Keeping It Right, the Second Time Around

Wednesday, December 16, 2015

We've all talked about how tough it was to survive "The Great Recession"... (Still don't think there was anything great about it!!) Anyway, we're here. Sales are growing back...That elusive word "profit" has returned, and so on. Life is pretty good. So what about all those lessons we learned on the way down? The ones that frankly allowed us to survive? What I'm talking about now is how easy it can be to fall back into old bad habits we had in the past. So, let me identify in Kimal’s case, some of the areas that were "loose" before the Recession, what we did to "correct" them, and now how we now view these areas moving forward.

In the case of customer "Credit"...We used to "work" with builders by allowing slow pay--often as a normal thing. (Hey! We've known "Joe" the Builder" for twenty years...He'll never "stick" us!) But we quickly learned in the Recession that allowing "slow pay" didn't work. We HAD to have our money to pay the bills...So, enter "Zero Tolerance." If there was "no check by the fifteenth" it meant no continuing credit...Period! We had to toughen up by necessity. Today we are no less tough. After all, we are a bank to these folks. And I learned that at times, I had to be the liaison to talk to the builder...No passing the buck there!

How about the area of "Associates," or more specifically, our new hires? Back in the day, it almost became, "Hey, if their breath can fog a mirror, if they have a pulse...we need a ‘body’”...It was kind of "Ready, Hire...Aim!!” And where we had (and still do!) a lot of great Associates, we made some bad "hires." I guess we concluded that an 80% level of performance with some was good enough. No more! These days we do an extremely thorough job of background checks, interviews, etc. And many times, for seemingly small reasons, decide that person is not a good fit for Kimal. This isn't arrogance. We decided that having (as near as possible) an "A" team in place is better than some "As" with a bunch of "Bs" and "Cs" thrown in…(and a few "Fs" I might add!) Yes, with the labor force the way it is, it's mighty tough to find that next "Gem," but we've all decided that we're better off to do double or triple duty for a while, than having someone pass the "Fog" test. A footnote. As I look back at our peak of 234 Associates, if we had done it much more "right,” that number would have probably been closer to 205 or so...but with far more "A" Associates.

With respect to customers, we did have some customers back in the day that produced a lot of "Volume"... Didn't take the time to really analyze their (volume-oriented) worth to Kimal...And as the economy went down, we discovered that we could actually "Live" without some of these types that frankly could suck the blood right out of a supplier like us. Now, we've developed and are fine-tuning a kind of “Scientific Metrics” to truly grade the customer…Bottom line. We ask ourselves, “Are they good for Kimal?” (and vice versa, for sure) and if not, we may decide to "Invite" them to buy elsewhere. From a Protocol/Systems stand point, I'd be glad to share this in a future letter.

One more area I'll mention: Our equipment, or more specifically, our fleet of trucks. After selling a bunch of them, we realized that the trucks left (the best) hadn't been maintained as well as they should have been...And we've paid the price for that. Moving forward, we're now almost “anal” about a rigid program of "Care and Maintenance"…I intend for these trucks to run "about forever" and do their daily job with few problems.

To sum it up, I could go on, but the lessons learned on the long slide down were of course some of the reasons that we survived...We did well, now we have to maintain that same "Protocol" and if possible even take it to the next level. When the next downturn occurs, we will be far more ready. Good selling!

Al E. Bavry, CEO, Kimal Lumber & Hardware 12/16/2015

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