Speaker 1 00:00:05 Welcome to the Clear Impact Podcast, brought to you by pg t I University. Thanks for joining us today. My name is Sherry Connor and I am your host. Good afternoon. We are here on the Clear Impact Podcast and we are launching a new series today around financial wellness. And finally, back in studio is Brad West.
Speaker 2 00:00:28 It's great to be back. I'm sure everyone's been winning a long time. Your prayers have been answered to say so. I'm, I'm back.
Speaker 1 00:00:34 Nice. Thank you. We definitely had a great time The last time that we were in here and we talked about playlists and music and reminisced about eighties rock and that was really fun. And
Speaker 2 00:00:44 If you stick to the end, we might talk about that a couple minutes more.
Speaker 1 00:00:46 Oh, all right. More bonus content from Broad West. I'm not surprised. That's right. So you really helped me design this series around financial wellness and I'm grateful for the expertise that we have in our company and that we can leverage that to help our dealers be more successful. And so give us just a little brief recap of what you do here, Brad.
Speaker 2 00:01:07 Yeah, so I've been here for 17 years now. Have various accounting and financial roles for most of the time period. But for the last several years I've been focused on corporate development and mergers and acquisitions, otherwise known as m and a. And we've done a lot of acquisitions, so it's kept me pretty busy. But I'm always excited about, you know, sharing some of the financial and accounting and things I've learned in this business for 17 years with, with our dealers. And, um, look forward to this series. I think it's gonna be helpful.
Speaker 1 00:01:33 Yeah, I hope so. M and a when you say it so fast, it's like, what is it? What is it? So thank you. Mergers and acquisitions. Absolutely. Yeah, I've been here two years and there've been three since I've been here. I mean there was one like two weeks after I started and I was like, what? We have a new company
Speaker 2 00:01:48 <laugh>. Yeah. We move quickly.
Speaker 1 00:01:49 Yeah, no, it's exciting and it's fun to see the map expand and the brands grow and all of that. So financial wellness. Mm-hmm. <affirmative>, how would you define that?
Speaker 2 00:01:57 That is a great question and when you send it to me ahead of time, I must say I was a little bit stumped under the right way to answer that question. And I'm typically not stumped. Oh. So that's a pretty exciting moment, but it's not really a straight formula. Percentages. I certainly can change with economic conditions, but I wanted to come up with a an answer cuz you deserve one.
Speaker 1 00:02:16 Well thank you. I appreciate that. Right.
Speaker 2 00:02:18 We're gonna be talking about some things during this podcast series that are metrics and some guidelines that will help people. They're not necessarily set in stone as this number needs to be this or you're struggling. It's just something that we want all of our dealers to be mindful of so they can make the right decisions. One of 'em be like free cash flow for conversion, which we'll talk about a couple episodes here. But I did want to give you definition and I don't wanna leave you up empty hand it. So I, this is what I came up with. I think a sign of financial wellness is that you're a business that's capable of making any decision that you want. Whether it's to grow, to expand, whatever you can make any decision that you want and you're not limited by your financial condition, your cash availability, your liquidity, that kind of stuff. So, okay, hey, I really wanna expand this jar, I wanna move a little bit west <laugh>, I don't have enough cash to do it. Okay. There's something in the financial wellness category that you're probably missing and a successful company or the most successful companies are ones that the moment their light bulb goes off, mm mm-hmm <affirmative>, you know, they're ready at that moment in time to make that choice, make that decision because they have liquidity, the cash that they need. That would be what I say as a company that's financially well.
Speaker 1 00:03:30 Nice. So having the freedom to follow what you feel like is the next move and not being hampered by lack of resource in order to
Speaker 2 00:03:39 Do it Right. And if you think about it, we take that for granted. Most of us are not in a position where if you look at that 3 million car, you can say, Hey, I'm gonna have that car, but I can't.
Speaker 1 00:03:50 Yeah. I wouldn't feel safe driving anything that's super expensive in this area anyway. There's too many crazy drivers in this world. Well
Speaker 2 00:03:57 I'd rather be in a car than on a road bike. I'll tell you that
Speaker 1 00:04:00 For sure. Absolutely. So back to financial wellness <laugh>. So we did a podcast last year about key financial principles and we talked about forecasting, which included controlling variable costs. And that was such an excellent conversation. It was episode 25 for those that may have missed it. But let's just do a, a quick recap. So we talked about forecasting, we talked about budgeting, we talked about variable margins. So can you just touch on those briefly?
Speaker 2 00:04:27 Right. So from a forecast perspective, that's at any point in time, whether it's beginning of the year, middle of the year, end of the year, doesn't matter at any point in time, what are your expectations for the future? If you looked forward, what do you see? It's very important that you those forecasts all the time. And not just financial, just in general, you always wanna think about what the future holds. And it's really important that you do that because you need to know what your expectations for revenue and your expectations for expenses. It's obvious, but I'll say it anyway, that if you know there's an expense that's not necessary, that's hampering your business and it goes for six months without you noticing it cuz you weren't looking for it and all that stuff, then that's something that's gonna inhibit your financial wellness. So there's a lot of things that I think about forecasting specifically in the Florida market even.
Speaker 2 00:05:11 Like what does the state codes and the changes in the state's codes, well how does that gonna affect your business weather look like in the short term? What's the weather look like in the long term? All those things. Competitive environment, what's the competitors doing, what do I think they're gonna do? How do I think they're gonna react to me doing this program? Whatever it is. Mm-hmm <affirmative>, that's what a forecast is. And I think I mentioned this there in episode 25, but I'll say it again. What's important is that you kind of lay in the ground, put your line in the sand if you will, what you think's gonna happen. Because whenever something happens that's different than when you think it's a learning opportunity, right? There's something that you thought was true that wasn't, or there's something you needed to learn that you didn't know.
Speaker 2 00:05:48 Either way that learning only comes from having an expectation before whatever happens happens for you then respond to it. Sure. So that's why forecast is important Now. So what's a budget? A lot of people use those terms interchangeably, but they're different. And I know we have a specific podcast on budgeting coming up here in this series, but a budget is basically laying the foundation for next year's expectations. But you involve your entire team and the process, you involve all the key people in your organization in helping you create this budget. Cuz it's not just something you do by yourself, it's something you get the people that matter, the people that control your costs, the people that control your revenue, you get them involved cuz you're trying to expand the knowledge of the company. You're also trying to get people to buy into the success cuz the budget is what you're saying is what we're trying to accomplish for the year.
Speaker 2 00:06:33 The forecast is saying, okay, am I gonna get there? Do I need to make adjustments as we go? The budget still, what you did in the year is saying, okay, we need, this is our goal for the year. Doesn't really change, right? Mm-hmm But you need other people involved in creating that. Otherwise there's no buy-in. You hear this a lot, you're over budget by 10%. Well that's not my budget. I didn't create that budget so I'm not over budget cuz I told you I couldn't have ever done that budget anyway. Right? So you wanna have the key people involved in helping create that budget. It's also just a great opportunity to learn. Cuz what you're basically doing is you're have the key people in your organization are now doing forecast. They may only be doing it once a year, right? During the budget season. Mm-hmm <affirmative>. And you may as a dealer, as a business owner, you might be doing it more frequently, but you need your key people to be thinking like this at least once a year. And that's what the budget process makes sure that you do.
Speaker 1 00:07:21 That's excellent. I know our team puts together our forecast and hands it up to whoever's above us and then that gets factored in
Speaker 2 00:07:29 And then we cut it by 10%. Give it
Speaker 1 00:07:30 Back to you <laugh>. Is that what happens? If you're lucky? Yeah. Oh okay. It's only 10%. It's only 10%.
Speaker 2 00:07:36 And then last but not least, variable margin is my favorite topic. So since you told me that we don't have two hours to talk today, I'm gonna shorten it from what I would normally talk about for variable margin.
Speaker 1 00:07:49 Be sure to tune in for upcoming episodes to help you understand the fest station industry, what you need to know when buying windows and doors and other related topics. You can find out more about
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Speaker 2 00:08:06 But it basically says it's the amount of money you make selling each unit, right? So the quick definition would be your sales revenue less each expense. That would not exist if the sale didn't occur. So materials installed, delivery commissions, if you didn't sell it, that expense would go away. That thing is part of your variable margin. So a good variable margin is 30, 40, 50% a variable margin that's 10% or less. You're gonna struggle, right? Because you're just struggling to make money in every single unit that you sell, right? So it excludes those things that don't change when you don't have a sale. For instance, if the rent of your building is the same, no matter how much you sell, we would call that fixed, right? Those kinds of things are fixed expenses. Variable would be those things that specifically go with how much you sell. Very important metric is your variable margin.
Speaker 1 00:08:55 That makes a lot of sense because then you know if you can expand or if it's worth expanding,
Speaker 2 00:09:01 Right? And the basis of a successful business is one with a high variable margin because that means that there's enough value in what you're selling. So you can make good money inclusive of the fact how much it costs you to make it and install it or whatever. You can still sell it at a value if for some reason it costs me a dollar to make a pencil, but you're only willing to gimme 90 cents. It's hard to make that up in value.
Speaker 1 00:09:23 Yeah, that doesn't make any sense at all. But great example. So what steps would you advise for dealers to keep and even gain market share to help offset things like inflation and other factors?
Speaker 2 00:09:37 First and foremost, and I've learned a lot over 17 years, so I don't think I would've necessarily answered this the same way five years ago, but you know, you learn and you get to work with some of the great people we have at the company and and you gain some experiences from talking to them. The number one thing you have to do is you have to continue to meet or even improve your customer expectations and experience with you. Because ultimately that's what the customers will make most of the decisions on. Do they enjoy? Is it mutually beneficial to work with you? That's what survives the test of time. So I think there's a lot of examples of businesses that kind of cut the customer experience corners when things go bad and then they lose customers and then when things start to go good again, they don't get 'em back.
Speaker 2 00:10:22 So you wanna make sure that you meet your customer's expectations and that the experience is probably number one in people's world, not necessarily the price. The second thing is the leads that you generate. Like, so let's just as an example, your dealer who sells the homeowners, right? And you have your customer leads. If the leads are softening because the market is turning down, let's say inflation, interest rates, whatever it may be, that affects the market, means that less people are calling about changing out the windows, right? Mm-hmm <affirmative>, then you have to have a higher batting average with the leads that you get in order to maintain or grow your order rates that you have. So take the time to train your in-home personnel, your sales front facing employees, the ones who determine what your batting average is for successfully closing the lead. That's pretty important to soft market. So then the last thing would be how do you generate new leads? You know, is that a different form of advertising? Is that creative solutions or referral bonus or something that exists for your existing customers who somehow are centered to tell their neighbors about your great work and your great product. You want to try to generate more leads creatively during this period where they don't necessarily show up at your door so easily. That way you get more swings at the plate. Those are the three things that I would say.
Speaker 1 00:11:43 And we set up our dealers nicely to do all of those things because we have lead match that comes right from our websites directly, directly to whoever's in that vicinity. And then in the faster that those are acted upon, the more leads will come to them because it's all based on algorithms. And then we also have the marketing funding. I don't remember what that's called, but it's where we help our dealers pay for advertising. A co-op, it's a, is it a co-op?
Speaker 2 00:12:13 Yeah, I think that's what it's called. A co-op advertising.
Speaker 1 00:12:15 Yeah. I'm gonna be talking to some marketing people later this year. I hope so. We can get some more light on that. But the dealers that are participating in it know that if they put pg t logo on the side of their van, we help pay for
Speaker 2 00:12:25 That. There's a lot of creative things that you can do and when if the last couple years you might not have had enough people to answer the phone, right? That's how often it was ringing. Okay. It might not be ringing as much this year as it was the last two years. Mm-hmm. <affirmative>. Okay. Well that just, if you answer the phone more often, you might just get more leads from that. Right? Because maybe you missed some calls the last couple years, that's how much it was ringing. So there's opportunity, there's still a lot of people moving down here. A lot of people need new windows and doors. A hurricane came through last year, people are gonna be thinking about not wanting to go through it again. So the opportunity's definitely
Speaker 1 00:12:56 There. And for our dealers in Florida, there's a sales tax rebate that's still good until
Speaker 2 00:13:00 It's fantastic, right?
Speaker 1 00:13:01 July of 24.
Speaker 2 00:13:02 Yeah. Take advantage of that. Make sure your homeowners know that.
Speaker 1 00:13:05 And what else would we say about that? This is a good time to sharpen up your processes if things are a little quieter, then evaluate, take the time, do some training. Hey, take some classes on PPG t i University. There you go. They could do that. Well this has been a great session to start our series off with and um, look forward to having you back in studio. You're gonna be speaking to us again with Jeff Jackson. Yep.
Speaker 2 00:13:27 We're gonna be talking there a little bit about some long and short-term strategies for businesses that help you think about financial wellness.
Speaker 1 00:13:34 Yeah. Right. And then you're coming back in with Rick,
Speaker 2 00:13:38 Rick Tyson. Yep. Here we'll be talking specifically about cash flow metric and some things like that. So that's a great episode.
Speaker 1 00:13:44 Nice. And then we finish it off with Craig Henderson. That's right. Who is our new interim cfo
Speaker 2 00:13:50 And he'll be talking about budgeting. Yes. So you take all of that and then this is the last point. Two years ago we talked about the best playlist in the world.
Speaker 1 00:13:59 Yes.
Speaker 2 00:14:00 And I would like to point out that you can follow me now on Spotify. Oh, uh, I have playlist. My Spotify account is B Fresh West, that is my name that everyone knows me by. Jeff calls me BRE all the time. So if you refresh West Okay. And you can see some of the, the playlists that I've created. Fantastic decade playlist. A sixties, seventies, eighties,
Speaker 1 00:14:23 Nineties. Oh nice.
Speaker 2 00:14:24 The zeros. I'm working on my 2010s still, but check that out and you'll be excited about 50 great songs that you'll never wanna skip. At least that's my theory. I'm
Speaker 1 00:14:33 So excited about this because after we finished recording that last episode, we sat and played music trivia and you stumped me more times than I care to admit, even though we're just like a year or two apart in age and had the same genre growing up. But I'm excited to listen to those. Yeah,
Speaker 2 00:14:49 That's probably because you spent most of your time in the eighties in some kind of weird psycho induced stupor or something that you just, you just bypass past you. Is that what happen?
Speaker 1 00:14:57 Something like that. Nice. Maybe.
Speaker 2 00:14:59 Well it's great to be back. I'm looking forward to this exciting series and as all things, if anybody dealers have questions or like to clarifying points or anything like that, feel free to email us and we're always excited to share information with our dealers.
Speaker 1 00:15:11 Sure, absolutely. And I know that they really appreciate having access to the people around here that know what they're doing and can help them. So thanks so much for your time. I appreciate having you here. No problem. All right. Take care. Bye bye. PG t I University is the customer education team for an entire family of brands. We began with the original Easy Breeze, porch and closure line, then became P G T, America's leading brand of impact resistant windows and doors. We then added cgi, C G I C window, Western Windows Systems, new South Windows, echo windows, and doors and land, windows and doors, and our latest acquisition Martin Garage doors. We create products built to withstand major storms, keeping people safe, secure, and prepared. Our exceptional brands give you the protection you need without compromising design or functionality. PPG t I University is here to educate you, our listener, so that you can be a more informed consumer of window and door products.
