Michigan's Floor Covering Brokers: Best Practices - Feb 2016
By Jessica Chevalier
Twelve years ago, following a 30-year career in the elevator and escalator industry, Denny Lauterbach decided to put down roots in the resort town of Traverse City, Michigan and set out to buy a business. Through a series of connections, he found Floor Covering Brokers, which was founded and owned by an installer turned retailer, and the two parties came to an agreement. So, with no experience in the floorcovering business, Lauterbach purchased Floor Covering Brokers.
BUSINESS IS BUSINESS
“When I got into it, I spent a lot of time considering whether it would be what I wanted to do for the rest of my life and whether I could learn new tricks as an old dog,” says Lauterbach. “I had done nothing with retail before, but much of the flooring business is conducted as a contracting business, which is what I had done for a long time—sell under contract and complete the contract. Elevators and escalators are highly technical. It’s a complex engineering product, and I thought, how complex can the flooring industry be? You put it fuzzy side up, and that’s about it. I’ve been amazed at how complex the products are. I started off taking a Mohawk class in Dalton and was pretty amazed at the detail of all the products. Twelve years later, I still have a lot to learn.”
What Lauterbach lacked in floorcovering knowledge he made up for in sound business sense. “I have been managing business for close to 40 years,” he says. “All business is people.”
In Lauterbach’s opinion, assembling the right collection of skills with staffing is crucial to developing a successful business, and he considers that among his greatest challenges with Floor Covering Brokers. “It has taken a lot of years to get the right mix of talent,” Lauterbach adds. “We have about ten salespeople on staff, and it can be a real struggle to develop the right combination of salespeople who can manage projects and take good care of customers. In the last two or three years, we have achieved the finest level of staffing that I’ve ever experienced: people who work well together, who get along extremely well and who ‘get it’ with customer service.”
Lauterbach participates in a local monthly meeting with other business leaders through his local Chamber of Commerce, wherein each participant shares their top problem. And 95% of the time, reports Lauterbach, the issues are related to staffing or personnel. “You have to be flexible and involve people in developing goals and visions, and they have to be on board with them,” says Lauterbach. “The bigger you get, the tougher that is. We are blessed with people who are excelling these days.”
Lauterbach bought Floor Covering Brokers in 2004 and paid a premium for the business. Though Traverse City is more than four hours from Detroit, Lauterbach says that his area felt the impact of the coming recession before much of the country because of the crash of the auto industry. As a result, he basically dealt with the recession from 2006—two years after his acquisition—until 2011. Although this was surely a fairly stressful time for Lauterbach, instead of floundering he used it to build the processes and systems that help his business run smoothly today.
The strategy paid off. In addition to the 10,000-square-foot showroom and 6,000-square-foot outlet that Floor Covering Brokers has at its primary location in Traverse City, located on a main thoroughfare, last April the business added a second store in Acme, Michigan, a northeastern suburb. Acme is currently expanding—a new mall is planned for the location—and Lauterbach sees it as a long-term growth area.
In addition, within the next five years or so, Lauterbach plans for the business to expand into at least two areas in northern Michigan. “Growth is important,” Lauterbach notes, “but quality growth is really what I’m looking for. We’re the best in our market now. I want us to continue to be the best and grow wherever we can.”
FLOORCOVERING AND MORE
Floor Covering Brokers was started in the founder’s garage as a distribution business for the green turf that is typically installed on miniature golf courses. That soon morphed into a retail business with a full range of floorcovering products.
OPERATING IN A UNIQUE MARKET
Floor Covering Brokers offers a lifetime warranty on installation, and Lauterbach reports that the company typically repairs or replaces problem installations whether they are the result of actions by the business or the customer. “We’ve replaced many floors and done repairs when the fault for the problem wasn’t ours. The hardwood side of our business is where the pain is. Most of the problems with hardwood floors are atmospheric or customer-caused.”
While this policy may cost a bit, Lauterbach believes that it benefits the company long-term. “The feedback from our customers is very strong. Eighty percent of the business is repeat, from builders and individuals alike.” Customers who feel the security that their investment is insured are, after all, much more likely to take the leap.
Most of Floor Covering Broker’s installers are employees, but the company does add extra hands by contract in the summer months due to the nature of the market. Traverse City is a resort town on the shores of Lake Michigan—known by some as the Hamptons of the Midwest—attracting lovers of lake sports to its 28-mile deep bay in the summer and drawing skiers in the winter. The town has a significant number of wealthy individuals who have second homes in the area, and in the peak summer months the population expands from between 70,000 and 100,000 to over 150,000.
The bulk of Floor Covering Brokers’ business takes place between March 1 and the Fourth of July, and a second peak occurs between the start of school and the holidays.
In addition to staff installers, Floor Covering Brokers has a couple of degreed interior designers on staff and a couple more salespeople who have been working in the field for more than 20 years. In total, the sales staff at Floor Covering Brokers is seven women and three men, and Lauterbach has found that having a mix of genders and backgrounds is beneficial, as some customers seem to gravitate toward one or the other, “A lot of customers, quite frankly, want to work with a salesperson who has installed before,” says Lauterbach.
GETTING ON BOARD WITH CARPET ONE
During his 12 years as owner of Floor Covering Brokers, Lauterbach has been courted by several buying groups, but he never felt the connection. He thought, why join a group when we’re successful without them?
Lauterbach, however, always considered CCA Global the “top of the pile, the cream of the crop,” so he decided to dig into the organization and see whether it was a good fit for his business, focusing on its Carpet One buying group. Lauterbach and several of his staff members visited Independent Carpet One in Westland, Michigan and Skaff Carpet One Floor & Home in Flint, Michigan to see how the organizations ran. Reports Lauterbach, “After those visits, my whole staff was anxious to get on board.”
Before they signed on, however, Lauterbach also paid a visit to the Carpet One headquarters in Manchester, New Hampshire with several staff members. “We were overwhelmed by the quality of people that are Carpet One,” explains Lauterbach. “They have hired the best of the best: marketing people from Ralph Lauren, training people from ServiceMaster. The organization has done an awesome job of hiring high-level people.”
But what really convinced Lauterbach to sign on were the resources the Carpet One offers its members, “I was in a multi-billion dollar corporation in my previous career. In places like that, you have resources at your fingertips, but in a small business, you’re either creating a wheel or paying a lot of money for those resources. Carpet One opens up the ability to operate with a much more professional set of processes and resources; they offer go-to people to support you, while still allowing you to operate as an independent business. Their training programs are excellent. At Floor Covering Brokers, we are trying to develop people on the sales side of things and in project management, and having access to online and in-person training through Carpet One is huge for us. Their online and social marketing and web development resources are second to none.”
Floor Covering Brokers joined Carpet One in April 2015 and was fully up and running as a Carpet One dealer by September. For his first convention as a member of Carpet One, Lauterbach and his wife made the 1,200 mile road trip from Traverse City to Dallas, Texas on their motorcycle.
A MUSICAL MOTTO
Several years ago, Lauterbach was talking with a friend about how he might change up the marketing strategy for Floor Covering Brokers. The friend suggested that Lauterbach contact well-known Traverse City-based singer-songwriter Miriam Pico, and he did.
Copyright 2016 Floor Focus