June 1, 2015
Keep your eye on the prizeBY ROD McDONALD
When independent companies fail, the reason is often failure to focus. The person or company that tries to be all things to all people, usually winds up being very little to only a few.
Here is a blueprint to avoid that fatal mistake. There is a lumber yard in Regina that is now into its third generation. It was started in 1956 and the company has seen many changes in how business is done.
With the arrival of the box stores including Rona, Home Depot and Lowes, most lumber yards were forecast to diminish in size or to fail. Fries Tallman Lumber was in that category, yet 20 years after the arrival of the box stores, it has grown and succeeds at a very high level. Why? Read on.
This lumber yard kept its focus on its customer base, which was the construction industry. It does sell to the affectionately known weekend warriors, but they are not the main focus. The company realized that lumber is a commodity, much as peat moss bales are to a garden centre. The company also realized that time is money, and no one is more impatient than a contractor. When contractors want anything, they always want it five minutes ago, not next week. Planning ahead is not the norm in the construction industry. I won’t apologize for that statement. After 39 years in the trade, I have seen that level of impatience often.
STORY TIME: As an adjunct to the above paragraph, there was an ‘old-school’ brick yard in Regina, and a woman worked behind the order desk for many years. Her name was Bernice and you didn’t mess with her, no matter how gruff and tough you thought you were. Bernice was tougher. Bernice had a plaque on her order desk that read, “Failure to plan on your part does not constitute a crisis on my part.” She would tap that plaque when a contractor would rush in, demanding delivery of three pallets within the hour.
We are back on track. Contractors, everywhere, are an impatient lot. Fries Tallman recognized this, and they did two things that promoted the company as front runner in the lumber business. First, they have an order desk made up of staff members who know the difference between dimensional lumber and rough cut. They know when fir is required instead of spruce, and the load strength of a two by ten. In short, the order desk staff knows its stuff.
The second element Fries developed was a strong delivery presence: Afterhours staff to load the trucks for the next day’s 7 a.m. deliveries, with drivers who know how to find construction sites that are not listed on maps, and are usually on time.
Contractors did not want the frustrating experience of a box store, where most staff members do not know the product line, or have difficulty in completing orders and on-time deliveries. Nothing makes a contractor blow up more quickly than a delivery of eight-ft. two-by-sixes, when they had ordered ten-footers. Time is money, and if you have to wait for a second delivery, the project stalls.
The focus that worked for Fries Tallman in the lumber business will also work for us in our business. First, we have to define our customer base, and where they live. So many times I have visited a garden centre or greenhouse and asked where customers are based, I have been informed, “We sell all over.” Often, I am told the story of how someone drives 200 km, every spring, just to shop at their operation. That is a nice, anecdotal story, but anecdotal stories do not put too much food on your table. What puts food on your table is a consistent sales program. If you tell me, or anyone else, that your customer base comes “from all over,” you have actually told us that you don’t know, and that is not a good situation.
In the old days, (yes, Pops), I would take a weekend’s worth of cheques and mark down the areas where those customers came from. Not totally scientific, because it left out cash customers and credit card people. When
debit cards arrived, I could no longer use the addresses on cheques to ascertain my base.
What I then found worked best was to ask departing customers one quick question, and that was for their postal code. When you ask people for too much information, or what they consider to be private, they balk. But a postal code is an easy one to get and works just fine for estimating where your customers live.
Sixty per cent of my customers came from the four neighbourhoods adjacent to my garden centre. That was not a surprise. But there was a neighbourhood next to my most loyal area, and that one provided me with only one per cent of my customers. Now, that was a surprise to me. Also, a quality neighbourhood in the northwest part of the city gave me 17 per cent of my customer base. They were not close, yet the residents found me. Of course, only one customer per year came from other parts of the city; those areas were just not a part of my customer base.
What do you do with that information? First, it really helps you to figure out where to spend your advertising dollars, with a rifled approach instead of a shotgun. Why send flyers into a neighbourhood where no one is ever going to come to your establishment? I don’t buy into the concept that you should try to win them over. It’s not going to happen. They have already decided that they prefer to shop at Walmart. Spend your money on the people who are willing to give your place a chance and may already shop there.
Business operators need to keep their focus on their product line and service mix. Again: You cannot be all things to all people. I understand expanding product lines and the need to keep your place fresh and exciting. I also understand operators who have gone off half cocked and paid a steep price for that behaviour. Whenever an item or new area is to be developed, I would strongly suggest sitting down and calculating what you can gain and what you can lose.
When concrete statuary and fountains first hit the garden centre market in the 1980s, I bought three fountains and ten birdbaths. My staff objected and told me they would never sell. My response was that even if not one of them sold, I had not invested so much in inventory that we would suffer. Long story short: Everything sold, and within a few years, the statuary department was worth $60,000 each season. The upside was there and the downside was not so severe that it would knock me off my game. Of course, when an independent is doing that well with a product line, it is not long before other independents and box stores jump into the fray and the original numbers diminish. You never own a market forever. Just ask Eaton’s.
Chasing the fast and easy buck does not work, at least not in the long run. All of us should be in business for the duration, not the quick dollar. I would receive phone calls from people wanting to sell me their house plants, as either they were moving or the plants were getting too large. I did not buy, as my business plan was to engage in repeatable activities. If I were to purchase a nice plant from a homeowner, sell it, and a second customer wanted the same thing, how would I procure that second item?
One day, an elderly couple from Oregon visited. They owned a Christmas tree farm, were retiring, and had no one to take over the farm. They were clearing out their Christmas trees for a low price. The product appeared decent, the price was tempting, but the question I had to ask was: What do I do next year? Do I return to my regular growers, hat in hand, with them asking where I had been the year before? Buying from this couple was not a repeatable experience and did not fit my business plan. If it is not repeatable, I avoid it.
The owner of a greenhouse/garden centre near me would buy anything from anyone, if the price was right. He jumped around from supplier to supplier a lot. He was soon bankrupt, owing everyone money. Being a jackrabbit and jumping around after the quick or easy dollar does not pay. Rather, it costs. Often, the turtle wins the race.
ANOTHER STORY: CKCK 620 was a radio station in Regina. It was a well-run business that owned the market place from the 1920s until the early 1980s. I had a customer who was a salesman at CKCK in the ‘70s. He told me that most days, the sales staff was finished before noon because there was nothing left to sell. Why the popularity? They had a team of on-air personalities who had created an incredibly loyal following. In the ‘50s, our family radio was always set to 620, and the other four stations were ignored.
New owners came along and killed the proverbial ‘golden goose.’ Why pay big bucks to the well-known, on-air staff when you can hire younger staff for less money? Long story short: The station went bankrupt and their radio dial spot was taken over by a competitor. This story, had I written it 40 years ago, would have been unthinkable in our city. A loss of focus and not keeping their eye on the prize destroyed a business from within, something that no competitor achieved in 70 years of trying.
All of us have to ascertain who our market is, and what keeps us successful. Focus keeps us on the road to success.
Rod McDonald owned and operated Lakeview Gardens, a successful garden centre/landscape firm in Regina, Sask., for 28 years. He now works full-time in the world of fine arts, writing, acting and producing in film, television and stage.