Kitchen & Bath Design News

JAN 2018

Kitchen & Bath Design News is the industry's leading business, design and product resource for the kitchen and bath trade.

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Future leaders of the kitchen and bath industry gathered for the first NEXTgen Future Business Leaders Conference to learn business, marketing and financial strategies for success. BY ANITA SHAW Leading the Way he phrase "survival of the fittest" is one that people are familiar with and understand, whether it refers to their personal wellbeing or professional standing. In business, proper planning is key to survival, as witnessed during the Great Recession. Established kitchen and bath professionals have a keen interest in seeing the industry thrive for decades to come, and many are interested in sharing their knowledge and expertise with the next generation of dealers and designers. This premise led to the creation of the NEXTgen Future Business Leaders Conference, held in October at the Lost Pines Resort in Austin, TX. Sponsored by The SEN Design Group, the conference was designed to provide real-life strategies and business tactics for newcomers to the kitchen and bath industry – beyond the beauty of what is being designed and into the heart of the business. Sponsors of the event included NARI, Caesarstone, Medallion, Task Lighting, WarmlyYours and OperateIT. Guest speaker pre- sentations and workshops were geared to anyone interested in owning and/or running a dealership within three years time, as well as those preparing to sell their businesses in the next few years. To understand this topic's importance to the industry, Speaker Paul Hajek, MBA, CVA, found- er, Synergy Business Development, noted during his presentation that there are an estimated 79 million baby boomers, but only about 50 million GenXers. He added that baby boomers own 63% of the private business in the U.S., and 75% plan to transition over the next 10 years. That startling statistic means that the time to prepare for that transition is now, according to NEXTgen. The group plans to hold this event on an annual basis, with next year's conference scheduled for Oct. 4 and 5 at the same location. THE STARTING POINT While many may be toying with the idea of starting their own business, it's hard to know just when to jump in. Jay Acunzo, key- note speaker and host of the Unthinkable podcast, provided insightful opening remarks in his talk, "How Do I Know I'm Ready." Acunzo stressed the imp ortance of non-con- ventional thinking when it comes to succeeding in a competitive industry. The traditional way to approach things is to tell people how long the company has been around and that "we pride ourselves on our high-quality products," just like everyone else, he noted. "The information age means everyone can get best practices infor- mation. It ends up making us average. You're working far too hard to get average results." He urged attendees to trust their intuition. "Do we want an exp ert to hand us the answer, or do we find the answer from within?" he asked. "Intuition is the ability to succeed at higher sp eed. How do we use that successfully?" Acunzo believes business owners need to have an aspirational anchor, which is intent plus hunger. "What is your aspirational anchor? Why are you the team to do it? What is your unfair advantage? What makes you unique?" He added, "If you want to change a behavior of your customer, you need to focus on the emotion and the behavior. People aren't rational – they are emotional." He continued, "Don't demand action from customers – inspire it. Our work is about inspiring our true believers, not coercing the skep- tics. Too many people go after people who don't want to hear from them. Find the true believers, and lean on them to get you more customers." IN THE BEGINNING For those whose intuition tells them they are ready, the question becomes, "What's next?" Making the decision to move forward to start a business is only the first step. Ken Peterson, CKD, founder and president, The SEN Design Group, in Charlotte, NC, tackled the subject in the presentation, "Four Most Important Critical Decisions for a Start-Up." Decision One, according to Peterson, is to commit to using financial statements to make sound decisions – based on hard data. "You need to understand the balance sheet," he stressed. "It's a measurement, a photograph of your business since you started; it measures your cumulative performance." Using the accrual accounting method is crucial – where a job is recorded as "income" in the month it is substantially completed. "Inserting it as income and done [as the money comes in], as in a cash account, without putting the expenses against it, gives you an inflated profit," he explained. He also urged business owners to review their income statements. "Most designers just glance at this and let their accountants handle it," he stated. By comparing income statements on a monthly basis to the previous year – per- cent change and percent of income – the busi- ness owner can spot patterns and get an idea of how the business is doing. Choosing the right business model to match the chosen financial goals and personal strengths is Decision Two, according to Peterson. The start- up business owner should determine whether a studio business model, where they will wear the hat of sales and design, and hire a support staff, or a showroom model, with departments and department heads, is best. Decision Three is determining the correct price formula for an operation. "When you don't budget your business, you're not likely to realize your financial goals," Peterson observed. "Pricing is a science. Selling the price is an art," he continued. "Most dealers are under- pricing their projects by 15-20%. Learn to know how to price your projects properly." Peterson recommends budgeting three years at a time, and basing that budget on the own- er's salary, overhead and desired net profit. An emergency fund that equals 12 months of fixed expenses should also be part of the plan. The final consideration for new business owners is to design a marketing system around clients' needs. "The optimum time to ask for and earn your retainer is when your customer has determined and understands your expertise and credibility," he offered. Credibility can be relayed through the use of Facebook and Houzz profiles, as well as con- sumer seminars. The client need is information, so the showroom should be an education center, with elements such as storyboards, cabinet com- parison wall and digital product presentations. "The only way to differentiate a product or service is in its delivery," Peterson added. "As the designer, you are part of that delivery. It's about you and how you present your package that truly makes the difference." UNDERSTANDING MONEY ASPECTS Continuing the focus on the financial aspects of running a kitchen and bath firm, Ken Olan, co-founder, ExactMats, Inc. in Houston, followed with two presentations: "How to Understand & Read Financials," and "The ABCs of Capitalization." JAY ACUNZO KEN PETERSON, CKD KEN OLAN T 86 Kitchen & Bath Design News • January 2018 NEXTGEN CONFERENCE REPORT

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