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Tough Call: The Next Big Thing?

When you bought a bankrupt lumberyard during the Great Recession, you knew it wasn’t going to be easy. However, with your knowledge of the building/remodeling market in your town, you believed that after a few lean years, you’d have a stable business that you could build on. Your mantra during those early years, “slow and steady wins the race,” served you well.

This year, your company celebrates its 15th anniversary. You and your team have earned the loyalty of a growing number of key builders, and the road ahead looks solid and promising. Just as you’ve begun feeling comfortable taking some chances to ramp up your company’s growth, an opportunity has presented itself.

A manufacturer you’ve worked with for years is getting ready to launch a new product that you believe could be a game-changer. “We’ve been working on this for years, investing in R&D, testing and retesting, and we’ve got something that I’m convinced represents the future for our company, and for the homebuilding industry,” your rep explained. “It outperforms everything else on the market, and we’ve developed a way to offer it for far less than competing products.”

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After showing it to your team and to a couple of your biggest clients, you agree that they’re onto something, and you’re excited to start offering it. But there’s a catch: “We’re so sure this is going to be a hit, we’re selecting one LBM dealer in each market to carry it. Since it’s going to be an exclusive, we’re requiring each dealer to have some skin in the game as well. We believe you’re the right supplier in this market, so we’re giving you first right of refusal. But this is all moving quickly, so we need an answer from you in 10 business days.”

As it turns out, “skin in the game” means a significant investment in inventory, in showroom space, and willingness to coordinate with their marketing team on events to spread the word in your market. You’ve run the numbers, and the initial investment they’re requiring is doable—but it’s a stretch.

You’d love to carry the product, but you’ve never gone all-in on a new product before. If it is as well-received as you think it’s going to be, having the exclusive could be a huge opportunity for your business. However, if you’re wrong and the product fails to take off, then you’re stuck with a sizable investment in something nobody wants. What would you do?

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Go big. This is exactly the kind of opportunity you were looking for. Yes, it’s a risk, but truly game-changing products are rare. Take the chance, and take your company to the next level.

Just say no. When something seems too good to be true, it usually is. Tell the manufacturer thanks for the opportunity, but you’ll pass.

Find a path. You can’t take that big of a risk, but you’d love to make a splash with some of your biggest builder customers. Find a way to make it work without the big investment.

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Wait and see. “Slow and steady” got you where you are. Plus, you’re not sure that any of your competitors are positioned to say yes. Say no for now, but circle back if they’re willing to negotiate.

What would you do?

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