To Showroom or Not to Showroom: Questions to Ask
It’s a big step, and for many it’s an important milestone. Opening that showroom — with a retail presence, road visibility, product selections, impressive company signs, office space, and warehouse space can be the right strategy for a growing remodeling company.
At the same time, the cost of acquisition, buildout, staffing, and maintenance can be a drain on resources and a distraction from growing a successful company. So, to showroom or not to showroom, that is the question.
First, for a showroom to make sense, it must contribute considerably more than the cost to acquire it, build it out, and staff it. If someone is going to add a showroom to an existing remodeling operation, I like to see it separated as its own class in QuickBooks so revenue generated and expenses related to it can be easily measured.
Second, a showroom can be a good idea if it’s in a location that’s likely to draw traffic. Such a location can bring attention to the company. It can also build confidence in those potential customers that want to see a more substantial company.
Third, it can also be beneficial if the facility allows for a better process for interacting with the customer, making selections, and other tasks so they can be done efficiently.
A showroom does not make sense if it conflicts with the company sales model. If you have a good source of leads already, if initial visits are made at the client’s home ,and if there’s little need for clients to go to the showroom, it may just be an unnecessary expense. Also, if it’s going to put unnecessary demand on the company to staff the facility, it might not be a good idea.
Once a showroom is built, often companies will focus more on getting people to the showroom than on getting them under contract. If it’smerely an extra step in the process, it may be more of an obstacle than a help.
Finally, the business owner should be in a position to comfortably afford the building and treat it as a rental property (with the company being the tenant). But that purchase needs to make sense on its own to be a good idea.