May, 2008

Finding Diamonds in the Rough

Even small-time remodelers can be nurtured into a growth spot for your business.

By Dave Klun

The remodeling industry does have some variation in its ranks. So far we’ve talked about the professional general contractor as the primary target for building new sales efforts, but there are also other players who work on existing housing stock that offer opportunities for lumberyards.

One major component of the remodeling industry that has traditionally been catered to by LBM yards is the specialty contractor— those experts in siding, insulation, drywall, millwork, windows, or roofing.

The last 15 years has seen a gradual shift in their sales destination away from standard lumberyards and toward dealers dedicated to supplying their specific material needs. While you may be able to fill in the odd corner for a specialty contractor, you have little chance of competing head-on with suppliers that need to maintain such limited inventory. As more sales are lost to specialization, it becomes that much more important for LBM dealers to find new avenues
to develop sales accounts.

Another area of construction that can be difficult for a sales staff to pigeonhole, but which remains a source of revenues
nonetheless, is building and property maintenance. Some of these accounts will be no more than a caretaker with minimal duties and little potential for increased sales. Others will be property management companies or building supervisors for large, multiunit developments. These can be well worth taking the time to identify as possible growth areas. Developing a product line that satisfies their needs will encourage them to use your outlet as a main source for materials for property management.

At the other end of the spectrum are the very non-specialized contractors, generally known as the handyperson trade (yes, it transcends gender). A novice carpenter/entrepreneur will initially be attracted to the cash ‘n’ carry and big box suppliers. They’re user-friendly (sort of a drive-thru supermarket); they stress cost-savings (matching the quality of inventory and staff), and they accept any form of plastic (no need to fill out those pesky credit applications). In
short, for a handyperson, those big boxes are accessible and non-threatening on both a personal and financial level.

Many of these people will also visit LBM yards. And, yes, some will never be anything more than a drain on your resources, looking for free advice for their next project. But before writing off all of these types of contacts as poor risks, keep in mind that you will find diamonds in the rough. However, passively waiting for the top prospects to reveal themselves won’t build quality sales leads.

There are some basic qualifiers for identifying the best leads. Is this simply a seasonal worker, providing some supplemental income to their primary career— say, a teacher repairing old windows? Are they supporting themselves or their family from this work? Do they use other tradespeople on their jobs? Do they use LBM dealers, rather than cash ‘n’ carry, for most of their materials? How much do they order every year?

With answers to these questions, you can make decisions on which relationships will bear fruit. Even at the small level at
which many of these people operate, finding out how dedicated they are to their work or how they see their future in construction will give you an idea of which accounts to pursue. Spend the time getting to know their needs. Put extra effort into answering their specific questions on products. Help them to streamline their relationship at your yard—even free lumber deliveries can be a revelation to someone accustomed to a daily lumber pick up.

With proper support, some of these oneperson outfits will grow to become professional remodeling contractors. And they will remember who was willing to champion them during their early struggles.

DAVE KLUN and BOB BUCK have extensive experience in the remodeling industry— Buck as a pro remodeler, and Klun as an LBM dealer focusing exclusively on this category.