Home April 2015 TOUGH CALL: Breaking Point

TOUGH CALL: Breaking Point

TOUGH CALL: Breaking Point

Your local market is well into recovery mode, but the owner of your yard refuses to ramp back up. What would you do?

Touch Call - Breaking PointThis June marks your 10th year as the general manager of the leading independent yard in your market. Needless to say, it’s been a wild ride. You took the reins in the last few years of what turned out to be an unprecedented housing boom. We all know how that one ended… with the bottom dropping out of the market and the Great Recession. As tough as that time was, your company managed to work through it. Yes, you had to say goodbye to some great team members, and all capital improvements were put on indefinite hold, but you made it.

Based on conversations you’ve had with builders, homeowners and remodelers in your market, you see 2015 as having tremendous potential for your company to post strong sales and healthy margins. There’s just one thing holding you back: Phil, the founder and sole-owner of your company.

While other companies in your market have been steadily ramping back up over the past few years—re-adding staff, modifying their product mix, updating software and putting new systems in place for the eventual rebound—Phil refuses. When you discuss the resources you need to move the company forward, his reply is always the same. “Not yet. I don’t want to be over-extended again the next time the market crashes,” he intones. “Better safe than sorry.”

You understand caution, but Phil’s skittishness ignores the reality of your market. For the past four years, sales have increased by double-digits. Phil’s refusal to let you hire additional staff means that your existing team is being worked to the bone. They appreciate the extra overtime money in their paychecks. But with each one doing the work of 2-3 associates, they’re simply spread too thin. You’ve already lost two of your best people to a competitor who offered healthy pay and benefits—and a reasonable number of hours per week. You’ve turned down several job offers, too.

Also, your POS software and other systems are badly out of date. Your lumber storage area is overflowing, and is in desperate need of expansion. These issues were causing problems before the crash, but Phil cancelled all upgrades planned for winter of 2008—and simply refuses to take a fresh look at the problem of aging, obsolete infrastructure.

You’ve worked for Phil for 35 years. He’s a good guy and an honest businessman. While you want to stand by his side, you’re concerned that the decisions he’s making (or refusing to make) are bringing your company to a breaking point.

What would you do?
1) Straight Talk. Sit down with Phil and state your concerns, with facts to back them up. Tell him that his decisions are tying your hands, and crippling his company.
2) Ultimatum. Tell Phil that his refusal to move forward have already cost him two of his best people, and unless he changes his stance, you’re going to leave too.
3) Reassure. If Phil agrees to give you some latitude to do your job, and to make some executive decisions, assure him that you can bring the company back on track.
4) Walk Away. As much loyalty as you feel for Phil, there’s no sense sacrificing your livelihood. It’s time to negotiate your future with a competitor, then walk away.

What would you do?

Something else?
If you’d take a different plan of attack, email your suggested solution to Rick@LBMJournal.com.

Got a Tough Call of your own? Send it to Rick@LBMJournal.com.