International Door & Operator Industry

JUL-AUG 2018

Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.

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Page 20 of 110

MANAGEMENT Continued from page 17 John E. Zoller and David H. Bowen comprise Zoller Consulting, Inc. of Wooster, Ohio. Zoller Consulting provides consultation of managerial effectiveness and financial performance of construction related businesses. They also offer customized seminars and training sessions. In addition, Zoller Consulting provides acquisition management, including finding buyers or sellers, locating funding sources, transaction structuring, and negotiating and organizing the transition to new ownership. Contact Zoller Consulting, Inc. at 330.262.8500 or John@ "The point is, while business is good, this is not the time to get sloppy or fail to watch the financial health of your company. Run efficiently and demand that budgets be met... Make hay while the sun is shining!" acting commercial doors and ancillary products such as dock equipment. Most importantly, embrace high margin service sales. A firm with thirty percent (30%) of sales represented by service sales can literally own their market place. In short, embrace the installation of "better" products, and both residential and commercial service to grow your gross profit and eventually your bottom line. Make hay while the sun is shining! With the assumption that business will be good (always take the word of an economist with a grain of salt) what sort of planning should the strong dealer undertake over the next six and one/half (6-1/2) years to take maximum advantage of a predicted strong economy? First, concentrate on getting your financial house in order. • Build your business assets. Allow yourself to make a profit. Don't succumb to the lure of managing your business to avoid paying taxes. Build your reserves. Taxes are simply another business expense, a cost of doing business. Of course, it is okay to take any depreciation expenses, but just don't try to artificially minimize financial performance. Think for a minute. Which firm looks and is stronger? A) a firm generating $2,500,000 in sales with $10,000 in cash or B) a similar sized dealership with $300,000 in cash. Which firm has the best chance to take advantage of an opportunity? While cash is king, carefully watch other balance sheet items. Control accounts receivables to assure your A/R are current. Don't allow retention on commercial jobs to be unmonitored. Watch these contracts and accounts frequently to assure you are in compliance with the contracts and your clients are paying according the terms of the contract. • Keep your inventory below 45 days (no more material than you need for 45 days). If you can use a manufacturer's distribution center, your inventory levels can and should be lower than 45 days. Inventory ties up money and distribution centers allow you to use less of your money to fund inventory. • Watch your liabilities, meaning keep them as low as possible. Pay your bills on time. Suppliers love dealers who pay promptly. Prompt pay builds good vendor relationships. Maintain an enviable current ratio (current assets in $$$ divided by current liabilities in $$$). Typically, a current ratio of 2:1 or 3:1 is acceptable, but superbly managed dealerships often have a current ratio of 4:1 or above. The point is, while business is good, this is not the time to get sloppy or fail to watch the financial health of your company. Run efficiently and demand that budgets be met. Make hay while the sun is shining! Next, from a management standpoint, focus on what is important and do not get caught up in minutiae. Weekly management meeting where the boss berates his managers are pointless and morale busting. Instead, create, or strengthen your management team with strong performers. Develop a business plan and then follow it. A business planning session ties up expensive talent that is truly wasted if the plan is not followed. A good business plan includes very specific action plans, a specific completion date for each action and a designated person responsible for completing the action plan on time. Finally, the owner or a senior management person must be in charge of following the plan to assure each manager is completing each action item on time. Top management is responsible for the strategic plan for the dealership. The strategic plan defines why the firm exists, what focus the dealership will follow, what type of sales will be pursued and how the public in the dealership's market place perceives (or should perceive) the company. When sales are growing and opportunities from a good economy are abundant, management must be on the lookout for logical investment opportunities that will help meet the strategic and business plan goals of the business. This might include investing in a new facility, branching out into new logical product lines, moving into new markets or making an acquisition of another dealership. The ability to take advantage of any of these opportunities requires a strong market demanding "better" products, prudent financial management to carefully husband assets, good managerial skills to improve productivity and a clear strategic plan displaying an understanding of who the firm is (or is not). With all of these pieces in place,don't waste the opportunities of a forecasted strong economy through 2025. Make hay while the sun is shining! 18 International Door & Operator Industry™

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