The business belongs to the customers

ft'r sHow(RooM) rrvEl Your IBuilding Centers. with l3 locations serving rural north-central Pennsylvania, has launched a state-of-the-art design showroom in Williamsport, by all accounts the best in the region, with 12,000 sq. ft. of home d6cor, including six home facades and over two dozen kitchen & bath vignettes.

Contractor customers can shepherd their own customers around the realm of what YBC's president and c.e.o.

Phil Skarada touts as "every decorating product imaginable, from faucets and vanities to countertops, flooring, windows and doors."

With 90Eo of YBC's business coming from the trade, not those retail dreamers, well... what's the point?

Duh. To help those very pros. "It helps them grow their business by providing an opportunity for them to showcase everything used in a home. Most of our customers build only one to five, or-at the most- l0 to l5 homes a year. No tract builders, with their spec houses. here in the middle of nowhere!"

"But you're drawing my business!" one of those builders exploded-until he understood. YBC operates, as it always has, on the simple principle that it's in business to help its own customers succeed: "We care for our business-and yours-because for us it's one and the same."

Then why the showroom? Phil sits the fellow down, buys him a cup of coffee, and asks him two things: "Are you putting up spec homes?" ("Nooool I haven't got that kind of money and can't get a loanl") "Well, then, do you have a showroom of your own?" (Same answer.) "See, you don't have the ability to show customers what you can do. Because you can't afford it, we'll do that for you. We'll be that platform." Not only did he see the light, Phil says, the builder started bragging about'his' new showroom to his clients.

"Our philosophy is based on the entire partnership cycle: vendors with us, us with our customers. We've dealt with the same vendors for 30 years, creating efficiencies for both of us, and efficiencies for our customers. We strive to be the best we can be, and expect our vendors to trade with us in the same way, and then take that to our customer base. You've got to sell your customers on that philosophy, and the only way to do that," Phil knows, "is one-on-one. Explain the benefits. That's the ball game."

This game goes into lots of extra innings, as both YBC and its contractors chalk up winning streaks. Service beyond-the-call includes designing website pages for them. ("Can't afford that," one resisted the offer. He quickly was stripped of that apprehension: "Hey, no charge. It's free.") "We deal with an environment in which each customer has unique capabilities, so we build on a customer's strengths and help them improve on weaknesses. These pros are good with the mechanics of building, but maybe not on how to run a business."

YBC also customizes TV commercials for these pros, with listings by geographical area and specialty. In other words, it steps up to provide any service that can help market their operations to the retail trade.

YBC's annual trade show. with seminars, vendor booths and demos, dinner and entertainment. draws 1.000 attendees. Pros who have achieved a certain volume of business also receive a coveted invitation for a Caribbean cruise (another chance for sales force and customers to mingle), provided they're not in arrears. Therefore. accounts receivable are nil. "Our peers are amazed," Phil reports. Special orders are another service that pays off for both. "It's a substantial part of our business"-as much as 5O7o of our volume at some locations, notes Phil. "We have a group of employees with that kind of knowledge, so when they come to us for something, we'll look for it."

YBC also installs kitchens with its own crew and subs out other items, from garage doors to insulation, to be installed by its cache of trusty pros. To make a builder's operation even easier, it also manufacturers trusses, interior doors, panels and framing (which YBC also installs, both to ease contractors' headaches in dealing with subs and to boost its own marketshare and revenue). The panel plant was launched seven years ago as '6a synergy with the business we were already in-a natural succession that's helped us with our commercial business, too," he says. "Turns out,85Vo of our customers are our own contractors." During the recent downturn, when the daunting issue for home builders was bank financing, YBC expanded its panel operation to bolster its commercial accounts, such as motel construction, driven by demand by those involved in fracking for natural gas.

Even though the company has been pro-oriented since day one, that alignment is constantly strengthened. "We continue to grow revenue by how we tweak it," says Phil. "We sit down with the key players in the company. We listen to our employees and ask a lot of questions."

Those staffers-well over 300 of them-make up the moving parts of the employee-owned operation, which means there are also over 300 on the management team. YBC was born of a leveraged buyout of a corporation divesting itself of a number of building centers that were losing money. "We used our pensions and 401/k funds as equity to buy stores in the Pennsylvania region in 1989 and

Whatts in a Name?

Shakespeare asked that very question, and so did the owner-employees of then-fledgling YBC. ldeas were tossed out at those initial meetings. 'Why not AAA-first in the phone book?" suggested someone.

Phil Skarada had other thoughts-thoughts that conveyed the company's reason for existence-and his marketing acumen prevailed. "This is not our business, it's the contractors', the customers'. 'This is your business,' we'll tell them'-Your Building Centers. "We're not external, someplace in North Carolina. We're right here, and we're not going anyplace.

'The first thing I did was change the dress code-remove the coats and ties in favor of casual dress. They were intimidating to one's subordinates, and their job is just as important as my own, if not more so, because they're the ones in front of the customers. My dad always told me, 'You're no better than anyone else.'"

The message stuck. "lf people ask me, I say 'l work for YBC.' I don't say 'l'm the president.' When they want to know what I do there, I say, 'Not much of anything. l'm an educator.'' lf later they learn he's, um, the president ('You're kidding mel"), he downplays his role. 'The people I work with are very responsible and do their jobs, My function is to be their tutor, their mentor. lf an employee asks why we're doing a certain thing, I take the time to explain why the decision was made, such as why Location A got a boom truck rather than Location B. I go over the volume of business each store was doing, the usefulness of assets, the cost vs. the payback. And usually they respond, 'l've never heard it explained that way beforel"' set up an ESOP structure. This literally puts the risk of running a business into the hands of a whole pool of people. We moved our future retirement into a position of risk, because we then had to maintain and grow the business. Everyone realized that the risk associated with the return was a strong motive to learn and grow-so we taught people 'This is how to run a business. Your retirement is based on your performance."'

In making a choice between using accrued capital to jump-start the projected design showroom or to pay year-end bonuses, the bonuses won out and the project was pushed back for a year or two. Yet Phil wouldn't have it any other way. "lt's been a good ride," he confirms with gusto.

Power to the people? He agrees: "Tremendous empowerment! They hold the future in their own hands. We taught people how to run the business, telling them, 'Our business is selling. Don't get hung up on your industry; ours just happens to be building materials. Selling is a function of timing and plan. It might fall flat, but that's not to say that that's forever. Look again.'

"It's a process of education. I tell people, 'Not everything works. And if it doesn't, stop. Try something else. But always understand your core business. The demands will always be there-the lumber and drywall, the commodities. But you can grow your peripherals-what your customers, and their customers, are asking for."'

"Change," he understands, "is inevitable. You cannot become complacent: That's what kills so many people. The difficulty, going into the future, will be to have resources and capital. People in our own group-a young group, in their mid-40s-have only experienced the past 15 years. But I tell them, there's a natural business cycle of four, five years. The past was like a house of cards that hit a brick wall."

Yet, YBC's business was trammeled "only very lightly," he adds. "In fact, we're actually hiring salespeople. We're constantly evaluating our marketing, updating our website" and already re-aligning some features in the new showroom to better serve the customers. "We're always looking for opportunities, and will continue to grow. Risk," he underscores, "comes from standins still."

Carla Waldemar cwaldemar@ comcast.net

By fames Olsen