7 Indicators why the Fence Industry is rock solid
I am extremely bullish on the future of the fencing industry. Since 2001, we have seen manufacturers, wholesalers, and retailers, acquired for high valuations. I have seen installers become millionaires. We have seen contractors become successful manufacturers and wholesalers. It is not an easy business, actually far from it.
There are 20 + year old companies whom are experiencing double digit growth in 2018. I have reviewed the Grandview and Freedonia research with their 2.6% to 5% growth projections. HA! I see the people and the market up close daily and it’s bigger, stronger, and faster than ever — almost all in double digit growth. What is happening? Can it be that technology is beginning to contribute massively to our old school industry? Is it time for a new school approach? Is it possible that our industry can be “Netflixed, Ubered, or Amazoned”? Probably not, but just in case, maybe its time to go on offense and seize the day.
The following observations highlight the untapped potential which I believe exists in our industry
1. Zero to $1,000,000 in first year.
If a start up with no office, no inventory, no yard, and few full time employees can do this, what does that say about the power and value of an existing business?
I’m sure that there are many who would debate this, but it is happening. Keep in mind that starting a fence company today is much different than in the past.
In the “old days” of the 20th century…….
You would need to secure lines of supply, set up fabrication shop, and buy inventory. In today’s world, the distribution is so efficient you could have nearly every order shipped to a job site. A fence company with no forklift? Yes. That also means no employee needed to drive it. A start up doesn’t even have to wait for the new yellow page book to be printed with that first ad to get the phone to ring.
Immediate direct response advertising is a click away. All the money and energy that would normally go into operations, can now be used for sales and marketing.
A smart start up business plan also focuses on “selling”, not just installing fence, which opens up more channels for revenue. Of course market demographics play a key role in this phenomenon.
2. There are many additional profit centers
With the exception of a select few, most professional fence organizations are not diversified.
There are many opportunities for companies to grow if they so desire and have the ability to invest the time and resources.
- Residential for the commercial focused, commercial for the residential focused.
- Vinyl for the wood company, wood for the vinyl company
- Steel for the aluminum focused, aluminum for the steel focused
- Material sales for DIY & wholesale
- Access control
- E Commerce
- Guard Rail
- Patio Covers
- Additional markets and branch offices
Each could be a complete business of its own with the proper planning, attention, and leadership.
3. There is no nationally recognized consumer brand
Yes, there is “industry” brand recognition, but there is no Andersen Windows, or Trex Decking. (yet)
This may not seem like a positive sign for the market, but I surely see it this way. Imagine, the industry has gotten this far without it. Why? How did this happen in the first place?
My thesis is that due to the origin of our industry and it’s solid roots in chain link and wood, we were destined to be hindered by the commodification of these words. Until the national brands of steel, aluminum, and vinyl made their entrance 30 years ago, it was rare to show a manufacturer’s brochure on a sales call. Some of these early pioneers produced brilliant marketing. Due to the unique fragmentation that exists in the industry, brands have not been sustainable. Competition and trust played roles in this as well, and before long we had the same commodification of these product categories.
I see this a strong sign, because this opportunity still exists for a fence manufacturer, and all in its slip stream will benefit. I predict there will be a national fence brand within 10 years!
4. Sales are still predominantly reactive
With the exception of the commercial bid specialists and wholesale account development, the majority of professional fence sales are reactive.
I’m sure that there are many exceptions, however, as a rule, especially in residential installation most sales leads are company generated. These leads become appointments, then estimates, and 3 out of 10 of these become sales. This is fine for the busy season and may be palatable for the estimator with modest income goals, however, is it best for the company in the long run?
The majority of these companies are super happy and profitable with these numbers! What if the closing ratio increased 10%? What if the prices were 5% higher? What if the company didn’t have to pay for every lead? Again, there is your blue sky!
5. Recession proof business
Unless you are too dependent on one particular segment (see #2), the fencing industry enjoys the benefit of both the highs and lows of the economy.
I recognize that, this was not the case if the primary focus of your Florida based fence company in 2008 was tied to the builder market and new housing construction. It was clearly evident in my travels from 2009 to 2014 that the companies who were diversified prior to, or started during the recession dominate today.
Due to the fact that fencing is primarily a “need” demand product we have less risk. The need to protect and secure pets, children, pools, and properties far overrides the “want” of a new kitchen counter, swimming pools, or cosmetic home and commercial improvements. The fence company may lose a few high end sales to lower end internal solutions but will win regardless. When the economy shifts to growth, such as today, now is the time to market and sell to the “want” consumer. This consumer still has the basic need that a fencing solution fills, but there are so many attractive up-sell options to appeal to that “want”.
6. No national chain (yet)
Where is our, Sherwin Williams, Blinds to Go, Tile Shop, or Lumber Liquidators?
You can argue that the business may not be scaleable, however, I predict that within 10 years there will be at least two national independent chains with combined sales of $300 million.
I see this again as a sure sign that until this exists, the consumer fence and rail segment still has massive growth potential.
7. Brick and Mortar market leaders yield material sales
Web and big box gain market share daily and fence companies don’t even miss it.
The the big boxes not only have taken a huge bite out of the material supply line but now are dominating installed sales in some markets. While an installation contractor is debating whether there even is a DIY market on Long Island, his next door neighbor is ordering a fence from buyfence.com in San Diego. Again, see #2!
This is a thriving industry with massive potential and opportunity on every level. World class Distributors provide service from coast to coast and the national manufacturers that survived the economic downturn are stronger than ever. There will be some who won’t realize the full potential as there are many variables and distractions.
Time to reward those still reading. As I have learned from Gary Vaynerchuk , the television and print ad mediums are dead. The gatekeepers of attention are gone. Anyone can steal the show now. The fencing business daily grind is visual and is a continuous story that can be told.
Social Media platforms are the best way to promote your story. Not the way most do today, but by what you will see tomorrow. My first article on Medium sheds light on the subject.
For those who will seize the opportunity with a diversified approach; a full scale offensive is in order!
Please follow me here: medium.com/@peterfickinger
I will build on this premise and not only fire you up but your employees, recruits, and investors as well. I will do so by providing insight and ideas for this amazing business.
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Thank you so much!