November, 2006

Don’t Kid Yourself About Your Business

Beware of copouts that stifle profits.

By Bill Lee

Managers who expect to grow and prosper must look at their businesses as objectively as an outside analyst would. Do any of these copouts apply to you?

I’m the third generation and I’ll survive just like my dad and granddad did.

Nothing could be further from the truth. The graveyards are full of business owners who were content with the status quo. Some change is essential.

If you want different results, you must commit to doing some things differently than you have done them in the past.

Avoid breathing your own exhaust for too long: schedule visits to successful businesses outside your trade area.

Borrow their best ideas and begin implementing them in your business.

No matter how successful you think you are, many owners and managers out there are running their businesses more efficiently than you are.

There are no more good people left for me to hire. We have to settle for other companies’ rejects.

This is simply untrue. There are quality people in every community—you just have to set high standards and look until you find the people who meet them. Make hiring a process, not an event; be on the lookout for good people continually. Don’t wait until you have an opening to begin. Good people are like good ideas: they’re rarely going to come looking for you. You have to spend enough time to find them.

We have the best service in town.

Says who? Service is in the eye of the beholder. I know one business owner who recites the results of his customer satisfaction survey each time he loses a customer. He refuses to admit that his service may not be so great in the eyes of those customers who have left him to do business with the competition.

Good service is relative. Until you begin measuring it and comparing how well your company performs in the current period versus previous periods, and comparing each aspect of your service against that of the competition, you cannot make this claim. Answer the questions: “What are the odds that an order we receive will be shipped complete, with no backorders? What are the odds that our deliveries will arrive when we promise that they will be there?”

If it ain’t broke, don’t fix it.

This mentality allows dealers to overlook innovative marketing or operational techniques that may be superior to their current way of doing things. There was really nothing wrong with that old Burroughs bookkeeping machine you replaced with a computer system. It wasn’t broken, but it sure was obsolete.

We don’t have time for training and we can’t afford it.

As long as our people have good product knowledge, that’s 90% of the training battle.

If you don’t think you can afford to train your people, how much do you think ignorance is costing you?

In the absence of training, your people eventually become obsolete. Exposing your people to new ideas and new ways of doing things more efficiently and more effectively is a great investment. As an example, how much more gross profit do you think your business could generate if your outside salespeople were more effective at dealing with pricing objections? To gain this expertise, your salespeople must be trained.

(This is why Lee Resources is partnering with LBM Journal to host a Sales Success Conference December 5–7 in Dallas. At this conference you’ll learn how to boost your company’s market share during a housing downturn. For more information or to register, call Lynn Schwarz at 800.277.7888, or e-mail Lschwarz@LeeResources.com. This conference targets both sales managers and salespeople who sell to contractors.)

My competition won’t allow me to earn an optimal bottom line.

Opportunities for 6% to 8% profit margin before taxes are available to any dealer serious enough to develop a profit plan and with the personal discipline to work the plan. It’s not too early to begin your profit planning process for 2007.