Fire Bullets Before Cannonballs To Build Business

If you haven’t read Great By Choice yet, pick up a copy of Professor Jim Collins’ latest book soon. It will prepare you for thriving in a business world of uncertainty, chaos and rapid change; in other words, what we’ve all experienced in the kitchen/bath industry over the last five years and what we continue to deal with today.

Indeed, Collins predicts this will be the norm for the next few decades. So this book is important reading. Great By Choice chronicles why some companies in certain volatile markets have succeeded spectacularly while others, often pioneers, have not.

Collins writes: “Of course, it is not discipline alone that makes greatness, but the combination of discipline and creativity. The great task, rarely achieved, is to blend creative intensity with relentless discipline.”

SHOWROOM EXPANSION

Collins’ nine years of research revealed a conundrum: bet big on the wrong innovations, or fail to properly execute the correct ones, and your company can become vulnerable quickly. On the other hand, if you, as the owner, become paralyzed out of fear of making the wrong changes, your company may be swept aside by the competition and become irrelevant just as quickly.

So how does this lesson of blending discipline with innovation and creativity – of “firing bullets before cannonballs” as coined by Collins – apply to kitchen/bath dealers? From my perspective, it’s applicable in all ways imaginable, but most conspicuously when it comes to showroom expansion.

For example, how many dealers do you know in the industry that shot a cannonball first when contemplating an expansion? I’m reminded of a dealer, who I’ll call Paul, who had a viable $1.2M dollar kitchen business catering to builders. He was renting about 1,800 square feet of showroom and office space in the front of an attractive, stand-alone building. The building’s owner ran his business out of the balance of the space in the rear, occupying perhaps another 6,000 square feet.

Being both innovative and aggressive, Paul figured that he could triple his business by going after the consumer carriage trade. When Paul heard that his landlord was thinking of retiring, or at least scaling back his business, he initiated a discussion about taking over about 3,000 square feet of additional space for an expanded showroom. Then he asked for my advice.

My suggestion was to first prove that he could attract and sell the targeted clientele from the current showroom space and with his current staff by:

  • Adding a furniture-grade cabinet line, showcasing it in a small new display with an upscale theme;
  • Adding a master bathroom display and getting his sales designers trained to sell these kinds of projects so they were equipped to do whole-house interior remodeling projects;
  • Converting his showroom into an educational center, installing a cabinet comparison display wall and conducting consumer seminars on topics of interest to this market;
  • Investing in a marketing campaign that validated his company’s expertise in remodeled kitchens, bathrooms, master bedroom closets and cabinetry storage around the house.

Much to my dismay, he decided instead to fire not one, but two cannonballs. He went ahead with the 3,000-sq.-ft. showroom expansion. However, before he completed this major undertaking, and proving that his new 4,500-sq.-ft. showroom/office would generate in practice the desired revenue and net profit, he learned that the building was being put up for sale. He bought the building in 2007 just as the housing market was crashing. Highly leveraged, and now made more vulnerable with radically contracting cash flow, he was out of business within a year.

Sadly, his story represents a large swath of our industry’s retail owners. Driven more by ego and creative design than empirical analysis and validation, many kitchen/bath owners have fallen by the wayside, or have never been able to build their business into an engine of spectacular wealth. Why? They simply won’t follow a pattern of taking small, disciplined steps forward on a steady march toward that goal.

EMERGING TECHNOLOGIES

New technologies and social media seem to be all the rage these days. Those of us who are ill-informed or uncomfortable with these galloping trends would do well to learn from Collins’ advice: fire bullets first – before cannonballs – to build your business. Collins defines a bullet as an “empirical test aimed at learning what works and meets three criteria: (1) low cost; (2) low risk; and (3) low distraction” for the overall enterprise.

Now imagine for a moment that the first industry-specific, end-to-end management software program has just come out. Though not technologically inclined, you’ve been secretly hoping for some kind of comprehensive automation that would make the job of managing a kitchen/bath firm simpler and more profitable. This management tool is being promoted as eliminating redundancies, improving productivity, delivering superior customer service and, as a result, gaining significant market share. How can Collins’ lesson on firing bullets first be applied?

Start by having a free demonstration. Let your staff be briefed on the product. Interview several kitchen/bath owners who have used the product for several months. If everything checks out, buy just the basic package. Don’t buy licenses for everybody on your staff – or for your subcontractors – just yet. If it is a full-cycle software program, there will be modules for just about every task in producing a new kitchen or bath: from client data entry (CRM), to lead/sales analysis, to good-better-best budgeting (so consumers can shop within your company and make a quick commitment), to retainer agreements, to integrating with CAD programs, to job estimating, to contracts, to integrating with Quickbooks, to electronic ordering, to job scheduling, to project management, to final invoicing, and to warranty work.

Plan on learning, testing and mastering one module per week. Only after you have successfully tested all of the modules in actual daily use should you suspend your old systems, consider ordering additional licenses or step up to a premium package that would offer additional, useful benefits.

Such a “calibrated cannonball” is fired only after a satisfactory succession of bullets hitting their targets.

 

Ken Peterson, CKD, LPBC, is president of the Chapel Hill, NC-based SEN Design Group, which co-produces the 2013 regional seminars with Kitchen & Bath Design News. Peterson can be reached at 1-800-991-1711 or kpeterson@sendesign.com.

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