While LBM dealers' sales are seasonal, some variable costs, and all fixed costs, are not. Smart dealers are using their time effectively managing resources as sales usually decline during the winter season. What can you do now to optimize your profits for 2012? Here are 10 things to consider. Try implementing one idea per week and when spring rolls around you will be better equipped to build profits.
1) Train Employees Using Webinars - Consider using your state federated association for webinars. The topics are chosen by dealers and intended for dealers. Invest in a big LED or LCD TV and mount it on the wall in your conference room. When considering webinars, don't forget about including your key customers. Safety programs, government regulations, and sales, come to mind as training that can include your customers.
2) Strategic Plan - If you don't have a strategic plan I challenge you to meet with your employees and ask a few simple questions like: Who are our ideal customers? What products and service do we offer? What are our sales and profit goals for 2012? How do we get there? I am a huge fan of writing these down and keeping this very simple. First-timers should keep this document limited to a few pages. If you do have one, continually refine the plan on an annual basis reviewing monthly. I believe the most important part of the plan is not the plan, but the reflection process involved in developing the plan.
3) Facility Hygiene - How do you really look? When a customer drives up at your yard what do they see? Schedule a breakfast meeting with a key customer and then ask them to drive you back to your yard. Sit in the passenger seat of their vehicle and observe with them as you enter your facility. Walk around the entire facility. Would you want to buy from you because of the way your facility looks? Don't just stop there. Next, find a prospect and repeat the exercise. A prospect buying somewhere else can give you insights into your competition; things that are different, possibly better. Write down the suggestions and make changes. "Elbow grease" is cheap; use it.
4) Vendor Meetings - Vendors are a key part of your business. Make a list of your top 10 vendors and meet with them this winter. Flip the table from restaurants and entertainment to simple and definable goals in 2012. These should coincide with your strategic plan above. Some simple questions that I like to ask vendors include: Are we a profitable customer for you? What new products are coming down the pipe? What are you seeing out there? If you have a high level of trust with the vendor, share your strategic plan with them and let them advise you on how they can help you get there reaching your goals.
5) Customer Meetings - Meet with your top 10 customers on an annual basis. Just as you want to be productive with your vendors, respect the time of your customers and setup up focused, goal driven meetings with them. Keep a score card on each customer. This should include overall sales, sales by product lines, returns, profits, number of deliveries, percentage of time spent with each employee required to serve the customer, and a grade from your delivery personnel to your sales staff for areas like ease of use in doing business. Just yesterday I received my progress reports from my kids' school. On one sheet of paper I felt that I knew what was going on and what changes need to be made. Can we duplicate this for our customers and have a one sheet scorecard?
6) Employee Evaluations - If you are not conducting employee evaluations start now. I am a big fan of prompting employees to give management feedback of how they, the employees, are performing. I disapprove of evaluations where the management sits down with an employee and tells them what they are doing right and wrong; where the employee has no input. I have a form that I have used for years and if you email me your name and address, I will snail mail one over to you. If you are an employee and a victim of a one sided evaluation, present this form to your manager and suggest that you start evaluations now. Successful dealers evaluate new employees verbally after week one, then using this form at the end of month one, then quarterly the first year. They then move to annual evaluations.
7) Prune the Tree - Just as with trees you should not prune a tree year round, but you should prune a tree every once in a while. What do I mean? Every successful organization should look at their customers, vendors, and employees on an annual basis and determine if they should continue in the business during the next year. We did this at a millwork company where I worked early on in my career. At the end of each year we looked at the customer base and tried to determine, as best we could, what customers would be in business in the next year. If we felt a customer was not going to financially make it, we "fired" that customer. The thought was why should we invest in something that is going to die? It was tough, but it made us better. We also looked at every employee and determined which ones we wanted to work with in the upcoming year. If we did not want to work with them, we parted ways. With vendors we followed a similar pattern. Was this brutal? Absolutely. Did it make us stronger? Definitely.
8) Plant Trees not Gardens - Start putting your customers into these two categories and make a chart. A "tree" is a customer that will be with you more than one season. They are repeat buyers, strong, and they gel with you and your team. A "garden" customer is one that will only last one season and you will have to replant them; meaning you will have to replace them because they will either not have another project or they will purchase somewhere else. As they leave, you have to replace them much like you replace the plants in a garden every year. Trees are strong and can withstand storms; economic downturns or simply one bad job. Tree customers are with you for the long-haul. Take your garden customers and try and convert them to trees. If not, replace them with a tree. It will be easy because they will only be there for one season.
9) Community Involvement - Pick community organizations that you want to promote. Do this for the right reasons, but get some mileage out of it. I drove through a fast-food restaurant last night traveling back home and it had an option to give $1, $2, or $3 to a charity that they support. I know they are doing it for the right reason, but are they getting mileage out it? You bet. You will see them blast it all over the world. As you give to charity, it is O.K. to have a press release written up in the paper. How about using the logo of the charity on your statements, invoices, website, or marketing? And sometimes giving resources to the community is not cutting checks; it is about giving of your time. When valuing your time, consider that if you make a difference in one person's life.
10) Budget - Maybe this should be number one. You can't fly an airplane without fuel and you can't run a company without a budget. Be as realistic as you can be based on this past year. Include your goals for next year based on your conversations with your customers, vendors, and employees. If you don't have one, keep it to a few pages to start. If you have one, track it every month. I feel managing a budget is like running purchase advice for product replenishment. You can't be right in your predictions 100% of the time, but the closer you get to 100% the better off you are.
In closing, I would like to share a story with you that can put you over the profit edge. When I was a kid I literally slept with a basketball. Dale Brown, LSU's basketball coach from 1972 to 1997 and college coach of Shaquille O'Neal, said something to me one summer that stuck. He said that if you want to be great at basketball you have to think about it every day. You have to sleep with the basketball. My parents thought that I was nuts. I actually slept with the ball in bed one summer and I am convinced that it made me better because I was always focused on basketball.
What if you just put the word "profit" in every email or memo that we send out to our employees, in our break rooms, on our financials, in the glove boxes of trucks? What if you wrote the word "profit" on your pillow and dreamed about it every night? Do you think that this might just be the start of something big for 2012?Have a great Holiday Season and let's all become profitable in 2012.
Chris Rader is president of Rader Solutions, a consultanting business based in Lafayette, La. Contact him at firstname.lastname@example.org.