Remodeling Sales Opportunities with New Products
By Mark Willinger (Modern Builders Supply)
March 7, 2008
If there were a way to improve your sales by $85,000 a year between 2008 and 2011 despite a struggling market would you take advantage of it? To help demonstrate what I mean I am going to present you with two different scenarios that can occur in your business.
First, for the sake of argument lets say you have 20 employees and at some point 10% of them decide to leave, not because of your lack of management but just because they feel it is time to move on and have received better offers. This is a situation that you do not have much control over, you could offer them more money but more than likely you would have to over pay them to win them back and therefore become less profitable in the long run. You now have 18 employees but the need for 20, how would you react?
Second, lets assume that your company is in the Building market, and housing starts are down (which they are) and we will use the same 10% for comparison purposes. Theoretically, that would mean that your company has lost 10% of its business. Again because this is an external market factor you have no control of the situation. How would you react?
If I were a betting man I would wager that for the first scenario you quickly answered I would hire 2 new employees, increase the workload or some combination of the two. Yea that was pretty simple, in the second case however my guess would be that you are not quite sure what to do. The point is that in both scenarios you have little or no control over the situation, however in both cases you have control over how your business reacts and it is that reaction that can make you money.
There are several options to improve your profits in the second scenario, but here is my suggestion. Research emerging markets, look for products that are still in the introductory or growth stage of the product life cycle which have huge potential sales. One example is composite decking, expected to grow more than 10% a year through 2011 to nearly 1 billion lineal feet sold, according to The Freedonia Group, Inc. Check out your local market and see how many decking contractors you find. In my market the number was 20% that of total builders. That means there is a lot of opportunity for your business to succeed in this emerging market. Even if you were already in the composite decking market, that 10% increase in demand would cover a nice chunk of the losses due to housing starts and imagine the potential sales you could gain if you are not in the market at all. It is important to get into the market now and establish yourself so that you can gain future referrals and establish a strong reputation. Do not wait until 2011 when it is too late.
Here are some tips about marketing composite decking. Remember that it is much easier to maintain because it does not need sealed and in fact in long run can be much cheaper due to the maintenance costs of wood decking. Another point to bring up is that it is more environmentally friendly than wood. Make use of the “think green” trend as a selling point. There are two points of difference the consumer cares about, but also make sure to stress that it looks like real wood, a similarity that the customer will also be concerned about.
Composite decking is just one example of an emerging market; you can conduct your own research and find many other income opportunities to help improve your business. Think about all the customers you have done jobs for since you started. Were they happy with your work? Did they ask you what else you did? These are people who could potentially be ready for a new addition like a deck. You have accomplished the most difficult part of the sale, gaining their trust, so why not use that to your advantage. The cost of acquiring new customers is never cheap and when the economy is down it can become tough so use your resources contact past customers and expand your business. See how I calculated $85,000 per year and calculate your own potential sales.
