Big sale keeps Diebolt in business

LAHARPE — Don Diebolt had to act fast.
In less than a week he had to raise $1 million to satisfy loan requirements, or risk losing his business.
From Dec. 6 through this past Monday he held a sale at his lumberyard east of LaHarpe. By Tuesday, he averted default. Of the money the sale raised, $500,000 went to reduce a $2 million loan and the other $500,00 will be used as operating capital.
From 7 a.m. to midnight for five days straight he and his crew conducted the massive sale, which started at 20 percent off and increased to 40 percent off on the last day of the sale.
“That’s how you raise cash — fast,” he said. “I traded inventory for dollars.”
Monday’s sale garnered 1,056 transactions. “We didn’t exactly make money that day, but we raised cash, which was our goal,” he said Wednesday afternoon.
Each day as the prices were slashed, sales grew. Thursday’s transaction tally was 200, Friday, 300, Saturday, 518, Sunday, 670 and then Monday’s bonanza.
The bulk of the money raised came during the first two days when lumber, insulation and drywall were sold. “That was all gone by the end of the third day,” he said.
Another big-ticket item was the sale of building plan packages, accounting for $225,000. The other $700,000-plus in sales came from shingles, lumber, sinks, tiles, power tools, hand tools, vanities, faucets, fixtures and the many other items the massive store carries.
Prices are now back to normal, though many of the shelves are somewhat bare.
Diebolt plans to restock, but not near to the levels of previous years.
“I’ll put back $200,000 in inventory,” he said.
Once burned, twice shy.

HOW DID IT GET SO BAD?
Diebolt can pinpoint the start of the slide.
November 2009, sales were down, and stayed down.
“I didn’t get my inventory down fast enough,” to weather the recession, he said. “I didn’t know how long it was going to last. I should have had a five-day sale like this two years ago.”
By 2010 and 2011 he had lost everything he’d built up from his banner year, 2009.
“Then, I had $3 million in inventory and 45 employees. That spring we had a lot of storms,” he remembered. “Every house in Bronson needed a new roof. Business was up 42 percent over the previous year.”
Diebolt purchased the business from other family members in 1999, when the value of the business was $1 million. At its top, Diebolt put the price of the business at $6 million, including inventory, land and equipment and the sister businesses of Lifetime Surfaces and Kitchens and More, operated by Don’s daughter, Michelle Diebolt-Smith.
But the recession held a firm grip on Diebolt’s business when construction came to a standstill. It got to where he and his wife, Susan, cashed in their personal savings plans to help finance the business.
Don began to fall behind on payments to the bank. “I couldn’t make the interest, much less the principal on the loans,” he said. The interest alone averaged $96,000 a year.
When he fell behind on payments, his 5.95 interest rate was jacked up to 7 percent.
He tried to secure a loan through another bank to help pay his debt, but that fell through, he said.
“When you lose money for two years, nobody wants to loan you money, despite the fact that this year things have started to pick up,” he said.
For the first half of the year, sales were up 10 percent over the previous year. By fall, Diebolt has seen a 20 percent increase in sales.
“I’m like a farmer who goes two years without rain, and now that it’s starting to rain, it’s too late. The turnaround just took too long in coming.”
Diebolt has seen an uptick in new housing construction, including stand-alone garages and post-frame buildings.
“We’re building by far more compared to last year,” he said of his business.
Perhaps that why Diebolt, 63, isn’t ready to throw in the towel.
“Oh no, we’re going to be fine,” he said. “I’ve had heat before.”

BUT PERHAPS not quite this intense.
Time had run out, the bank said, and offered him a deal which included he sign the deed of the company over to them.
“So if I stumbled once, the business would be theirs,” he said. “I wasn’t about to do that.”
The alternative was to raise a large sum in short order, or legal proceedings against him would begin.
“When the sheriff came to serve me notice, I was surprised,” he said in his typically understated manner.
The terms gave him six days to raise the cash.
Post-haste, Diebolt went into action.
“I went to the Register to work out a rough draft for a full-page ad announcing the sale. An hour later, it was good to go,” Diebolt said. The ads ran in five newspapers, including Chanute, Parsons, Ottawa and Fort Scott.
“We reached a 100-mile radius,” he said. “The ads worked. I don’t mind giving the Register credit for getting the word out.”
Diebolt said he holds no hard feelings against the bank. “We’re good,” he said.
He expects to maintain his work force of 35 employees and its $1 million payroll.
“We’re back to business,” he said. “In fact, by Monday we’ll have received 20 truckloads of lumber, oriented strand board, shingles, drywall and insulation. What was sold out, is now restocked.”