Keep Your Flooring Business Growing
A healthy business grows just like a healthy child. The most important and defining characteristic – the personality of the business – is developed early and never really changes, while its outward appearance can seem to change overnight. The occasional identity crisis is inevitable, and can produce many sleepless nights for an owner. However, when the business knows itself well and can balance its opportunities with its roots, that growth is organic. The balance depends on setting long-term goals and planning accordingly. Are we growing to become a ballerina or a neurosurgeon? Though both require above-average skill, tenacious ambition and sheer willpower to outperform the competition – a certain personality – the path to success is still vastly different. Understanding the desired outcome is just as essential to development of a business as it is to an individual.
Division 9 began in late 2002 in Seattle in my partner Chuck’s fourth bedroom, with a desk made out of an old door and what computer parts and supplies we could scrape together. I was a consultant then, helping to establish the business and train staff. Chuck’s sales focus was service-oriented tenant improvement (TI) work for “boutique” general contractors and property managers. He was thoroughly successful in building his brand. A year later, Chuck’s uncle Mike became a partner. Mike promoted a similar brand of service to the GC community that helped to expand sales. By the end of year three, I had also joined the firm as a partner. Now, we were two-and-a-half times the size, had a staff of eight and our very own forklift and box van.
In the next few years we did what we knew, and we did it very well. The first big turning point for our company came when we landed our first whale – a $5 million project that put us on the map in terms of handling major construction. We had hired several more staff, adding sales people as well as support and logistics people from within the industry. We all worked until we dropped in those days, and the office was bursting at the seams. We had a lot of fun, as it seemed there was nothing that could take us down, if, of course, we were willing to keep going at a record pace. Our big project was a huge success, and a couple more big ones rolled in. We had typical small business issues in human resources and cash flow, but our customers and staff were happy. We thrived on the challenge. Our goal was simply to be the “little guy” who could pull off big stuff.
Everyone knows how the next sentence starts: “And then the recession hit…” In 2009, the Seattle construction market was suffering from substantial losses in commercial leasing and residential speculation, not to mention all those big corporate projects that were shelved or simply abandoned. Microsoft announced an indefinite hold on new buildings, which had been up to 40% of our TI business in past years.
Paving the way for the future
We suddenly understood that growing a business in a healthy economy is relatively easy; the hard work comes with sustaining your business through a period of unknowns. Two things in the early days of the recession paved the way for growth in the future. First, we developed an affinity for our backlog/burnoff schedules. We studied our batting average and our margins. We wrote report after report, constantly slicing and dicing the data to extract every possible nutrient from it. When the TI and contract residential business went away, we had, by chance, already started bidding healthcare and some government work. Once we started digging into the details, we realized quickly that we had barely dodged a bullet.
Optimism and stability
Second, we learned the value of optimism and stability in leadership. Our bank went into receivership. Project owners claimed bankruptcy, and our lien rights became worthless. Our commissioned salespeople were struggling and morale was exceptionally low. My receptionist learned that being served with a copy of a lawsuit didn’t mean we had done something wrong – in most cases it simply meant we weren’t getting paid for our work. Our people needed confidence and clarity more than anything else; our clients needed us to be stable enough for the next project. Chuck, Mike and I had to walk into our office every day and encourage people to keep trying. After all, we were Division 9, and D9-ers don’t fail. Our goal was to be different, to be stronger than the rest. Ironically, this was precisely how we had inspired people to grow with us during the boom years. The circumstances were changed, but we were the same people with the same vision, and it was still relevant.
The second time around
In early 2013, two million-dollar contracts arrived on my desk, the first in nearly four years. I knew immediately we were understaffed to handle them, and I thought I knew exactly how to go about solving that problem. We went on a hiring spree, and by 2014 had expanded our office and warehouse. A few critical things were different this time around. Our typical hiring pool of the three Fs – friends, family and flooring people – was running thin. Because we had never set any real training programs in place, on boarding became our single largest challenge. In late 2014 we upgraded our long-outdated Enterprise Resource Planning system, which was a significant ordeal. To boot, the recession had produced a new crop of smaller competitors who were eating up our margins on competitive bids. Those factors resulted in the one thing we said would never happen to us: we actually felt like we were failing, even though we were diligent in setting a specific long-term goal of growing to a certain volume. As it turns out, growing into a $15-million company is a lot different than growing to a $30-million company, and topline growth isn’t a real goal.
We knew that our growth pre-recession was largely unplanned, and that the inevitable contraction was unplanned as well. We hadn’t necessarily set out to grow again in 2013, it just seemed to happen, and we were happy to take it on. But at this point, we were at a size that required considerably more structure to be able to perform effectively. Our main focus was becoming larger and larger projects, which meant we had to be able to replicate much more complex procedures than we had been working with just a short time ago. With a larger, newer staff and systems, and greater regulatory burden, this required significant management that the three owners could not support alone.
A strategic approach to leadership and development
Enter the Fuse Alliance team. In late 2013, Ron Lee and Geoff Gordon visited our office and invited us to join the Fuse network. We were familiar with the co-op purchasing model by reference only; our experience to that point involved strategic partnerships that were individually negotiated and maintained. We had also sparingly dabbled in leadership and development for ourselves as owners. The opportunity with Fuse was another turning point for us. We were introduced to Fuse University. The concept of a standard training program for our industry had been on my mind for years! We added the content to training schedules, and dove in headfirst as Fuse members. Fuse introduced us to leadership coach Mike Moore, who’s many pearls of wisdom have been impactful, and stay with us long after we listen to him speak or read his articles. The Fuse Alliance annual conferences are the most effective owners’ retreats we’ve ever had; we have the opportunity to talk about our business with peers as well as experts, in a setting that gives us perspective we can’t get at home.
Planning for long-term development is key
This focus on long-term development – the holistic growth of our business – has had profound impacts. By 2015, we put a qualified management team in place. We had also greatly enhanced our training systems, and began to tackle some of the cultural issues that were causing our identity crisis. This required a lot of professional help; we couldn’t have done it alone.
We had to systematically detach from our business as owners, and then reconnect with it at a different level. It’s been excruciating in some ways. Not knowing firsthand that the truck left on time, or the client got what they needed, or that HR issues are being resolved and everyone is okay…it’s disorienting. But hiring and training the right people is how we get to the next level. We mistakenly believed we had to simply trust in everyone we hired, and convinced ourselves that was impossible when we were growing so fast. Who we really need to trust is ourselves as business owners, to hire and develop the right leaders. This has been a game-changer. It’s like what happens when your teenager picks the right friends. You sleep better. You make better decisions. You enjoy yourself more.
Had we planned for growth, versus waiting for it, we would have been actively addressing those issues of long-term development much sooner. Economic cycles are inevitable, largely predictable – so why wait for the next one to set long-term goals? Evaluating your business for what you want it to be in five, 10, even 20 years is essential to understanding how you need to build and maintain it, and it’s a constant conversation. We know now that this is only our adolescence as a business. There are many more changes to come, but if we focus on how we grow versus whether we grow, the end result is far more likely to be positive.
Growth in business doesn’t just mean a bigger topline number; growth is continual development of complex and critical systems that produce a defined result. Therefore, businesses can – and I would argue must – actively grow regardless of economic factors. In our business, we’ve learned that active development is not only part of our personality and part of our age as a business; it doesn’t feel right unless it’s meaningful. Landing the next contract or staying on budget is success, but singular success isn’t enough. We also need the collective wisdom of our experiences to visibly push the business towards our goals – that’s healthy growth, and with it comes valuable foresight.