November, 2008

How Are You at Walking on Water?

There is business to be had, but it’s much harder to find. Here’s where to look.

By Bill Lee

I recently read a terrific little book entitled: If You Want to Walk on Water, You Have to Get Out of the Boat. While this book was recommended to me as a tool to help me expand my Christian ministry, I found the title also to be applicable to what’s required of many in our industry who are doing their dead level best to survive one of the worst housing depressions in modern history.

Orders are difficult to come by right now. Owners and managers are struggling with what actions to take and how to make the best of a difficult economy. And the press doesn’t help much, either. When every time you turn on the TV or radio or pick up a newspaper you’re slammed with bad news, it’s even more difficult to keep your chin up and keep on trucking.

There are no silver bullets out there, at least not that I’ve been able to uncover. The only action plan I know of to get through this market and live to fight another day is to get serious about the offensive side of running a business: sales and marketing. There is business to be had, but it’s harder to find.

Repair and Remodeling Contractors

Repair and remodeling contractors have always bought more building materials at higher gross margins than new home builders, but it seems that salespeople only focus on this lucrative industry segment when new construction is tanking.

I have friends who do in the repair and remodeling industry what I do for lumberyard owners and managers and they tell me that while their clients’ sales are down from last year, they’re not off by much. These businesses—many of them mom and pop businesses—are staying busy. I’m trying to get some hardwood flooring installed in my house and I’ve been waiting three months for the contractor I want to use.

Begin targeting repair remodeling contractors! They may not buy the quantities that you’re used to from your home builder customers, but at least they are buying. This is good gross margin business every lumberyard should include in their marketing plan for 2009.

How do you get started? Like all marketing plans should start: make a list and assign the biggest, best and most creditworthy repair and remodeling contractors to your outside salespeople. If you have R&R contractors left over, assign them to your inside salespeople to market to by telephone.

Commercial & Industrial Businesses

Several decades ago, before new construction really took off, this market segment was a staple for just about every
lumberyard. But many building supply companies abandoned it for the higher volume they could generate by focusing on home builders. The good news is that these businesses are still out there, they are still buying lumber and other basic building materials, but instead of buying them from lumberyards, they—like repair and remodeling contractors—have oftentimes taken their business to the box stores.

If you ignore a market segment long enough, it will find another source of supply. So now is the time to revive your marketing efforts and target this business. Use the same strategy as I recommended for the R&R contractor—make a list and assign to your inside and outside salespeople to pick up the telephone, introduce themselves and ask for their business.

City, County, State, Federal

This is another market segment that almost never cuts back on spending. These agencies buy more building materials than you may realize.

Remember the title of an article I wrote several months ago: “Just Because the Worms are Scarce Doesn’t Mean the Chickens Quit Scratching.”

BILL LEE has nearly 40 years of experience in the construction supply industry. A consultant and seminar leader, he is the author of two books: Gross Margin and 30 Ways Managers Shoot Themselves in the Foot. www.BillLeeOnLine.com, 800.277.7888.