Hardwood Floors April/May 2019

The Changing Wood Flooring Industry (Continued)

percent wished to pass it on to a family member, and 28 percent wished to continue or close. Of those who wished to leave the business, 65 percent said it was a good time to sell, and 49 percent said they wanted a be er work/life balance. Family members said that 80 percent preferred taking the money, while 20 percent wanted to run the company. In response to the 80 percent who preferred to take the money, 90 percent of owners said family is not quali ed to run the business, and 10 percent would rather have family choose another career path. Maybe not a surprise, 48 percent of business owners didn’t have a formal exit strategy. e majority of business owners don’t have a full understanding of what takes place in the selling of a business. Seventy- ve percent of owners believe they can sell their business in a year or less. is is on top of the 58 percent who have never had their business formally appraised. e succession to family members is usually not as successful as owners would like. e succession to a nonfamily member to run the business is not easy and is o en also unsuccessful. Finding a seller who will pay what you need is not easy either. You know what the point is. Knowing your future and detailed planning are not easy. It takes time away from running a successful, hands-on business. But owners owe it to themselves and their families to have a good strategy and know where they want the ownership to go. e wood ooring industry and the businesses within it have lots of opportunities to make money and grow. e trick is knowing where you want to go. Bruce Zwicker is an advisor to flooring companies: manufacturers, distributors, dealers, and associations. He can be reached at 410.903.8357 or zwicker. brucezwicker.com.

high-end service for high-income buyers, or design center services. Youmay nd yourself having to add new products or services to your business. Youmay need to rebrand your business to t your new strategy. Plus, you will probably have to add new competencies through adding talent. Certainly, competence in technology is vital. How do you improve your technology for e ciency and customer experience? Easier project quoting. Be er inventory management. Social media. A fully functional up-to-date website and great SEO. Ge ingbehind theNWFA’s “RealWood. Real Life.” campaign shouldalsobe apriority. I urge you tovisit nwfa.org to ndout howtobe apromoter of real wood. Another important consideration is scaling your business to the true size of your market. is is critical; otherwise, you will miss opportunities either because you aim too low, or because you aim too high and risk cash problems. Acquiring businesses that help your growth strategy is ne but only when the price is right and there is value to your business. Overextending yourself is a huge risk, nancially and operationally. If you are overextended, the customer experience will su er and/or cash will become too tight. It is essential to keep in mind that we have enjoyed an unusually long recovery since the 2008 bo om when ooring demand plummeted 40 percent in less than a year. e demand for ooring has grown on average about 3 percent since then, and for now, our fastest growth year is behind us. In 2017 growth was about 5 percent or more. Flooring typically grows about 100 to 200 points above gross domestic product. So, in an economy that will grow about 2 percent, we won’t see 5 percent again. Will we see a recession, and if so, when?Who knows?We can’t control that. We can control our business. Lastly, and importantly, is for owners to know their exit strategy and/or succession plan. A USB study of 2,245 investors, 1,085 of which were business owners, reported that 58 percent of business owners wished to sell their business. Twenty

26 hardwood floors www.hardwoodfloorsmag.com