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Kitchen & Bath Design News recently posed the following question to dealers and designers in the kitchen and bath industry: “What are the best ways to handle cost control?” Following are some of the responses KBDN received.
“Controlling costs is something that every business needs to understand fully.
“It’s important for every organization to not only understand when to add people, but, conversely, when to trim staff. If sales trends are increasing, optimism is high and overtime hours are necessary almost every week, it may be time to add people to enable steady and manageable growth.
“Conversely, when trends are identified in the other direction, the opposite is true. This can be handled simply by attrition in larger organizations, but the reality is that a company needs to be sized appropriately for the amount of customers coming in the door.
“A continual look at the organization’s process and procedures can also be identified as costs. If salespeople can be freed from paperwork and other ‘non-value’ added work, they will have the ability to sell more.
“Getting your salespeople to try to sell more is not the answer, but ‘enabling’ them to sell more in the same amount of hours that they currently work will get their attention.
“Streamlining your procedures will identify ‘non-value’ added procedures that require people managing them, which is a huge cost.
“All of the organization’s procedures should be examined to determine how to process orders quickly, efficiently and without enduring additional costs. Procedures that are not adding value should be taken out of the process.”
John Valente, v.p./operations
Williams Kitchen & Bath
Grand Rapids, MI
“Surround yourself with the best people and the best suppliers, educate yourself and your employees, and stay on top of the latest information. Read, listen, participate. Controlling the cost of business in many areas means hiring the best people you can afford.
“Another key to controlling the cost of doing business is experience. Experience is one of the best teachers for business management and project management. Experience teaches you how to look at new products, new clients and prospective employees, whether with caution
or with excitement.
“If you don’t have the experience, then listen and observe those that do. Learn to rely on those people in certain fields of expertise.
“No one can do it all and do it well, so find people and resources that can help you keep from wasting valuable resources.”
Andrea Langford, ASID
Langford Kitchen Studio
“I would be so bold as to suggest the single biggest key is to simply know and understand what your costs are, where they come from and what factors drive them.
“Have you analyzed what a lead costs? Have you analyzed what an hour of show room/consultation costs? Do you know what you need in signed agreements and commitments per week, month, or quarter? Do you know what to do if you don’t meet a goal? That is, have you analyzed enough to know what steps to take to increase leads, commitments, work load?
“From there, it’s controlling all costs that are not job-driven. By that I mean the cost of products and job site labor are relatively a fixed and known amount.
“You have the ability to adapt, change and control overhead numbers. Do you really need that truck, or is an ego-boost to see it on the street?
“Have you analyzed your lead sources enough to know whether the flashy magazine ad is helping, or you just like seeing your picture?
“Do you really need that second or third design consultant or production manager, or are they just being carried so you can have ‘the biggest shop in town?’ Are you having meetings just to have them – a non-productive expenditure – or are goals and outcomes set first?
“Any expense that doesn’t generate immediate revenue, needs sharp and critical analysis and needs positive justification.”
Gregory A. Miedema, CGR, CGB, CAPS, president
Dakota Builders, Inc.
“Handle your payroll. One way I do that is when I hire somebody, I give them 90 days on a trial basis so that they can show me that they’re going live up to what they have sold their selves and their work to be.
“I have 90 days to find out if they can’t cut it and I put that trial period in their contract. You don’t want dead weight, you don’t want to hire someone who looks good on paper and then pay them a salary when they are not performing.
“Hiring practice is really important toward controlling payroll, which, therefore, goes a long way toward controlling your overhead.
“Controlling cost is about looking at everything that goes out, to make sure you’re not throwing your money out the window.”
Patricia Davis Brown, CKD, CBD, NCIDQ, ASID
PDB Fine Cabinetry
Vero Beach, FL