While many of us rarely think about business slowdowns unless we’re in one, this is nonetheless a part of the business culture. The recent economic downturn has changed the competitive landscape so that, going forward, only the smart and the strong will survive.
I just returned from our BKBG conference, at which there was a lot of conversation about how different companies are dealing with things. Some dealers who have more than one showroom are looking at closing the oldest or slowest showroom. Others are laying people off because there’s not enough work to keep them on the payroll.
Some dealers have increased their business hours to become more accessible for customers, while others have cut their hours, with the philosophy that no one is coming in anyway, so why pay staff to be there? Some dealers have cut salaries and redistributed the work load, while others have taken this time to take care of all of the things that didn’t get addressed during busier times, such as implementing new forms and systems, or restructuring the internal way they do business.
A few of the people told me that they were around in the ’80s when we had a downturn in business, and one of the things they learned from that experience was that they never wanted to be that strapped for cash again, so they put a nest egg away for that rainy day. They put anywhere from 2% to 5% of every deposit that they received in a separate account. While this may not sound like much, it grows over time, and can make a big difference in tough times. It’s worth remembering for the future.
Many told me that they never quite realized the importance of budgets, and now they are looking them over and finding areas of fat that can be cut. How about outsourcing some of the things that you do internally instead of having someone on the payroll do them? Bookkeeping or drafting might be better done out of house, cutting down on overhead costs.
Another area of change can involve cutting back with drivers, delivery trucks and warehouse costs. While these are nice to have, the reality is that most small-to-medium-sized kitchen and bath companies can get by without this overhead. If you feel the need to keep your truck, how about using a self-store facility instead of your own warehouse? If it’s big enough, consider renting some space to another company.
Getting rid of or renting out your warehouse will also help you to get rid of useless clutter. For instance, those mistake orders taking up space can be donated to charity, saving you space while providing a tax write off.
With many cabinet companies delivering on their own trucks, it makes no sense to accept a cabinet delivery to your warehouse and then reload the cabinets on your own truck to deliver to the customer. By having the cabinets go directly from point A, the manufacturer, to point B, the customer, you minimize potential damage as well.
This is also a time to look at cutting back on travel and entertainment. Maybe now is the time to put off the showroom displays that you were considering, unless you can get the products from your vendor as a memo billing item.
Another area to look at is installation. If your installers are in house, consider making them subcontractors. There are some big advantages to this for them and certainly for you. This is an area where you must be careful how you handle them so the IRS does not come back to you for additional taxes. Check with you tax attorney about how best to set this up so you are in compliance with the federal and local laws.
The next area of concern during this slow down is advertising. Depending on your advertising budget, consider some changes, maybe cutting back on some of the more expensive ads (such as TV or radio).
Note that I did not say stop advertising. While cutting back in some areas may make sense, you still want to keep your name out there, but you need to maximize the impact of every dollar you spend.
Consider some other media that you may have passed on before and see if there might be a fit. What about local papers, magazines or home shows?
I’ve always found local home shows to offer exceptional value for the time and money you put into them. If you have a good one in your area, consider having a booth where you can showcase your best products. Offer to do seminars at the home show. This gives you a captive audience where you can help them understand your business while you get some really good leads.
Remember, too, that home shows are less about getting today’s business than getting the business of the future. Over the years, I have had people come through our booth and say, “We are not ready yet to do our kitchen, but when we are, we’re going to come and see you.”
But to ensure that future business comes your way, you have to follow up. Now is the time to go through all of your past bids, call all of the “I’ll be backs” and see if they are still interested in doing something with you. You may just hit the timing right and secure a job or two with these calls.
How about contacting builders, contractors, interior design firms or architects in your area?
Of course you can still choose the door-to-door approach. Pick a neighborhood that you’d want to work in, create a nice tri-fold about you and your company and knock on doors to see if anyone has any interest in a new kitchen or bath. It’s called grunt work, but in slow times, we need to do whatever we can to generate business.
The last thing to consider is how to expand your business base, offering things that you don’t always think to mention. You can offer cabinets for every room in the house, including bedroom furniture, bookcases around the fireplace or entertainment centers.
The business is out there – but in slow times, we need to work a little harder to get it. Now is the time to go to work and determine how you can get your share of what’s out there.