Strategies for succeeding in ‘the new normal’

 

BY RICH SCHMITT

Management specialist

 

As I begin this column I am traveling home from HARDI’s annual meeting in Orlando. From what they tell me, attendance was down about 10% from their all-time peak in 2008. I find the high level of attendance really amazing, and I am sure that it is due to the ongoing dedication and efforts of the board, staff and members to make their meetings meaningful and worth attending. 

 

I think HARDI’s unwavering focus has allowed them to grow while other industry groups struggle.  From my vantage point, here’s what I see:

 

• First and foremost, the members come to the meeting and they come to work. The wholesalers and suppliers are asked to have one decision-level executive attend the meeting.  Many companies send several senior execs to the meeting. While I enjoy meeting with people at all levels in a company, meeting with decision makers provides the highest value to our company.
• Second, the members attend the committee meetings, the educational sessions and the conference booth program. While the meetings are always held in a nice venue, very few, if any, people “skip out” of the working sessions. As a vendor, I know that the right people will be at the meeting — and show up at all the planned activities. Someone once told me that the members do it out of respect for suppliers and other members who are in attendance. (As an aside, I was at another association’s meeting several years ago and a wholesaler’s president was telling me how he had played golf during the conference booth session. It was difficult not to show my anger since we had just wasted a ton of money to get a table in the poorly attended conference booth area. Our mission was to see guys just like him, but many of them were awol (absent without leave), playing golf and gambling instead. 
• Third, there is a long-term commitment to high-quality programs at the meetings. While there isn’t normally any earth shattering, meaning-of-life insight disclosed at any association’s meetings, there are always new insights, new points of view and plenty of reminders that we all need to pry us out of our personal ruts. I always come back from HARDI tired from the intense meetings and reenergized about one or two specific topics. I have always considered that the meeting was well worth the dollar and time costs.
• Finally, they provide a pre-registration list prior to the meeting and an attendee list at the meeting. This may seem like a simple detail, but it allows wholesalers and vendors to plan and prepare for appointments at the meeting. (For the most part, we will no longer attend meetings where the attendees are not published. We have been to way too many meetings where the attendance was not worth the cost and the trouble. I suspect that, in some cases, no list is produced because the planners are embarrassed by their inability to get members to attend. At one such meeting last year, another vendor told me that he felt cheated by the lack of attendance after being promised “record attendance.” He said, “Next time I’ll be smart enough to ask if it is a record because it is so low.”)

 

We have been attending HARDI meetings for 20 years and now have a handsome plaque to prove it. My dad started attending 20 years ago; we attended several meetings together and now Jen, my daughter, and I attend. We feel that this association has been the highest roi marketing investment — in terms of dollars and time — that we have made over those 20 years. Congrats and thanks to everyone at HARDI who make it happen.

 

While at the meeting, we had an opportunity to talk with a lot of wholesalers who have reconfigured their businesses for the “new normal.” As you might expect, there were a mixture of reports ranging from: “We’re growing”; “We’re down a little”; “We’re down a lot,” to “We’re really struggling and the jury is out regarding our long term future.”

 

In the remainder of this column, I’ll share some thoughts for each of these groups in reverse order.

 

We’re struggling

 

Get yourself into turn-around mode. Struggling companies have their best shot when they get out of “business-as-usual” mode and into a highly focused turn-around configuration. 

 

• Stop the bleeding. You have more time when you are not bleeding. Make the changes required to get into the black, even if just a little.
• Get right-sized. The struggle becomes easier when you are not carrying additional weight. This applies to all expenses in all areas.  Get your expenses right for the size business you are, not the business that you want to be, wish you were or hope you will be. 
• Watch your pricing. Many companies are dropping their pricing to keep cash flowing. While this may be required in the short-term, this is seldom a long-term fix. Further, most companies drop their pricing more, or far more, than is really required to keep cash flowing. If this is your strategy, be sure to adjust your expense budgets to match the anticipated lower gross margins available to cover those expenses.
• Get about selling. Don’t sit hoping that the economy will recover and business will again flock to you with little real selling effort. Those days may or may not be gone forever, but they are certainly gone for now. 
• Get help. It is a very human trait to procrastinate getting help. Most of us wait too long to call a doctor — even as our health is changing dramatically. It is the same with companies. Many times a turn-around focused consultant can get your com­pany back on course with the least trauma. Don’t wait until the situation is desperate or beyond hope to make the call. If a potential consultant recommends a new strategic planning process or offsite executive retreat as the solution to your crisis, keep looking.

 

We’re down a little or a lot

 

While many companies find them­selves in this situation, some have become resigned to and actually comfortable with their plight. So they have downsized and are sitting to wait out the storm. I think the team should be fighting to offset any downward trend in every way possible. Selling, pricing for profits and prudent expansion should be on the agenda in a very determined way.  There are some acquisitions that may now make sense as some owners no longer have the stomach for the fight and they have more realistic expectations regarding the value of their company. 

 

We’re growing

 

While everyone else is struggling, some companies are still doing well.  Some of these companies have been run so well, are so lucky or both, that they seem “recession-proof.” Before you sprain an arm patting yourself on the back, look carefully at the light at the end of the tunnel to be sure that it isn’t an oncoming train.

 

I don’t want to rain on your parade but several senior executives confided that mid-year they were thinking they had escaped the recession without a scratch, and then were surprised as their market and business dropped into the tank just like everyone else’s. It turned out that their community was a “late-bloomer” in the recession. This recession continues to have ripple effects and some markets may not yet have been im­pacted since they are at the far end of the ripple. Stay lean, keep your eyes on the gauges and take action if the business starts south.

 

One recommendation for all of the groups: Get out of the office. Senior management needs to get out and reconnect with customers, prospects and the market, for several reasons:

 

• To tell the customers that you appreciate their business. In all economies and in all markets this is a good investment in time.
• To humbly ask what your company needs to do to earn a greater share of their business. Just asking will give you a better position in the customer’s mind. A single visit will not cause a revolutionary change, but multiple visits, calls and e-mails will make a difference over time.
• To meet potential customers and to develop relationships with other people within the customer’s business who may, in the future, be valuable. Walking out to the counter and waiting on the occasional customer is good but, make no mistake, it is not the same as visiting customers and prospects in their shops or, even better, at a job site. The customers at your counter already like you and buy from you, but talking to them often just reinforces the status quo.  Talking to contractors who are not buying from you can be gut-wrenching but extremely enlightening. 
• To gather first-hand information about the market, the competition, the customers and how your company is perceived. Second and third-hand information is never as precise and comprehensive as first-hand, feet-on-the-ground observations of any situation.

 

In a storm, the captain always steers the ship from the helm where he can see and react to the situation immediately, not after it has been described to him second or third hand. As far as I am concerned, getting into the field is manning the helm of your ship. For a reprint about operating in turn-around mode or on field visits, e-mail me at rich@go-spi.com.