CM Perspective: You’re Selling More Trusses, but Are You Making More Money?

When times are good and business is continually flowing in as it is right now, it’s easy to just keep the foot on the gas pedal and deal with what’s right in front of me. However, I make better decisions when I have the ability to look at the bigger picture. If I am only comparing myself to my past performance or my pre-determined expectations, I’m missing a huge opportunity. Let me explain.

Lumber costs have climbed to historic levels, which has severely hampered our industry’s profitability at a time when sales have been strong. As my friend Jim Finkenhoefer recently communicated, now is the time for us all to make back the margins we lost as lumber costs rose faster than anyone anticipated. But the question is how to do that effectively. As we bid going forward, what should we charge per square foot on a given project? At current lumber-cost levels, what should our production costs be per linear foot?

Tim Noonan, a great recent addition to SBCA’s board, makes a good point when he says, “We are busier than we’ve ever been, and we should be compensated for all that hard work, not just break even.” How do we determine what that compensation should be? If we aim too high, we lose business opportunities. If we aim too low, we shortchange ourselves and undermine the value of every component manufacturer (CM) in the market.

The good news is there is a powerful tool we all can use, SBCA’s Financial Performance Survey. It works like this: We all anonymously share our data with a third-party, they compile it into easy-to-read charts and tables based on region and company size, and publish it for survey participants to access. You can see how your numbers compare to similar-sized companies and industry averages in your region of the country.

Why make important costing decisions in a vacuum? A subcommittee of CMs recently took a look at the survey and identified ways to streamline the questions and make it easier to fill out than in the past. It doesn’t require a huge investment to share numbers you likely access frequently, and in return you will receive a lot of industry-specific benchmarks you can’t find anywhere else. The more CMs that participate, the better the results.

We owe it to ourselves and our fellow CMs to participate in this survey and take advantage of the opportunity to compare our performance against each other and improve our bottom lines.