Considering that the housing market has lost some of its red-hot sizzle this year, now is a wise time to evaluate your sustainable growth potential and focus on plans for the future. Making the decision to evaluate your business is easy. Figuring out how to develop a strategy and then implement it is where the hard work starts.
To do this, says Steven Little, senior consultant for Inc. magazine and author of the new best-selling book The 7 Irrefutable Rules of Small Business Growth, you need to know your customers better than they know themselves. “Buyers are liars,” he told a group of remodeling executives in late May at the Remodeling Leadership Conference, an event produced by REMODELING magazine, a sister publication of PROSALES. “They don't mean to lie, but they can't articulate what they want.”
While Little was referring to consumers in this case, this theory can apply to your customers. Maybe builders that you serve, for example, don't seem interested in construction services, but they would readily jump at the opportunity if your company expanded into new areas and promoted them.
No doubt, if you develop the ability to put yourself in your customers' shoes you can better anticipate their current and future needs and profitably grow to meet them. One of my favorite sayings from another great book, Think Big, Act Small, by Jason Jennings, sums up this approach perfectly: “Volume is vanity, profit is sanity.” The quote comes from Pat Tracy, CEO of Dot Foods, explaining that the company has never expanded for the sake of expansion unless it was going to benefit customers and, in turn, turn profit.
This is a smart growth tactic that has paid great dividends for BMHC, this month's ProFile (see page 70). Needing an avenue to supplement slim profit margins at its distribution arm, BMC West, in the late-1990s BMHC correctly anticipated big builders' growing demand for construction services and forged a partnership with Phoenix-based framer Knipp Bros., the first of 16 acquisitions that together now form the foundation for BMHC's new SelectBuild construction services division. As CEO Rob Mellor tells contributing editor Joe Bousquin: “We were selling a lot of commodity lumber, but we weren't doing as well as we should. The question became, do we stick to our guns or try to figure out another market? We had to do something. We were a public company. We had to grow.”
While gut instinct often plays a role in determining the right ways to grow, companies that consistently hit home runs when expanding have a lot in common, according to Little, who notes that there are seven “areas of concentration” that characterize growth leaders: a sense of purpose that is not tied to wealth accumulation; outstanding market intelligence; an effective growth plan that is written, well communicated, and regularly updated; customer-driven processes; the ability to harness the power of technology; the means to find and keep the best employees; and the capability to predict the future and trends.
Jennings also sets forth a list of common traits that characterize the top-performing companies profiled in his book—those that have grown revenues and profits by 10 percent or more for at least 10 years—and his primary conclusion is reflected in the book's title Think Big, Act Small. These companies, which include Dot Foods, SAS, and Sonic Drive-In, have huge ideas but operate like start-up enterprises. For example, research for the book revealed that top executives at these organizations are humble and down to earth. They also are accessible and work in the trenches, treat employees like owners, and focus on growing future leaders, among other things.
How does your company stack up in these areas? Now is the time to make an evaluation and plan for the future, not when market competition forces change. Take the time to study benchmarks both inside and outside the LBM industry, jettison traditional approaches, and find new ways to make improvements and add value.
EDITOR'S NOTE: If you're ready to learn more ways to achieve consistent high performance, don't miss Jason Jennings speak at the NLBMDA/ProSales Industry Summit Oct. 26–28 (www.industrysummit.org).