Even for established lumberyards, the concept rings true and helps get the business out of some ruts. “Engage your existing customers and those you want as customers to get more familiar with them,” says Allen, which he says goes a long way to keeping them and responding faster to their changing needs. “Operate in a mode that every customer, every day, every dollar is important, the way a startup does.”
For Max Guetz, former owner of Home Lumber in Colorado (now part of ProBuild), the decision to open a new location in Grand Junction, Colo., a few years ago–a process akin to a true startup and one that Guetz had initiated twice before–was based on following the dealer’s No. 1 customer into that market. Guetz also reconnected with a former manager living in Grand Junction to help lead the effort and assembled the best sales, administrative, and production teams he could from other dealers in the area that were letting people go or were on
But the best thing Guetz did to set up his “startup” for success, he says, was to focus exclusively on pro sales with a goal of quickly becoming a full-service supplier, including millwork and manufacturing capabilities. His willingness to risk being different to seize an opportunity was taken straight out of the entrepreneur’s handbook.
Obviously, there is no rule of thumb as to what will differentiate a new or existing business in its market; even knowing what it is–a new product line or exclusive brand, a focus on a underserved segment of customers, installed sales–does not necessarily translate to acting on that knowledge (taking the risk) or achieving success.
“If what you’re selling isn’t profitable, you aren’t going to make it,” says Rader. To hedge that risk, Rader advocates periodic reviews of the lumberyard’s customers, product mix, services, suppliers, opportunities, and profitability with a startup’s mentality that nothing is sacred.
“Call a timeout and spend at least four hours a quarter going through the questions that a startup would,” he says, encouraging dealers to mark such reviews on their calendars and commit to the regimen. “It may trigger a discussion that leads to greater profitability,” from the ability to more nimbly respond to changes and appropriate opportunities, Rader says.
Rekindle the Spirit. As a consultant to small and startup businesses across several industries, Zahorsky has identified and defined the entrepreneurial spirit. He’s categorized entrepreneurs into nine distinct personality types, from The Visionary (think Bill Gates) to The Superstar (Donald Trump). Though they differ in their reasons and approaches to entrepreneurship, says Zahorsky, they all have two things in common: an insatiable curiosity and constant radar for opportunities.
Those are characteristics that not all dealers naturally have or can afford under the daily pressures of running a lumber business. The closest type Zahorsky identified is The Adviser, a customer-first entrepreneur. But rekindling and stoking that spirit, say experts, is essential to acting like a startup.
Zahorsky and others advocate startups to outsource their weaknesses and engage experts to help fill in the blanks. To some extent, the approach holds true for an established business.
“Once you honestly determine the type of startup personality you are, no matter which one, focus on that strength,” Zahorsky says, and find others in and out of the business to take up the slack.
