eritiue ligence Putting the Rapid back in Park Rapids

By Carla Waldemar

f'M writing this story in late IDecember, the traditional season for sharing tidings of great joy. Instead, we're hearing gloom and doom-the slippery slide of housing starts, major layoffs by our manufacturers.

Yet the funereal knell never reached Terry Novak, owner of Park Rapids Building Supply in the woods of Northern Minnesota, where news travels slowly. Not knowing any better, he drove his business to new heights last month (and that's after already pushing sales from $1.8 million in 2001, when he took over from his dad. to $3.3 million earlier this year).

Clearly, what he doesn't know won't hurt him. as the saying goes. Let's add that he never went to business school, either, but picked up plenty of good practices (and great ideas) by osmosis. And by listening to his customers and staff.

Terry's father, a former Lampert Lumber employee, had struck out on his own in 1989, building his smalltown home center from the ground up. Meanwhile, Terry (a fixture around the yard during his high-school years) earned his living fighting wildfires for the DNR-a job, some would say, involving far less risk. Or maybe it made risk-taking something you did every day, as natural a way of life as pulling on your pants in the morning and heading for the coffee.

Stepping back to what he'd known and loved-the family business-one of the very first changes the young man made was installing a rental department. "My dad was dead against it," Terry says, "but I was ready to try it, and when I asked the staff what they thought, they agreed"-never mind that two other stores in town already olfered that very same service. He was competing with five existing lumberyards right there in Park Rapids and a total of l5 yards within 15 miles. Terry invested $70,000 in a rental package designed to cater to his pro customers by capturing the lion's share of product lines, "to set ourselves apart completely and make it harder to compete with us," he says.

Contractors love it, he reports. To cement his goal of builder loyalty, he's since doubled his investment and purchased an enclosed trailer (with the help of a couple of vendors, whose logos are painted on the sides as traveling billboards). It's paid off so well that he's set to buy a second one.

He's also expanded his line of power tools-a previously underperforming sector. With the astute aim of drawing traffic, he's deliberately dropped prices (sometimes even selling at cost), but makes up in volume for those slim (3Vo to 5Vo) margins. "We used to sell one tool a month; now it's two or three a day," he says. "We've got the biggest tool selection and at the lowest price. We don't make money on tools, but we get 'em in the door," where they linger to stock up on lumber and those lucrative tool accessories. It's working. "People tell me, 'I didn't know you canied (fill in the blank), and wow! What prices ! "'

Contractor loyalty became the new mantra when Terry took the helm. Learning from that bad marriage joke ("I told you once I loved you"), he says, "We've changed our attitude and Iet them know every day that we appreciate them, not just once a year."

The first change this beginner boss made was to extend daily hours from 5 to 6 p.m., figuring "most people don't get off work till 5, when they want to come in. Contractors also love it because they can stop here at the end of the day and then head right out to the jobsite in the moming. As a result, we've been fairly busy, and sales have increased," he indicates.

He also launched a Contractor's Night early on, despite his dad's reluctance and imposed budget cap. That first year drew 23 pros and six vendors ("not bad; takes time to build"). The second year, "when I did my own thing," Terry introduced door prizes, which have proved a hot draw. Spending $1,500 per event, Terry offers classy items such as framed prints rather than the usual ho-hum Tshirts and tape measures. Last year's drawing was for a fish house, and if you're not from Minnesota, let me just tell you that one of those crazy houses on a frozen lake is more coveted than a Mercedes or a Harley. Attendance last year skyrocketed to more than 100 contractors, partly underwritten by 15 reps.

Little things count, Terry knows. Every year, he sends each builder a lovely ham as a holiday remembrance. He provides coffee and donuts every Monday morning. Best yet, he hosts outings for his premier pros. "The first year, we decided to try a pheasant hunt for nine contractors," he says. The payoff: Several of them, who'd been cherry-picking every store in town, now deal exclusively with Terry.

"The next year, we hosted a fishing trip, hired a bus, finished with a steak dinner. The following year, we got the wives involved-they exert a big influence on business," he has learned-"for a party cruise on a northern lake. Last year, we went back to the pheasant hunt." These promotions cost him $10,000 a year, but bring in $l million in sales, he figures.

Parties are great, but come Monday morning, product weighs in, too. He recently reset the entire store, boosting inventory from $255,000 to $730,00 and adding a store-within-a-store concept that appeals to walk-ins. ("That's where the money is," he notes.) He's greatly expanded his SKUs, doubling the size of the paint department to appeal to female customers, who function as the deciders in their households, and added four female staffers-a first for Park Rapids-on the floor as well. "Women like to buy from women; they're not made to feel foolish," he explains. "Contractors like to deal with them, too; often, they're more pleasant," he hears.

He's also launched a propane service (Amerigas, right across the street, actually refers customers to him). And, true to his credo of carrying plenty of stock, he began drawing that advantage to customers' attention by stacking huge piles of landscaping block out in front to highlight his unbeatable selection. That worked. too. It's built the category to $50000 in annual sales and added five pro landscapers to his customer list.

The same scheme has paid off for Logix foam blocks. "We used to sell l1 semi-loads; now, we're up to 15," he proclaims. Promotions? Check. Product? Check. But what about service? Check that, too. A new outside sales fellow practically lives at the jobsites, doing take-offs, scheduling free deliveryeven to commercial jobs over an hour away. "Plus, he grew up in this town and knows all the guys," his boss reports. "We pay attention to our big custom builders, but," he underscores, "we pay the same attention to a remodeler who's just putting in a door. During a downturn, it's the smaller guys who keep you rolling."

A new boom truck-the first in the area-has proved a real boon, too. "Customers love it. Now, the OSB doesn't get spanned out or sit in the mud," and those heavy landscaping blocks land right where they're supposed to. Terry discovered a surprise bonus for his builders. With a boom on hand to do the heavy lifting, they're able to hire older, experienced, trustworthy labor instead of simply musclebound kids.

Teny also has instituted new staff policies, such as drug-testing, that didn't appear on the radar back on his dad's watch. He's also a strong believer in sharing information and shying away from micro-managing. "I'm pretty open," he says. "Monthly, we go over sales figures for a year ago in order to set out goals."

And those goals are....? "We're predicting another big increase in spring."

- A former award-winning LBM trade magaTine editor, Carla Waldemar writes frequently on the industry. Contact her at cwaldemar@ mn.rr .com.