Considering the sustained and consistent growth of the construction industry over the past decade, when pro dealers across the country close the books on 2005 this month and crunch the year-end numbers, they'll likely find their companies riding another wave of success with the P&L in the black and sales increases approaching the double digits. If you count your company among this industry majority of balance sheet victors, feel free to kick back momentarily to toast your crew and your customers on another great year. But make sure to keep the numbers out of the desk drawer: Whether your yard is a local operation doing $1 million in annual gross sales or a regional powerhouse topping $100 million or more, leveraging that balance sheet against your own historical performance and the performance of your peers is vital to continued success in the traditionally cyclical construction business.
Luckily, the building supply side of the industry is teeming with opportunities to facilitate this practice, and astute pro dealers and trade experts agree that the best year-end position for any enterprising lumberyard executive is seated at an industry roundtable with balance sheet in hand. “If you have the right mind-set, and you're progressive and want to grow the business, you're in the right place regardless of your volume,” says Jim Enter, president of the Charleston, S.C.–based American Association of Roundtables, an organization devoted exclusively to benchmarking and roundtable services for the LBM industry.
Enter, who began his career in the industry in 1964 with the Pelican Cos. (now part of Dallas-based Builders FirstSource), currently facilitates 13 separate roundtables and manages facilitators for 12 others. From owner roundtables where dealers compare 110 separate financial metrics to best practice roundtables benchmarking installed sales and truss operations, Enter says dealer interest in the peer-to-peer exchange of strategies is on the upswing, particularly in the areas of fuel and delivery costs and compensation and benefits. For the dealer that has yet to pull up a seat, Enter offers a tempered promise: “It's essential to stick with it to see long-term results, but you'll get multiple paybacks from your very first meeting.”
Associate Yourself One of the most accessible avenues for pro dealers to begin benchmarking financial data and sharing best practices is by leveraging membership with the National Lumber and Building Material Dealers Association (NLBMDA) and its 21 regional federated associations, virtually all of which offer one or more roundtable opportunities with topics covering everything from financial metrics to operating truss plants and installed sales programs to running millwork operations. At the national level, NLBMDA has launched a Strategic Analysis Program to support its annual Cost of Doing Business survey (see “Going National,” page 56). Regional associations also offer similar business condition survey-based reports, but primarily are facilitating roundtables for their members.
At Paducah, Ky.–based Cole Lumber, president Ronald Goode bolsters his participation in NLBMDA programs with roundtables hosted by the Kentucky Lumber and Building Material Dealers Association to gain perspectives from a cross section of dealers—both regional and national—to gauge the growth and success of his pro/retail business. “Ideally, you're not just looking at your peers, but at companies doing business a little bit differently than you to get the best of the best practices,” Goode says. “We do benchmarking with the relationships we've built through the Kentucky lumber dealers association, and we're also pitting ourselves against the high-profit, contractor-only based yards ... through [participating in] the Cost of Doing Business survey.”
Dealers in the South can consider themselves fortunate with the opportunities available through the Southern Building Material Association (SBMA), which boasts 17 roundtables, more than any other federated association, according to SBMA president Larry Adams. SBMA's offerings, which include financial metrics, operations manager, installed sales, purchasing manager, truss operations, millwork operations, and CFO roundtables, have been growing since its first group began meeting in 1987. “Roundtables enable you to do things a little bit beyond [analyzing raw data],” Adams says. “They allow you to talk about what affects financial numbers, and how you can change them. The group gives the participating companies advice on improving metrics—it adds another dimension to the financial analysis.”
Knoxville, Tenn.–based Tindell's Building Materials belongs to five roundtables at SBMA, including the building material owners group formed in 1987 as well as installed sales, sales manager, and truss and millwork operations groups, reports company owner Carl Tindell. “People are pretty critical in a good roundtable,” Tindell says of the twice-yearly review of balance sheets and more than 90 financial metrics in the owners group. “[The other members] tell you when you're screwing up and where you need to improve. I've always looked at it as my report card, how I'm doing in comparison to my peers, in relation to the industry.” Over the years, Tindell's has used the benchmarking process to improve margins and make decisions on buying computer systems, vehicles, and equipment, Tindell says, “and in turn we've shared our own best practices, particularly with our incentive programs.”
According to Adams, consistency in that dealer-to-dealer exchange of ideas is a critical component of any successful benchmarking or roundtable effort, a benefit that improves as regular contact beyond scheduled meetings increases. “Eventually we see our dealers talking to each other [outside of the roundtable framework] on a monthly and even weekly basis, and that's one of the reasons we do this, we want them to have that kind of communication with their peers,” he says.
Just as important is keeping things fresh: SBMA roundtable facilitators have their own annual roundtable to choose group events, guest speakers, or educational presentations to complement the straight shoptalk. For example, the association's operational roundtable concluded its fall meeting this October with a visit to Alpharetta, Ga.–based storage solutions provider Sunbelt to look at some new technology in racking systems and approaches to yard logistics.
Upstream Solutions Pro dealer vendors like Sunbelt—especially those with maximum exposure to varied retail operations—are often an overlooked resource for benchmarking, especially in the areas of inventory and operational best practices. “Any time dealers and suppliers can lean on each other as an outside source it helps to boost everyone to a new level,” says Sunbelt vice president of sales Clint Darnell. “So it's always a positive for us to act as that type of a resource.” During SBMA's recent visit, for example, about 12 dealers joined Darnell at Sunbelt headquarters for a PowerPoint presentation on Sunbelt's newest inventory systems followed by a strategic roundtable covering emerging best practices in door and window storage and delivery.