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The big guys grow not by adding more salespeople, but by getting their existing salespeople to sell more. Many kitchen and bath firms have record growth year after year because they exceed their capacity constraints.
There are major differences between what the most successful dealers do compared to everyone else.
Here’s a quick test to see how you measure up. You don’t have to figure out inventory turns, cash flow or average job completion times by client. Just give your firm one point for each “yes” answer.
Now, for the bad news: The grading scale is tough. A score of 10 is perfect, and nine is okay, but eight or lower means you probably have problems.
Many dealers are running with a score of one or two, and they need serious help to improve. The threat is the big guys who score 10 and plan on moving to a city near you.
If you’re the manager or owner of a kitchen and bath dealership, you can use this as a checklist to make sure your team is working as efficiently as possible. When your firm starts rating a 10, you can leave your team alone and fully focus on expanding the business.
If you’re trying to decide whether or not to take a job at a specific firm, ask your prospective employer these questions and rate them. If the score is low, make sure you’ll have the authority to fix these things. You can also use this test to evaluate a firm you are considering merging with or buying.
Now, here are the questions (aka., the 10 secrets of a successful dealer):
1. Do You Let Salespeople Sell?
Too often, salespeople in the kitchen/bath cabinet industry have evolved into “order takers” instead of salespeople. Why? Because they are so bogged down with manual pricing and paperwork.
Too many salespeople hit the million-dollar barrier where they cannot sell any more no matter how hard they try. The big guys allow their salespeople to sell more by keeping them out of the paperwork world. If you want to do big business and your salespeople can’t handle $3 million per year, you have to streamline your quoting process, give them more customer service support and insulate them from delivery problems.
2. Is Your Purchasing Function Centralized?
Salespeople who do their own purchasing are rapidly becoming obsolete. How many people do you think you would need to process purchase orders for $40 million in revenue? If you answered more than two, you have room to improve. The big guys don’t re-key their sales order info into their purchasing departments. That info is already keyed on the sales side and flows electronically to purchasing, shipping, receiving and accounting.
3. Do You Provide Structured Training?
It’s hard enough to teach someone the cabinet business, much less bring in someone with experience and expect that person to conform to your way of doing business. Unless you drive structured training around an automated process, you’ll have challenges growing sales and profitability.
4. Do You Take Time to Analyze Your Business?
The big guys know the key to growing profitably is determining where the true bottlenecks are, continually improving operations with that information and having the right system to improve. If you’re too busy processing orders inefficiently to even know what’s really happening in your firm, you are at a serious disadvantage.
5. Do You Compensate Your Employees Based on Profitability?
The only way to get designers/salespeople, installers or anyone else to focus on making sure you make money is to share that wealth. Think about this the next time your installer leaves those extra pieces of molding at the job site. Face it: Nobody cares how much the firm makes unless it is tied directly to their paycheck. You’ll be amazed at how fast jobs get completed and how many costs can be saved when your people are compensated on profitability.
6. Do You Offer Standardized Programs for Your Builders?
If your builders dictate what your style and options programs are for their kitchen and bath plans, then you’re allowing them to disrupt your business. Let your builders know you’re the best one to help them develop a standard, consistent program of plans and options. The big guys who drive this process enjoy consistency, fewer mistakes, less variability, better service and bigger profits.
7. Are Your Systems Standardized?
A standard process that can be easily replicated is key. The big firms do it because the owners have already realized they can’t be at all of their locations at once, but need to manage each location as if they were there, especially if they are trying to grow. This includes processes for qualifying, quoting, pricing, purchasing, shipping, receiving and billing. If everyone is doing something different, management by crisis rules the day.
8. Are You Attracting And Keeping Good Talent?
Two things will attract better talent: better compensation and a better work environment. Both of these will get you the best people available because word travels fast in this industry. The big guys invest heavily in tools and technology that allow employees to be more effective, and pay them based on how well they perform financially for the firm.
9. Do You Expand Your Product Offerings with Related Products?
What else can you sell to your existing kitchen and bath clients? It’s far easier to increase revenue by upselling existing clients than trying to acquire new ones. The big guys have this down to a science – offering more products and services and watching sales increase.
10. Are You Opening More Locations?
Once you have your firm working effectively based on these key success factors, it’s much easier to duplicate it and expand into other markets.