“Many of them operate on an asset-based line of credit, and their banker is reading the papers and coming to them saying ‘I’m not crazy about your industry’ and asking ‘Is the value of your inventory going down and your receivables going up?'” Taylor says. “[Dealers are] seeing their credit lines shrink significantly at a time when they can least afford it. … The money issues really have pinched them. [Some] may have been able to slide by with less than efficient operations in the past. That’s not the case today.”
Taylor predicts cash flow will be as important to the survival of some dealers as the volume of business they’re getting or the prices they’re paying for inventory. Traditionally, a co-op will try to help dealers by operating efficiently and delivering a rebate. But Taylor says Do it Best is exploring ways to go beyond that, in particular by negotiating lower prices with vendors in exchange for a promise to pay them more quickly–in 30 days, say, rather than the typical 90.
Do it Best also has expanded opportunities for dealers to get into equipment rental and home dé cor, such as flooring, countertops, and cabinets. “The thing about rental for a pro dealer is that, if you’ve got the right stuff, it’s all there for your early project needs,” he says. “If you use that as a way to make a connection, then you’ve got more of an opportunity to get more of that project.”
Taylor, who grew up in a family-owned building materials center in Virginia’s Tidewater region, credits many members with cutting expenses and conserving cash to the point where they’re in a position to take advantage of other dealers’ closures. “For members who have managed cash flow well, there are outstanding opportunities … to outpace the growth in the economy,” he says.
