No doubt, today’s Building Material industry is stormy. The industry itself seemed to show its desperation at last year’s 2009 IBS Show, displaying a theme of “Survival”.  It seemed the industry was saying it was OK to give up until the market returns (looking for a silver bullet approach). While a trade show does not a successful year make, it does send important signals of its key players and the industry itself. Last year’s show signaled stagnancy, with new products and programs few and far between. Most companies stated their strategies were “status quo until market conditions return to normal”. Well gang, there is no normal. And for sure 2.1 million housing starts will never be the norm, maybe 1.2 million starts a few years out.

As I attended the 2009 BATIMAT show in France this past November, I did see some hope from the exhibitors and investments they are making in their company and the industry, but I also understand Europeans are more optimistic than Americans… they tend to see opportunity where we may see constraints. I hold great anticipation to see what the upcoming 2010 IBS brings.

While the seas are stormy, some leaders have emerged to hold their helm and guide their companies into more successful seas. Only a select group of companies have really taken a leadership role given current market conditions. In essence a company has two choices; 1) Cut its way to prosperity; reduce spending, eliminate sales and marketing people, shut down lines or entire plants and send the people home, fight to steal competitor’s customers by reducing price (dramatically)… boy that sounds very familiar to most of the market. 2) Take Leadership; leaders (not necessarily market share leaders), rather thought leaders find the opportunity to lead through the storm and steer their company to look at the market conditions as an opportunity versus a threat or an unfortunate reality.

Most of these companies are smaller and more agile and aren’t burdened with the conservative philosophy of thinking they must “play not to lose”. Instead, these leading companies are “playing to win”, looking for all the angles and ways to use the market conditions to their benefit. Those companies have grown profits by establishing new business models, buying fledgling companies, and taking profitable share for stagnant competitors. This thinking has allowed these companies to dramatically outperform the market… which is the true measure of success (not what the company puts in its strategic plan document).

Find your path to a new form of leadership…. Take the helm and see where it can take you.

Bill Rossiter

A great article from Jim Carlton in a recent Wall Street Journal that shows how far energy efficiency can go. Here’s the intro follow the link to read the entire article.

The green building movement is targeting a goal once thought virtually unattainable: zero net energy use.

While the trend is nascent, dozens of “net zero” and “near net zero” developments — projects designed to use only about as much power from the public grid as they can save or produce on their own — have sprung up across the U.S. over the past five years.

Read the rest at The Wall Street Journal

Goals, tracking and measurement lead to long-term success and in today’s economy that’s about as surefire as it comes. Too many, though choose not to plan and that leads to short-term troubles that quickly spiral out of control. Before you get overwhelmed with yet another task to accomplish, take a deep breath and read this previously published article to the advertising and marketing community. It’ll put planning into perspective, offer a few pointers and just might rejuvenate your work spirit.

We certainly know, no one plans to fail. But don’t let be this be the year you fail to plan and find yourself without a business to evaluate in 2011.

As for me, our plan is to communicate with you regularly through this blog. We look forward to the increased communication and ongoing discussion

Download a PDF of No One Plans to Fail

Mark Mitchell

Why does this happen? And how can you protect yourself?

The biggest reason for failure is financial. Just as many new businesses fail because they are undercapitalized, existing businesses have been seriously weakened financially by the downturn. Economy improvements and increased sales can put a severe strain on cash. Now is the time to shore up your financial team–your internal sources, your accountant, your supplier, your bank and your customer relationships.

Whether you have a bookkeeper, controller or CFO, they need to understand cash will be just as important as it has been during the downturn. Consider having weekly cash flow reports. This is also a good time to take a hard look at your accountant. If your accountant does only the minimum of what’s required, like tax returns, you probably need a new accountant. If your accountant hasn’t been with you during this downturn, regularly bringing you unsolicited ideas and advice, it may be time to move on.

A good accountant should have strong relationships with banks and be able to put you with the right bank, if yours isn’t meeting your needs. He’ll also be realistic with you about your credit needs and how much you can probably obtain.

Most of your suppliers have probably gotten through this with many of the same challenges as you. They are anxious to start growing again and probably now have fewer potential customers, so you are more important to them. Now is the time to talk with them about your plans. If you are open with them, they may be able to help ease your cash flow with solutions like better terms. They are more likely to do this if they feel comfortable with you and your business plan. It will be more of a challenge if you wait until a big order comes in and then try to negotiate with them.

It also helps to see how the bank sees your business, which is very different from how you see it. Get your financial statements in order, including year-end statements and tax returns. You may anticipate a big growth in sales revenue, but bankers aren’t focused on your projections. Sure, they look at you, your plans and your place of business, but what they focus on are a few ratios from your balance sheet. If you don’t understand these, make sure your accountant explains them to you.

If you extend credit, you need to be on top of this as it grows. Customers who get beyond-agreed-upon terms need to understand what you will do if they do not pay and when you will do it. You then need to follow through. Now is the time to work out a plan, perhaps with the help of your lawyer that lays out step-by-step what happens when a bill is not paid. This plan needs to be carried out consistently, with no breaks for good-old Henry.

The final area to keep in mind is margins. You will have pressure to take orders at lower margins. You will be tempted to accept these in an effort to keep the relationship or just for the volume. Resist this temptation with all your power. Once you reduce a price, it’s almost impossible to go back up. You have succeeded so far for a reason. Sometimes your customer has to go somewhere else to appreciate why he does business with you.

Mark Mitchell is president and chief creative officer of Interrupt Marketing. For over 20 years Mark has focused on helping building material manufacturers to more effectively market their products through the channel of distribution including builders, contractors and retailers. Contact him at mark@interruptmarketing.

What you can’t see, in fact, can hurt you, especially as it relates to home construction.

According to the government census, there are nearly 110 million occupied homes in the United States. Leading building material manufacturers state that up to 70 percent of these homes are not insulated to current energy code requirements, making them less energy efficient than a new home. However, making matters worse, most new homes being built today are constructed in accordance only to the lowest possible legal energy efficiency standards. While it may be legal, it does not address one of the biggest complaints of homeowners…comfort. More than half of these U.S. homeowners report at least some dissatisfaction with their home’s comfort level.*

Making a home more energy efficient not only makes it more comfortable to live in, it also enables homeowners to lower the cost of maintaining their home year-round and for years to come. In fact, 73 percent of homeowners say they are willing to pay more for an energy-efficient home.** And with the government’s energy tax credits, homeowners can save even more money when executing energy efficient projects for their home.

So, how do professional contractors turn that into sales? By becoming an energy efficiency expert, and highlighting it on each of their remodeling projects. When contractors provide a more holistic service offering (versus just a low price), they have the opportunity to add energy efficiency to their customers’ remodeling projects and enhanced profit to their business.

Of the 25 million homeowners involved in remodeling projects***, many could include energy efficiency enhancements if homeowners were just made aware of their options. This profit enhancing opportunity for the contractor is often lost because many contractors focus on reducing project costs, rationalizing that they must compete with other contractors that typically lead with price.  Homeowners have high expectations, stating that they want their contractor to be more of a consultant and provide deep expertise to their home’s project. These homeowners are more willing to pay additional dollars for the services and product attributes (including energy efficiency) that these contractor’s enhanced solutions usually provide. Contractors who make energy efficiency a priority and utilize this expertise to differentiate themselves from price-centric contractors can secure more jobs and more profit per job.

For example, roofing contractors head to the attic to check out the backside of the roof deck before they quote the job. While in the attic, they could check the attic insulation level and provide a quote to add attic insulation to optimize the home’s energy efficiency. Most big box retailers make this service easy… as they have a rental program where professionals (and DIYers) can rent a blowing machine along with the blowing wool insulation.

This same approach could be used for windows and HVAC contractors, as their homeowner sales pitch focuses squarely on enhancing energy efficiency of the home. Adding a tag-on insulation project or air sealing solution would help optimize the energy efficiency of the whole house. Attic or crawlspace retrofit insulation applications, along with air sealing are the easiest and usually most cost efficient ways to add on sales to a home retrofit/remodeling project.

So what about other remodeling projects? Kitchen or bath remodels usually focus on beautifying with cabinets, countertops or flooring, but they don’t have to stop there. When opening the drywall, caulk and seal the cavity (to reduce air infiltration) and then re-insulate with the highest R-value available. New, more energy efficient windows or doors add to the look of the room and can make it more comfortable by reducing drafts and adding thermal performance. When re-siding a home, adding new windows to key sides of the home, a new layer of foam board insulation over the existing exterior, and caulking around all openings can make a huge difference to the energy efficiency, comfort and performance of the home.

Focusing on energy efficiency makes everyone a winner. For homeowners, they get a lower cost to maintain their home, added comfort, and research shows that a more energy efficient home can enhance in its resale value. For the contractor, leading with energy efficiency expertise can differentiate them from other contractors, help them close more projects, and ultimately enhance their profits. Oh yeah, and the planet saves more natural resources.

* Decision Analysts (What Your Customers Want By Garry Upton)

**Ecohome, June 2008

*** NARI

From an article I wrote for the Daily Energy Report

For the most part, trade shows are becoming less and less effective every year.  Look around at many trade shows and you’ll see the shortage of customers walking the show floor.  At some shows it seems as if there are more exhibitors checking out the competition than attendees.

Of course the economy and increased travel costs have affected this.  More companies are sending fewer people, or are simply skipping the shows entirely.  Another big factor is that in many industries, the thousands of individual business customers have now been replaced by a few large multi-location companies who now represent the lion share of all sales in many categories.

The first way to stop wasting money is to simply not exhibit at the show.  Many companies make large annual investments in trade shows for three simple reasons:

1.     “We’ve always been there.”

2.     “The competition will be there.”

3.     “What will it look like if we don’t attend?”

These are all pretty lame reasons to spend such a large amount of your marketing budget.  Companies should always practice zero based budgeting as part of their annual budgeting practice.  Put everything on the table and see if it still is the best use of your money.  As exciting new ways of communicating, such as social media or pop up stores emerge, many companies make the mistake of assuming they can only venture into these areas if they have additional funds.

Most of the time, the funds are right under your nose, if you just look at what you no longer need to do, such as trade shows.  Apple stopped attending the largest trade show devoted solely to Apple and used the money to open more retail stores.  The result is that they now have trade shows for consumers 365 days a year.

Two other considerations are big customers and the regionalization of show attendees.  In most industries, 20 percent of the customers are responsible for 80 percent of the business. It may be more efficient to make more and better sales calls than to think you’ll reach the big guys at a trade show.  Maybe taking some of that trade show money and hiring a stronger national account sales person or team will get you more sales than a trade show.   The largest customers come to the show to see what’s new.  They don’t waste time looking at something they are already familiar with.  Unless you are new or have a really compelling new product, you are, once again, probably wasting your time and money.

Whenever a show stays in one location like Chicago or Las Vegas, they are in many regards more of a regional show.  Smaller businesses within 200 to 300 miles of the show are more likely to attend as they can drive to the show and only be gone for a day.  Business owners who live further away have the added expense of air, hotel and meals, as well as being out of the office for several days.  For these reasons, many of them don’t attend, so you don’t reach them.

If you measure the traffic in your booth and count the number of existing customers versus the number of new or prospective customers, you’ll usually find that you are actually talking to very few prospects.  The vast majority of your traffic will be existing customers stopping by to say hello and to be made to feel important.  In most cases, companies should have good ongoing contact with their existing customers, which makes the trade show investment redundant.  If you think you have to take them to an expensive dinner or show, you can do that in their hometown.

Count the number of prospects who stop by your booth and divide it by the amount you spend to exhibit at the show.   You may realize that you could have taken each of them to Paris and had some real quality time for what it cost to reach them at the trade show.

An alternative to a trade show is to use the funds more effectively by doing many mini shows at your distributors, retailers, or local home and garden shows.  These can be part of a bigger event or done on your own with an event such as a contractor night at a distributor.  Don’t wait for the distributor to ask you to be part of his event, be proactive and take him the idea.  There are three benefits to local shows.  You show the local customer such as a distributor that you care about their success.  You get to educate his sales force about your product and how to sell it.  They have so many other products to worry about that many of them are just order takers.  If they feel more confident about their ability to talk about your product, they’re more likely to try to sell more.  The third benefit is that you actually get to meet the customers who buy and use your products.  You can learn a lot about what they think, which will lead to even more sales.  And these sales are a lot more measurable than a trade show booth.

If you’re still determined to exhibit at a trade show then you should take steps to reduce your expenses.  A big area to start is the size of your booth space.  Many times a smaller booth can achieve the results you need, and reduce your show expenses considerably.  Another big area is the booth itself.  Ask yourself if you really need that expensive custom-made booth that requires crates, shipping and set –up, as well as  refurbishing between shows.

If you feel you need a large custom exhibit, many exhibit companies will now rent you many of the booth components, which is usually less expensive than having them built just for you.  Another way to make a large presence at a lower cost is to use fabric structures, which can be quite creative and because they are so light, reduce your crating and shipping costs.

If you are able to right-size your booth down to a 10’ x 10’ or a 10’ x 20’ then you can really achieve some significant savings by using a portable display from a company like Skyline www.skyline.com.   You can fly with the display or ship it UPS.  Anyone can set it up in a few minutes and it’s easy to customize if your messaging changes.  If you creatively and tastefully design the backdrop graphics, no one will notice that you’re using a portable display.  Creatively and tastefully means use a professional designer. Graphic design is not a place to save money.

The messaging, or what your booth says, is also a very important part of how to maximize the return on investment for your trade show expense.  I’m amazed at how many booths simply have the company’s logo as the most prominent graphic of the booth.  They then will list the type of products and the features. For example a typical booth will say:

Jones Water Heaters

Large Capacity

Quick Heating

No Rust Through

Who cares?

A better way is to grab the attention of the buyer (trade show attendee) with benefits that are meaningful to him.  To a home builder you might say:

Show Homebuyers Why Your Home is Better

The Jones Brand Name Means Quality to Consumers

New Quick Recovery System is Easy to Demonstrate and Creates Word of Mouth

“You should see the water heater in the home I toured today!”

Before you decide to exhibit at that next trade show, stop and ask yourself, “What if we didn’t exhibit?  Is there a better, more effective, more measurable use for that money?”