Home Industry News REAL ISSUES. REAL ANSWERS: Razor Thin Margins



“Walk away from marginal profit business and concentrate on customers would will pay you for your value.”

“Here in Southwest Georgia, we have lived with this for many years. My best advice is to focus on the needs of the customer, whether they be on hand quantities, we actually ‘stock’ some large quantities for a few great customers to aid in keeping their business, by keeping their production lines rolling. We price match our competitors when asked to. Also we focus on selling the whole job. You can even lose margins in a few places if the overall job generates robust margins in other places. The key is to keep the customer in mind and let them in on sale items they use all the time, offer deliveries that fit their needs. You may even have to ‘teach’ some how to better plan out the jobs to minimize interruption in the building progress, and tips on how to manage the job, ie. onsite storage of some high use stock etc. We’ve found that putting our customers’ needs first and showing a genuine interest in helping them to make their businesses thrive, helps our business thrive as well.”

“Stay the course. Don’t sell out to a big investment firm. If you are familyowned— stay family-owned.”

“You have to stick to your company values and culture. We believe that service will win out in the long run.”

“Continue to emphasize service and try to move away from the price discussion.”

“Identify areas with healthy margins, and focus on them. Leave the low margin sales to the competition.”

Systematize as best you can to eliminate error whenever possible. Train your employees to know when they can have control and when they need to involve you. Teach your people about the value of add-on sales and build your brand so people know your name and will fififi nd you when they need the next purchase.

“Focus on what you do best and target that area. You cannot be all things to all contractors. Sell your products and services at a respectable margin.”

“1: Find a niche that you are good at, that fills a market need and become the best at it. 2: Find a way to provide construction financing. Builders today have less access to capital than ever. 3: Never do business with big national builders. They have only one objective; drive your profits into the dirt. 4: Start a training program for sales staff. 5: Find the best people—and hire them.”

“There are plenty of higher margin opportunities besides new construction and storm chasers. Prospect these other opportunities every day.”

“Continue to think outside the box, create excitement and change for your new generation of customers.”

“Search for customers who will respond to high levels of service and spend your time and efforts on those customers. Find ways to reward those customers with thoughtful gifts at Christmas. Establish personal relationships with customers that are loyal. Don’t ignore the customers that are pricesensitive, but don’t let them consume the valuable time you need to give to customers who value and appreciate your efforts.”

“No dealer can live on razor thin margins forever. Price-matching big box stores who give product away at razor thin margins is not the answer. Find a niche in a customer base that appreciates superior customer service and next day delivery product availability, then keep your margins reasonable. Whenever the big boxes fail, point out their vulnerability in their inability to adequately service contractors’ needs.”

“I would recommend that the ownership of the LBM take a look at the products they sell. They should look for manufacturers that afford them a business plan that separates them from their competition. It is the road less traveled, because it’s hard work to pioneer a program. It should be mutually beneficial with an abundance of open dialogue toward mutually rewarding goals.”

“We are a niche specialty lumberyard. Late in 2015, we shed what I would classify as standard products that could be gotten easily from other suppliers/ dealers. Instead, we focus on our unique products that garner higher margins and walk from or refuse to get involved with products that will be commoditized by other companies. My suggestion is whatever your business model is, figure out your strengths and focus your energies in that arena and spend less time in those areas that have low returns.”

“You need to get out and make more and more contacts with customers you have not been doing much business with. Don’t wait for them to come into your store. Go get them.”