Kitchen & Bath Business July/August 2021 - 26

DEALER DISH
Don't Kill the Messenger
EVEN DESIGN SHOWROOMS CANNOT RELY solely on design skills. Kitchen
and bath business owners are increasingly realizing the importance of
implementing - and regularly updating - sound business management
strategies to run a strong business. As the head business coach at SEN Design
Group, I help showroom owners grow their business. Many of them simply
need to adjust their business management plans to move on stronger. Others,
however, have reached a turning point. Whether they are emotionally drained
or fi nancially bruised, these owners are having to consider taking a step back
and downsizing operations. Why does this happen and how can you identify
the moment to act?
COMING UP WITH THE DIAGNOSIS
Th ere may be both qualitative and quantitative triggers for this process.
For example, from a qualitative standpoint, as a showroom owner, perhaps
you have realized that your skill set is not in hiring, training and managing
salespeople. Perhaps the last recession taught you that sales management is
not your strong suit. Or you may have accumulated frustration seeing your
salespeople lose business. Th ose are qualitative stress points.
From a quantitative perspective, on the other hand, as I see frequently in the
kitchen and bath industry, many owners have been too far removed from the
fi nancial workings of the business. Th ey concentrated energy on what they
love and are good at: the design and sales side of the business. Many of them
never developed a command of the fi nancial structure nor have mastered
the business literacy. As a result, when sales slump and revenue drops, the
weaknesses of the business become apparent.
If you have come to either of these realizations, the next question becomes:
When is it time to downsize? Th ere is not an easy answer because
circumstances are diff erent for every business. However, there are four clear
indicators to help you determine if the time has come.
26
Four signs it's time to downsize your
kitchen and bath operations
1. Th e number of days from lead to closing is
30%-50% longer. When this happens, cash
fl ow drops respectively. Th erefore, it is important
to have a comprehensive lead system in
place to produce accurate data instantaneously.
2. Your larger customers are not paying within
30 days or running signifi cantly late on their
payment terms. Most kitchen and bath companies
collect a 50% deposit. Let's say you
have a builder or contractor who has started
to lag making the second 50% payment. It
starts lagging one week, and then on the next
job it lags two weeks. Th is creates a shortage
of cashfl ow to run your business.
3. Th ere is no more overhead that can be cut
for the downsized operation. You should
consider getting input from a reliable third
party (a business coach or a board of directors
group) because frequently a professional
more distanced from the business than the
owner can recommend additional cuts owners
cannot see.
JOHN LANGis the
head business coach
at SEN Design Group,
a national kitchen and
bath industry business
education resource and
buying group.
4. Th ere no longer is a positive monthly cash
fl ow - which is the primary goal of every
business during a recession, not necessarily
making a profit. The firm is running
45 days or more on its payables to vendor
partners. It should be noted that a rolling
three-month cash fl ow forecast is the key
/ JULY-AUG. 2021 / KBBONLINE.COM / Th e offi cial publication of NKBA (NKBA.org) and KBIS (KBIS.com)

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Kitchen & Bath Business July/August 2021

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