| Managing For
Money
Million-Dollar Management
Window coverings managers are selling more dollars and managing
more salespeople than at any time in our 40-year history.
by Steven C. Bursten
Today, more independent
shop-at-home window coverings businesses are tracking $1 million
in sales than ever before. Ten years ago you might have counted
them on your fingers and toes; for sure on yours and your spouse’s.
Today, more than 100 are estimated in the million-dollar range—and
hundreds more are shooting for it.
How do they do it? When so many business owners struggle to sell
$100,000 why are others selling five and 10 times more? What products
are they promoting? What is the profile of a million-dollar window
coverings business?
If you want to grow, you will learn from their stories. This group
is small in number. Because many don’t sell draperies we don’t
see much press coverage. So, today, let’s shine a spotlight
on their businesses and see what we can learn.
In this first story we will discuss where Million Dollar Managers
came from and profile their businesses. In future stories we’ll
talk about their strengths, challenges and opportunities. Bottom
line: If you want to manage your own million-dollar business better,
or if you want to grow your business to reach this higher level,
expect to learn ideas and insights to help achieve your goals.
WHERE DID THEY COME FROM?
Most million-dollar businesses are less than 10 years old. Many
less than five; some even less than two years old! These businesses
trace their roots in large measure to the original Window Works
(WW) franchises back in the 1980s. Starting in Florida—the
original hot market for PVC verticals and alternative window coverings—Window
Works was the first system of independent location-based window
coverings businesses that did not sell draperies. (WW has virtually
disappeared from the national scene, but more because of management
issues than lack of consumer acceptance.)
Hunter Douglas Window Fashions can claim much of the credit for
the success of non-drapery, high-volume businesses. As they introduced
cellular shades, Silhouettes and a growing selection of non-drapery
products, a new kind of window coverings business took shape. For
the first time a business owner could sell functional and fashionable
window coverings, yet without learning the mind-numbing intricacies
of custom drapery measuring, ordering, receiving and installation.
Custom drapery selling is not a bad business, but it is more complex.
More than complex, it is a different culture. Custom drapery selling
is a consulting, design, ornamental, decorating, emotional and problem-solving
business. Non-drapery selling is a functional, privacy, light control,
price-driven, competitive, comparison shopping business. In fact,
from a culture and marketing standpoint, alternative window covering
sales have more in common with carpet sales than drapery sales.
PROFILE OF A MILLION-DOLLAR WINDOW COVERINGS BUSINESS
Sure, there are a few dozen custom drapery businesses selling a
million dollars a year. The difference: drapery businesses often
take 10 to 20 years to reach $1 million in sales. The non-drapery
retailer can do it in less than five years. Should we learn from
that? You bet!
Let’s look at a profile of these new million-dollar businesses.
Sales: $1 million-plus
Salespeople: Owner plus two or three others
Advertising: $2,000 monthly minimum; $3,000 common
Location: Retail store, strip shopping center
Rent: $1,500 to $3,000 monthly (Rent should be viewed as
mainly an advertising expense.)
Store sales vs. Home sales: 90 percent of sales made in the
home; 20 to 40 percent of appointments originate in the store. Balance
are called-in and do not visit the store
Gross Profit: 36 to 40 percent claimed; however, rarely achieved
as an annual maintained gross profit after callbacks and returns;
32 to 35 percent is more common.
Market: New home subdivisions are prime; customers need immediate
privacy and light control. Blinds for the entire home may be $3,000—about
the cost of one well-designed window for custom draperies.
HOW DO THEY START AND OPERATE?
These businesses are male dominated versus the female norm in drapery
sales. Men often are more functional, less conceptual, in their
selling skills. With drive and willingness to risk, they get off
to a fast start. (What men usually fail to do, that women seem so
good at, is to build strong relationships and powerful repeat and
referral sales over time.)
Couples may operate a business together, but wives often have their
own careers. A wife’s income can enable the husband to start
up and survive the early stages.
These businesses succeed where growth and new housing are prominent.
When they are first to open a new growth area, a driven owner can
build a reputation before competition can get a toehold. They always
start the business on price as primary advantage. Why not? They
have no reputation, no following and little overhead costs. Three
or four sales a week will get the business close to break-even,
not counting owner’s draw—especially if the owner installs
his own sales.
LESSONS WE CAN LEARN
Main message: It takes drive, willingness to risk, new home growth,
good location, installing what you sell and, often, a spouse’s
income for stability. And, one more thing: It takes a simple focus
on product sales more than decorating services.
Can it be duplicated with a drapery business? Technically, yes;
culturally, difficult. The difference in attitudes between function
and concept selling; between drive for results and desire to build
relationships stack the deck against the drapery salesperson. However,
that is the purpose of this story—to help window coverings
business owners pinpoint critical success factors, then choose for
themselves what to learn to their benefit.
GROWTH CHALLENGES
After the survival stage, along about $40,000 in monthly sales,
the fun begins for these fast-track operators. That’s when
they need another salesperson; when gross profit becomes critical;
when balancing advertising, leads and salespeople becomes a high-wire
act.
Now it is time to learn how to compensate salespeople: draw, base,
commission, bonus or what? And if commission, how much? Base it
on sales or gross profit?
All these challenges and more await the new business owner as he
or she moves into the next stage. We will expand on these challenges
and opportunities next month.
Steven C. Bursten is the retired founder of Decorating Den
Interiors and author of a how-to book on new business start up,
Bootstrap Entrepreneur. He is president of custEmers.com, specializing
in affordable Internet marketing tools along with tried and true
techniques. Bursten welcomes your questions about marketing, sales
and customer relationships. Request his new report for businesses
that sell $1 million a year—or want to: “Solutions for
Million Dollar Managers” via e-mail: million.dwc@custEmers.com.
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