LBM Journal‘s 2022 Dealer of the Year awards, sponsored by Epicor, recognize four LBM companies of different sizes that epitomize the entrepreneurial spirit. By our definition, a Dealer of the Year describes a company in which leadership excels at identifying underserved—or emerging—markets, satisfying customers, and constantly working to grow and improve business. While these companies represent vastly different operations, the common thread is their fierce commitment to finding ever-better ways to serve their customers and their communities.
Spahn & Rose
During the COVID-19 pandemic, the term “working remotely” was ingrained into businesses around the world, even at local lumberyards, where previously the concept was rarely considered. But if there’s one thing businesses learned during the pandemic, it’s that the technology that was once on the horizon is now at our doorsteps. For a number of companies, that means the ability to expand operations is no longer limited by proximity to the main office. For Spahn & Rose of Dubuque, Iowa, that meant buying and operating a lumberyard 840 miles away in Marietta, Georgia.
Ask Spahn & Rose President Dave Davis what allowed the Iowa company to successfully complete the acquisition nearly on the other side of the country and he’ll tell you it was the management team. With the right people in the right roles, the company had the know-how to put the deal together.
“We’ve got the right people in the right places making good decisions,” Davis says. “And we have the data to support those decisions.”
Davis is the eighth person to run Spahn & Rose since its founding in 1904, and just the second from outside a founder’s family. The legacy isn’t lost on Davis. At Spahn & Rose, the company history is saluted, and progress is celebrated. Take for instance the company website, which reads: “When Spahn & Rose sold its first lumber, Theodore Roosevelt was president, Henry Ford set a new automobile land speed record of 91.37 miles per hour and Cy Young of the Boston Americans pitched baseball’s first perfect game.”
Over time, Spahn & Rose has grown to include 23 locations, plus a distribution center and corporate headquarters, based in Dubuque. While Davis’s background in retail includes 25 years at True Value, he wasn’t brought aboard to expand into hardware. The company has remained dedicated to its core customers: contractors, builders, and remodelers, which make up around 90% of its customer base.
“We sell hardware, but only to the extent that it serves our core customer,” Davis says. The only outlier may be the company’s Dunn Lumber location in Lake Geneva, Wisconsin, which Spahn & Rose acquired in 2019. The store includes an 18,000 square-foot retail hardware and rental facility.
“We love our DIY customers, and we’ll welcome them,” Davis says, “but they’re not our core customer.”
Foundation for growth
Of the 325 team members currently on staff at Spahn & Rose, 25 are outside salespeople. In an area that covers most of Eastern Iowa as well as locations in Illinois and Wisconsin, the sales philosophy is to build top-line business in the company’s core markets. Success in these markets can be attributed to the management group, Davis says, and the team’s ability to make data-driven decisions that benefit the whole company.
“Epicor Bistrack gave us better control and visibility into what we do. It has allowed us to centralize processes, to take mundane tasks away from the yard and let the yards be more customer-focused,” Davis says. “Once we did that, we were even more confident in our operations, and we could start to look at good opportunities for growth wherever they were.”
With a handle on operations backed by a confidence in data, Davis says management was able to discuss what types of areas the company wanted to be in and which companies in those areas would be a good fit for the Spahn & Rose model.
The first acquisition under Davis’s watch was Wisconsin’s Dunn Lumber, a company even older than Spahn & Rose. The opportunity to implement Spahn & Rose’s capabilities in the operations of a large hardware inventory and robust rental business was attractive to the management team, Davis says.
“The first thing we look at is if the target company shares our core values, and will it embrace our company culture. If not, we’ll move on. We’ve had discussions with some profitable businesses that we’ve not gone through with because they weren’t a good cultural fit.”
It was the successful onboarding of Dunn Lumber that provided Davis and the Spahn & Rose team with the confidence that they could acquire a company anywhere in the country. No longer were they limited to a couple hours of drive time. “We met Metro Building Products in Marietta, Georgia at the right time,” Davis says. “Their owner was ready to retire. They really put their arms around us and embraced us.”
When the Spahn & Rose team had developed the ability to manage data at its core locations, it wasn’t a stretch to take those same practices to a market like Marietta, Georgia, serving more than one million people. Once you’re able to analyze a lumberyard’s inventory, customer, and sales data from a distance, remote operations simply aren’t the challenge they once were, Davis says. “We’ve become a real data-driven company.”
The data that drives the company has also driven up profits in recent years. While Spahn & Rose finished out 2020 at $156 million in revenues, 2021 is shaping up to be about $190 million, he says.
Changed by COVID
While revenue increased during the COVID-19 pandemic, it didn’t come easy for Spahn & Rose. “We’re a business of people,” Davis says. “Our people were affected. Our people hurt and we tried to give them everything we could at the time.”
Davis says a strict adherence to CDC guidelines kept the company operating as consistently as possible. “In our mind it wasn’t a political issue or a political question. It was a question of health and safety for our team and our customers. The pandemic has shown us how important it is to show respect to individuals.”
Even after restrictions eased, Spahn & Rose, like many LBM dealers, faced challenges with materials and labor shortages. Davis says there aren’t any issues at Spahn & Rose that aren’t common in the industry.
“I had a mentor early in my career who said, ‘There are always going to be issues in business. What matters is how you deal with them.’ We deal with them by taking care of our customers. It has been, and continues to be, an all hands on deck situation,” Davis says. “Life with customers has changed, and we try to be accommodating everywhere we can be.”
The pandemic forced Spahn & Rose to focus more on its already strong online and social media presence, as well as move quickly toward technology on the marketing side of the business. “You have to ask, ‘What do you learn from change that happens around you? What do you take away from it?” Davis says.
The company sent a survey to customers asking for feedback on the ways in which Spahn & Rose communicates. As a result, Spahn & Rose is moving more quickly away from traditional marketing in efforts to target builders more efficiently on social media platforms such as Facebook, Twitter and Instagram.
“The loyalty that customers have with us is based not only on how we treat them, but how we communicate with them,” Davis says. As a result, the company makes an effort to let customers know when items are available in stock, when there are going to be major price changes, and more via email and text message.
More growth ahead
With a system for growth in place, Spahn & Rose is careful to take advantage of the right situations. Davis says the company is open to strategic and opportunistic growth, and will continue to grow through acquisition, as well as locally by increasing customer share as well as increasing business segments.
“We have confidence in the way we do business, that our processes are good, and that we treat our customers with the respect they deserve,” Davis says. “It’s not a question of where, it’s a question of being better.”