With any business model comes fiscal responsibilities and other economic factors.
Whether shed professionals need to increase profit margins, improve cash flow, inspect financial statements, or completely restructure, there are many resources available for those who need them.
What follows are some ways builders and dealers in the field can handle various financial matters for their companies and their customers.
NOW OR LATER
On the sales side, flexible payment plans can help to close the deal when installments are stretched out over time make outdoor structure costs more manageable for the end user.
At North Country Storage Barns in northern New York, customers can secure financing through lenders like Express Financing Solutions and J Money.
“They are both very prominent in the shed industry, and the interest rates are very reasonable for the current market,” says sales manager Zachary Redder. “With gazebos or chicken coops, customers might not want to pay in full. Financing can make it a little easier on them.”
Opportunities like these can increase sales.
“It’s about 50/50 here,” adds Redder. “Some people like to do a hefty deposit and finance the rest, or do a down payment and put the rest on a credit card.”
With finance companies, he explains, they have to verify that the building was delivered and arrived in good condition.
For some customers, rent-to-own (RTO) can be a better option because there is no credit check.
“After the deposit, we deliver the shed, and their first payment is not due for 30 days,” says RTO manager Heather Brancatella.
“There is no principal or interest as there would be with a mortgage. It’s a great way to go, like a layaway plan.”
She adds, “We like to keep things pretty simple, especially for the end user.”
Redder agrees, “We’re happy with the diversified options for customers to choose from. It’s nice to be able to offer a little of everything.”
PAYMENT PLANS
Between technology advancements and additional costs that include credit card and bank fees, business practices and transactions continue to evolve through the years.
For Wesley Weaver, partner with Golden State Buildings in Sanger, California, recent requests from customers include those who want to pay with Zelle.
“It’s pretty fast for us, and it’s nice for the vendors, but we only do that on a small scale,” he says.
Other current modifications include a customer fee for more expensive credit card purchases.
“Most people do not care for that, so for larger ticket items we offer a cash discount,” Weaver explains.
He also mentions that some banks started charging business owners a fee for cash deposits.
“We found a bank that doesn’t charge for cash, so we have one we use for those deposits and another for credit cards and checks,” he adds.
A cash management system they implemented that tracks customer payments and deliveries has already had an impact.
“We know when to expect that money, and it can also track bills for supplies like lumber,” says Weaver. “That really made a difference for us. It’s a great addition for us to be able to manage our cash, and a novel idea to see what the checkbook balance will be three months out. What we use is Excel-based, but there are other programs out there.”
FINANCIAL AID
When it comes to professional lenders who service the shed industry, making significant investments like custom structures more accessible can benefit shed companies and consumers.
For instance, based in South Florida, Express Financing Solutions has clients nationwide.
As senior consultant Aaron Wallach explains, “Shed builders send us their customers who apply, and we do all of the work getting them approved.”
The shed builders get paid in full upon completion or delivery, and their customers start paying on the loan 30 days after the project is complete.
Payment alternatives like these can lead to a better bottom line for shed builders.
“If they don’t offer them financing as an option, people don’t want to look like they don’t have the cash for what they want,” says Wallach. “But if you do, they will inquire. It turns people from shoppers into on-the-spot buyers.”
The process can work with various situations.
“We have an extremely high approval rate, so we are able to obtain loans for people with credit issues,” he explains. “We also work with top-tier credit. We work with every customer at no cost to the builder with a quick online application.”
HELPING HAND
With many costs on the rise due to inflation and other factors, payment plans have grown in popularity for customers in the shed industry who plan to add these popular structures to their property, from garages to gazebos.
From Central Ohio, Joel M. Oney, owner of J Money, also works with shed builders around the country to boost their business.
“Financing helps to sell more buildings. When you offer payment plans, you have an assured source of payment, and you don’t have accounts receivable,” says Oney, whose background in banking helps him work with dozens of shed manufacturers and home improvement contractors.
J Money can also help shed builders with their own finances.
“We provide lines of credit against their inventory, so they can be moving money around within the business,” he explains.
On the customer side, Oney says he started financing loans when RTO didn’t fit, and he realized there was a gap.
“They work well for custom buildings and tiny homes. Providing these solutions helps shed guys build more sheds,” he adds.
Still, there are some restrictions.
“The loans have decent interest rates, better than a credit card and a lot of consumer loans, but someone has to have pretty good credit to qualify,” says Oney, who has seen demand for these products grow steadily in recent years. “We’ve financed thousands of sheds. Most loans go up to 10 years, but we can stretch it out to 15 if needed.”
For some, seasonal scenarios can have an effect.
“For many shed builders, winter sales are slow, and they need to be concerned about cash flow. Working with customer lines of credit could help them to bridge that gap,” he adds.
CUSTOM FIT
Personalized products can keep shed builders and their customers in the know from start to finish.
Colin Dexter, owner of Sound Data Solutions in Navarre, Florida, offers the “Sheds” line of fully customizable software products designed primarily for shed manufacturers.
“Our software enables manufacturers to track progress throughout the build process, while also supporting the point of sale by allowing dealers to enter orders when a customer places a deposit,” he explains. “The software can also track the cost and profit on every building, including materials, sales commission, deliveries, overhead, and any other cost associated with the buildings.”
Dexter, who has been in business for more than a decade, also offers versions for small manufacturers and retail sales lots that sell buildings from other manufacturers.
“It can also be used on the sales lot, allowing dealers to generate documents like estimates and sales invoices for customers,” he says about the unique software that he builds in Microsoft Access.
Each company has its own individual copy of the program, and his clients receive initial training that is tailored to them.
“All customers start with a standard set of features, and we can then develop the software further to fit each customer’s business model. No two systems are exactly alike,” says Dexter. “Having visibility into costs and inventory, along with production and delivery scheduling within a single system, makes it much easier to manage information and keep everything on track.”
For instance, one manufacturer did not realize they were losing money on a particular building.
“The software produces a profit and cost report for every building sold,” he explains. “If the end customer wants to upgrade to a 6-foot door and add more windows and a ramp, it will factor in those items as well.”
Adds Dexter, “Another success story comes from a shed dealer who sells products from multiple manufacturers, each with different financing arrangements, and was previously managing everything on paper. Now all their information is in one place, and the system provides clear visibility into what’s due in and what’s due out.’’
PROBLEM SOLVING
Sometimes it takes an objective perspective to address the financial problems many shed companies will face at some point, whether that happens after a pandemic or a rapid expansion.
Based in Colorado, John Angelo, owner/president of Angelo Advisors and RTO Lending, provides contract finance work and consulting for the shed industry. For instance, when a business faces profitability challenges or is running out of cash, he can assist with these issues.
“I have a lot of experience in the shed industry, both in sales and manufacturing and RTO,” says Angelo, who offers fundamental and operationally focused finance work for companies complex enough to benefit from restructuring.
He doesn’t offer software, but there might be a personal visit.
“I typically put my boots on the ground at some point and travel to look at operations, but a lot can be done remotely,” he adds.
With his expertise, customers who were being consumed by financial issues now have the confidence to focus on other priorities.
“It frees them up to move their business forward,” says Angelo. “Some clients experience rapid growth or the market changes—what got you here doesn’t get you there. I can go to their financial statements to understand how growth impacts their operations and finances.”
His unique background combines banking with the shed industry.
“One of my passions is democratizing access to capital,” says Angelo who previously ran an RTO company that led him to his other business, RTO Lending. “Shed dealers and manufacturers work really hard and have historically been locked out of owning RTO contracts due to capital and labor constraints. RTO contracts are a profitable part of the industry. Typically, dealers sell that building, and the RTO company collects profits on the contract.”
His option can improve their profitability.
“I provide capital so the dealers can retain ownership of the contract rather than send it to an RTO company,” he explains. “They build a meaningful long-term financial asset while accessing 100 percent of the required capital and no additional workload. The dealer owns the asset long-term; they can build their portfolio.”
For these loans, Angelo looks for strong operators with long-term staying power.
“A rental contract produces immediate cash flow and can be a wonderful long-term asset for a shed dealer,” he adds.
In the end, money and finance industries may be traditional, but there are always opportunities to improve.
“Even with technology, it still comes back to fundamentals: understanding profits, costs, assets, liabilities, and being in compliance with stakeholders,” says Angelo.
“Everybody is highly focused on software right now, but if you implement new software in a struggling company, it won’t fix the problem.”
