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By Steve Ondich Atlas Lumber Co.

Sales and earnings over the last five years were strong. There weren't a lot of new accounts opened, but existing accounts kept growing.

fANUARY is over j and I can report with confidence that sales were heated, fax machines were spewing purchase orders, many customers experienced record growth, optimism was in ample supply, and the availability of raw materials was a major obstacle to sales growth. Of course, I'm referring to January 2006.

Fast forward to January 2OO7 and we're looking at a completely different climate. If you believe that the market for building products will recover by the 2nd quarter of 2OO'7, you do not need this information; please skip ahead to the next feature article.

When I speak with my colleagues in the lumber and building products industry, I can barely finish saying hello before I'm asked "How's business?" People tend to ask that when business is not so great. They want the reassurance of hearing that their problems are industry-wide, outside of their control, and certainly nothing that they could have prevented. If that sounds reasonable to you, please understand that there's no honor in going broke regardless of the surrounding circumstances.

Many sales managers in our industry are scared because they don't know how to respond to the challenges we now face. The companies I speak with have a lot in common.

Outside reps were left alone rt provided they turned in -r good sales numbers. Reps ' who performed below average may not have con, tributed much to the sales effort but it was easy to gloss over. Orders seemed to materialize without much effort. At times, orders materialized so effortlessly and with such consistency, there was probably some debate over whether outside sales reps were needed at all. Treading water was great when the tsunami of homebuilding was dragging everything in its path along for the ride to prosperity. Now that the wave is receding, everyone is trying to remember how to swim.

How did this happen?

Managers di.d not intervene when their reps stopped doing outsi.de sales work.lt's typically easier to squeeze more business out of existing accounts than to try to open new ones. This is not lost on reps, so it's not surprising that many of them got out of the habit of networking and prospecting. Given the choice of having lunch with their top account or trying to make appointments to meet with new ones, most reps would choose the former.

I agree with their logic to some extent. However, the purpose of the outside rep is to drive new business that the company would not have otherwise received. Inside reps and support staff are in charge of processing business that the company already has. When outside reps take on the duties of their inside counterparts and lose interest in driving new business, there's a problem.

Reps put all of their eggs in one basket, and then left to golf.We've all heard the warning against putting all of our eggs in one basket. Twists on that clich6, attributed to Henry Ford, is to go ahead, put all of your eggs in one basket, but watch that basket. Many reps do not watch their basket. When people pay attention, they're more likely to anticipate and deal with changes. Reps that become pigeonholed in specific accounts or industries can appear very successful when their niches are healthy. A better indicator of sales aptitude is how well they respond to changing markets.

Managers failed to plan.Yery few industries consistently grow from year to year with no major fluctuations. The residential construction slowdown should have surprised no one, yet I talk to knowledgeable industry people who were blindsided by it. Too many companies made no effort to protect themselves from the inevitable. Now, they're scrambling to react. Sports psychologist Timothy Gallwey observed that athletes who are faced with unknown or uncertain situations experience muscle tightening and tend to freeze up, hampering their performance. Manager who failed to plan for a market shift may find themselves choking under the pressure of how to respond.

We have no time machine, so what can we do now?

a I o Make a realistic assessment of your sales team

Be honest about the strengths and weaknesses that are now apparent. Do you have any of the following personalities on your sales force?

The pilot fish. A pilot fish gets its meals by following large sharks and feeding off the crumbs from the shark's prey. Pilot fish are so insignificant to the shark that they're largely ignored. In the business world, a pilot fish rep latches onto a big account, yet produces very little business for his or her company. The marginally good news is that some working relationship has been established with a large account. The flip side is that a big account is being tied up by a rep that is not viewed as a serious vendor. Pilot fish reps need to elevate their relationship with their sharks or forfeit the accounts to other reps who won't settle for a periphery role. The insignificant business activity aggravates the situation because managers are likely to allow an ineffective rep more time to monopolize the account. If they've been assigned to a large account, they have an obligation to turn in large business. Giving reps exclusive rights to an account (keeping other reps out) is a privilege. Make sure they see it that way, too.

The ghost hunter. The ghost hunter has derived years of commission from a certain account or industry. He refuses to believe that those dependable accounts are no longer capable of driving the business that they once did. Instead of shifting his focus, the ghost hunter stubbornly tries to recapture past glory, Maybe he's so scared of prospecting again that he's in denial. Perhaps he's fallen out of touch with his own industry and doesn't recognize what has happened. He's attempting to plow a barren field and it's your duty to bring that to his attention and get him redirected.

The wilting rose. This person may have been a top performer at one time, but has consciously or subconsciously reduced their personal level of expectations. Maybe they've amassed or inherited enough money that they don't feel the need to push themselves very hard. Reps are used to working and thinking independently, so they may feel it's okay to sell less as long as they're okay with the lower commissions. Most companies in our industry have substantial fixed costs that must be supported through sales.

If you have to fire drivers, warehouse, or support staff because of low sales, make sure the Wilting Rose makes that connection. If money is no longer a motivating factor for them, you must show them the association between your company's success and their own. Even if they lose their hunger for commissions, few people lose their pride. Make sure they know if they're letting the company down.

.t lo Make some chanses

Change how your.-"p, -" compensated (gasp!). Reassign accounts. Hire new representatives. Create special contest or promotions. It's possible to be in a rut even while you're prospering. People work through it for the money. When business slows down, that incentive becomes less appealing. To some extent, modifications of any magnitude will cause new things to happen. Reps will get the message that changes are happening and they'll refocus and adjust their mindsets, accordingly.

Be sure to carefully analyze any policy changes before implementing them. An across-the-board cut of the commission rate is unlikely to go over well, regardless of how it's presented. If, however, you switch sales compensation from salary to commission, it may cause reps to look for new types of business that they previously ignored. Certain personality types thrive in sales under a salary but cannot handle the uncertainty of commission sales. Consider customizing packages to achieve the best results from individuals, instead of offering the same package to everyone.

When bringing on a new hire, take care not to alienate your existing workforce. Regardless of how excited you are about their potential, they still need to prove themselves at your company. During my senior year of college football, our coaches recruited a talented player who played at my position. The new competition did not bother me. What hurt was the way my position coach treated him. He was ecstatic to have recruited him and it showed. The recruit was a better player than me and deserved the spot, but I couldn't help but feel abandoned by the coach I'd worked so hard for in the past.

In business, if you pull out all the stops to hire a superstar who leaves after 6 months, you may have to deal with a disgruntled sales force in addition to a grossly inflated payroll. at Or Have management roll up their sleeves.

Don't blame your sales team for problems that you failed to head off. In l2-step programs, it's called enabling. Even if your reps have historically operated without much oversight, turn over a new leaf. Change will not happen without someone leading the way. Ask to arrange joint sales calls at accounts where you suspect there may be unresolved issues or untapped potential.

If you're unsure about the way an account is being handled, go with your instinct and contact the client directly. They may be more candid with you than they would with their rep present. Remember, you're calling to find out how your company is doing for them, not to check up on your rep. If the sales force sees management actively taking steps to grow the business, they're more likely to follow suit.

4. R"-"-ber what this feels like.

At some point, our industry will pick up steam and once the feeling of eminent danger has passed, a lot of the participants will revert back into their bad habits. If you can retain a healthy amount of skepticism and fear, you'll be in a better position to weather the next downturn.

Intel Chairman Andrew Grove penned the book Only the Paranoid Survive.I recommend reading it to get a sense of the speed with which revolutionary changes occur in the high tech marketplace. Afterwards, you'll be a lot less intimidated by a slowdown in the housing market.

F lDo Stav positive.

Wtren iimes are difficult, you're often forced to make unpopular decisions. There is absolutely nothing to be gained by projecting an image of misery. Would you be inspired by the leadership of a crestfallen loser? Even if you just laid off 75Vo of your work force, the remaining 25Vo need strong, positive leadership, probably now more than ever.

- Steve Ondich is v .p.-sales & marketing for Atlas Lumber Co., Chino, Ca. As a freelance writer. his work has beenfeatured in Woodworker West. IIe can be reached at (909) 591-9442 or steve@ atlaslumber.com.

Rrrlrr:ns

Meek's Lumber & Hardware opened a new store Jan. 2 on 6 acres in Anderson, Ca. (Mike Robinson, branch mgr.) ...

Rudy's Ace Hardware, Wood' land Hills, Ca., is closing Feb.23 due to big box competition and the retirement of Rudy Nigro, who opened the store 60 years ago

True Value Hardware, Belgrade, Mt., saw its 10000-sq. ft. store destroyed by a Jan. 30 fire; cause of the midnight blaze is under investigation ...

L&M Lumber, Lake Isabella, Ca., is undergoing a complete remodel, including increasing the store size by nearly 50Vo to 19,000 sq. ft. ...

Rex Hardware, Petaluma, Ca., is building a new store on the site of its prior location, which was gutted by a fire June24 ...

Inwe's Cos. opened new stores Feb. 2 in NE Bakersfield. Ca.. and Bozeman, Mt.; Jan. 26 in Turlock, Ca. (Rick Christman, store mgr.), and Jan.23 in S. Tacoma, Wa.

Lowe's is considering possible locations in Vernal, Ut.; downtown Redmond, Wa., and Hollister and Sacramento, Ca.; will anchor a new 390,000-sq. ft. retail center in the midtown area of Los Angeles, Ca.; is seeking rezoning to build in

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Lafayette, Co.; applied to build in Port Orchard. Wa.. for a winter 2007 opening, and expects to unveil a new store this fall in S. Pueblo, Co. ...

Lowe's has extended its deal with Weyerhaeuser Co. to carry ChoiceDek composite decking products for an additional three years, but is also adding Trex decking and railing beginning in 2nd quarter 2007

Home Depot opened new stores Feb. I in Los Banos, Ca., and Dec. 14 in Phoenix, Az. (Jeff Grooms, store mgr.) ...

Home Depot plans to build two stores in Medford, Or.; is seeking approval for a location in Carson, Ca.; submitted plans for a 132,400-sq. ft. store with garden center in Redmond, Or., and will anchor a new shopping center in Palm Springs, Ca.

Home Depot applied to build a 134000-sq. ft. store on 10 acres in Carson City, Nv., by March 2008; wants to relocate its existing store in Ogden, Ut., to a site formerly occupied by a Fred Meyer store, and is facing homeowner opposition to its plan to anchor a new shopping center in Long Beach, Ca....

Wromsnrns/tmuncrutEnt

All-Coast Forest Products has relocated its Salt Lake City, Ut., distribution center Feb. 1 to a larger facility providing over an acre of warehouse space and a broader selection of products; a grand opening celebration will be held in the spring ...

Capital Lumber, Phoenix, Az., purchased 17 acres in Salt Lake City, Ut., to build a 55,000-sq. ft. DC by the end of the year ... ...

Cross Tree Woodworks Inc. opened in Libby, Mt., offering remanufacturing, planing, custom woodworking, siding, flooring, moulding, lath and stakes (John McGlasson, chief steward; Beau Gormely, chief of operations); www.ctwoodworks.com

Mary's River Lumber Co. is closing its Philomath, Or., sawmill from Feb. 8 to March 5 for a refurbishment ...

Stimson Lumber cut its Libby, Mt., fingerjoint mill to a single shift due to market conditions ...

Weyerhaeuser Co., Federal Way, Wa., will close its Bauman sawmill in Lebanon. Or., March 30 due to inadequate log supply; its planer mill will continue to operate ... the company is seeking a buyer for its veneer manufacturing plant in Elma, Wa., and Cosmopolis pulp mill near Aberdeen, Wa. ...

Califurnia Cascade Industries now distributes Timbertech composite decking and railing statewide from its facilities in Fontana and Sacramento, Ca. ...

Empire Buitding Products, Missoula. Mt.. and Vandermeer Forest Products, Lynwood, Wa., are now distributing PrairiePickets composite privacy fencing from Heartland BioC omposites, Torrington, Wy

Anniversaries Reel Lumber Service, Anaheim, Ca., 75th Spenard Builders Supply, Anchorage, Ak., 55th ... Dave Grattan & Sons,Irwindale, Ca., S0th Jack Lindgren Builders Hardware, Riverside, Ca., 50th ... Thunderbolt Wood Treating, Riverbank, Ca.,30th ...

Housing starts rose 4.5Vo in December to a seasonally adjusted annual rate of 1.642 million single-family starts fell 4.IVo, (Please turn to page 58)