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How Legacy Habits Are the Core Cause of Pale Profit Performance

How Legacy Habits Are the Core Cause of Pale Profit Performance

Material Matters Industry News/Information Ken Wilbanks

Ken Wilbanks

Note –We hope you find value in this message from Industry Advisor Ken Wilbanks. If you would like to learn more about Ken’s Gross Margin Mastery program, please contact BLD Connection team at or (888) 544-6822.

How Legacy Habits Are the Core Cause of Pale Profit Performance

Last week I delivered a keynote program to a fine company. A Multi-location group of stores. A new Principle Family Member at the helm. A PALE Gross Margin and much to lose if action is not taken. Now, these folks have HUGE hearts! Absolutely. Liked them totally. It didn’t take but a minute to discover HOW legacy habits are THE CORE CAUSE of their pale profit performance.

In no priority order, here is WHY they are in the performance danger zone:

  • A Pervasive Discount Culture. Each and every salesperson in the company – EVERY LAST ONE –discounts an order freely. Afraid of losing a sale (whether or not this is the case). BAAAAM Discount. Go to church or on a sports team with a customer? BAAAAAAMMM…. Discount again. Kids go to school together? CUT THE STINKING Price again! “Contractor Pricing” extended to every Tom, Dick and Harry coming through the front door. CUT THE PRICE!  Over and over again, discount, discount, discount. I mean DANG! One wonders when – if ever – anything is ever sold for a right and righteous full price? Do these folks really WANT to be profitable? This state of operations has a name of course. It is a “Totally Feral Free For ALL.” Out of control and running downhill fast.
  • Item File Hygiene is NON-EXISTENT. In case you don’t know what this means, it means that sufficient stewardship insuring that current costs reflected in the operating system just hasn’t happened in a VERY LONG TIME. Years? Maybe never? Thus, proper retail pricing based on solid margins for their products is absolutely absent on a sufficient number of everyday items as to be eroding Margin Achievement every hour of every day they are open for business. It definitely begs the question “How in the world could an Executive Leader actually let this happen?”
  • NO Special-Order Margin Targets in place AT ALL! Lord have Mercy….. NO guidance. No oversight. No Leadership. NONE. As we talk about in Module 5 of my Gross Margin Mastery Journey, your Special-Order activity should be ENHANCING your company’s Gross Margin. Not running it into the ground.
  • Their Branch Managers have the LOWEST GROSS MARGINS of all their revenue generators. I really don’t know what to say here. It makes me think of that penetrating Sicilian saying, “The Fish ALWAYS Stinks from the Head.” Unimaginable actually.

Though there are quite a few other areas for this dealer to address FAST with a PLAN, this final revelation cuts like a razor.

  • They are admittedly understaffed as a company by about 18 full-time team members. Easy to see this by any staff planning method.


  • IF they had been fully staffed in the past year, they would have LOST MONEY as an organization. Essentially a POOR CUSTOMER Experience AND a horribly overworked current team are the ONLY reason they made any Pre-Tax Profits AT ALL in 2023…….. oh WAIT, there is ANOTHER REASON….
  • THEIR WAGE LEVELS FOR team members is DISMAL! They are literally 5 years behind on Wages and Benefits compared to ALL OTHER JOB OPPORTUNITES AVAILABLE IN THEIR MARKET AREAS!

Poor Wages, weak Benefits and measurably understaffed…… a WAY below Industry Average Gross Margin…… and barely profitable now.

Makes me shudder really. To my core. SO avoidable. SO unnecessary. Someone has been asleep at the wheel.

NOW, what is the state of affairs in your organization? Does this dealer’s situation apply to YOU TOO? A little bit? A LOT?

I Don’t Think So!

A few simple shifts in their company culture will brighten their future tremendously.
The same is true for all. Here’s how:

  • NEVER EVER allow or foster a Discount Culture. Set the prices on your products with confidence. If an exception to those prices is in order, Lead That Exception!
  • Take Care of your Item File Maintenance, assuring correct costs and proper retails. As a hint, independent dealers too often price everyday items way too low. Get paid for WHO you are and WHAT you Know and DO for your customers, NOT just for product alone.
  • Establish worthy Special-Order Margin Targets for all product types. Set these in STONE, with exceptions – Yes, there will be exceptions –being done with the direct partnership of a member of your Management Team.
  • Create a culture where your Branch Managers are Living Examples of high margin achievement.
  • Be darned sure that your P&L Bottom Line is sufficient to have a bright future, with talented people on your teams enjoying a great career and advantaged lives for their efforts. To have this be so, your Gross Margin MUST be stellar!

Don’t know where or how to begin? A Clarity Call with me is in order! Just reach out. Improved Performance in 2024 is just a Few Bold, Courageous, Focused actions away.

Life will Always Favor the Bold!

Ken Wilbanks
Advisor Educator Coach
(828) 776-6459

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