We have all heard the expression that “two heads are better than one.” Now imagine how much better hundreds of heads are working together towards a common goal of greater dealer growth and profitability. It’s out of this synergistic environment that great new ideas are born, incubated, and developed by SEN for the benefit of members and vendor partners alike.
It’s absolutely true that a 1% reduction in your cost of sales increases your net profits by fully 1%. But the same is not true of a 1% increase in sales. Yet dealers always seem to focus on the top line.
By the time variable costs like commissions and payroll taxes are paid, only a fraction of the 1% sales increase falls to a kitchen and bath dealer’s bottom line. And when sales increase dramatically in any one given year – like a 25%-30% increase – more human errors are typically made in the planning, ordering, manufacturing, shipping, and installation of products, generating lower gross margins. A dealer’s customer service can only stretch so far without added infrastructure and automation. As a result, a 1% sales increase can actually reduce that fraction of 1% improvement to zero. Or even generate a negative impact on the dealer’s net profit!
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