My Yardsticks: John Mensinger, President, American Lumber Co., Modesto, Calif.

With an M.B.A. from Harvard, a knack for public service, and an insatiable travel itch, John Mensinger keeps his family's small pro yard in Modesto, Calif., on its toes. Here's how the local leader does it.

John Lee MODESTO, CALIF - Jan 21, 2013. Portrait of John Mensinger, owner of the American Lumber Company in Modesto, California. Photo taken inside his office in Modesto. Hanging on the wall above Mensinger are banners from various Rotary Club chapters throughout the world that he has visited. Photo by John Lee.COPYRIGHT 2012 JOHN LEE PICTURES.www.johnleepictures.com

My family has a background in public service. My mother was the mayor of Modesto from 1979 to 1987. I've written public opinion columns for the local newspaper, The Modesto Bee, and am on the board of the local Rotary Club. For a time I led the Modesto Sister Cities nonprofit and traveled to India, Mexico, France, Japan, and the Ukraine.

Crossing Cultures. One quality of a great ally is the ties between people and businesses. My father fought the Second World War against the Japanese, and now Japan is one of our greatest allies. Modesto having a sister city in Japan is just one more tie. As a small-business owner, I can take some of that culture’s thinking with me.

Belt Tightening. Modesto was incredibly hard-hit by the construction slowdown. We cut operating costs by one-half, reduced expenses, laid off employees. We now need a 10% increase in business to be profitable, and I think that’s very likely to happen—I just don’t know when.

Spreadsheet Solutions. Every day, I plug sales and gross margin into a spreadsheet and calculate a forecast for the rest of the month. I also review a daily sales report. You can begin to see patterns—you’re not getting enough margin with one customer, or a particular product is mis-priced. Every day, five or six items jump out, and I address them immediately. I also set up a spreadsheet to help determine different ways to maximize the volume of a lumber shipment. They’re almost never going to under-ship a load.

A Taxing Situation. The 1% lumber assessment has been an inconvenience, but we had to do it. It took us about 15 hours to code our SKUs and we’re still working on a more efficient way to code special orders. California doesn’t have a good business environment. That’s a matter of public record. But our competitors are in the same boat.

My Yardsticks. To succeed in this business you have to be very flexible and you have to learn by doing. In our business there’s a lot of tolerance for sloppy work. But we’re very tough at our yard. If someone doesn’t have the right attitude, we stop doing business with them.—as told to Hallie Busta