Who had a lousier 2010, you or Tiger Woods? You or Barack Obama? Rarely have we entered a year in which perspective and attitude matter more in our industry. Most dealers I've met lately regard this slump glumly, as a famine to be endured. That's why it was such a head-turner to hear Peter Ganahl refer to our current malaise as "The Opportunity Zone."
Ganahl is president of Ganahl Lumber, the Anaheim, Calif., company that is ProSales' newest Dealer of the Year. Peter believes fervently in two truths about LBM. The first: Construction supply is a cyclical business, so you need to shift your management style depending on whether you're in what most people would think of as a boom (Peter calls it "The Go-Go Zone") or a bust ("The Opportunity Zone"). The second: You can make money no matter which phase you're in.
Ganahl–unlike a lot of dealers its size–has done precisely that. In the Go-Go Zone days it paid down debt, salted away profits, avoided making acquisitions (prices are artificially high then, Peter says), and skewed compensation plans so they had higher upsides, thus helping staff increase their income during boom times.
Those moves also benefited Ganahl Lumber when the crash came. The same high-variability compensation plans that fattened the bank accounts of senior management and sales reps automatically ratcheted down those employees' paychecks when hard times arrived, thus reducing company costs. At many other dealers, when commissions dried up, LBM officers responded by boosting the reps' base pay. Ganahl went the opposite direction, adjusting compensation to put even more emphasis on performance. The company used that same mentality when it chose which staff to cut as sales dropped. While others trimmed staff based on seniority, Ganahl did it based on who was least effective. Thus, when hard times came, Ganahl still had its best people on the payroll.
Such tactics helped Ganahl achieve a rarity among dealers: An unbroken string of profits. It's now at a point where, as Peter wrote in a recent staff newsletter, "If our construction-related economy shows little or no improvement for one, two or five years, we will be fine. We are not waiting for the tide to rise to be viable and profitable."
The bottom line is still black even after the company spends money on investments. After General Motors pulled the franchise from a dealer in Pasadena, Ganahl bought the facility at what it regards as a good price. Ganahl also revamped its Anaheim showroom and launched a pilot program there for installed doors and windows.
"And we are not done yet," Peter wrote in his memo to staff. "There are so, so many opportunities our there right now that were not even possible during the last Go-Go Zone. In my 42 years in this industry, I have never seen such an opportunity-rich environment."
Yes, Ganahl people have a steely, almost obsessive focus on the bottom line and on performance. But there's also a genuine love of the business and excitement over its possibilities. Perhaps these days, you can't have one without the other.
Craig Webb, editor