Execution: The Key to Making Your Business Plan Succeed
One of the most important aspects of being a flooring retailer to remember is that the product you SELL is not FINISHED until it is successfully installed. It is not like buying a television set, car or clothing. In those instances, the consumer can touch, feel and see exactly what the product will be after the purchase.
A flooring retailer acts more as an assembly line from which the consumer can select among a multitude of colors, textures and types of flooring products. The retailer will then develop a list of ingredients for the final assembly of the flooring product selected for on-site assembly by a professional installer.
For this reason alone, labor can be the pivotal point for success or failure in the retail business and often can be the most challenging aspect of execution in the overall efforts of the retailer. Professional installation labor is available in varying degrees of competency, professionalism and dependability. A retailer who does not seriously consider his or her best labor options is doomed for failure.
Primarily, labor is available in the guise of either a subcontractor or a full-time employee. Most start-up retailers may not have enough ongoing work to afford employing full-time craftsmen. If that is the case, utilizing subcontractors may be the best option -- but buyer beware.
If a candidate doesn't have one, insist that he provide you a handwritten letter of introduction that includes his educational background and a description of all training that pertains to floor covering installation. Next, request references (at least six) and check their veracity. Ask the reference pertinent questions regarding the candidate's professionalism, quality of work, dependability and ability to interface with the consumer.
Personally inspect a prospective installer's work before hiring him. A picture is truly worth a thousand words and you can save hours of anguish by inspecting each individual's workmanship prior to offering employment. Before you hire subcontractors, review with them your policy on payment, required insurances, end-of-year tax paperwork, claims procedures, company policies and, most important, your expectations.
Always remember that -- regardless of the subcontractor's intentions -- by the end of the day, some of what you expect may get lost in the shuffle. Subcontractors are independent businesspeople who often are faced with simultaneously accommodating several retailers like yourself. Different retailers have different priorities and the contractor's urgency to complete multiple projects within a tightly defined timeframe may allow details to slip through the cracks.
Establishing a ready line of communication, coupled with persistent initial supervision, can minimize callbacks from a disgruntled consumer. I've also found that a retailer can reduce claims and eliminate anxiety by purchasing and including in the cost of the job incidental ancillary items such as manufacturer's adhesive, seam sealers, seaming tape, thinset mortar, grouts, preferred underlayments, etc. Doing so takes the burden of purchase off the shoulders of the installer who often opts for the least-expensive available product.
Full-time employees can be groomed and trained to strictly perform every aspect of the installation according to your instructions. Common sense will tell you that the control you exert and demands you can make will always be greater with an employee than with a subcontractor. Over the short term, a full-time employee can be a more expensive investment -- especially if you provide a benefits package, tools, vehicle, ongoing training and the security of 40-hour workweek.
When searching for qualified, full-time installer candidates, request a resume or detailed letter of introduction (just as you would of a subcontractor). Also tell them that they must be willing to undergo a drug-screening test and criminal background check.
Recently, I hired a new full-time employee. I had 29 people inquire about the job, but only six agreed to a drug test and criminal background check. The test and check requirements immediately weeded out a lot of deadwood and, ultimately, made hiring the right individual easy.
For me personally, hiring full-time installers has been the path of least resistance. Time will determine what works best for you and your retail business. Often, retailers will maintain a core group of employees and supplement their labor with subcontractors during the busy times.
Remember, your installer ultimately is the most important person in the sales chain. The installer will have more influence and spend more time with your customer than anyone else from your store. The installer will be your store's signature of confidence for a consumer who has just made the third-largest purchase that a family makes.
When it comes to what to charge for your goods and services, I'm sure we all can agree that pricing varies significantly. I know what prices my competitors hit the streets with. Bottom line is that it all depends on how you want to spend your time -- trying to make ends meet or building a business that is profitable and growing.
The choice is yours, but make sure that everything is considered when determining your margin. For example, some retailers use subcontract labor and often markup their labor little or none. If that is the case, you need additional margin to deal with callbacks that can gobble your time and keep your from selling the next job.
Most subs do furnish their own tools, vehicles, fuel, supplies and insurance. And they usually work by the piece, which eliminates expensive overtime. In such instances, your markup can be comparatively small.
If full-time employees are your chosen route, factor into the margin equation your benefits, insurance, overtime pay, taxes, vehicles, fuel, vehicle maintenance, training and the overhead that encompasses your rent, phone, etc. Initially, you may find that your margin may not be as high as you would like, but it is the sacrifice you may have to make to develop the necessary critical mass in a customer base that you'll need to build on.
As time passes, you will begin to see opportunities to increase margins both on labor and product. At my store, we try to market ourselves as a niche retailer that offers unusual products with minimal limitations of our installation skills. This strategy has begun to pay off in the quality of jobs and markup that we are starting to command.
BUILD A BUFFER! I guarantee that you'll experience slow times. So, use the extra money you build up during the salad days to squeeze through the lean times.
And finally, I personally believe that the most important aspect of a retail execution lies in follow up. To this end, we send all of our customers a self-addressed envelope with a four-question survey designed to gauge their satisfaction with the product, our professionalism, our craftsmanship and their overall shopping experience. Approximately 85 percent of the surveys are completed and returned to us.
When any of the questions are not rated with a "very satisfied" or "extremely satisfied" response, we call the consumer to follow up and find out why she wasn't delighted with the job. We believe that most consumers don't complain enough. Instead, they just don't buy from you again and use every opportunity to tell everyone about their dissatisfaction.
In reality, unhappy customers represent nothing less than golden opportunities dumped into your lap. Acknowledge their dissatisfaction and set out to make them happy.
Our business model is built around customer service, professionalism, craftsmanship and happy customers. Perhaps that's why 80 percent of our business comes through referrals from happy customers. We chose this route because you easily can consume 80 percent of your time gaining the trust of cold customers. Referrals, on the other hand, already trust you. So, your job is to find for them a product that fits their budget. In essence, a sale that takes 80 percent less time translates into more time to sell other customers or upgrade your existing clients.
Execution of a business plan is complex, especially in a competitive arena where the costs of labor, products and service can vary dramatically. Learn from your mistakes, try new things and stay focused! Labor, margins on product and labor, and follow up are fundamental aspects of the flooring business that, all too frequently, do not get the energy and attention they deserve.
Allow me to leave you with a final thought on this discussion. My friend, Wayne Patrick, says, "You never lost money on a job you didn't do!" The point of that statement is simple: you will never please all of the people all of the time. So, follow your gut instinct -- if a particular job is not right for you, pass on it.
The next article in my Journal of a Start-Up Flooring Retailer series specifically will address refined processes for determining who is an unwanted customer, how to charge appropriately for labor and get your price, complaint handling in a positive fashion, and building systems within your retail business so that it runs itself.