The sharpest managers know that inventory needs to be marketable if they want to make a profit. They understand that overstocked, dead, obsolete inventory drain the resources of a company and block other product and profit opportunities. Attentive managers eliminate the problem items and invest to be ready for market demands.

Bill Hofius Just as a manager has his inventory positioned to take advantage of changing times, the entire business entity should be in a position to take advantage of market conditions. And while it may not seem that way now, there are companies out there with sufficient capital to invest in this embattled building supply business environment. They will also have the opportunity to exercise restraint, expending just enough capital and energy to make the buy.

Whether you want to be the dinner or the diner in such a situation, is your business market ready? Here are some questions that should help you know where the value lies.

  • Is the business an exact strategic fit?
    Value lies in alignment. Specific product line distribution and customer base bring value to the deal if they align with the buyer's mix. Understanding the market positions of related businesses including your own is valuable when buying or selling a business. Owners with a firm understanding of the strategic position their business holds in the global market, may choose to expand rather than exit.
  • Does the business supply a niche market?
    If the product offering has a high price of market admission, such as technical expertise, skilled labor force, manufacturing economies of scale, or a strong customer base, then the business may have more value. Sometimes the least expensive and quickest way to expand into a market segment is to pay a premium for a business.
  • Is there a professional management team in place?
    The owner should ask himself, "If tomorrow I am unable to participate in the business, would the people in place be able to run it, grow it and provide income to the stakeholders in my life? If the answer is no, consider building that key group of management leaders to secure the business. Even in these times, people need to be working on the business and not just in it. This reduces risk and brings value to the stakeholders, whether they will be the family, employees or an acquisition partner.
  • Can the business be divided or divested into sub-units?
    As suppliers have grown product offerings to satisfy customer demands, some service or product lines become the core of the business while others make marginal contributions or less. Know what market positions the business holds. Sometimes the sum of the parts is worth more than the business as a whole. The right divestiture could put a business in the position to expand into their fringe or their core.
  • Have you tested your banking relationships?
    Part of being market ready is to be in a financial position to take advantage of market conditions. If the business is in reasonable shape, then expand that credit line or ask for a loan. It won't take long to find out if your business is on the banker's list to invest or divest.

As Don Bravaldo of Walden Businesses says, "The best way to survive a wolf attack is to get the wolves fighting over you." This may not be the best time to sell a building supply company, but it may be a good time to buy a supplier or a strategic component of one. While juggling cash demands, market pressure and the economy as a whole; for the sake of your employees and stakeholders, be market ready!
Bill Hofius of Hofius &Associates LLC is a consultant and a veteran of the building supply industry. For more information, contact Bill at or go to, where "leaders make more than promises, they make things happen."A special thanks to Chad Riedel of Source Capitol and Don Bravaldo of Walden Business for speaking with me on this topic and sharing their insights.