Naples, Fla.—FEI Group last week hosted its popular Project Benchmark, an operational best practices workshop experience designed for Home Solutions and Multifamily Solutions leadership. The deep dive study resulted in more than 60 fully defined best practices across the project’s six focus areas: leadership, sales and marketing, operations, culture, information technology, team development and human resources.
Sponsored by Shaw Builder + Multifamily, more than half of the 122 Home Solutions and Multifamily Solutions members invested more than 650 hours completing in-depth surveys to assist in framing the project and discovering best practices that have the potential to impact the group at large. In addition, five onsite visits were conducted with select members for even more of a deep dive. Partnalysis, the firm leading the project for FEI Group, analyzed the information shared by participants to disseminate the findings. Those findings were then published in six volumes totaling more than 500 pages of material for participating companies.
Forty-four members traveled to Naples where the best practices were shared at the two-day workshop. The goal was for participants to see how they compare to like-sized businesses. “It’s one of the most requested things we do,” said Max Holland, executive vice president and COO. Ironically, this was the first Project Benchmark workshop since 2011.
In addition, Jim Kirkpatrick, CFO of Shaw industries, conducted a condensed version of the Big Rocks Financial Workshop, where 19 members confidentially shared their financials. “Jim’s team takes all of that data and creates a benchmark comparison so members can see how they’re performing versus their peers on all the lines in a financial statement,” said Graham Howerton, president. “It identifies where they’re excelling and where they may be out of whack. Then Jim and the members discuss a specific area. Jim helps facilitate those dialogues, then conducts one-on-one session with those who want to take it a step further. These one-one-ones are a rare opportunity to dive really deep into your financial statement. And if a member is out of whack on a particular line item, he or she can ask Jim to suggest some levers can be pulled to make a positive impact there.”
Kirkpatrick told FCNews he was most impressed by how well FEI members have been weathering the storm. “Think about what has happened over the last two or three years,” he said. “They’ve gone through COVID-19; they’ve gone through price increases; they’ve grown through decreasing demand; they’ve gone through [escalating] interest rates. They’ve turned the headwinds into opportunity. They have remained steady over the last four years in terms of revenue growth and profitability. These guys are entrepreneurs and are finding ways to make money.”
Kelli O’Day, owner of Signature Building Solutions, Kent, Wash., attended the Big Rocks workshop and learned where there is room for improvement, specifically with gross profit margin. “Maybe we don’t need to be so worried about our competitors and the price point they’re in,” she said. “We may be missing the mark on that. We also learned where we’re good, like our inventory turns. We are also very efficient operationally.”
O’Day participated in a 2019 benchmarking study one year before she officially became a Home Solutions member. “What’s interesting is some areas where we were really good [in 2019] are areas where we are a bit low now, like gross profit margin,” she said. “We’ve gotten a picture of where we think we need to be to be competitive but maybe our mindset is a little askew. So we will work on raising gross profit.”
Michael Haley, owner of Haley’s Flooring and Interiors, Huntsville, Ala., also participated in the financial benchmarking session. “This is our second time doing the financial workshop with Jim Kirkpatrick,” he said. “The first one was astronomical. Where you thought you were doing well you might not have been, and where you thought you had a big flaw you found that to be a common problem. So seeing what everybody else is [struggling with] gives you confidence that you’re not on your own island.”
Attending the benchmarking session two years ago has reaped benefits for Haley. Back then he thought he was doing “pretty well” with margin, then realized he was “fairly average.” At the same time, he thought he had a high overhead, then found out he was actually right on target. “We were not happy with where we were when it came to margins. So we came back and looked to see if we could find a point or two. We implemented some different practices that we learned, and this year, when we showed our new numbers, we found we actually grew 2.2 points in margin. That was really exciting.”
How did he grow that margin? “We became more efficient, be it with software or workflow. We found out you may not need 10 people to do what eight people could do. We also learned to trust our software. That makes you more efficient.”
Haley found another benefit of the benchmarking workshops and member discussions. “With the benchmark, you see other people’s flaws or problems,” he said. “I can learn off their faults and failures.”
Tyler Long, owner of PG Long Floor Covering, Portland, Ore., cited a pair of takeaways from Project Benchmark. “No. 1, you find out where you’re strong, which reinforces what you’re doing; and No. 2, you find out where you’re weak. You may or may not have already known that, but having clarity is good.”
Unlike some others, Long excels in gross margin. “Our gross margins are in the 90-plus percentile, so we do very well there,” he said. But he also learned PG Long Floor Covering is weaker in its net operating income (NOI). “Not that we’re on the lower end, but I’ve always prided myself on being on the high end,” he said, adding that this is probably his fifth time doing this. “NOI was an area where I knew we were trending downward in the last couple of years, even though sales were fine. But we’re getting confirmation that we used to be in the upper 25%, now we’re probably in the lower 40%.” The reason: Long opened a couple new branches and a couple new divisions in the last two years, which takes investment. “I’m not totally surprised, but I also would have hoped it wouldn’t have been as big of a drop as we saw.”
Long cited another reason: “We didn’t right-size after a great year in 2022 as we headed into 2023 and 2024.”
Multifamily Solutions members Christian and Kimberly Rooney, owners of Priority Floors in New Orleans, have participated in all three Project Benchmarks, the first of which was held in 2008. “We bought our business in 2006, so when the 2008 best practices opportunity came up, we jumped on it,” Kimberly Rooney said. “More than anything, what we got out of 2008 was just perseverance.”
Priority Floors has participated in numerous benchmarking exercises over the years. While they have gotten clarity on where they stand in terms of profitability and margins, they learned to alter how they pay their labor and salespeople. “For example, when it comes to patch (for floor prep), some members pay by the pound, some pay by the hour, and some pay by the bag,” Christian Rooney said. “We analyzed all the different ways and found the bag is the best way in our market.”
Another benchmark on which the Rooneys gained clarity was compensation as a percentage of sales and a percentage of profit.
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