It’s been called everything from a “global phenomenon” to the “worst recession in the 68 years since the end of World War II.” During the Great Recession, which officially ran from December 2007 to June 2009, the U.S. economy shrank more than 5 percent – the worst drop of any of the previous 10 recessions. More than 15 million American workers were displaced from their jobs. As we all know, the pool and spa industry was not spared, and some regions were particularly hard hit. We checked in with some industry veterans to learn the strategies that helped them ride out the storm. Here are their stories.
Owners: Dale and Kathy Howard
Locations: 6 (Phoenix, 4; Glendale, 2)
Staff: retail, 30-35; service/repair: 12
Trucks: 0 (Techs drive their own trucks)
Service work: 350-400 accounts (75% residential; 25% commercial)
The Great Recession was especially tough for Phoenix. “Those building pools were devastated,” says Dale Howard, who owns B&L Pools with his wife, Kathy. “There are just 10 percent of the builders left. Guys who didn’t have their acts together are gone.”
B&L Pools calls itself “the valley’s largest family-owned retailer of swimming pool and spa supplies.” With revenues of more than $5 million annually, there are six stores, including two showrooms of 8,000 square feet each and an 18,000-square-foot warehouse. About half of Howard’s business comes from chemicals and major equipment with the other half composed of parts, repairs and a smattering of spas and accessories.
To keep up with the changing times, B&L Pools modified and adapted its operations. For example, Howard says that though portable spa sales are a relatively small part of his business, it was important to make adjustments because there was a significant slump in sales. Prior to 2007, the firm’s stores in the greater Phoenix area were selling 110 to 130 spas annually and had six or seven models on display in the showrooms. Then the economy slumped – spa sales dropped to fewer than 10 annually, and they reduced the number of showroom models to two, or three in the larger stores.
In response, management decided to change spa lines, going with a local manufacturer to save shipping costs and buying one or two units at a time. Now, spa sales are coming back, with 20 to 25 being sold annually, Howard says.
The company made other changes as well, extending business hours, renegotiating leases on rented buildings and shutting one location (they have since opened another).
“My team did an excellent job of getting business, even if it was smaller amounts of it. There was brainstorming going on,” Howard says.
The company has proven it has staying power, but that’s not to say it was easy to survive the economic downturn. “A ton of people were laid off [in this area] in 2007 and ’08, and they would think about what they could do and some would say, ‘I can clean pools!’ ” Howard recalls. He personally knows of a former bank vice president and an architect who turned to pool cleaning to pay bills. Plus, some pool owners decided to save money and try cleaning their pools themselves. Despite the challenges, B&L Pools retained enough accounts to stay in the black.
Indeed, the company didn’t have to lay anyone off, perhaps because it was diversified to start with so that when business dropped in one area, another could bolster it. “We cut back on the work force through attrition,” Howard says. “We’re down five people, and now we’re leaner and meaner. We’re controlling the hours better – there’s a lock on overtime.”
To keep the staff busy in the off season, he comes up with various projects. “We own several buildings, so the guys who are mechanically inclined become roofers in the off season,” he says with a laugh. It helps that one of the technicians is an ex-roofer, who can lead them. Howard adds repairing pools and spas requires a number of skills, such as plumbing and electrical knowledge, which come in handy because one of his buildings needs some electrical work. He also wants to build a storage area for chemicals outside and, if there’s time, maybe have employees paint offices.
The firm got to where it is today through slow, methodical growth, namely, 3- to 7 percent annually over the past 40 years. (The first 10 years or so, there was no retail operation, Howard notes.) “We’re not interested in growing fast,” he explains.
Howard, who worked for the company during high school, bought it in 1979 from the retiring partners. He says he enjoys the challenge of the business and the people who work at B&L Pools. “They’re like family – you take care of them, they take care of you. Yes, they have a job to do, but it’s a group of people who are doing this because they enjoy it. ... It’s a team effort.”
Withstanding the Storm
ALL-POOL SERVICE & SUPPLY INC.
Owner: Steve Bludsworth
Location: 1 (Orlando, Fla.)
Staff: retail, 1; administration, 3; service, 11
Service work: Accounts N/A; 100% residential service/repair
Florida was among the states hit particularly hard by the housing crisis, and while the situation has eased somewhat, the Sunshine State hasn’t fully recovered.
Steve Bludsworth, owner of All-Pool Service & Supply Inc. in Orlando, recalls that before the recession, builders were busy with construction, and they sent renovation work his way. “Then [things] went down the tubes,” Bludsworth recalls. “A lot of people went out of business, and a lot downsized, closing buildings and going back to working out of their houses. Builders started doing renovations.”
That meant his renovation business dried up.
In response, All-Pool Service embraced work they hadn’t done in the past, such as attending to pools at foreclosed houses – and trying new sidelines, such as selling high-end barbecue grills. He also set up a propane tank on his property and sells fuel to residents who come in for refills.
A big plus for All-Pools also was the fact that it owned its buildings and vehicles. “I know a lot of guys where the banks took back their trucks and buildings,” Bludsworth says. “If we hadn’t been debt-free, I don’t know if we would’ve made it.” He pauses, then adds, “I took a pretty substantial pay cut. All owners do [in that kind of situation].”
Another action he took at the beginning of this year was to buy an Orlando firm that did electrical wiring; now it’s a division of All-Pool. With a licensed electrician on staff and two technicians in the field also doing such work, Bludsworth’s company was able to expand its offerings. “Other companies send electrical business to us,” he notes.
Such measures have made it possible to avoid layoffs and cuts to hours or pay, Bludsworth reports. It also helped that the staff shrank a bit through attrition, due to retirement or resignations.
Today, employee training occurs weekly. Sometimes sessions are led by manufacturers who come in and talk products. Other times, Bludsworth might call, say, on a friend in the air conditioning industry, who works with the All-Pool staff on customer service and selling upgrades, helping hone their selling and marketing skills.
At monthly meetings, everyone, including office staff, gathers to discuss customer feedback and brainstorm. “We’re always soliciting ideas from employees,” Bludsworth says. “After all, they’re on the front lines.” A recent example of a revenue-generating idea came from one of the electrical team, who suggested putting fliers or brochures in the trucks, to be given to pool cleaners they see in the area, the message being, “If there’s a bad light or electrical problem, we can fix it.”
Furthermore, an incentive program is in place to encourage employees to sell more. Bludsworth calls it a spiff program and says it works this way: A technician goes to a home to fix a pool pump and notices a faulty pool light; they might suggest LED lighting, thus garnering a commission if the homeowner purchases it.
Bludsworth intends to stay vigilant, so his company doesn’t get derailed in the future. “I keep running our business like we’re still in recession: Watch everything, don’t get sloppy. Watch the minute details, so there’s no waste.”
A Proud Tradition
PRIDE POOLS, SPAS & LEISURE PRODUCTS INC.
Owners: Sherry Buckman, Alex Smith, Marshall Smith
Locations: 2 (Savannah and Claxton)
Staff: retail, 10; service, 6
Service work: 20-30 commercial accounts
The economy took a little longer to improve in Savannah, Ga., says Sherry Buckman, co-owner of Pride Pools, Spas & Leisure Products. She reports that her region is just now at the end of the recession.
“Retail is really slow, and we’ve had a ton of rain in the Southeast, which hasn’t helped,” she says. “But we’re seeing some turnaround, mostly in construction.”
Founded by Gary Smith 38 years ago, the firm began as a builder and, at one point, was the largest pool company in five cities. In March 1999, Smith decided it was time to retire and turned the business over to three of his five children – Buckman and her brothers, Alex Smith and Marshall Smith. Originally, there were five stores, then it was reduced to three, to avoid the extra traveling between locations. The new owners further condensed to two, with one store in Savannah and one in Claxton. On the service side, technicians work on commercial accounts, and the company also builds fiberglass and vinyl-liner pools.
Fortunately, layoffs have not been necessary, not even during winter months. “We cut some hours a little, but not benefits,” Buckman reports. “So now it’s 72 to 75 hours per pay period vs. 80 hours.”
Instead, management took measures to ride out the recession by cutting costs. Pride reduced its Yellow Pages advertising and negotiated much better prices on the company’s phone packages.
Another successful strategy: Add more products to the store offerings. By increasing spa lines from one or two per store to three, the company has realized a sales increase of more than 5 percent over last year. (Between the two stores, they move 75 spas annually.) Buckman thinks the uptick was due to the fact that they were able to offer variety to consumers.
The decision to choose a new spa line was not made lightly – it took them two years to settle on a manufacturer. “We had heard that Bullfog Spas is … a good company to work with,” Buckman says. “The swim spa is our new big thing!” Indeed, the swim spa addition went very well – “it was sold before we even brought it into the store! Sometimes giving them variety works.”
Other new, successful items include hammocks, high-end barbecue grills and, surprisingly, mail wraps (decorative sleeves that are wrapped around a mailbox). “Place the mail wraps near the register and customers can add them to their chemical purchases,” Buckman notes. “They can be seasonal and really perk up a plain black mailbox.”
She reports that her inground pool business is up 15 percent, though aboveground pool sales remain below pre-recession levels. “The inground business kept us going through the recession,” she says. The company, which had gotten out of construction for a time, returned to it just as the recession arrived in the region five years ago. It was slow going the first couple of years, but the owners had expected that. Prior to the economic downturn, they had sold more than 100 aboveground pools annually; now it’s at 75 to 80. Fiberglass pool sales have steadily marched upward, from 20 in 2010 to an expected 34 this year.
Employee training and incentive programs have also played an important role in the company’s success. “We’re training constantly,” Buckman says. At the first of the year (January to March), at least half a dozen vendors come in once a week for several weeks, training on products and sharing sales tips.
Once a month, the staff gathers to talk about any issues and things they’re working on. And once a week, Buckman circulates industry-related articles for the staff to read. The articles, mostly sales-oriented, come from motivational speakers, such as the late Zig Ziglar and Jeffrey James. “I think it has helped and that the staff is incorporating [the ideas] into their selling techniques,” she says.