A California dealer requested recently that I speak to his group on a question I've heard often lately: What works? More specifically, what business models, products, and practices do I recommend a dealer embrace to survive this toxic economy?
My response was to toss out a bunch of concepts I've seen nationwide. Some dealers get ahead by diversifying, like the New Hampshire shop that sells wood stoves in the winter and bought an ice cream franchise for summer income. Others specialize, such as the company in San Diego that focuses on custom entry doors and little else. Some benefit from friendly ties to vendors, while others fatten their wallets by mercilessly squeezing their sources.
I realize now that I failed to help the California dealer, mainly because I didn't stress enough that America is too diverse for a single business model to work everywhere. But on deeper reflection, I realize the successful operations I've seen do have one thing in common: committed, smart, adaptable leaders.
Committed. I have met bosses whose main motivation for working appears to be that they inherited the business from their dad and want to hand it off one day to a child. Others treat their LBM operation as just one profit line in a portfolio of businesses. The ones who look happiest and do the most, I've noticed, are those who regard LBM work as the right way to give the best of themselves back to their families, companies, and communities. Does LBM work make the highest use of your talents?
Smart. There may be hermits who are top-level LBM dealers, but I have yet to find one. The best yards are run by folks with voracious curiosity. They visit other facilities, share financials at roundtables, and pick up ideas at LBM group meetings. They know the difference between strategy and tactics. Above all, they can process concepts into the right action plan for their location and then can communicate that plan in a way that inspires others.
Adaptable. Whatever model you choose, don't count on it lasting. Our business has changed radically, and if you think about the non-housing events since 2000–including 9/11, hurricanes, and two Wall Street crashes–it's even less likely you'll make money the same way your father did. Good dealers don't just come up with a strategy; they review and revise that strategy regularly, adjusting it to changes in business conditions.
This month's issue honors dealers that possess these qualities. Franklin Building Supply created a showroom far different than the one it originally envisioned largely as a result of visits it made to other dealers. Ridgefield Supply, Boston Cedar, and TW Perry revamped their websites to meet changing needs. Parr Lumber's marketing reflected a careful balancing of internal concerns and of external audiences. And The Standard Group did a lot of searching before it found a technology that could help it fulfill age-old concerns in exciting new ways.
These dealers were committed to improve their operations. They raised their business IQs by researching extensively. And they then figured out how to adapt what they had learned to meet local needs. Their evolutionary path helps shows the way forward for all of us.
Craig Webb, editor
202.736.3307
cwebb@hanleywood.com
