Letts get growing

rRSr, A Heppv New Ysen to all our readers. I hope you had a wonderful holiday with your families and are charged up for the year to come. May 2014 be profitable personally and in business.

This year certainly holds a lot of promise, as forecasts suggest the gains of the last two years will continue in2014.Indeed, at the top end of the housing starts forecasts, numbers will approach historical averages. Most businesses that have survived are already facing the challenge of how to grow again. In speaking to many owners, I know some are nervous about the thought-and for good reason. When and where to invest is a tough question.

I think that many would admit that in the yearc 2004-2007 we were all drinking the Kool-Aid and, as the market grew, we may have taken actions that our instincts told us not to. Companies entered the market and, just as quickly, exited it with no solid foundation of business. Others invested heavily, taking on debt to manage what turned out to be phantom business. Many paid a heavy price, and the industry today is a fraction of what it was only six years ago, with an awful lot of pain during the process. But the good news is that if you are reading this issue, you were one of the great survivors of our "Great Depression."

We as an industry (and this is your comment to me over the years) never learn. So the question perhaps to ask as the industry grows again is, how are we going to grow the right way? Whether large or small, we will face the challenge of growth this year.

The challenge is, if you are seeking out new business, it has to be worth the time and risk. Too often we chase new opportunities without considering whether these activities can be short- and long-term profitable, a good use of resources, worth the risk of adding new resources, or fit into the culture of our company. Perhaps the latter is what we do not take heed ofoften enough.

For any growth decision you take (developing or stocking a new product, adding staff, expanding, remodeling, rebuilding, etc.), make sure you have the funds. Monitor your cash flow intently. Nothing chases off your friendly banker like money wildly flowing in and out, as many discovered last time round. Indeed, get the bank to buy into your growth and any short-term negatives that you anticipate. Line up financing before you expand. No surprises!

Keep staffing increases to the minimum to protect cash. Staffing is normally one of our top expenses-consider outsourcing in the beginning.

Work with your suppliers, where appropriate, on scheduling, co-op marketing, training, etc.-all to get your new program off the ground as quickly as possible.

The key to any business success for the long term is to have a strategy that is focused, concentrates on profit opportunities with healthy margins, and allows you to work with customers that are profitable to the company. (Yes, you know the ones you don't want: the ones who are low-margin to start and get even lower with their constant demands). Don't waste time or resources on unprofitable business. Let those customers go elsewhere. Don't let them bleed you.

Identify the driver of your business and concentrate your energies on building that. Understand where you can gain the most. In previous columns I have suggested ranking your customers by their value to your business (by the way, that value changes every year). Pay attention to the quality of their business. Their value is not only the hard profit on products sold, but also includes the costs of servicing them. When that is done, you probably will get a better understanding of their true value.

It's the same with new customers. New business is great-in fact, the lifeblood of every company-but if you lack the skill set in your company to manage this new business, and if it does not fit in with your culture (sales or otherwise), stay clear. All business is not created equal.

Again, have a great year. I look forward to meeting you on my travels.

Alan Oakes. Publisher aioakes@aol.com www. bu ldi n g-prod u cts. com

A publication of Cutler Publishing 4500 Campus Dr., Ste. 480, Newport Beach, CA 92660

Publisher Alan Oakes ajoakes@aol.com

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