No one really knows exactly when the next economic boom will hit. It may be a year or two from now or perhaps a bit longer. But by the time you realize the boom is in full swing there’s a good chance the economic recovery will have already been underway for some time.
After several years of consumers and customers enduring such a weak economy, a pent up demand for hardwood and other flooring products has developed. This ultimately will produce a much stronger business climate for your products and services, and you need to align your business for the economic recovery.
So what are you going to do to align your business for success? Here are 10 critical questions you need to consider, and savvy answers that make good business sense.
1. Do you have the necessary working capital to grow your business?Your business can’t grow and run smoothly without sufficient working capital. Paying your bills on time is more important now than ever, given such a tight credit environment. So if you are running a little behind, it’s vital that you communicate regularly with your lender and key vendors to know how they evaluate your credit and how they view you as a credit risk.
If you have need for more capital, perhaps it’s time to consider taking on an equity partner or looking for a buyer. On the other hand, if you are financially strong and have solid credit, it’s also a great time to go after a strategic acquisition for growth.
2. Do you have the right people in place to get the job done?If you are dealing with the same old personnel issues year after year, you probably have key people holding you back from accomplishing your business goals. Business owners are often “too slow to fire and too slow to hire.” Making the tough personnel decisions now will get you to where you need to be when the next boom hits.
3. Are you doing enough sales and field training?Buyers come into a retail store to get answers and become educated on what flooring products are right for them. Salespeople must ask the consumer the right questions to recommend the right type of hardwood flooring for their specific need.
Everything starts with management and then flows on down. Product training should be ongoing. Your suppliers should be called upon regularly to hold off-hour training sessions. For installers and flooring contractors, the NWFA has invested in regional training schools staffed with the industries’ best professionals. There are schools for beginner installers and continuing on to the advanced installer.
4. Are you selling the right products for your market?Consumer preferences constantly change, new products are introduced every year, and technology rapidly improves. Now is the time to tune-up your product offering. Study what’s hot in your area and what’s not. Re-align yourself with the best suppliers to market the right products for today’s fashion-conscious consumer.
6. Is your installation equipment up-to-date and in good mechanical condition?If you perform flooring installation you know the investment you’ve made for power tools, sanding equipment, machinery, trucks, etc.
Don’t overlook your sales floor productivity tools (i.e. computers, smart phones, iPads or tablets, and software). Take an audit of the age and mechanical condition of all of your equipment. Make necessary changes, repairs and upgrades so you’ll be more efficient and productive now and when business starts booming again.
7. How has your market changed since the last business boom?Style and color continually change. For example, 30 years ago 12” by 12” parquet floors were very popular in the U. S., and 20 years ago, the linear strip-look took over the hardwood flooring market. Consumer preferences today are leaning more and more toward wider width hardwood plank floors and finishes with lower gloss levels. You also need to be current on changes in demographics, average building size, room sizes, and product upgrades that sell.
8. What are you doing to keep your labor costs competitive?Now that consumers like the look of wider plank floors, take advantage of the labor- saving factor this offers. Wider widths (3”, 3 -1/4”, 4”, 5”, and greater) install more efficiently as there are fewer courses to either nail or glue-down. To get a better return on your labor dollar, I recommend you try to upsell the end user on a 5” plank floor, or a combo plank consisting of 3”, 4” and 5“ wide planks. Simply beautiful…and your material dollar margins can also be higher!
9. Is your retail and warehousing space sufficient to display and carry additional inventory to service your customers, or do you have more space than you need?Cost containment is a critical component for profitability. Change what you need to right-size your facilities. If you are short of space for growth, adding space now will never be cheaper to do. Conversely, if you are overburdened with an expensive warehouse, bite the bullet and downsize your space requirements.
10. How have your personal goals changed over the past four years?If you are planning on retiring in 10 years, you need to be working on a succession plan or exit strategy. If you are relatively young and want to grow your business, you have a completely different set of issues. In either case, now is a great time to re-evaluate your personal goals to determine what is best for you as well as the business.