FloorMax, in Laurel, Md.
NFTrecently spoke with Joseph Jovinelli, vp sales for Laurel, Md.-based FloorMax, a Carpet N Things Company. Jovinelli talked about remaining successful during several big transitions for the company, including changing the company's name after nearly a quarter of a century, moving into a new location and expanding to new stores.
Can you give me some background on FloorMax?
We are a 25 year-old independent flooring retailer currently with four stores in the D.C. Metro area. Our mix is approximately 75% retail/25% commercial. The majority of our business is repeat and referral.
What led to the name change?
We changed our name after 24 years, from Carpet N Things to FloorMax, due to product mix changes and consumer demand. We felt Carpet N Things limited us to carpet-only in our consumer's minds when in fact, our business mix had changed dramatically to hard surfaces in the past five years. Our retail product mix is 35% wood, 35% carpet, 10% vinyl, 10% laminate, 5% ceramic and 5% miscellaneous (stair-railings, countertops, bathroom remodeling). We also purchased and moved into a new $4.5 million, 40,000 sq ft facility in 2009 which presented its own issues managing cash-flow and financing during ongoing business.
Almost everything we thought we knew about business in general and this business specifically has been challenged in the past three years except one; treat people fairly and honestly (including our employees and vendor partners) and provide quality, service and value to our consumers.
What financial challenges did you face when moving into a new building. How did you resolve them?
The bank that we first discussed our plans with in 2006 (in a completely different economy) verbally committed enough money and then some extra at that time, so papers were signed and a deposit was placed. When we got closer to closing at the end of 2008/early 2009, our bank got amnesia. We forged relationships with other banks immediately, responding at the first hint of hesitancy.
We also began work on an SBA loan and were approved in conjunction with bank financing for one of the largest SBA loans issued. We also personally leveraged ourselves to provide operating income as closing and moving costs ate into cash flow. When the banks saw we were serious about success and were investing in our business, they committed as well. Arranging the financing was literally a full-time job. We explored traditional and non-traditional means. We spoke to many people and sought advice. We're flooring people, not financiers, so we sought advice from people that knew money and offered unconventional options.
What advice would you give to retailers looking to expanding their businesses?
Make sure capital is in place for growth before it is required, as unforeseen cash-flow restrictions will strangle growth. Plan for immediate growth needs and forecast growth needs for the next five years as well. Maintain operating efficiencies. Understand the difference between the top line and the bottom line, but also how they are related. Hiring employees, adding equipment or increasing advertising expenses for a small increase in business is usually detrimental to the bottom line.
What else have you learned to keep a business going during this type of climate?
Diversify your business, but remain true to your core business. We view our business as a tree. The core business, retail, is the trunk. Any branches (diversity) must stem from the trunk. It's too late to plant another tree and expect to eat the fruit or rest in the shade now, and one tree may strangle the other as they fight for operational and financial nourishment. We're retailers, but we can service small commercial jobs, GCs and builders. It's not a different business model.
The majority of our business is repeat and referral retail. If we lose sight of that reality, we lose all. We couldn't service tract builders like Centex or large-scale commercial projects and still provide the level of retail service required to remain true to our core business. They are different business models altogether.
We also preach to our salespeople that if all they are doing is waiting for business to come through the door, they will be frustrated and disappointed and are not helping themselves or the business. They must go out and seek business as well. Explore new means of generating customers and marketing themselves and the business. Realtors, GCs, insurance adjusters, etc. Also, never underestimate the power of networking. People usually want to do business with people they know and trust. Whether it's business or civic networking, let people know what you do.
Lastly, nothing is off the table. We constantly assess and re-think our business model and method of operating and doing business. Our egos don't pay the bills. If an idea has merit or another idea has outlived it's relevance, we will address it. As an example, our name change. We were constantly asked by our customers and friends if we could recommend someone to do their wood floors or install ceramic for them. The name the owner had worked over 20 years to develop was no longer relevant. It was a difficult decision for both business and personal reasons, yet, I think, ultimately the right decision.
How many branches does your company operate?
Currently four but looking to expand again in areas that serve our advertising efficiencies and hub-and-spoke warehousing. We've recently signed a lease on a new retail facility in Columbia, Md., with a scheduled opening date of Feb 1, 2011. We are also currently working on a few other opportunities for new locations, but nothing is at fruition yet.
Editor's Note:For more information on FloorMax, visitwww.carpetnthings.com.
