When you get a moment between getting product out of the yard and answering questions from contractors and sales staff, close your office door and think about what you'd do if you could do it all over again. Start from scratch. Build a lumber business from the ground up. How would that vision, knowing what you know now, be different than what's going on outside your office?
This is not a frivolous exercise, but rather one that every business owner should do as part of strategic business planning. After all, times change–sometimes quickly–and injecting a little entrepreneurial spirit might be just what your business needs to succeed. "Getting back to the curious and creative mind-set of a startup widens your vision to more and other opportunities," says Darrell Zahorsky, a small-business information guide at About.com and author of the forthcoming book, "Starting a Small Business."
Of course, not all of us are startup types, with the personality cocktail to foster and execute an entrepreneurial mentality within the organization. Most lumber dealers are managerial types, nobly trying to keep their yards on an even keel, squeezing profits out of every shelf and extra turn out of their inventories. To suggest rewinding to a blank slate and making a new model profitable is not only madness, it's simply not in the DNA.
With that in mind, here's what you need to behave like a startup without blowing up the business and rebuilding. It'll still take some gumption, vision, commitment, and follow-through, but the prize is well worth the effort. And who knows? Like any exercise routine, it may become a habit that keeps your business in tip-top shape.
Basic Anatomy. If startups have one thing in their favor over existing businesses, it's that they have nothing: no money, no products, no customers, no burdensome overhead.
"The basic tenet of all startups is that they have to do more with less," says Karen Axelton, former executive editor at Entrepreneur magazine and now chief content officer of SMB Connects in Irvine, Calif., a content provider for small- and midsize-business owners. "For existing businesses, the lesson is to streamline procedures and practices that have become bloated or redundant."
One obvious challenge for a startup is generating a sustainable cash flow. While established lumberyards may have money coming in, Axelton says, taking a fresh look can tighten up that financial benchmark.
"You can get into ruts as you grow, with both customers and suppliers," she says, referring to dealing with chronically late-paying contractors and relying on suppliers to set payment terms for what the business buys upstream.
In fact, as the credit crisis tightens lending practices, even for established businesses, a dealer should tap both sides of a supply channel for a little extra working capital–a practice that startups must employ in lieu of wary lenders. For dealers, the practice is simply smart business.
"Offer incentives and discounts for customers who pay early and in-full," says Bill Allen, a volunteer counselor in the Orlando, Fla., office of SCORE, a non-profit national consulting consortium for small businesses. "And don't assume you are getting the best deal from your suppliers. Test and review those relationships" to get longer and better terms.
Allen also warns against the business drifting away from the initial vision and plan for success, something to which thriving startups generally adhere. The drift, he says, can cause inefficiencies and a loss of focus across the organization.
"Refer back to your business plan every time there are dramatic changes in the market or in your business," he says, such as during budgeting or when opportunities arise, to make sure you are on track with your initial and agreed assumptions. "Even if you're not [aligned], it's important to confirm that those changes have been intentional and warranted," and not a byproduct of drift.
Rethink the Mix. "The first thing I tell a startup client is to never start a business without customers," says Chris Rader of Rader Solutions, a construction supply-chain consultancy in Lafayette, La., and an online columnist for ProSales. "You've got to do some prospecting and find those that are unhappy with their current suppliers."