Hank Darlington: Good showroom business management
For the past 25 years I have traveled our wonderful country doing basic business management consulting for owners of showrooms.
I continue to be amazed, and disappointed, at the lack of good business management in operating DPH showrooms. Most of the large wholesalers that operate showrooms have implemented good management practices into their overall companies, but all too often they don’t treat the showroom part of their business as a separate entity.
Let’s face it — operating a showroom is significantly different then running a large wholesale business — meaning wholesale vs retail. Yes, good business management basics would be the same for both the wholesale and showroom businesses. I’m talking about having a mission statement, three- to five-year detailed business plan, annual and monthly budgets, detailed monthly financial statements, good human-resource practices and a detailed marketing plan. Because wholesale and showrooms are significantly different in how they operate, I’m suggesting there should be separate plans, budgets, financials, training etc., for the showroom side of the business.
Let’s take a closer look at the main business management principles I believe should be incorporated into operating the showroom:
The name of the business is important: It should tell potential clients not only who you are, but what you do. For example, “ABC Kitchen and Bath,” vs. “Smith Wholesale.”
The location of the business is extremely important: Many (most) wholesaler facilities are in industrial parks or other out-of-the-way locations where there’s room for larger buildings and pipe yards. Showrooms, on the other hand, should be located in customer-friendly places. Since the majority of visitors to the showroom are homeowners and designers, the showroom should be close to other retail “home-type” products, have easy access, good parking and be an attractive building. Remember, the building and location are part of the customer’s first impression.
The products you show and sell are very important and how they are displayed is just as important: Wholesalers operate on a “turn and earn” principal. They invest a lot of money into inventories and building space. They need to turn that inventory as quickly as possible. On the other hand, showrooms display investments that just sit there looking pretty. The turn and earn on display inventories is terrible.
The showroom needs to be well laid out, flow nicely and be very well lit. There should be things such as: working displays, and a comfortable area for clients to relax and talk with sales consultants (I call it a decompression area). People are busy and have time constraints, so having an area to sit, catch your breath and have a good latte is important. Live displays, a decompression area, refreshments, big-screen monitors, iPads, etc., are all part of helping deliver that great “customer experience” that everyone’s talking about.
Having a detailed, written three- to five-year business plan for the showroom business is a must: You need to know where you are today and where you want to be in three to five years. It’s your GPS/roadmap on how you want to grow, change and build the showroom business. Part of this would be having a detailed action plan on the various components of the business plan. Part of this plan includes a description of the action to be taken, person(s) responsible, start and completion dates, budgetary figures and a space for periodic updates.
Doing an annual/monthly budget every year is a must: Use your historic financials as your guide. The budget will tell you things such as when you can afford to hire more people, remodel all or part of the showroom, buy new software, etc. The budget eliminates surprises that almost always crop up.
The showroom business needs its own monthly financial statements: It needs to be treated as its own business (profit center). Many wholesalers still wash the showroom numbers into the overall wholesale business. This is not right. If you’re going to invest several hundred-thousand dollars into a showroom business, you need to know if you’re getting a return on your investment in that business. I know that if the owner of that showroom invested a like amount of money in the stock market, they would be checking it daily. So, doesn’t it make sense that they should know exactly what the numbers are for the showroom business?
Remember, don’t just grind out the numbers. Learn to read and use them to your advantage. They are one of your most important tools for managing the business. As I’m writing this — it feels like it’s almost too elementary — but my experience tells me that it’s needed.
Let’s spend a moment on human-resource management. It’s become very important. There are so many federal, state and local laws that dictate how we must handle the HR side of the business. I’m still a strong believer in writing job descriptions for every showroom employee. Everyone deserves to know what is expected of them. I also believe that regularly scheduled performance evaluations are very important. Just like the employee needs to know what’s expected from them, they deserve to know how they are performing in their positions. A well-done performance evaluation helps both the employee and the manager. It’s a great one-on-one communication. It’s the boss’ opportunity to coach and mentor his team.
Another important part of HR management is training. I strongly support a detailed, written training program that starts day one and never ends. You have a responsibility to give your employees every possible tool available to help them succeed. In addition to sales training, there is product knowledge and computer and systems training. At our business, we dedicated one hour a week — every week to training. You should also!
Business management is like a three legged stool. There are three important legs: Financial, HR and marketing management. To operate a successful business, all three legs of the stool must be of equal length and strength — or you’ll have a callie wobble stool/business.
A few words on marketing management are in order here. To begin, you need a detailed written plan that includes things such as who will your target customers be by group and what products and services will you offer? How will you promote the business? These areas should be reviewed every year. Times have changed dramatically. It used to be that the plumber was the driving force, now it’s the homeowner. It used to be that the Yellow Pages, newspaper and magazine advertising was how you promoted the business, but now it’s a website and social media. It used to be that showing and selling as many DPH products as possible was the strategy, now it’s much more selective (as it should be). Now the all-important “great customer experience” is in vogue. Good marketing will help you deliver this.
The internet, virtual and augmented reality are here. Are you utilizing these in your business? If not you should be thinking about it!
I’m encouraging you to take a hard and honest look at your showroom business management activities. If there are areas that you can/should be doing better, you better get with it because your competition down the street already is working on it!