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Lisbiz strategies: Lessons learned from my focus group

July 31/Aug. 7: Volume 31, Issue 4

By Lisbeth Calandrino

 

Lisbeth CalandrinoWhen it comes to selling flooring we keep hearing the big box is clobbering the independent retailer. I find this hard to believe, so I decided to hold my own mini-focus group to get a clearer understanding of the issues. I recently convened a panel of 21 women—ages 25 to 65—at a small restaurant near my house. I asked the participants to provide thoughts on their shopping experiences relative to home centers vs. independent retailers. I asked a friend of mine to take notes so I could collect my own data.

Following are some takeaways based on the comments of the participants.

Lesson No. 1: With customer service, perception is reality. “Customer service in retail today is worse than ever.” This isn’t the first time I’ve heard this sentiment. If you have a problem with a product or service, according to my focus group, the independent store is the worst place to get satisfaction. This seems to be due to a couple of things. The big boxes have more money, so they are more likely to solve a consumer’s problem quicker. The more a consumer presses them, the faster her problem will get resolved. Furthermore, it’s hard to find anyone in charge in the independent business. The big boxes often have a customer service department to handle problems, while associates in the independent stores have very little power to solve problems.

For many who have closely followed this industry, this flies in the face of conventional wisdom. It is a long-held belief that home centers and big discount merchandisers lack the skilled work force to provide personal, specialized attention—the hallmarks of the independent specialty retailer. Furthermore, there are countless stories of specialty flooring retailers who operate in the shadow of large home centers and still have managed to not only survive but thrive. And now with the big boxes dramatically scaling back the pace of new store openings, there’s an opportunity for specialty retailers to recoup some share.

My advice: Invest in a customer service department with a different phone number and have the calls go directly to the owner.

Lesson No. 2: Installation is critical. My focus group experiment proved consumers are indeed interested in the installation process and believe certified installers are the way to go. (Another plus in the column for specialty retailers.) They all seem to be aware the big boxes sub-contract their installation and feel that is a bad policy. It signifies that the home center has little control over the process and the warranty is confusing. Furthermore, many home centers continue to de-value the importance of professional services by promoting “free” installation, which is often misleading.

Thankfully, specialty retailers understand the importance of installation, as installers often have the last word when it comes to warranties.

My advice: Look for opportunities to get your installers certified. This will bring credibility to your business and instill greater confidence in the consumer.

Lesson No. 3: More consumers are utilizing technology. In working with my focus group, I learned people utilize technology in different ways. When it comes to ordering online, most prefer to use their computers rather than their phones. In addition, many enjoyed using YouTube to get information on how things work.

My advice: Create a YouTube channel to show your customers how to choose flooring and explain the installation process.

 

Lisbeth Calandrino has been promoting retail strategies for the last 20 years. To have her speak at your business or to schedule a consultation, contact her at lcalandrino@nycap.rr.com.

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Dear David: Managing a business amidst sibling rivalry

July 3/10: Volume 32, Issue 2

By David Romano

 

Dear David:

Screen Shot 2017-03-06 at 10.37.51 AMMy father transferred our business to my three siblings and me quite some time ago. We didn’t pay for it and all have equal ownership. I now find myself doing more for the business than my siblings. When I ask them to work harder and play a larger role they throw our equal ownership in my face. I am now considering opening a separate flooring store without them. Do you have any suggestions before I make this decision and cause more conflict?

Dear Owner,

Starting a separate company may cause even more strife than your current situation. The thought of starting a new company may get your heart pumping and sound like a good solution, but when the adrenaline wears off and you are hit with your new reality it may be more than you can handle. If you are the one carrying the largest workload, you will most likely end up with two full-time jobs because completely exiting the family business could cause irreparable harm to your family.

If your father had structured the transfer differently you could have avoided this mess. Not assigning one of you controlling interest is the main issue and is a real impediment to an effective solution. Here are some recommendations:

  • Sit down with your dad and siblings and discuss what you’re feeling. Let them know just how bad it is and that you are considering opening your own flooring store without them. During the conversation ask for a renewed commitment from each sibling. They may not know what they are doing is having such a negative effect on you or the business.
  • If they do commit, define roles and responsibilities. A clear understanding of what is expected is important for everyone whether or not he or she is part of the family. This exercise may be enough to get them re-engaged. You need to define what each should be doing and what each task looks like when done right. Check on their progress in 90 days to ensure no momentum is lost.
  • Make adjustments to how everyone is paid so they are rewarded for their direct effort. Just because you are all equal owners doesn’t mean you all need to receive the same amount of pay. If you all sell, set up a plan where each gets a lower salary and then earns commission or bonus once their salary is covered. If anyone’s function is not sales related, research what his or her position would be paid if you were to hire someone else to do the job. If the position should be paid less, pay them less. If the position should be paid more, pay them more.
  • If all else fails get an objective evaluation of the business done to find out the value of each shareholders’ stake in the business. If some are not willing to pull their weight buy them out. If you do not have enough cash to pull this off, I suggest you look at getting some funding. If you cannot get the funding you may consider buying enough equity from them to gain controlling interest.

Best of luck in this venture, and if you one day find yourself in the same position as your father where you want to transfer the business to your children do not repeat the same mistake. Have them buy into the business, assign controlling interest and be involved in setting clear expectations.

 

David Romano is the founder of Romano Consulting Group and Benchmarkinc, a group that provides consulting, benchmarking, recruiting and software solutions to the flooring, home improvement and restoration industries.

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WFCA University adds to destination training, online offering

WFCA logoDalton, Ga.–In response to a recent membership drive and member demand, World Floor Covering Association (WFCA) has expanded its University course offerings with extended online training modules and destination camps across the country, according to Freida Staten, vice president marketing and communications. WFCA University is the association’s own professional training program geared exclusively to the needs and interests of members.

The professional development tool, which is available as a subscriber service for WFCA members, consists of primers, research, online training and seminars as well as on-site regional training programs to help retailers reach the top of their game. Just a few months after its launch, WFCA University has expanded training programs by nearly 20%, with 46 training modules available online through the subscription program and 11 new destination camps planned in seven locations across the U.S.

The extensive training program offers educational courses for professionals in a wide variety of functions including sales, merchandising and human resources. The coursework is broken down based on the career path and professional stage. “Upon initial launch of the WFCA University program we saw many middle, senior and owner-level executives tapping into the training program,” Staten said. “Since that time, the adoption rate of our program has broadened to include many professionals in the early and middle stages of their careers.”

For more information visit wfca.org, email Tom Jennings, vice president, professional development, WFCA, or call 816-231-4646.

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Marketing Mastery: How a burned-out dealer got his life back

April 24/May 1, 2017: Volume 31, Issue 23

By Jim Augustus Armstrong

 

(Third of three parts)

Screen Shot 2017-03-06 at 10.45.16 AMIn part one I told the story of Earl Swalm, a dealer from Canada who increased his revenue by 50% and cut his work hours in half. In part two I covered some of the strategies he used to grow his revenue. In this section I’ll discuss how he was able to cut his work hours.

Overwork in the flooring industry is epidemic. It’s much more common for a dealer to work 60-plus hours per week than 40.

A one-store dealer who is putting in 60 hours per week generally can’t imagine opening a second store, let alone five or 10 more. They’ve put themselves in a position where if they don’t show up for all those hours things start to fall apart. Yet there are plenty of dealers who own five to 10 stores. It’s physically impossible for them to put in 60 hours at each store. So, what are they doing differently?

In a word: systems. A system is a written procedure, process, method or course of action designed to achieve a specific result.

A dealer with 10 stores has to be system-dependent, meaning his stores have written processes and procedures that can be taught, and which employees can be held accountable to follow.

An owner-dependent business is the opposite. If the owner doesn’t show up for any length of time, things quickly fall apart. This type of business usually has few—if any—written systems.

Over a period of about 12 months, Swalm made the transition from being owner-dependent to system-dependent. “It didn’t happen overnight,” he said. “It was a process where I systemized small chunks of my business at a time.”

Here is a partial list of the things for which Swalm created written systems:

  • Greeting customers
  • Opportunity tracking
  • Measure tracking
  • Material tracking
  • Sales presentation
  • Purchase ordering
  • Post-sale, pre-installation communication
  • Post-installation referral and testimonial gathering

Training for success
Swalm has regular training sessions to keep his team up to speed on the systems and to hold them accountable for following them. When something breaks down in the system, he doesn’t jump in and do the task himself; he fixes the system. “This is called working ‘on’ rather than ‘in’ my business,” Swalm said.

The role of software
“I am a big believer in software,” Swalm explained. “I used to try to keep everything in my head or in a job folder, but there is no replacement for ‘working software.’” I agree. However, software doesn’t replace systems. There are plenty of dealers using quality, industry-specific software who are stressed out, working 60-plus hours per week. Software is merely a tool to make your existing systems more efficient. For example, inventory tracking used to be done on paper. Now software can help you do it much more efficiently. But it doesn’t replace the need for an inventory system.

Transforming your business so it’s system-dependent may sound like a lot of work. It is. But what’s more work: implementing systems, or spending your life working over 60 hours per week?

If you have questions or need guidance on systemizing your business, I’d be happy to chat with you. Email me at support@FlooringSuccessSystems.com.

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Marketing Mastery: Note to dealers—Beware of burnout

March 27/April 3, 2017: Volume 31, Issue 21

By Jim Augustus Armstrong

 

(First of three parts)

“I was putting in 60 or more hours per week,” Earl Swalm told me. “I have two kids and I felt like I was missing out on a lot. It was really tough, very stressful.” Many dealers can relate.

In this series you’re going to learn Swalm’s story. Specifically, how he took control of his business, cut his work hours by more than half and grew his revenue by 50% in one year.

Swalm owns a flooring dealership in Moosejaw, Saskatchewan; he bought the business in January 2000. He worked many 70-plus-hour weeks for 10 years. “I started to implement paper systems early on, but couldn’t escape the ‘I wish I could find someone just like me’ syndrome,” Swalm said. “I felt like if I didn’t do it myself or babysit it, things wouldn’t get done right.”

He liked the flooring business, but he couldn’t escape the fact he was working for his business instead of it working for him. The long hours, stress and the burnout were taking their toll. “I finally decided to sell my business,” he told me. “I couldn’t see any other way to get my life back.”

This is something I hear from a lot of dealers. They get into the flooring business because they see it as a better opportunity than a 9-5 job to create a great life for themselves and their family. Unfortunately, for many the dream of owning their own store turns into a nightmare, with long hours, stress, not enough money, etc.

Swalm began to research selling his business. He wanted to get top dollar, so he reached out to me to help him with his marketing and business systems so the store would be more appealing to a buyer. He began implementing systems and strategies to make his business more profitable and efficient.

About a year into this process I got an email from Swalm saying he’d decided not to sell after all. Curious, I called him and asked why. “Because I’m only working about 35 hours per week,” he quipped. “Business is fun again. Why sell it?”

In my opinion, the purpose of your business is to fund and facilitate your ideal lifestyle. Providing employment and great products and taking excellent care of your customers are all important. But if you’re not funding and facilitating a great lifestyle, then what’s the point? If you’re stressed out and tired all the time, then what good does that do you? Life is too short to live it burned out and wishing for something better. The bottom line: Make it count.

In the end, that’s what Swalm decided to do. Today he works an average of 35 hours per week and oftentimes only 25. He regularly takes time off, including 10-day trips away from his business. And while he’s away it continues to run like a well-oiled machine. Last fall his revenue was up 50% year-over-year.

“I now work from home a couple of days a week,” he told me. “My day starts at 7 a.m. and I usually quit by noon or 1 p.m. Last Thanksgiving I took four days off and completely unplugged from work. In the past, when I’d take time off, I would check emails and take phone calls, so I was still mentally working. But now I’m totally present for my family, and I really enjoy myself. It’s great.”

In the next I’ll cover the sales and marketing strategies Swalm used to grow his revenue and review the steps he took to cut his work hours.

 

Screen Shot 2017-03-06 at 10.45.16 AMJim Augustus Armstrong specializes in providing turnkey marketing strategies for flooring dealers. For a complimentary copy of Jim’s book, “How Floor Dealers Can Beat the Boxes and Escape the Cheap-Price Rat-Race of Doom Forever,” visit beattheboxestoday.com.

 

 

 

 

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FlorStar: Building a business based on service

February 13/20, 2017: Volume 31, Number 18

The following feature is the second installment in a series highlighting the 14 distributors that constitute Bravo Services, a group comprising many of the top flooring wholesalers in the country. Here we focus on FlorStar Sales, whose origins are rooted in the 19th century.

Screen Shot 2017-02-20 at 9.26.29 AMFlorStar’s modern history began in May 1988 when Wade Cassidy, current owner and chairman, led a management buyout of the flooring division from Carson Pirie Scott & Co. The highly leveraged transaction was not lacking in risk—Cassidy and other managers put up their homes and provided personal guarantees to secure necessary financing. Fortunately, their entrepreneurial spirit, work ethic and support from vendors and customers allowed FlorStar to persevere.

FlorStar reflects its chairman’s humble origins. Cassidy grew up living over a chicken coop in rural Maryland and, as the oldest among his siblings, worked multiple jobs while attending school to help support his family.

In February 2005, the company moved to its current headquarters and main stocking warehouse located in Romeoville, Ill. In 2008, FlorStar entered the hardwood sundries and supplies business via acquisition and has continued building its presence in that space. Ownership consistently has embraced technology and reinvested in systems and its people. FlorStar was among the first in the industry to configure its warehouses with space-saving, narrow aisle racking and wire-guided turret vehicles. The firm’s long-tenured management team, averaging more than 20 years of FlorStar experience, is also relatively youthful with employees in their mid-40s on average.

“Wade’s fair and ethical treatment of customers, vendors and employees, as well as his constant reinvestment in the business, motivates folks to do business here, come here and stay here,” said Scott Rozmus, who was named CEO on Feb. 1.

Among the more significant challenges the flooring industry faces is the decline in the number of independent floor covering retailers and qualified installers. FlorStar addresses these challenges by, among other things, adopting policies and programs to support independent retail. Whether through flexible credit, just-in-time inventory services, technical support, training, participation in organizations or otherwise, FlorStar promotes and encourages the growth of healthy, independent retailers and highly qualified installers.

Going above & beyond
FlorStar has had sales professionals drive six hours to obtain and drop off additional material a dealer needed to complete a job… After the terrorist attacks on 9/11, when all the airports were shut down and no rental cars were available, the company gave someone who had been stranded a lift in one of its trucks (in the cab, not the van) so he could get to his home six hours away.

Nuts & bolts
Geographic coverage: All or part of 10 states: Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.
Brands: Armstrong, BASF, Bella Cera, Bruce, FlorStar Glass Mosaics, FlorStar Porcelain Naturals, From the Forest, Healthier Choice, Homerwood, Inhaus, Lauzon, Milliken, Mullican Flooring, Next Floor Carpet Tile, Qu-Cork, Sika, Sound Seal and VPI.