What Role Does Technology Have in Your Flooring Business?

There is some resistance to new technology in the retail flooring industry.

Along the continuum of innovation adoption, There are innovators, early adopters, late adopters, and laggards. While the industry has innovators and early adopters, many flooring businesses fall into the last two categories when it comes to technology. One theory as to why this is, is that the majority of business owners in our category come from a very practical, hands-on background, often installation or product related; technology, particularly as it relates to business software, is regarded with some scepticism. Also, over the years, software solutions have been touted that have proved less than suitable for the flooring industry. Those who have tried these are justifiably sceptical of claims they hear from anyone in the IT industry.

Whatever the reason for hesitancy, it is time to revisit the subject.

Most flooring businesses have not changed their methods of doing business in decades; a person from the flooring industry fifty years ago could step into most flooring businesses and not notice many changes. The same could not be said of most other industries.

“Very often, the first thing the new owner of a flooring business will look for is a solution to address these issues. In doing so, they will create value that the seller of the business should have captured.”

Today, where people come into our industry from other industries, we see them struggle with the manual nature of many processes within their new business. They are frustrated by the double-handling, lack of transparency in their financial reporting, and inability to analyse precisely what is happening within their business. Many quickly discover that selling flooring is not a straightforward retail activity and are surprised there are not better systems in place to control the number of steps in a flooring transaction. Very often, the first thing the new owner of a flooring business will look for is a solution to address these issues. In doing so, they will create value that the seller of the business should have captured.

In our role as a supplier of IT solutions to the flooring industry, initial discussions with new clients usually revolve around how our solutions will address frustrations they are experiencing and then what further benefits might accrue that they might not have anticipated. Some of the more common discussion points:

Measuring and Quantifying. This is a subject in itself, but it is sufficient to say that flooring retailers using a quantifying solution have a significant advantage over those competitors that continue to use the old-school methods. Electronic measuring and quantifying is not experimental; it has been around for some decades but is yet to be adopted by many in the industry who believe they can do it quicker and more accurately than a computer. The equation is simple; quantify more plans, generate more quotes, make more sales, and make fewer mistakes.

“The equation is simple; quantify more plans, generate more quotes, make more sales, and make fewer mistakes.”

Double Handling. A fully integrated business management system removes the need for repeatedly handling the same data as a sale progresses through the business, saving time, removing frustration, and eliminating opportunity for error.

Managing Stock. There is a high cost for retailers carrying stock when it is used inefficiently. The goal is to minimise shortends and to use those that are created in jobs rather than have them sold off for mats. Also, fully understanding the makeup and movement of your inventory is notoriously difficult to do using manual systems. As a stockist, you want to identify your best and worst sellers, those that generate the best GP, and those you would be better off buying in. Knowing what stock is on hand is problematic in a manual system, whereas it’s available within seconds in an integrated system.

Maximising Installation Resource. Our installers are a finite resource, and any day that goes by where they are not fully utilised is an opportunity missed. Your business management system should manage every aspect of your installation diary, alerting you to anything that might lead to installers going without work, such as products that have not been ordered or yet delivered.

“In many businesses, the shrink in margin between written sales and delivered sales is material to the overall profitability of the business.”

Sales Analysis. So many businesses fly blind when it comes to knowing how their sales team is performing. As business owners, we want to have sales performance data at our fingertips; performance against budget, written sales (our pipeline), delivered sales, conversion rates, GP percentages and GP dollars. We want to incentivise our salespeople, so we might want to implement a commission system that doesn’t require days of calculations and debates. We want to know the difference between the margins achieved at the time of quoting (written sales) and the actual margins achieved on installation (delivered sales); in many businesses, the shrink in margin between the two is material to the overall profitability of the business.

Financial Reporting. Most flooring businesses are multi-million-dollar enterprises, yet many don’t know how profitable they are from month to month; maybe the majority find out when they get their annual financials from their accountant six months into a new financial year. A fully integrated business management system will allow the business owner to track how the business is going during the month and then give them monthly management accounts within days of month close.

Increased Profitability. Any investment in your business should show a return, and technology is no different. A fully integrated business management system will pay for itself and make your business more profitable.

Increased Business Value. At some stage, you will be looking to sell your business; it will likely be your most valuable asset. A prospective purchaser will be looking at how profitable the business is and how easily they can run it. Implementing an integrated business management system now will maximise the value of your business and make it easier to sell.

In considering technology for your flooring business, there is more than we can cover in a single magazine article. The first goal is to recognise that there is maybe more to technology than you might have thought and then to initiate a discussion to find out just how much more there is.

At RFMS, we would be happy to hear from you.

Chris Ogden is a consultant and Managing Director of RFMS Australasia (rfmsANZ.com), a supplier of IT solutions specific to the flooring industry. Chris has an extensive background in all aspects of the flooring industry, and he can be contacted at cogden@rfms.com.