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The Merchant Magazine (ISSN 7399723) (USPS 796560) is published monthly at 4500 Campus Dr., Ste.480, Newport Beach, Ca. 92660.1872 by Cutler Publishing, lnc. Periodicals Postage paid at Newport Beach, Ca., anl additional post offices. lt is an independently-owned publication for the retail, wholesale and distflbution levels of the lumber and building products markets in 13 western states. Copyright@2o13 by Cutler Publishing, lnc. Cover and entjre contents are fully protected and must not be leproduced in any manner without written permission. All Rights Reserved. lt reserves the right to accept or reject any editorial or advertising matter, and assumes no liability for materials furnished to it.

By Alan Oakes

Whatts your new growth strategy for 2013?

f Hoee youR vEAR has started well. After the first weeks, we are hearing mostly lgood news. which is a good sign. Now that the fiscal cliff issue has been somewhat settled, it will interesting to see if there is any fallout to the economy from the increased taxes pretty much everyone will be paying. The first obvious hit has been the increase in FICA tax that I certainly saw in my first pay slip this week. I am sure more stealth surprises will come.

But, in my calls to contacts-many of whom are owners-when I ask how their businesses are doing, the first response is things are getting better. When I press, I get well, things are not getting worse Now I think most businesses have seen some forward progression, but there is no doubt we have been operating with the philosophy that "flat is the new up." We have all faced grave challenges to keep our businesses operating profitably and have been happy to escape the past two or three years on an even keel. The successful entrepreneurs and managers have weathered the storms. Some competitors have not, but-as is life-a whole new set of challenges may be coming our way.

I have to say, doing business is not as easy as it once was. Starting a completely new business or substantially repositioning an existing business is a lot easier to do in a buoyant economy than in the uncertainty of the past few years. Simply doing what we did in the past may no longer be enough. Most entrepreneurial businesses in the past ran their companies "off the cuff," but that is less easy to do these days.

Along with supply, another primary issue most businesses fight with today is cash flow. As business starts to grow again that will probably get worse due to the shrinkage in credit lines over the last four or so years. At a time when banks have not been kind to this industry, it is certainly time-ahead of the curve-to look to improve credit lines, search for new lines of credit, and discuss with your suppliers how you might get an increase in credit line to support a growing market. Most entrepreneurs are good at seeing how to grow business, but the nuts and bolts of finding capital may not be their strong point. Many a fast-growing company has gone out of business because it did not have enough capital or credit to support the growth. We certainly have seen that the past few years.

Most banks or investors will also want to see that there is a management team in place to be able to guide the business going forward and, more importantly, that there is a good plan in place to achieve the growth. Do you have a formal growth strategy for 2013 and 2014? How will your company manage it? All data suggest housing starts will be 900,000+ this year-nice growth over 2011. In an improving economy, remodeling will continue to increase, too. If we do see an explosion at some point (and I am not suggesting it is imminent), how equipped are we to handle it? The future, for sure, is uncharted and it will a require a different mindset than five years ago as well as a different mindset than we needed to survive the past five. A lot of management and staff that were here in the boom of 2003-2006 are no longer in place. In fact, for many companies, there has been no real growth since 2007.

Many learned the hard way that what goes up can come down even faster. We would all like to think we have learned a lot and will not get ourselves in the same mess, but we will-human nature! So have a viable, comprehensive plan in place to manage the increase in capital cost. If we have been able to secure low-interest funding these past few years, it is clear that as the economy improves. rates will also start rising. All that being said, we have stronger, battle-worn owners and managers, now better equipped to manage and grow responsibly.

See you on the road.

Alan Oakes, Publisher aioakes@aol.com

www. b u ld n g-prod u cts. com

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

Publisher Alan 0akes ajoakes@aol.com

Publisher Emeritus David Cutler Director of Editorial & Production

David Koenig dkoenig@building-products.com

Editor Karen Debats kdebats@building-products.com

Contributing Editors

Dwight Cunan

James Olsen

Jay Tompt

Carla Waldemar

Advertising Sales Manager Chuck Casey ccasey@building-products.com

Administration Director/Secretary Marie Oakes mfpoakes@aol.com

Girculation Manager Heather Kelly hkelly@building-products.com

How to Advertise

Chuck Casey

Phone (949) 852-1 990 Fax 949-852-0231 ccasey@bu ilding-products.com

Alan Oakes www.building-products.com

Phone (949) 852-1 990 Fax 949-852-0231 ajoakes@aol.com

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David Koenig

Phone (949) 852-1990 Fax 949-852-0231 dkoenig@building-products.com

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