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news Iowa Dealer Storey Kenworthy Celebrates 75th Anniversary In Des Moines, IA, Dave and John Kenworthy and their team at Storey Kenworthy are in the middle of what has become a year-long celebration of their dealership. And they’ve got plenty to celebrate! The brothers’ grandfather, Arthur G. Kenworthy, and his business partner Charles R. Storey founded the company in 1936 and over the past 75 years, three generations of hard-charging entrepreneurs have grown it into a thriving operation with nine locations throughout Iowa, a payroll that’s 165 people strong and a product mix that includes office supplies, printing and promotional products in addition to contract furniture. So far this year, reports John, anniversary celebration events have included an ice cream social, car washes by company executives to raise funds for deserving local causes and a company-wide Office Olympics. On the schedule for later this year: an Open House customer appreciation event and a company-wide anniversary celebration that will bring employees and friends together from across the state. “We set up a special committee to plan for our anniversary and decided we wanted to celebrate, share and contribute back to the community to honor this special landmark,” explained John. And even as the Storey Kenworthy team looks back on 75 special years, the fourth generation is starting to make its presence felt. Dave’s daughter, Nicole Boyington, joined the company back in 2008 and is working hard to continue the proud traditions of service and value her great grandfather and his team put in place 75 years ago. Our congratulations to the entire Storey Kenworthy team and here’s to the next 75 years!

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This Year’s Dealer Financial Comparison Analysis Offers a Path to Better Times Ahead If you do nothing else with this month’s issue of OFDealer, please plan to spend some quality time working through Bill Kuhn’s analysis of the association’s most recent Dealer Financial Comparison and Benchmarking Guide. As he has for the past seven years now, Bill offers some thought-provoking insights on the survey results and provides an invaluable way to connect the dots between the raw numbers and action steps dealers can take to strengthen their own businesses. Bill’s argument—that we are in a fragile and volatile economy that will stay that way for years to come and force us all to look at new ways of doing business— will come as no great surprise. But he supplements that argument with some concrete guidelines on how to respond, highlighting several key areas with the potential to make the difference between today and tomorrow's high-profit dealers and the rest of the crowd. How do you stack up against this year’s analysis of dealer financial performance? How do your own numbers compare with the benchmarks laid down by the survey? More importantly—and this applies regardless of how well you came out this year—what are you doing to make your numbers next year even better? Even with recent hard-won improvements, these are still among the most challenging times many dealers have ever faced. But the good news—and it is good news—is that opportunities for new, profitable growth are still out there. Bill Kuhn’s column this month provides a model you can use to make the most of those opportunities but as he suggests himself, there’s little time to waste and less margin for error. Do yourself andcontinued your dealership on page X a big favor and start work now. PAGE 3

Dealer news continued from page 3 Goodmans Interior Structures, AZ Dealer, Presents Seventh Annual ‘Eye for the Good Guy’ Awards In Phoenix and Tucson, AZ, Adam Goodman and his team at Goodmans Interior Structures recently helped out some deserving local good causes in a big way, when they presented the dealership’s 2011 “Eye for the Good Guy” awards. Now in its seventh year, the program provides two worthy nonprofit leaders, one each in the Phoenix and Tucson markets Goodmans serves, with a $20,000 office redesign. "Goodmans Interior Structures understands that non-profits typically have limited resources and the goal of serving the organization’s mission comes first," said Adam. "That’s why we developed Goodmans’ ‘Eye for the Good Guy,’ to focus attention on local non-profit leadership and give them the opportunity to succeed in a functional work environment."

Adam Goodman (center) presents one of his dealership’s “Eye for the Good Guy” awards for 2011. The awards support deserving causes in the community and are selected on the basis of over 20,000 online votes and input from a panel of local non-profit experts.

Winners were selected through a combination of online public voting and assessment by a panel of local judges. More than 20,000 votes were cast by the public during the month-long voting period earlier this year.

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Dealer news continued from page 4 Creative Office Pavilion Opens New Portland, ME Showroom

The building that houses Creative Office Pavilion’s new showroom dates from the 1860s and comes with plenty of natural light and a high-profile downtown location. In Portland, ME, Mark St. Clair and his team at Creative Office Pavilion setle in after moving to a new showroom, just a few blocks from their previous location, where they had been for close to 15 years. The move was not without its challenges, explains Mark. “Our former showroom was a special place in one of the city’s most historical buildings that dated from the 1860s. We wanted a similar location and ‘Wow Factor’ and we wanted to be downtown close to our clients and the A&D community.” Also important: plenty of natural light to showcase COP’s products, parking to accommodate visitors and a purchase deal rather than leasing, so that Mark and his team would be more in control of their own destiny. The new location, just three blocks from their old home, also comes with more than its fair share of history—a building that dates from 1867 that still has many of the architectural features from that time. It also offers significantly more room—10,000 square feet versus the 7,000 they were used to—and features plenty of natural light and a high profile location on the corner of two of downtown Portland’s busiest streets. The formal grand opening is scheduled for later this month, but already the initial response from clients and the A&D community has been “overwhelmingly positive,” Mark reports happily. “The new space has received rave reviews, drawing adjectives like ‘vibrant,’ ‘upscale’ and even ‘Metropolitan!’” he reports, “and it’s been a real morale booster for our own people, as well.” continued on page 7

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Dealer news continued from page 6 Louisville Dealer Office Environment Company Launches New Brand Identity

Custer Workplace Interiors, MI Dealer, Repositions 3D Renderings Offering

A typical rendering from Custer’s new Frog Dart Creative operation.

The new Office Environment Company logo highlights its new brand identity. Louisville-based Office Environment Company last month announced a completely new brand identity that it said features the same clean, contemporary look of its showroom and represents a significant departure from its former self. “We’ve been in business for over a century,” said chairman Kelly Burke, “and had used the initials ‘OEC’ to identify our company for the vast majority of those years. Even when we changed our name from Office Equipment to Office Environment Company in 2003, though the logo was changed somewhat, we retained the initials. The new brand identity is truly transformational.” Added president Tricia Burke, Kelly’s sister, “The new brand identity really represents the consultative approach we take with our customers—by listening first, then offering solutions. We have always understood the value of building client relationships and how important two-way conversations are in building trust and loyalty. The bi-directional arrow in the logo graphic helps communicate that aspect,” she added. The new brand identity, six months in the making, was officially rolled out August 1 and is not only showing up on new stationery, marketing collateral and the company website, but also on a custom 50-foot building banner that turns the exterior of the showroom into a permanent billboard.

There isn’t a dealer out there these days who wouldn’t like to grow the services side of their business as product sales remain under fierce margin pressure and stubbornly hard to come by. In Grand Rapids, Dave Custer and his team at Custer Workplace Interiors have been hard at work trying to do just that and so much so, that they recently re-positioned the 3D renderings part of their services offering under a new name and gave it a much broader market to aim for. What started out four years ago as Custer Studio is now Dart Frog Creative and, says Dave, the repositioning opens the door to a new opportunity with enormous potential. “Custer Studio has provided renderings for industry manufacturers and other dealers but we’ve also done work for home builders, lumber companies, electrical equipment manufacturers and others,” Dave points out. The new name, he explains, provides a way to expand even further beyond the office furniture industry. “Dart frogs are quick and nimble and that’s how we see ourselves,” he adds. “We pride ourselves on our quality and timeliness and the new name adds an extra dimension to our marketing.” Right now, Dart Frog Creative is a team of six but the company is looking to expand, both within the office furniture space and beyond. “Just about anyone who publishes a catalog or a flyer is a potential customer and that means an extraordinary opportunity at a time when furniture business in West Michigan has been challenging, to say the least,” Dave adds. If you’d like to learn more about Dart Frog Creative, check out their website at www.dartfrogcreative.com.

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BIFMA: July Orders Up 7%, Shipments Up 10% 2012 Forecast Scaled Back Earlier this month, the Business and Institutional Furniture Manufacturers Association (BIFMA) released its market statistics for July and while the forward momentum was not quite as strong as it has been in recent months, order and shipment growth were both still in the positive column. BIFMA said it estimates July orders increased 7% year-over-year, slowing relative to the 12% increase posted in June. July shipments increased 10% year-over-year, also decelerating compared with +19% last month. Analyst Budd Bugatch of the Raymond James investment house described the July numbers as “somewhat disappointing” and said they were a bit

Teknion Names New President of International Markets Teknion Corporation has announced that Terry McAllister will join the company as president, international markets. In this new role, McAllister will be responsible for all of Teknion’s markets outside of the United States and Canada. “We are excited to have Terry join Teknion to lead the growth of our international markets,” said David Feldberg, president and CEO. “Terry has a long and successful track record in the office furniture industry, with considerable experience in the growth and development of international markets. He is a strong addition to our senior management team, and brings a breadth of experience which will help us grow our international footprint and seamlessly serve our worldwide customers.”

weaker than anticipated, though he noted June had posted a bigger than normal sequential increase and also, that July is seasonally the slowest month of the summer, with order rates tending to pick up moving into autumn. ‘While the industry continues to benefit in the near term from healthy corporate profits/balance sheets, office churn (from companies seeking to reduce costs through better lease rates and/or space consolidation) and pent up demand from projects deferred/cancelled during the recession, the industry’s key macro drivers remain mixed and downside risks have clearly picked up,” Bugatch maintained. “New hiring ground to a halt in August,

McAllister’s appointment is effective October, 1 and he will report to Scott Deugo, senior vice president and chief sales officer, world markets.

Inscape Wall Products Awarded Greenguard Certification Inscape Corporation has announced that its Addwall, Inform and Reform movable wall products have been awarded Greenguard Indoor Air Quality Certification and Greenguard Children & Schools Certification. Both certifications signify that these products are now in compliance with the chemical emissions guidelines set by the Greenguard Environmental Institute (GEI). “Greenguard certification of our wall products enables Inscape to provide systems, storage and wall products that contribute to healthy workspaces,” said David Par-

business confidence (while still well above recessionary lows) has weakened, and the Architect’s Billing Index (a leading indicator of non-residential construction) has also been in decline recently,” he pointed out. Reflecting continued economic uncertainty, BIFMA also recently lowered its 2012 industry forecast–now anticipating 7.5% order growth (down from 9.5%) and 7.5% shipment growth (down from 9.7%). BIFMA expects 2011 orders to increase 14.1% and shipments to increase 17.6%, essentially unchanged from its previous order and shipment forecast of +14.5% and +17.5%, respectively.

shad, vice president, product design and development. “Knowledge workers spend a large percentage of their day in office environments. Inscape is committed to providing product solutions that preserve the air quality of those workspaces.”

Configura Prepares for Fourth Annual CET Designer User Conference, Launches KI’s CET Designer Extension – SpecEngine Dealer technology provider Configura is finalizing plans for its fourth annual CET Designer User Conference in Las Vegas, October 25-27. The conference serves interior designers and specifiers who use Configura’s CET Designer software. Dealer principals, salespeople and IT professionals are also encouraged to attend. continued on page 10

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Industry News continued from page 8 As in past years, Configura offers its conference for free to users, providing two days of Configura-led and peer-to-peer training, breakout sessions in which users can dialog directly with manufacturer representatives about what they want from their software extension and meals and networking events that are experienced in Vegas style with a Swedish twist (the company is headquartered in Sweden). For more conference information, visit www.configura.com/userconference. Separately, Configura announced the launch of KI’s CET Designer Extension, SpecEngine. KI joins manufacturers Steelcase, Haworth, Teknion, Spacefile, Inscape, Aurora Storage Products, Carvajal Espacios and Solinoff, who also have chosen the CET Designer solution.

National Office Furniture, Dallas Showroom Earns LEED Gold and Escalade Casegoods Line Moves up to level 3

tion for meeting strict indoor air quality criteria. The series has also been awarded ANSI/BIFMA level 3 certification which can contribute toward LEED points.

MMPI Names Paul Heinen Senior Vice President MMPI, organizers of the annual NeoCon World Trade Fair, recently announce Paul Heinen has been promoted to senior vice president, overseeing the company’s office, retail and contract furnishings industries. In his new role, Heinen will be responsible for all office and retail activities at MMPI properties in Chicago, Los Angeles, Washington, DC and Boston. He will also oversee MMPI’s contract furnishings business, which includes 113 permanent showrooms in over 550,000 square-feet of space, as well the production of NeoCon World’s Trade Fair in Chicago, and NeoCon East in Baltimore. Heinen replaces Mark Falanga, who was recently named president of MMPI.

National Office Furniture, a brand unit of Kimball International, Inc., has announced its Dallas showroom recently earned LEED Gold status and its Escalade casegoods line received level 3 certification. The Dallas showroom marks National’s sixth LEED certified facility.

Heinen is a seasoned, 26-year veteran of the real estate industry. Prior to joining MMPI in 2009 as the vice president of office leasing, Heinen was with The John Buck Company, where he was principal and head of asset management for 13 years.

National partnered with the PageSoutherlandPage A&D firm to earn LEED-CI Gold for its showroom, located in the Dallas Decorative Center.

Bush Separates into Two Operating Divisions

High recycled content and low-emitting materials such as adhesives, sealants, paints coatings and composites, and furniture were specified as well as nonhazardous cleaning supplies incorporated into the building’s maintenance and operations. “We’re excited that our dealers, designers and customers have this great, green space to collaborate and experience our solutions and our commitment to sustainability. Special thanks to PageSoutherlandPage for their expertise and creativity in creating stunning, green buildings and interiors,” said Kourtney Smith, VP marketing, National Office Furniture. Escalade casegoods now feature National’s proprietary, water-based UV finish, IntegraClear, enabling this series to achieve SCS Indoor Advantage certificaSEPTEMBER 2011

Bush Industries last month completed the final phase of separating into two distinct operating divisions – Bush Furniture and bbf. Effective immediately, each division assumes its own brand name and will operate as a separate strategic business unit of Bush Industries. Bush Furniture will continue to focus on the retail furniture market and e-commerce channels, and bbf will continue its focus on the commercial furniture market. Both businesses will operate autonomously with separate profit centers and dedicated resources; however, they will continue to share select services such as information technology (IT), human resources and finance. With this transition, Bush has appointed a new leadership structure. The two business units will be managed separately OFDEALER

under the leadership of Patrick Theimer, president of Bush Furniture, and Jim Garde, president of bbf. Both Theimer and Garde will report directly to Jim Sherbert, CEO of Bush Industries.

In Memoriam: Mike Ferry of B3W Mike Ferry, president of the B3W manufacturers’ rep organization, died September 4 of complications from lymphoma. He was 65. An office products and office furniture veteran with more than 35 years of industry experience, Ferry built his organization into one of the leading rep groups in the country, representing some of the industry’s top brands and covering a territory that included California and the Pacific Northwest, Arizona, New Mexico, Nevada and Hawaii. In addition to many years of service on numerous manufacturer rep councils, Ferry was an active member of several industry associations. In addition to serving as chairman of the Office Products Representatives Association (OPRA), Ferry held the unique distinction of being the only independent rep to serve as chairman of the Business Products Industry Association, BPIA is now known as the Independent Office Products and Furniture Dealers Association, which includes two membership divisions, the National Office Products Alliance (NOPA) and the Office Furniture Dealers Alliance (OFDA). “Mike Ferry was a highly respected and valued friend of industry dealers and manufacturers throughout his successful career as a manufacturer’s representative,” said Carlene Wilson, Principal & VP of Sales for BKM Total of Texas and IOPFDA chair. “He contributed generously to our industry association's initiatives as a chairman of BPIA in 1998 and never stopped giving his whole-hearted support and encouragement for OFDA and IOPFDA programs. Mike will be greatly missed by our industry.” Ferry is survived by his wife Michelle, a son, Mike, Jr., and two daughters, Megan and Danielle, both of whom are involved in B3W. In lieu of flowers, the family has requested that memorial contributions in his honor be made to the City of Hope’s National Office Products Council.

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2011 OFDA Conference Will Bring Together Exceptional Line-Up of Speakers, Sponsors and Attendees for Best Practice Exchanges, Education and Networking Where will you be September 25-27? If you’re like many progressive office furniture dealers, manufacturers and service providers, you’ll be at the J.W. Marriott Starr Pass in Tucson, AZ, for OFDA’s 2011 Dealer Strategies Conference. This year OFDA has brought together an extraordinary line-up of industry thought-leaders and business management experts to share their vision of how the office interiors market is changing and how dealers and their key industry partners can transform themselves to create new business opportunities. This year’s conference program has been shaped with extensive input from a variety of OFDA members and a planning task force chaired by Bill Stoops of Elements, a Denver-based Knoll dealer. Task force members include Paul Barr, Premier Office Solutions; Kristen Haren, The Inside Source; Sandi Jacobs, SideMark; Dave Jarka, JEi, Corporate Services; Bob Rohlman, National Office Furniture, and Tom Vande Guchte, Storr Office Environments. An impressive 28 dealers, eight manufacturers and four industry consultants are participating in general session presentations and panel sessions this year.

and include OFDA Platinum Sponsors Global-The Total Office, The HON Company, and the Merchandise Mart; Gold Sponsors ECi Systems Solutions, Kimball Office, Knoll and National Office Furniture, and conference function and attendee handout sponsors 20 20 Technologies, AIS, Configura, Global-The Total Office, The HON Company, Knoll, and National Office Furniture. Industry business partners with displays will be highlighted during general session programs and during all networking breaks throughout the conference. They include: 20 20 Technologies, @theoffice, AIS, Configura, Concept Seating, ECi, Exemplis, Fortune Web Marketing, Horizon Keystone, Khameleon, Michael Thomas Company, Obex and SolomonCoyle. A full conference program is available on the OFDA website at: http://ofdanet.org/Updated2011-Conference-Agenda. Please look for our comprehensive conference ‘wrap-up’ in the October 2011 edition of OFDealer.

OFDA extends a special thanks to those dealers and consultants who have volunteered to present or have organized and will moderate panel discussions: Paul Barr (Premier Office Solutions); Wayne Breitbarth (M&M Office Interiors); OFDA chair Frank Gutwein (Widmer Interiors); Gary Gang (HRMC), Jim Heilborn (Jim Heilborn Associates); Robert “Jake” Jacobs (JEi, Corporate Services); Dave Jarka (JEi, Corporate Services); Lisa Johnson (Corporate Interior Systems, Inc.); Debbie Junge (Junge + Associates); Jason Kirby (eBoost Consulting); Randy Kloostra (Kloostra Consulting Group); David Solomon (SolomonCoyle); OFDA vice chair Bill Stoops (Elements); Matt Sveen (Intereum); and OFDA past chair, Carlene Wilson (BKM Total Office of Texas). This year’s sponsors contribute generously to the success of OFDA

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Services Remain a Key Revenue Generator in Good Times and Bad By Scott Cullen If you’re in the furniture business, services are likely a healthy segment of your business. They add value and allow you to cast a wider net, particularly when customers’ and prospects’ budgets are tight and many anticipated new furniture purchases have either been put on hold or scrapped altogether. continued on page 13

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Cover continued from page 12 Although selling services is not a novel concept and virtually all office furniture dealers do it, we rolled the dice and spoke with a half dozen dealers who shared their experiences selling services and identified some of the trends taking place in their markets. What they had to say may not come as a complete surprise and may well validate what you already know. But quite possibly, it may also give you some new ideas you can use to build your own new services opportunities. “Services are a key part of most contract furniture dealers’ portfolios and can be a good revenue stream if managed properly,” contends Thomas Hegge, vice president, Office Pavilion in Reno. “We’ve led more with services lately and that’s a big focus on our website. We take care of the customer from start to finish and develop a long-term relationship.” Office Pavilion offers a varied menu of services, including design and space planning, project management, delivery, installation, and reconfiguration as well as asset and inventory management and panel and chair cleaning. For Office Pavilion the differentiation comes from having their own trucks and equipment and eliminating the middleman, which places them completely in control of the situation.

become more competitive while acknowledging he’s seen an uptick in his overall services business. That said, he hasn’t seen many dramatic changes from a services perspective at the local level. But on a national level, Hegge is seeing more large corporations looking at their office furniture as managed assets, and depending on the situation, shifting assets such as furniture from one area to another rather than purchasing new ones. “Now they look for a network of providers,” he points out. “If they need product in L.A. but own it in Denver, they’re looking for a way to get it there instead of buying something new. It’s a good thing to be a dealer for a major manufacturer because you can network into that.”

The challenge of offering services in this day and age in Hegge’s opinion relate to the costs.

“We’re very oriented towards after the sale service,” emphasizes Tom Huerkamp, president. “I can honestly say we’ve never lost a customer once they do business with us. I think service is what it’s all about.”

SEPTEMBER 2011

“We think our reputation has reached a point where we make a good margin on all the services. Even though we might not be line item charging for it, we’ve built it into our total proposal,” adds Huerkamp. continued on page 14

“I don’t think it’s going to be a long-term thing because at some point those assets are going to start wearing out and they’re going to start focusing on how the facility looks,” notes Hegge. “But in the short term they’re watching their bottom line and managing costs.” In Delta, CO, ProSpace Interiors remains focused on providing every possible furniture-related service from the time they place a customer’s furniture order until the furniture is integrated into a customer’s facility and beyond.

Hegge reports the services business has

ProSpace does extremely well with services because this is an area Huerkamp says the dealership will not bargain with.

Office Pavilion is a Herman Miller dealer and has found themselves on both ends of these asset relocations, either transporting product elsewhere or handling the installation locally. Ultimately he feels Office Pavilion is seizing an opportunity that may not be there tomorrow.

“There are a few people who don’t want to eliminate the middleman and do a virtual kind of thing, sub-contracting it to take out the risk and only buying the service as they need it,” opines Hegge. “Some of us hold onto it ourselves because it builds a base of business that carries you when you don’t have product sales while allowing you to stay close to your customers. It depends market to market how you handle that.”

“Obviously, fuel is up and benefits have continued to go up, on the other hand cost of labor is flat or even down a little,” he says. “And service margins have always been a little better than furniture and they continue to stay that way.”

of customer service that allows us not to be a low bidder. We can be a high bidder and still get the job. We try to respond to every possible issue that a customer might have in making a project work for them.”

That includes pre-planning and consulting, space planning and design, assembly and installation and reconfiguration and relocation.

Huerkamp draws a parallel between services and customer service. “I always tell my people, anybody in the world can sell what we sell. The real trick is how we do it. It’s all based on a high level OFDEALER

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Cover continued from page 13 The services segment of Machabee Office Environments’ business encompasses repair and maintenance, reconfigs, space planning and inventory management. The Las Vegas contract furniture dealer also works with dealers from outside their market, providing local installation services. The newest addition to their services menu is seating and panel cleaning, which they hope will appeal to customers during a reconfiguration.

“The tricky part is because we’re a new Herman Miller dealer the focus on our website has to be new furniture,” says Stinson. “We have a secondary website for pre-owned furniture and our liquidation services.” In addition to liquidations, Premier is also handling more moves for their customers.

“This was an added service we could offer with little additional cost,” explains Machabee’s Kira Archuleta.

“We’re one of the few dealers in this area capable of providing new furniture, pre-owned furniture, liquidating old furniture, and moving an entire company,” adds Stinson.

Machabee doesn’t do anything radically different when it comes to marketing services as opposed to marketing furniture.

Ironically, corporate downsizing has helped the services side of Premier’s business, she contends.

“It’s up to the salesperson or designer to look at their situation and determine what fits that customer best,” says Archuleta.

“In the old days, everybody had a facilities manager or a person to handle all of that ‘stuff’,” explains Stinson. “That person isn’t always around anymore in a lot of companies. Even some of the bigger ones don’t have a facilities person on staff.”

Surprisingly Machabee is still doing well selling new furniture as they enjoy a growth spurt in services, particularly reconfigurations which have become more popular in a down economy.

As a result, those responsibilities are now falling on someone who doesn’t necessarily have the knowledge or experience to pull it all together.

“We’re seeing more inquiries [for our reconfiguration services] than in the past,” states Archuleta. “It’s something people consider a little more right now; they’re more receptive to the idea of taking something they can reuse and implement it into a new function whereas before people may have been quicker to reorder everything new and not consider what they already have.”

“When they don’t have that, they can talk to me,” says Stinson. “I can liquidate, move them, get them new furniture, and they look like a star.” Bill Coons, president of Office Interiors in Atlanta, has always placed a premium on services over traditional furniture sales ever since founding his company, Facilitec in 1991.

The services available from Premier Office Solutions in Hatboro, PA, encompass furniture maintenance, project management, long- and short-term furniture rentals, installation and design support as well as liquidation services, which they’ve been offering for the past six years.

In 2007 he acquired Office Interiors, a 20-year-old contract furniture dealership whose primary focus was the higher education market. Today, Facilitec focuses primarily on A&D while Office Interiors operates as a full services office furniture dealership. When opportunity knocks, the two companies blend together. Both remain successful, with services a primary component of both.

Premier has been doing well of late with liquidation services. This is a service that often comes into play when they get called into projects for new furniture and are asked to take care of a client’s existing product. And, says Monica Stinson, sales and liquidations specialist at Premier, it’s a service that helps set them apart from the competition in their market.

When talking to Coons about services, he stresses that neither of those organizations is doing anything unique. “We do pretty much what everybody does,” he says. “We can get their furniture electroplated, refinished, repaired, reupholstered. What’s different is most dealerships are built on the model of selling new furniture, and our model has never been that. Our model is that the furniture is the byproduct of who we are.

“Not every new dealer can do that,” she points out. That’s a big leg up for us. We offer that to new clients when we’re brought into quote them new.” But offering liquidation services has its challenges. “Liquidation services can be tricky when it’s with new furniture because sometimes you have to roll those numbers into your base bid for new furniture,” says Stinson. “On occasion we’ve been awarded the liquidation only, but not the new furniture. It doesn’t happen very often, but it does happen.” The liquidation side of Premier’s business has been growing thanks in large part to word of mouth. SEPTEMBER 2011

“In other words, yes they need furniture, but the value we bring is on top of that furniture, understanding uniquely how to buy that furniture, understanding how to hear the need and come up with a solution as opposed to, ‘You need a U-shaped desk, here’s a desk, that’s what everybody buys.’” continued on page 16

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Cover continued from page 15 Most of our clients start off using us for one thing and as they learn more about us we’re able to blend deeper into the account on multiple levels,” he adds. How does Office Interiors add more value to the traditional furniture dealer model? “First and foremost we carry all that knowledge of architecture, move management, and logistics management within our company,” responds Coons. “We reach far beyond how to put a desk together, how to get it ordered, how to get it here, and how to get it installed. That’s where some of these services connect to.” One of the newer services that Office Interiors provides to clients is helping them sell their old furniture. Other office furniture dealers do this too, but what Office Interiors does is truly market their client’s furniture so they can get the best price possible for it. “We had a client that wanted to get rid of 100 workstations,” explains Coons. “Rather than selling them to us for nothing, I was able to take six months and market it. Instead of the client getting $100 for each workstation, they got $500. Then they bought a hundred new Teknion workstations from us.”

a project done or to deal with multiple responsibilities.” He continues to emphasize that running a services-based dealership isn’t all that unique in the office furniture industry while sharing his vision of how the business should be run. “If I truly had my ability to do this industry the way I’d want to do it today, I’d do the whole thing fee-based,” he says. “Fee-based professionalizes it. You also have to educate your client as to what you’re getting paid for. If most clients knew that and started looking at the quality of the professionals they have to deal with, then this business wouldn’t be so driven into the dirt on margin today.” Whatever your thoughts on services—whether in the forefront, sent to the middleman or as a value-add after a sale—the variety of options available can help define the brand, touch existing customers and expand the idea of the office furniture dealership. And you might just make a little more money at the same time!

Asked how the services business is doing, Coons replies, “Services are not so much up or down, it’s how you gain client loyalty. As long as most people perceive they’re not paying more or maybe less, they would rather deal with one person than a multitude of people to get

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Scott Cullen has been writing about the office furniture, office products, and office technology industries since 1986.

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Comparative Benchmarking and Suggestions for the Coming Year

By Bill Kuhn In each of the last seven years, I have devoted a column in OFDA’s official publication to a discussion of the association’s annual Dealer Financial Comparison and Benchmarking Guide. In this year’s column, I also offer suggestions to improve your financial results over the next twelve months. The recently released 2011 report, which reflects 2010 financial performance, should be studied by dealer principals, their CFOs and financial advisors. A review of the DFC report will enable dealers to focus on today’s most critical ratios and determine the performance their dealerships must achieve to be among the high-profit—and financially strong—dealers of tomorrow.

A Glance at Last Year The Results Comparison table on the following page lists a few of the more significant ratios and percentages for high and middle profit dealers. The DFC report breaks out these numbers and hunSEPTEMBER 2011

dreds of others for groups of specific dealers. I’ve included the latest numbers and those of the prior year in order to note trends. A comparison of these results shows a return to growth with a slight increase in profits. Installed gross profit was more stable than I would have predicted, but I later mention this line item is one of future concern. High-profit dealers lowered their core operating expenses by almost two percentage points. The middle-profit dealers did not show improvement and are almost four percentage points above high-profit dealers in spite of a 10% increase in revenue. While both groups showed profitability, they both increased their debt-to-equity ratio, a ratio of leverage and risk. The high-profit dealer debt-to-equity ratio is not alarmingly high; the middle profit dealer ratio is of concern, particularly in our fragile economy. The key factors in a period of economic uncertainty relate to the balance sheet and liquidity, specifically, the current ratio, debt-toequity, return on assets and return on equity.

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continued on page 18

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Comparative Benchmarking continued from page 17 RESULTS COMPARISON TABLE OFDA ’11 DFC (’10 Results)

OFDA ’10 DFC (’09 Results)

High Profit

Middle Profit

High Profit

Middle Profit

Growth

10.2%

10.4%

-2.4%

-21.9%

Installed Gross Profit

21.9%

19.7%

22.5%

19.4%

Core Operating Expenses

14.9%

18.7%

16.6%

18.6%

Net Profit Before Taxes

6.9%

1.8%

5.7%

0.7%

Current Ratio

1.7

1.5

1.7

1.6

Debt-to-Equity

1.2

1.8

0.9

1.3

Return on Assets

22.7%

8.5%

22.5%

4.5%

Return on Equity

44.4%

23.8%

48.1%

10.5%

A few other numbers in the report caught my attention. Dealers with an installed margin of less than 16% had a net profit of 1.2%; in the installed margin range of 16 to 26%, the net profit was 2.8 to 4.0%. Those with an installed margin of over 26% had a net profit of 6.7%. The total revenue of those dealers with a high installed gross margin percent was considerably less in terms of volume than the other dealers, but dealers need to look carefully at their product/service margin mix. In reviewing installed gross margins, both margins and dollars need to be considered. In reviewing dealer revenue (which the report breaks out by under $5 million, $5-10 million, $10-25 million, and over $25 million), all dealers except those under $5 million had a net profit of 2.4 to 2.8%. The smallest dealers had a net profit of 1.3%, roughly half the amount of all other categories. Looking at these data more closely, the driving factor was core operating expense. The smallest dealers averaged 22.1% in operating expenses, the other dealers ranged from 15.7 to 19.0%. While small dealers don’t have economies of scale, they need to improve their 1.3% net profit either through additional revenue, higher margins, or lower expenses.

Year-by-year comparisons—and forecasts—are misleading. Additionally, their projections include global sales with some international markets doing quite well, whereas dealers generally operate in their U.S. regional or local markets. Furthermore, BIFMA statistics do not measure some of the noncommercial markets in which dealers are involved. A much better approach would be to determine, as best you can, how you fare in your local marketplace, whether you are improving or losing market share compared to other dealers. 2. Revenue. Prepare forecasts and business strategy for each market sector in which you’re involved: commercial (large, medium and small), government, education, health care, hospitality, other. A few years ago, we all talked about the expanding fields in government, education, and healthcare. The economy is now proving that any area has its window of opportunity. Cutbacks in all areas of government and in education are occurring, while commercial may be experiencing a slight rebound.

Suggestions for Improving Your Financial Results in These Economic Time

Last month’s cover story on value-based offerings from the transactional side of the business is relevant to this discussion. Small businesses comprise over 90% of all businesses.

1. BIFMA versus Market Share. Don’t become obsessed with the BIFMA numbers (which some dealers do). For many reasons, those manufacturing numbers are not comparable to dealer numbers.

Thinking about future DFC guides, I personally believe it would be advantageous for our association to include market sector analyses in future reports, breaking out commercial, government, education and health care. Let OFDA know what you think about that.

The BIFMA numbers look better, in part, because manufacturers have had a much more significant decline in recent years compared to dealers–for example, down 30% in 2009 with continued declines in the first part of 2010.

3. Margins. I’ve always been a strong proponent of increasing a dealer’s service mix. There is no better time than today to pursue additional areas for growth, including services. continued on page 19

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Comparative Benchmarking continued from page 18 Companies today are extremely cost conscious and are looking to reduce expenses wherever they can. They don’t want to hire additional personnel and we are a long time away from returning to a reasonable unemployment level. Customers will continue to outsource and dealers can be part of that outsource opportunity. 4. New Major Threat. Editor Alicia Ellis made a very telling comment in her January “Outlook 2011” article. The biggest threat listed by dealers for 2012 is the economy and its instability–no surprise here. The surprise is the number two threat, namely, other dealers who are either pursuing contracts outside their traditional territories or are bidding so low that they make it impossible to be competitive. This threat has never been mentioned before in previous yearly surveys. More of your strategic marketing planning will undoubtedly need to address this threat, and a lot of the strategy will include margin and

service opportunities. Don’t wait until 2012. Act now! 5. Expenses. I discussed the high level of expenses among smaller dealers in terms of percentages. It’s not only small dealers who still have not addressed cost control adequately. It’s not just about not hiring or across-the-board cuts. It calls for a careful analysis of what can be done more economically, in part through technology. Some dealers still need to address those sacred cows—costs you know you need to cut, particularly in sales, management, and owner compensation. It’s also about determining where you need to spend money wisely to realize opportunities that are and will be emerging. We are in—and will be in—a fragile and volatile economy for years to come. Our industry’s past is not indicative of the future. We are all looking at new ways of doing business.

The ratios in the DFC report will be changing, particularly among the high profit compared to other dealers. Include in your financial analysis a careful review of the latest DFC report, then project how those numbers, ratios, and percentages can be changed utilizing sound marketing strategy and financial wisdom. Get your copy of the DFC today and start planning for tomorrow! http://www.ofdanet.org/index.asp?sid=90 Bill Kuhn, principal of William E. Kuhn & Associates, is a noted industry consultant, writer, and speaker with over 35 years of industry experience. In addition to his contributions to OFDealer, he also authors a regular column in INDEPENDENT DEALER, our companion publication on the office products side of the industry www.idealercentral.com. For more information, contact Bill by phone: 303-322-8233, fax: 303-331-9032, or e-mail: BillKuhn1@cs.com.

A FREE service for OFDA members, the New Insurance Renewal Reminder Service gives you the advance notice you need to review your existing life and long term disability policies and make important decisions about future coverage. We’ll notify you a few months before your existing policy renewal is due so that you’ll have time to weigh your options and consider the alternatives.

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An EmployeeFinding Machine As the economy begins to improve, our minds turn to adding key employees to help us grow and execute our strategies for market domination. LinkedIn can help us do just that, in not only a highly efficient but a more productive way than with the tools we have had available to us in the past. Until the advent of LinkedIn, we never had a keyword-searchable database of potential employees from all over the world that we could look through in order to find just the right candidate. LinkedIn now gives us access to over 100 million potential candidates. That database is right at your fingertips—and for no cost other than your time and effort.

By Wayne Breitbarth

of times per week. I know the president of a local company in my own market who found a new VP for his company in just five days after using the Status Update to ask his network for help. Think of the time and money that saved him, especially since he was just about to hire a recruiter for that position. 2. Use the Jobs tab in the groups you belong to, especially those groups that are related to the specific industry your potential candidate would work in.

As discussed in previous articles in this series, making sure you are well connected on LinkedIn is the gas that makes the engine go. Many of the ideas I share with you will not work as well as advertised if you have fewer than 50 connections.

Consider joining new groups just for the purpose of looking for this candidate if you are not involved in groups where this person would usually hang out. For example, if you are a member of the ASID chapter in your local market, you should post your job opening on the Jobs tab within that LinkedIn group.

Before you can expect big results when searching for employees, customers or whomever, you will need to connect with at least 100 people whom you know and trust.

3. Use the Advanced People Search on your home page. Some of the criteria you will want to consider when building your search are:

Once you have done that, the following features will help you turn your LinkedIn account into an employee-finding machine.

A. Title. Be sure to try some different words for the same job.

1. Use your Status Update Box (big blue box on your home page, marked “Share an update”) to ask your network if they know of anyone who is qualified for the position you are attempting to fill.

B. Company. This can be very useful, especially if you choose the "Past" option when you are searching companies that compete with your company.

After all, this is your network, and the people in your network know you well and understand the nature of your company. If someone in your network is aware of a prospective candidate, he/she should be able to quickly introduce you to the candidate. This is the easiest and most efficient way to find your next hire. That being said, I would not post this question in your Status Box every day, but try to limit this question to a couple

C. Keywords. Here you can get very creative, using terms like specialty software, skills, specific industries, territories or regions of the country, etc. Also, if you include words like "pursuing," "seeking" or "looking" in your keyword search, you will find interview-ready candidates. D. Location. You can concentrate your search around a mileage radius (10, 25, 35, 50, 75 or 100 miles) from your zip code or any other zip code that you are interested in recruiting from. The wider the radius, the more people you continued on page 21

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Linkedin continued from page 19 will find but also the further from the actual target they may be. E. Other search criteria and/or fields you might want to use could include using the keyword field and entering other keywords, such as brands of furniture, specific software, or using the College field to look for people who attended a school that you know has a great reputation for the type of person you are looking for. Here is an example of what the Advanced People Searching screen might look like if you were looking for an interior designer (1) who has worked at or is working at ABC Office Furniture (2), has the words “office furniture” somewhere in his/her profile (3), and is located within 50 miles of my zip code (4). This is the exact technique I used recently to find an interior designer for my staff. No recruiter. No job board ads. It’s just that simple.

1 2

4. Save your search once you have landed on a search or searches that have brought you some good potential candidates by clicking the word "Save" on the top right of the Results screen. Then LinkedIn will continue to look for more potential candidates by regularly searching your network, including the new connections people in your network are making on an ongoing basis. 5. Search through Status Updates (on the home page, right below your blue Status Box, click the words “Search Updates”) by typing "seeking employment" or other similar words in the area marked "Search Updates." You can find the Search Updates Box right below the blue Share button in your Status Update Box on your home page. This enables you to find people who are mentioning that they or someone they know is doing just that—seeking employment, etc. You can regionalize this search by adding relevant geographic search criteria. Be sure to save this search so you can rerun it later. 6. Post a job on LinkedIn's job board. Currently the charge for this is $195 per month per posting. There are some multiple-job discounts. You get to this by clicking the Jobs tab on the top toolbar and selecting "Post a Job." Once you have used the above techniques to find a few good candidates, spend some time reading and studying each candidate's profile, especially the recommendations. There is a wealth of information included on the profile that may either bring that candidate to the top or sink him/her. To receive a free worksheet that will help you find the people you are looking for on LinkedIn, go to www.powerformula.net, select “Free” under the Resources tab, and download “LinkedIn People Searching – Your Ticket to Improved ROI.” Wayne Breitbarth is an owner of M&M Office Interiors in Pewaukee, Wisconsin. Wayne began moonlighting as an unofficial LinkedIn trainer in early 2009 and has now led seminars for over 10,000 business professionals across the country. He was a featured speaker at last year's OFDA Dealer Strategies Conference and has recently released a book entitled The Power Formula for LinkedIn Success. Contact Wayne at wbreitbarth@mmoffice.com or by visiting www.linkedin.com/in/waynebreitbarth

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BIFMA Certification Update the sustainability certification program for furniture By Tom Reardon BIFMA’s level certification program was introduced in June 2009 with seven product manufacturers offering about 130 level certified products. Just two years later, the program now includes 27 manufacturers offering over 1,230 certified product lines with more being added every month. Not only have more manufacturers pursued certification of their products, many manufacturers have moved products up toward higher levels of certification. About 65% of certified products have achieved level 1 status, 27% have reached level 2, and just 7% have attained the highest conformance tier, level 3. level is the certification program that provides independent, thirdparty conformance verification to the ANSI/BIFMA e3 Furniture Sustainability Standard. This open assessment protocol provides a set of evaluation metrics to determine and recognize increasing degrees of product sustainability for furniture, in effect, helping to determine a products overall degree of “green.”

which went into effect in 2007). However there are some instances where North American references are used. Efforts are underway to address these, so that the standard can be even more relevant globally. Still, product manufacturers from Europe and China are presently among those offering level certified products. level recently underwent a brand refresh with updates to its website, addition of a video library, training aids and revised print materials. BIFMA has developed a 1-hour CEU intended for A&D practitioners. The CEU is accredited by IDCEC and the GBCI for LEED-AP continuing maintenance credit. There is a list of accredited trainers included at the levelcertified.org website. Many furniture manufacturers have accredited faculty members in various regions across the country. Consult the list of trainers to see if one of your manufacturers can provide the CEU for your dealer team. Visit www.levelcertified.org for more information on the program.

As the standard and certification program have been in use for some time, the standard development team is now looking at potential improvements and refinements, including efforts to internationalize the criteria for broader global applicability.

Tom Reardon is the Executive Director of BIFMA. For more information about BIFM or level certification, contact Reardon at 616-285-3963 or visit www.bifma.org.

In many ways, the standard was written with consideration of international criteria such as REACH (the EU’s Registration, Evaluation, Authorization and Restriction of Chemical substances SEPTEMBER 2011

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