The One Covid-19 Article LBM Dealers MUST Read

Jim Moody, CAE
CSA President

Even if you are tired of reading articles about preparing for Covid-19, you need to read this one. It’s different from everything else you’ve been reading because the information it contains may save the lives of your team or the life of your business. 

It’s hard to prepare for something we can’t see, particularly when we think there is an overreaction. But over the past week, we’ve seen things get really bad in Italy and other parts of Europe. Their health system is not third world. Most of us are realizing that if they can’t cope, we probably can’t either. Coupled with our government’s evolving stance, we are all coming to recognize that this truly is a big deal. 

Ruth Kellick-Grubbs, one of the foremost authorities on our industry, moderates several of our dealer roundtables. She offered to share her thoughts on managing this crisis with those groups, and I was fortunate to sit in on one of those calls. Ruth did this simply for the love of the industry and out of concern for dealers. She agreed that I could share with our full membership some of the information she presented. Some of what she shared involved reducing the spread of the virus, and some of it involved what you need to be doing to manage your business as we move into a recession. 

What follows is a compilation of the ideas and best practices I heard on that call, coupled with some things I’ve heard from members. 

Employee Health

  • Stop as much contact as you possibly can with other people. Sales reps should be working exclusively by phone. Close your showroom to customers. Encourage retail customers to email, text or phone-in orders. Set up a drive-through for people to pick up their merchandise without leaving their cars. Deliver as much as you can. Take credit cards online, over the phone or use a device that pairs with smart phones such as applePay. If you must use regular credit-card readers, seek permission to approve without signature. And for heaven’s sake, don’t touch anyone.

  • Practice social distancing. Sometimes that means keeping people seven feet away. One dealer put a line of tape on the floor in front of their sales counter to show people how far to stand back. Sometimes that means separating your employees into teams that work completely away from each other. That way if someone on one team gets sick you don’t lose the entire employee base. Require everyone with a desk job to work remotely. Require at least one member of the leadership team to work remotely so that if several people get sick, there’s at least someone who can run the business. We know of some companies where the CEO is self-quarantining just for that scenario. Think about every single process and figure out a way to minimize human contact.

  • Be aggressive with your cleaning. Surfaces that get touched like doorknobs, counters, computers, phones, credit card machines (assuming you have customers who must swipe), bathrooms, etc., should be wiped down with antiseptic at least hourly. Yes, hourly. Make wipes available for frequent use. If someone picks up a writing utensil, it’s theirs to keep. One key form of transmission is touching a contaminated surface and then touching eyes, nose or mouth. 

  • Practice the hygiene you learned in kindergarten. Sneeze into the crook of your elbow. Cover your mouth with your arm when you cough. Wash your hands every chance you get using the hottest water you can stand and soap. Rub your hands vigorously for at least 20 seconds. (Pro Tip: If you sing Happy Birthday twice, you’ve probably hit 20 seconds.) Some dealers have created fun/humorous/silly videos to demonstrate these practices to employees.

  • Communicate clearly, effectively and frequently with employees. There are going to be many people who have a significant emotional response to this crisis. Communication helps keep them centered. And as we all know, in a vacuum, people default to the negative. While you do need to communicate quickly, it’s equally important to be sure your facts are correct. Be clear about who your spokesperson is and control the message. Often in situations like this, multiple people at the top are talking to different employee groups and not saying exactly the same thing. You must get your messaging clear. Make sure that your communications include expressions of concern. It’s sometimes easy to forget the touchy-feely part, but it’s important. Don’t forget to give credit to your team for their hard work.

  • Lay out your safety protocols and make sure everyone in leadership sets a good example. Message: This is how we are going to keep a safe and healthy workplace. 

  • The CEO should be the calm voice of reason. This is his or her most important job right now.

  • Send at-risk employees home. Anyone over 60, or with an underlying health issue, should be self-quarantined. This is going to be difficult and will require difficult decisions on the part of the business, particularly for at-risk employees whose work can’t be done from home. 

  • People with young children are going to struggle to work while schools and daycares are closed. Each business is going to have to decide what to do about paying these folks. No one wants to be insensitive, but it does no one any good if you go out of business paying people to stay home. 

  • There’s a similar situation for employees who live with at-risk people. Do they come to work, risk getting the virus, and then go home and transmit it to someone who could actually die from being exposed? 

Business Health

  • You should assume that business is going to grind to a halt. While we are seeing hardware designated as an essential business in places that have shelter-in-place decrees (and therefore may stay open), there is absolutely going to be a huge decline in sales. LBM-only operations have typically not been designated as essential, but we are working to change that through our federal efforts with the National Lumber and Building Material Dealers Association. But, even if LBM is tagged as essential, there is a high likelihood that sales will decline significantly. If construction is not deemed essential (and it probably won’t be), there will be no one to deliver to during a shelter-in-place decree. And, in areas where building inspections are required, the building inspector offices will be closed. And that’s all before we see a recession-fueled decline in construction. We are headed for hard times. It’s time to get serious.

  • Develop a plan now for the eventuality of key team members getting sick. Can someone else do that job? Cross-training, although always important, is essential for the sake of business continuity.

  • Figure out what your policy on paid time off is going to be. There is no clear answer. You don’t want to bankrupt your business by paying people to stay home, but you also don’t want to incentivize people to come to work sick. Some companies are telling people that they will still be paid if they exhaust PTO due to Covid-19. Of course, some dealers can’t afford to do that. A federal bill may lend some tax relief if you are forced by the government to pay sick leave for people out with the virus. I can’t tell you what’s right for your business. My point is that you need to figure it out right now.

  • It’s time to play “what if” with your budget. Run the numbers to see what happens to your business if you are down 20% in sales. Then 30%. Even 50%. You will pretty quickly see where you need to make cuts to ensure viability. Based on the recent stock losses in public companies associated with our industry, the marketplace believes we are going to be off by about 40%. That’s an inexact way to predict the future, but it’s food for thought (or for choking on).

  • Cash is always king, and that’s never been truer than today. You can’t convert receivables to cash. We’ve talked before about how you need to be on top of receivables before the downturn comes. Well it’s here. Hopefully you are in good shape. If not, take action right now to collect. Tighten credit immediately. Like preparing for the virus itself, if you wait until people stop paying to tighten credit, the horse is out of the barn. Encourage credit card payment and suffer the fees the card company takes if it gets you paid. Getting 97% of what’s owed today is better than getting none of it tomorrow.

  • You also can’t convert inventory to cash in a downturn. Material prices have dropped significantly recently. Now is not the time to spend your cash buying in bulk even if it’s on sale. 

  • Start conversations now with your bank to dust off your line of credit or to put one in place. Hopefully you don’t need it, but you’ll want to make sure the engine is hot when you put your foot on the gas.

  • You should review all of your payable terms. I’m not suggesting that you fail to pay your vendors, but take advantage of any term offered. Pay as slow as you can without incurring service fees. You may even want to consider going outside your buying group to establish better terms with a vendor whose goods you purchase through the buying group (yes, that can sometimes be done, but you probably need to be quick to do it). If you do that, make sure you alert your buying group so that you aren’t assessed penalties for paying slow. 

When this all started, I wasn’t particularly alarmed. I read that 80% of people infected had only mild symptoms. But if 20% of us are really, really sick, our health system is going to be overwhelmed. People I love are going to die. What’s so scary is that people are contagious without even showing symptoms. By the time you know you are sick, you could have infected many other people. What we are seeing now is an afront to the personal freedom that we all treasure. It’s counter to the American Way. So many of us have felt that it’s overblown, and yet today I wish we had taken it more seriously a month ago.

Hopefully some of these insights will prove meaningful in the days and weeks to come. Let’s hope this isn’t as bad as I’ve made it seem. Nothing would make me happier than for you to call me in six months and tell me how wrong I was.