Gotta "Cap" Those Sales

Friday, February 19, 2016

Bet that got your attention! And a kind of "snarky" way to start. But—going back seven or so years ago, and "Riding the Recession Down" (or chasing the bottom, as one of our Directors described it) wasn't a bit fun. Mighty gut-wrenching when you let someone go that's been with you a long time, and in some cases, for twenty years or more. But in hindsight, we did a pretty darn good job. Not only survived, but through it all, managed to keep "the Cream of the Crop." So, we're on the other side, and moving ahead pretty aggressively. Adding people back, at a pretty good rate but doing it "smarter" then we did before. So, what's wrong with that picture?

Not much of that picture is really wrong, but here's the other side of the coin. As we're "Growing" again, we've been adjusting our Operation needs...Quite aggressively I might add. Total re-builds on some trucks, and some new trucks too. We purchased a number of Moffett forklifts...You know, to go behind our bigger trucks...a new component saw for the Truss Plant, re-aligned Interior Door Shop...And it goes on. Somewhere along the way, it caught some people’s attention..."We're spending money."...No, real money!!! Into the seven figure arena. So, the comments were suddenly orienting around "How much we're spending"!!...Now obviously we're playing a lot of catch-up. Not only catch-up but sales are growing at a nice steady stream pace. So with a sudden concern about how much is being spent (new attention getter!), it hit me, that there is a quick way to quell this..."JUST CAP SALES!”

Yes. If we quit adding those pesky sales, then we can slow down or quit buying more trucks, forklifts, adding new personnel, etc. Interesting how we can go from something fresh and encouraging...Sales Increase, more profit, etc., to "Gee, we have to really watch those expenses"! Of course I'm dramatizing and making light of some folk’s concerns.

So, here's my real take on this. If we were "smart" enough to adjust down, then we're "smart" enough to manage the upswing and the good times that are ahead. Don't know of course if we're setting ourselves up for one year, or six or more of “good” years. No one knows that. But one thing for sure. If we don't take advantage of the good opportunities right now, shame on us when it does slow down and we hadn't done the level best we could to capitalize what was right in front of us. And of course there are other ways to continue to "Keep your powder dry." Don't suck down too much cash...Don't increase sales for sacrificed margins, don't hire indiscriminately, where you have to start over with another person three months down the road, 'cause you made a bad hire. Don't spend too much money fixing an old truck when you probably should have bought that next new one. I'll stop there.

Guess it all just comes down to good smart management...Sometimes we're like the farmers...Gambling on the next planting and that spring crop being good...Maybe "doing the right thing" at that point in time is the tougher decision to make, but then again, lumber folks are a pretty resilient group--aren't we? Just do the "adjusting up" in the same smart way we managed "adjusting down," but "Capping Sales" (to me) would be the last option... Good selling in the coming years ahead…Might just be the most important times yet!

Al E. Bavry, CEO, Kimal Lumber & Hardware 2/19/2016

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