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7 Common Characteristics of Profitable Furniture Businesses

Furniture World Magazine
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See additional articles in this Furniture World Magazine Series below


Article Summary: What are the characteristics that separate the best operations from the worst?

View all articles by David McMahon


Truly, the families in the home furnishings industry are some of the most gracious, fun and down to earth people. This is my personal experience for all good, average, and poor business operators.

If you have been reading Furniture World for a while, you can see that our Editor’s main agenda is to help the people in this industry succeed. When preparing for my first article a few years ago, he said to me, “I want you to write about what people are asking you in the field. Write about common challenges or questions that they have.”

This month, after writing three completely different draft articles for this issue, I refocused on that original request after visiting a business with a ton of potential. This made me think of the two most common questions that I get asked by business owners:

“What have you seen the best operators do?” and “What common mistakes do you see in poor operations?”

Everyone wants to know what is working, right? And, of course, you all want to avoid the pitfalls.
The heart and soul of the furniture business is comprised of independent family operations. At one time I thought that would change. Now I believe that this will remain the norm for some time. That said, only some independents will prosper. These are the ones that operate as true professional organizations that leave any dysfunctional family issues at home.

The most profitable businesses have family members that work well together and complement each other’s skills. They act with intelligence and professionalism in their jobs. And they never stop pushing themselves to become better than anyone that they could hire for the same money that they are paying themselves.

On the other hand, family businesses that don’t adopt this business ethos or stagnate, have lower profitability. They are reactionary, and manage by “the seat of their pants”. These businesses need to improve their ability to survive the next decade as legacy does not extend into the future.

Now, back to the best. Another trait of successful operations is the owner’s ability to innovate. They implement the most current systems so that they can keep a constant finger on the pulse of their businesses. If sales go down, they know why and can adjust quickly.

They don’t just complain that “It’s slow”. That means nothing in itself. If cash flow is up or down, they know exactly why. The best have positive cash flows, even during recessions. Poor businesses take excessive loans (from banks, vendors, and customers) even in the boom years.

Innovation flows through all aspects of great operations. They implement the best procedures first, and try new ideas.

7 characteristics of the best retailers

  • There is complete usage of an integrated software system without manual processes.
  • They don’t waste time and they run lean.
  • They pay better for fewer well-trained and motivated people.
  • They have a web page that is a profit center.

  • They control their marketing. The best stores realize that the most effective communications come from their own people and they focus on follow up. They implement targeted direct marketing via email that is integrated with their database and focuses on be-backs.
  • They have 99% inventory accuracy and do this via bar coding. There is no other way. They use wireless to look up inventory and enter sales. This technology allows them to stay with customers throughout the entire sales process.
  • They have the most recent room planning software and use sketching to get to that point.
  • They use systems to track customer behavior so that they can offer better products and services.


Operations that are making mistakes are making the biggest one of all, doing the same thing over and over with declining results. They are subject to the fluctuating conditions of the marketplace. They have no control of their business.

Great operators really understand GMROI. They implement the acronym “SMART” steps.

  • Spot the winners – items, salespeople, and customer marketing methods that produce 80% of the gross margin dollar.
  • Maintain the winners properly – focus on 80/20 thinking.
  • Auto-identify and take action on stagnant items – FAST.
  • Reward high gross margin sales. Businesses that have implemented a commission system that pays a higher commission for higher margin report at least a 3% jump in profit.
  • Target email to your customers. Don’t send “blasts” marketing to everyone with the same message either by email, radio, TV, or newspaper.

Business managers who are not tracking GMROI in this industry should learn to do this. The alternative is another acronym GOB (going out of business). Without a decent GMROI, cash flow is not possible.

Furthermore, profitable businesses realize that, in the long run, GMROI does not only apply to inventory. Consider retailers’ biggest other asset, which is ownership of buildings and property. Wealth builds from appreciating assets. Owning real estate is how many businesses make it through tough times. If you are renting now and in this business for the long haul, explore your options to buy while prices are low.

The smartest people think they are not the smartest people and have a lot to learn. These people get advice. They are probably reading this now. The best of the best don’t hunker down and live in a cage in their store. They belong to performance groups, attend seminars, and have their favorite business consultants, coaches, and advisors who help them implement change. They are networkers.

These people get things done! They decide. They commit. They don’t make false promises. They ooze integrity. When the best say they are going to do something – they DO IT. They cannot be stopped. Entrepreneurs!

Businesses that falter are the ones that cannot make decisions. They are worriers. They do not take risks and as a result, do not realize any rewards.
My bottom line advice to you is: Never wait for the economy! Continue to seek ways to improve your situation, whatever it is. That is what you CAN control. Get help if you need it.


David McMahon is Director of e-Strategy and a business coach for PROFITconsulting. PROFITconsulting is a full service consultancy and marketing agency that specializes in retail furniture. FURNITURE WORLD readers can contact David to discuss this and other operations and marketing topics at david@furninfo.com.


David McMahon is a Certified Management Accountant and Consultant with PROFITconsulting, a Division of PROFITsystems. Questions about this article, or to request a similar analysis on your financial statements contact him at Davidm@furninfo.com or call 8oo-888-5565.

View all articles by David McMahon

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