Another way to gain an outside perspective is the advisory group. “I think roundtables are almost the appetizer to getting a board of advisers put together,” says Jim Robisch, a senior partner with the Farnsworth Group, an LBM industry market research firm in Indianapolis. “They see the group dynamic and the sharing and how productive it is. There is such a wealth of experience there. From that, they see that they may need this [help] on an ongoing basis, focused just on me, my company.
“Boards of advisers are coming into vogue, and that’s very positive. I belong to a couple,” he says. “These are very, very fruitful. It takes away the family politics. While there is some consideration [given] to the financial aspects of the company, addressing strategic planning and operations is more usual.”
Boards of advisers are extremely candid. Robisch says some of the best sharing and advice often happen outside the actual meeting, during cocktails before dinner or in talks while sharing drinks after dinner.
Safrit’s Building Supply tried to create an advisory group a few years ago, but it wasn’t successful. “We got some of our customers and some builders who were not customers, and we met at a nice restaurant, but it ended up being a mutual admiration society,” he says.
That first attempt at an advisory group lasted 18 months. Safrit dissolved it because, “We couldn’t get to that point [of sharing and help] we are at in the roundtable.”
The failure didn’t sour Safrit on the concept. He learned from the experiment. Meeting once a quarter was too much, he says, and he plans to dial meetings back to one or two per year.
“We are going to try again with outside people, like a banker. I know we aren’t going to agree with him. I’m only lukewarm about the banker,” he jokes. Safrit also envisions asking people to join who have connections with the LBM industry but are not customers.
Larry Adams, president of the Southern Building Material Association, recommends that advisers or outside board members be paid. “One dealer hands the members of his board an envelope with a $100 bill at the end of each quarterly meeting,” he says. Consultants also recommend paying expenses for advisers and outside board members who travel to attend meetings.
“I encourage people to get out of the industry when choosing someone for an advisory board,” says Enter, a consultant with the American Association of Roundtables in Charleston, S.C. He suggests retired executives, a banker—“not your banker”—and an accountant—“not your accountant.” Enter says one dealer told him that his managers could snow him but not his board of advisers.
“Tony DeCarlo [formerly president and CEO] of LMC told me that the greatest strength and greatest weakness of the independent dealers is their independence,” says Enter. It’s that very independence—which translates into a certainty that they know what it takes to run their yard and a reluctance to let their hair down or to admit to problems they might be having—that keeps dealers from joining roundtables or recruiting outside advisers.
Getting Help
Being a lumberyard owner can be a lonely job. The buck ends with you. If you’re feeling the need of a little advice, here are some sources you can tap:
LBM consultants
There are numerous industry consultants who can give you advice on a specific problem. Most, like Jon Davis (president of Davis Lumber in Hutchinson, Kan., for 27 years) have run lumberyards or worked in the industry before setting up shop as a consultant.
Roundtables
Facilitated meetings of up to 10 non-competing dealers who share financials and give advice to one another. Meetings usually last a day and a half, and are typically held twice a year. Cost: between $1,200-$1,500 per company, excluding transportation.
Advisory boards
Having access to a board that meets regularly and includes outsiders who are respected business leaders in your community is also an excellent means of hashing out problems and obtaining impartial advice. Contact your regional association.
