish options if requested.
Section 5 (Week 3)
Product & Service
As affordable housing shortages continue to loom over Californians along with rising interest rates, the California real estate market is quickly slowing as it pertains to new home sales and potential buyers who are looking to maintain lower property taxes all while reducing costs driven by inflation. With the help of new state legislature, “ADU permitting and construction has expanded rapidly in California” according to HUD User (2022). However, building ADU’s will require a long-term building approach from affordability and sustainability. Local governments along with consumers are looking to remove as much fossil fuels as possible through technological innovations and clean energy without jeopardizing luxury. Without a focus towards emerging green technologies in the construction industry, contractors will be left behind without the adoption of green building practices. By ignoring these practices, contractors miss an opportunity to design and elevate their customer’s long-term needs.
Through Dwell’s shipping container refurbishment program, they are able to purchase steel containers wholesale in an effort to minimize landfill waste. From both a structural and sustainable standpoint, Dwell clients benefit through the prioritization of equitable building practices. However, it does not stop with the shell of the ADU but is equally important when it comes to the core of the ADU. Customers in Orange County and throughout Southern California have an increasing appetite for both luxury and sustainability. Dwell recognizes these trends and offers each client the opportunity to design their ADUs according to the US Green Building Council (USGBC) Leadership in Energy and Environmental Design (LEED) green building rating. There is a growing trend in that various cities require new commercial buildings to be designed and built per LEED. Dwell understands this movement and will offer its clients a creative space that meets LEED to reduce long-term energy needs while providing a healthier environment for their families. Dwell’s owners are LEED certified and have designed their ADUs in a manner that provide savings through energy, maximizes value through potential insurance savings and other tax breaks along with improved health based on reduced airborne toxins and pollutants that LEED practices mitigate. As the USGBC puts it, “LEED helps create living spaces where people can thrive” (USGBC, 2022, para. 1).
Through the design phase of each Dwell home, clients will selectively choose through an assortment of regionally sourced materials that have 20% post-consumer recycled content. This not only benefits each customer but it helps to make an impact on the global market by minimizing efforts as it relates to the extraction of new building materials. From an energy savings approach, Dwell homes will come standard with solar panels to help minimize energy dependence. To take it a step further, each Dwell home will come standard with a Tesla Powerwall battery that stores energy during the day and provides power at night when Dwell’s customers need it the most. The Tesla name is well known in today’s market and with capabilities of monitoring and optimizing energy control via the Tesla phone application, Dwell customers can control their energy consumption remotely. In combination, each Dwell home will provide home automation utilizing the Google Home application for lighting, climate control, and home security. Entry door standard home security options include the Yale Assure Lock as well as the Google Nest Video Doorbell. For customers that are adding an ADU for short and long-term rental purposes, home automation and security are extremely important for renters to gain entry without the assistance or face-to-face interaction with the homeowner. With the advancement of the Internet of Things (IoT), “advancements in artificial intelligence, the smartest homes will be able to truly learn about their owners or occupants, eventually anticipating their needs” (Austin, 2019, para. 2). With the availability of connected devices currently available on the market, Dwell understands that each home must be carefully designed and developed with the use of these gadgets. Technology cannot be a forethought as it relates to design and must remain an important element in Dwell’s current and future design.
Based on Dwell’s research, ADU production has been very difficult to target with the majority of new ADU builds being located in larger cities closer to the coast. In fact, Salim Furth (2021) with ADU Academy suggests that the “access to jobs is the most important predictor” when it comes to ADU production (para. 7). With headquarters in coastal Orange County, Dwell is primed to take advantage of homeowners looking to expand their existing residence. With more than 30 companies with headquarters in Orange County, residents choosing to work close to home is a perfect opportunity for Dwell to offer home expansion solutions via their ADUs. Dwell will target homeowners with an age range of 35 to 60. The median age of first-time homebuyers is 36, with Generation Xers having the highest “median household income of $110,300” (Russell, 2022, para. 7). With an expanded age demographic, Dwell can target newly married Millennials looking to help offset monthly mortgage premiums with rental income and both married and single Generation Xers looking for rental income, home office space and multi-generational living for their aging loved ones. Younger Baby Boomers will also be targeted for those ADU customers that are looking for space for their children as well as creating a living space for in-house home care. In addition, Baby Boomers living on fixed income can add an ADU for rental income in order to help offset rising economic costs. Dwell’s largest focus group will be married Generation Xers based on higher median household income. In an effort to reach a greater market size, Dwell sees opportunities for growth within both the Asian and Hispanic communities where according to the Census Reporter (2022), Hispanics total 34% of the population in Orange County while Asian’s make up 22% of the population in Orange County.
Dwell will market its product through various programs in order to target both homeowners and residential architects. Dwell’s marketing mix will include: an interactive website, advertisements in magazines such as SoCal Design and Luxe Interiors & Design, architecture and design trade shows, word of mouth, and high quality photos and videos posted on social media sites such as Instagram, Facebook, and Houzz. Trade show advertising will be engaged through relationship marketing focused on architects looking to combine modern technologies in sustainable materials. Dwell will have an initial marketing budget between 8% to 12% of revenue in order to gain the attention of homeowners and design firms located throughout Orange County. Most importantly, having a website will be a critical marketing component so that consumers understand who Dwell is, their processes, their products, and the value received when purchasing a Dwell ADU. Dwell’s website will also serve as a resume by posting completed projects along with customer testimonials confirming their professionalism throughout the entire design and build process. Lastly, word of mouth marketing is imperative as consumers look to make one of the biggest investments when contemplating an ADU project. As part of Dwell’s core values, integrity will be the backbone of their word of mouth marketing. Dwell is committed to each customer throughout the entire process and will continue with this partnership via its 2 to 10-year warranty program. As more and more satisfied customers enjoy their ADU investment, Dwell understands the importance of its core values: mastery, integrity, and accountability. As Dwell moves from their product launch and moves into the growth cycle, marketing efforts will begin to move into Customer Relationship Management (CRM), in order to track data surrounding their customer so they can grow its business by understanding their current and future customer through new trends and preferences. From here, we will now take a look at Dwell’s marketing plan.
References
Arnold, C., Benincasa, R., Ganun, J., & Chu, H. (2022, July 14). There’s a massive housing shortage across the U.S. Here’s how bad it is where you live, NPR, retrieved from
https://www.npr.org/2022/07/14/1109345201/theres-a-massive-housing-shortage-across-the-u-s-heres-how-bad-it-is-where-you-l
Austin, P.L. (2019, July 25). What will smart homes look like in 10 years from now?,
Time, retrieved from
https://time.com/5634791/smart-homes-future/
Census Reporter. (2022). Orange County, CA., retrieved from
https://censusreporter.org/profiles/05000US06059-orange-county-ca/
Freddie Mac. (2022, September 15). Helping you leverage the ADU boom
, Freddie Mac Single-Family, retrieved from
https://sf.freddiemac.com/articles/insights/helping-you-leverage-the-adu-boom
Furth, S. (2021, June 10). The three facts of california’s ADU boom,
ADU Academy, retrieved from
HUD User. (2022, November 15). Making ADU development equitable in california,
Edge PD&R, retrieved from
https://www.huduser.gov/portal/pdredge/pdr-edge-featd-article-111522.html
Los Angeles Almanac. (2022). Median home prices southern California, retrieved from
https://www.laalmanac.com/economy/ec37.php
Miller, N. (2019, June 25). The increased importance of environmental sustainability in real estate,
Forbes, retrieved from
https://www.forbes.com/sites/forbesrealestatecouncil/2019/06/25/the-increased-importance-of-environmental-sustainability-in-real-estate/?sh=30c387337a13
Realtor Magazine. (2021, November 4). Study: adus can add 35% to home’s value,
National Association of Realtors, retrieved from
https://www.nar.realtor/magazine/real-estate-news/study-adus-can-add-35-to-home-s-value
Great article for statistics
Russell, J. (2022, October 10). At what age do most people by a house?,
MPA Magazine, retrieved from
https://www.mpamag.com/us/mortgage-industry/guides/at-what-age-do-most-people-buy-a-house/423391
USGBC. (2022). LEED certification for residential, retrieved from
https://www.usgbc.org/leed/rating-systems/residential
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