The panel consisted of Paul Knobel, co-owner of Karl G. Knobel Inc., a kitchen and bath designer and dealer based in Wilmette, Ill.; Annamary Kennell, former bath and kitchen dealer and now on staff of the Bath & Kitchen Buying Group and Fort¿uying Group; Hank Darlington, owner of Darlington Consulting, and showroom columnist in Supply House Times; and Don Arnold of Inter/Source, consultant, writer and author of Supply House Times' College of Product Knowledge.
Knobel stressed the need to "re-invent" your business in response to changing market conditions. When he found it difficult to compete with other showrooms, he chose to focus his business on customization. "I have become a cabinet and idea supplier," he said.
For example, Knobel's firm is pitching customized, high-end closet interiors to builders and also provides labor.
Wholesalers and dealers should charge a retainer fee for design services, he said. "Don't give away your knowledge," he said. "That is something people are willing to pay for. We have instituted a design service retainer program. Customers pay us a fee based on the type of project."
The fee is built into the company's cost and applied to the cost of the job. About 70% of the time, the customer signs the retainer, and more than 90% of those jobs are closed by Knobel's company, he said.
Annamary Kennell offered the following suggestions to improve a bath and kitchen business, based on her own experience.
- Hire a business consultant and train your staff. "Know how to design a custom shower, how to size a water heater and know the different types of drains," she said.
- Offer training to customers. When Kennell noticed most of plumbers' call-backs to her business were about thermostatic valves, she installed a working lab at her facility with six thermostatic valves for hands-on training.
- Hold a semi-annual sidewalk sale. To sell off older or non-moving products, Kennell staged a semi-annual sidewalk sale on a weekend, which she advertised in the local newspaper. The first year it generated about $10,000. Her final sale before selling the business yielded $120,000.
- Join a buying group. "There are buying groups for every size company," Kennell said. "It will help you capitalize on lost rebates and capture benefits."
- Base compensation on profits. Advise your salespeople to offer discounts on selected items, but sell other items at retail price. Profit margins should be in the 38% to 44% range.
- Create formal quotation and order forms. The quote form should present the style, unit and accessories. Kennell's firm created order forms with pictures and specifications for every product to be used in the project. Copies were given to the homeowner, builder, plumber and electrician.
- Have a formal plan for inventory flow. "We had a formal program that said after 30 days the material was billed to the client," Kennell said. "After 60 days it was shipped out or we charged the customer a storage fee."
- Take advantage of manufacturers' resources. Use training and product information offered by manufacturers.
- Document all phone conversations in ink. Kennell said a spiral-bound book in which she documented all phone conversations in ink saved her from two lawsuits and helped her win restraint-of-trade litigation.
- Insist on a change-out or rotation program with your suppliers. "If you still have a product after a year and a half, or encounter a problem, your rep or manufacturer should let you exchange it," Kennell said.
- Be open for business on Saturdays. Don't close on Saturday to please employees; you will lose some very profitable jobs.
Don Arnold offered some do's and don'ts for improving bath and kitchen business:
- Don't make selection of the sink and trim the last thing discussed in a kitchen design project.
- Make money on extras, such as a higher quality toilet seat, towel warmers or a washer and dryer.
- Always provide access to the motor in a jetted tub, and always test a shower valve before you close up the wall.
- Always include a personal hand shower.
- Chrome is still the most durable finish.
- Thermostatic and pressure balance valves are not the same thing.
- Anchor the shower spout in the wall.
- The laundry room is a great fit, often overlooked, for your kitchen and bath business.
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