Betting on diversification in 2023

Home Featured Post Betting on diversification in 2023

When it comes to running a successful small business in 2023, one keyword that is often spoken is diversification. Diversification can help a small business owner ease the slow times and it can even increase tickets sales and the store’s bottom line during the busy times.

For many store owners, limiting themselves to flooring was not their recipe for success. FCNews sat down with several flooring store owners who took the leap and diversified into adjacent product categories like countertops, cabinets and window treatments.

Here’s how they did it:

Stephen Melchiorre | Dynamic Flooring | Medford, N.J.

Cabinets and countertops

Why did you diversify?

I wanted to be able to control the sales process from start to finish and deliver the quality we were known for from start to finish. I also never wanted to have all my eggs in one basket, especially after witnessing how the recession of 2008 affected the flooring industry.

What was the result?

Our remodeling division has eclipsed the flooring division in revenue dollars. Customers now look to Dynamic as a source for not only floor covering but all of their home remodeling needs. Venturing into remodeling has helped our brand grow tremendously. We are now a household name in the South Jersey market for all things related to home improvement.

What is your advice for others?

Growth has not come without its own set of challenges. Be prepared to lose some of your contractor and builder business. You and your team should be prepared to deal with new trades such as plumbers, electricians as well as knowing the local building codes and what is required. Something as simple as a kitchen countertop replacement requires two trips for a plumber, new plumbing fixtures (a sink and faucet), as well as having a team of capable installers that can make game-time decisions. I would strongly recommend hiring someone on a consulting basis to help build a program for the areas that you wish to venture into.

diversificationBonnie McKesson | About Floors n’ More | Jacksonville, Fla.

Cabinets and countertops

Why did you diversify?

We moved to a new location with more space. We were doing bathrooms already and cabinets were a natural extension of that. We were already in our customer’s homes, and we can continue to service our customers, plus add a new customer base.

What was the result?

Diversification has opened a new revenue stream that has helped us with our growth. In the down times, it helps to offset some of the losses in the flooring sector. We were able to grow 20% by expanding in cabinets and in commercial sales.

What is your advice to others?

Do your due diligence. Don’t rush into it and don’t expect a positive return for two years. There is a steep learning curve. In the end, it will be worth it.

diversificationElizabeth Harding | Hometown Floor & Design Center | Gaylord, Mich.

Cabinets, countertops and window treatments

Why did you diversify?

Who doesn’t like a one-stop shop with knowledgeable staff and experienced designers? I feel like the more products and services you can offer a customer the more likely they are to purchase from you. I have experienced large remodel projects running smoother, too.

What was the result?

It has increased showroom traffic and grown our business. I’ve been able to install kitchens and baths along with all the customers’ flooring needs for their remodel projects. This has taken the average sales ticket from $20K to about $60K.

What is your advice to others?

Before you tackle diversification, you should make sure you have an installer and a knowledgeable cabinet designer. Anybody can sell flooring but cabinets are very detailed with so many options, you don’t want to mess them up.

diversificationRachel Berlin | Precision Floors & Décor | Plymouth, Wis.

Countertops and window treatments

Why did you diversify?

Flooring is just one aspect of the interior of a home. We recognized that it might be a challenge to have other options besides flooring but, ultimately, it would be best for our clientele. We realized our clients were looking for our design expertise and a “one-stop shop” for their flooring, countertops and window coverings. And the convenience of getting everything at one place was very appealing. We felt we could serve our customers’ needs and also have the opportunity to be in their home for multiple projects. So, even if we started with one small room and earned their trust and business, it was a greater chance we could get back into their home for window coverings and/or countertops later on.

What was the result?

Having some additional product offerings kept our clients in our store and coming back later (as repeat clients). We have grown our window covering department (specifically) with the effort of one of our designers who is very knowledgeable and comfortable with window coverings. She has made it her goal to grow that department and has succeeded. We love to celebrate that success! The more comfortable and confident we are selling these items, the better off we are as a company.

What is your advice for others?

Look at your sales team, your estimators and your installation crews. Do you have enough personnel to do this and do it well? It is quite an investment to get into window coverings, and if mistakes are made (and they will be) they can be costly. With countertops, it seems that now (especially recently) almost everyone sells them, so you have to stay really competitive. We found some really great fabricators—they make our job (as sales/design) easier and that helps keep everyone happy. But, ultimately, if you’re looking to take something on now, I’d do a really deep dive into it with your entire team before committing.

Adrian Rojas | In-Home Floors | Conroe, Texas

Cabinets and countertops

Why did you diversify?

Easy, we wanted to be able to increase revenue. Offering multiple products allowed us to capture more flooring business. Customers would much rather have a one-stop shop or they would go with a general contractor. Offering multiple products also allows us to ensure the installation happens smoothly, no subs pointing fingers in an arena I can’t control. Another reason is the fact that it makes the ticket so big, they are almost forced to
finance the project—one of our points of differentiation in our company is our finance options.

What was the result?

Diversification has helped our business grow by increased revenue, increased net profit and net profit margins, lowering costs, rapidly expanding our footprint, separating us from the competition, increased closing ratios and marketing as well. Diversification has helped us not only rapidly expand our business, but it helps with the cost side of things as well. Being able to upsell to triple the price of the flooring allows us to maximize the lead to its fullest potential. Instead of the average sale being $6K it is now $14K while the cost of the lead remains the same.

What is your advice to others?

Just like starting a business, you need to come up with a business plan: projected costs, sales, current market data and an exit strategy. Come up with the whole plan—from how it fits and benefits the sales side to the ar/ap/installation side. Then jump in head first and don’t look back.

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Jan. 23/30, 2023

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