Business Operations

Picking Your Product Lines

Now I know a pile of folks who own construction businesses and will install anything the customer asks for. This represents the path of least resistance and does make it easy in the sales process. That said, if you have this mentality you are missing out on a bunch of good stuff, especially money.

Now I know a pile of folks who own construction businesses and will install anything the customer asks for. This represents the path of least resistance and does make it easy in the sales process. That said, if you have this mentality you are missing out on a bunch of good stuff, especially money.

I mentioned last time that you can lock in prices on materials with your supplier so you can establish a price list to use all year. This is the key reason to identify a product line you want to sell and stick to it. At the first level of supply, sticking to one product line enables you to leverage your supplier to stock that product for you. They will not do this if you are all over the map on materials.

To get this started, I research all of the materials available to me first. I want to know everything there is to know about every product. This way I can discuss every product, including the ones I do not want to sell, with my prospects. I want to be the most knowledgeable person they call, and believe me, they will hire you more if you know everything about all of the products out there.

To get this knowledge, I use Google, manufacturers’ websites, contractor blogs, and, above all, the supplier’s sales team and especially the manufacturer rep. In this process of gathering information, I am also evaluating the service from this manufacturer. I am looking at question response time—does he or she answer my questions instantly and with detail? Does he or she have to call someone to get the answers? Do the answers make sense? Did they call me back immediately or the next day or ever? The last thing we want is to decide on a product line and have a rep who doesn’t return calls and doesn’t know their product first hand. And if you are a rep and reading this, there are many of you out there who would not meet my needs. Be the best you can for your customers because they deserve it.

After a full audit of the information and products available to me, I’ve made a choice. It may be the biggest manufacturer in the business, a small one, or a mix. I might prefer two board and three railing manufacturers as part of my overall product offering. I sit down with my supplier and ask what the lead times are for the entire line from those manufacturers. I want to know if I can get one piece in a reasonable amount of time. Often times, a job can get jammed up for a week or more due to a botched cut, damaged materials, or under-ordering. Or, I may not be able to return over ordered or mistakenly ordered materials. I do not want a pile of stuff at my shop that I couldn’t return. That’s lost cash, which is a no go in my book.

I want to agree with my supplier that the lead times will be acceptable and the return policy is in my favor. I firmly believe that 60% of what I need must be in stock at the location and 40% needs to be less than two business days away. I will not pay restocking fees, and special orders will be fully returnable or at a reasonable restock rate. It is on your supplier to make this happen. You cannot build a high volume efficient company without these supply tools. The 60% is framing, flooring, fascia and hardware; the 40% is railing and accessories like lighting.

I need to be able to send in an order for the full project and expect the frame, floor, and hardware to hit the jobsite the next day, and the rest right behind it. Yes, ordering in advance is better, but no matter how good you are, the need for materials today or tomorrow is critical. Your cash flow depends on it.

In exchange for this level of service from your supplier, you are going to agree to buy what you ask them to support. They will be taking a risk on you and you have to return the favor by buying everything from them. Don’t go shopping all over town for the same items. Yes, you can get other estimates to help keep them in check, but you must have loyalty to your supplier. They are a critical part of your business, and they have to make money too for all of this to work.

Your reps can discuss what kinds of loyalty programs are offered. Many manufacturers offer rebates. Many contractors never bother to redeem rebates. I’ll never understand this. Take the time and submit your rebates because it is cash straight to the bottom line. Use these programs to help with your selection. Rebates can easily add 1-2% to a job’s profitability.

Another reason to stick to one or a few manufacturers is support. These are manufactured products and therefore a reasonable level of product issues will occur. You need leverage with these manufacturers in the form of dedicated use to get the level of service and support when you need it. I’d like to say every manufacturer steps up and does a 100% job on replacing defective materials, but I’d be lying. Common sense and history tell us the biggest fish get the most attention. Be that fish. Your manufacturer choices are as critical as your supplier choices.

Some things to keep in mind: Using the largest manufacturers that have market presence makes it easy to sell their products and they often have all of the support mechanisms in place we discussed above, but keep in mind, they may not be as hungry as the smaller guys. The smaller guys might do more for you. This will come into play if you have a competitor who is also using the same materials.

It’s not always good to have six guys all quoting the same materials because this can turn into a price war. Sometimes it’s good to be the odd man out, selling something that’s different. Sometimes it’s good to be the guy selling the same thing everyone else is and be better at it. You just have to decide what way you want to go and commit to it 100%.

 

 

David Elenbaum

David Elenbaum has been in the deck industry since 2000, serving in retail, distribution, manufacturing, and of course, contracting.

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