The Gates Are Closed

“So if we purchase 40 cartons, you can give us 15% discount?” I asked John, the sales rep.
“Yes, that’s right,” John said.
“Can you write the quote on paper, John?”
“Sure,” he said, writing it on his business card. Which seemed a bit informal to me, but John looked confident, so maybe it was common practice.

It was a good day when our supplier decided to give us a massive discount. We had been talking to a customer about a bulk purchase of rubber gloves. They were happy with our services, so it was just a matter of prices.

We were confident we could win the contract. And off we went to negotiate, armed with great discounts from our beloved supplier.

We got the deal. That’s the good news.

The bad news was, John, didn’t honour the agreement. A quote written on the business card was not good enough for him to acknowledge. John said it was out of his hand. He said something about top management didn’t want the smaller distributor to wreck the market.

We couldn’t get the products at the prices promised to us.

It was a massive blow.

A good day turned into bad weeks, and then months.

In the meantime, our customer got the products from someone else. At least they seemed happy. We still had a good relationship, so hope was not lost yet.

There was only one other supplier in our state that distributed this particular product. They did not bother to return our call though, such rudeness and arrogance. We figured out in the end that they were the one who secretly supplied those rubber gloves through another distributor.

No worries, maybe not our luck. Our lucky break would come eventually.

***

“Fred, this is John,” a voice from the other end said.
“Hi John, how have you been?” I said, wondering what he wanted this time.
“Look, I know we haven’t been good to you,” he said.
“Ok.”
“But I’ve been talking to top management.”
“Yes, I’m listening.”
“And we all agreed to support you.”
“Regarding?”
“You know, the rubber gloves, the one we quoted last time.”
“Oh you mean the unofficial, dishonoured, quote? Is that the one?”
“Yes, that’s the one.”
“Why the change of heart?”
“There’s been a change in strategy, and they want to work with smaller distributors now.”
“I see.”
“So, are you in?”
“I’ll think about it.”

My mind was full of all past rage and disappointment. The time when John dishonoured the quote was still fresh. And the time when our $2,000 profit went down the drain. It left a unique mark because I was looking to use the money as a deposit for a new family car. We didn’t end up purchasing the car of course.

I spoke to my wife about it. We had our usual kitchen bench board meeting.

She said we should be more careful this time. I agreed to it, considering how bad they burnt us last time. We decided to accept the offer, provided they put it on formal company letterhead. In addition to that, but we also demanded better pricing for initial stocks.

John honoured the quote this time.

We talked to our customer and got a new deal with them to supply the rubber gloves. They put in their bulk order, and then another one, and another one. It was like a dream come true. We never thought things would work out well eventually.

Interestingly, we didn’t end up purchasing a new family car. We just felt the time was not right yet. Maybe past trauma was still too fresh.

We did feel that our luck had turned though.

***

“Andrew, can you talk to Tyres West?” I asked our sales rep.
“Sure, what do you want me to talk to them about?” Andrew replied.
“Well, they owed us $12,000, and it’s overdue for more than 60 days now.”
“Ok, that doesn’t sound too good, have you called them?”
“Yes, of course, and the answer was always the same: we are going to pay soon.”
“That sounds a bit worrying.”
“Can you go tomorrow?”
“Yes.”

Tyres West was the customer who purchased those rubber gloves from us. They were usually very good with payment. The past few months, however, were a bit worrying. I had hope that things would be ok though.

The following day, Andrew went to visit Tyres West to talk about the debt.

“Fred, you would not believe it,” he said.
“What?” I replied.
“The gates are closed.”
“What do you mean?”
“I mean, the gates are closed, in Tyres West.”
“What?”
“There is no one here.”
“What, are you sure?”
“Yes, very sure, I even jumped the fence.”
“You what?”
“The warehouse is empty, no equipment, nothing.”
“What …”

Tyres West closed down. No one knew what happened. The day before I was just on a call with their accounts lady. She even expected Andrew to come and discuss the debt.

We figured out later on that Tyres West closed down overnight. And even more surprising was that we read on paper about how the company had ties with the bikie gangs. It seemed like they were not as clean as they looked.

We lost a lot of money.

What an unlucky day.

***

At home, we had another emergency kitchen bench meeting. We wrote down our expenses and tried to figure out how severe the damage was. It was bad. We were glad that we didn’t purchase that family car. Let’s say, someone up there restrained us from putting that deposit.

Our kitchen meeting concluded with us slashing certain expenses. So no more eating outs and end of year holiday was downgraded from Bali to free activities in the city. We were confident we could ride this storm.

My mind went back to the day when John dishonoured his quote. I was so furious that I sent a formal complaint to his boss. That complaint seemed to go to a deaf ear though.

It seemed such an unlucky day. But now that I thought about it again, maybe it wasn’t so unlucky at all.

Perhaps it was our real lucky day.

We didn’t realise it yet.

 

“It’s amazing how you can look back at your life and feel like you’re the luckiest and the unluckiest person in the world at the same time.”

My name is Dave, I used to work for Fred

I didn’t get enough sleep the night before. I was hungry, and the auditorium was freezing. Someone was dozing off in front of me. This preacher was as dull as a blank A4 paper. At least we could fold origami with paper.

My wife dragged me there. She reckoned it was good for me to hear some encouraging words that morning. The topic was interesting: “Among The Wolves We Work”. I have to admit it could be a very interesting sermon if not because of that old-traditional-slow-to-speak preacher.

Anyhow, as my mind drifted to another time, I heard a voice in my head (not God’s voice). It was the voice of my customer. I remember distinctly how he said something along the line of: “Sorry we still have enough stocks.” Yeah, he somehow had enough stocks for months. I realised eventually that they purchased their stocks from someone else. What I didn’t realise was who this “someone else” was.

It was “Dave”, our ex-staff. He founded his own company after he left us. And apparently proceeded to steal our customers. He had burnt the bridge.

Dave did a brief stint with me for 6 months. He was our sales rep. A very ambitious young man. Before that Dave had his own lawnmowing business. He was somewhat lazy but cunning as a snake. Hey, that was one of the creatures the preacher was talking about: snake.

A prominent voice suddenly thundered from the stage: “I am sending you out like sheep among wolves. Therefore be as shrewd as snakes and as harmless as doves.”

Ok, take it easy. Who are these wolves you are talking about? And are you calling us snakes?

As expected my mind decided to take another trip to the past. This time it was our kitchen board meeting. My wife and I were discussing how to retaliate against this attack from our ex-sales rep. We figured he did not have the buying power and logistic means. So as long as we could drop our price and reduce minimum quantity, it was basically check-mate for Dave.

And that was precisely what we did.

We dropped our price significantly, and we reduced the minimum quantity from five boxes to just one. It worked like a charm. Our customers realised their grief mistakes and returned gracefully to our care.

Take that Mr Steal-Customers-From-Previous-Boss!

My wife elbowed me.

“Did you doze off again?” she whispered.
“No,” I said, not-so-convincingly.
“This is the good part, pay attention.”
“I am.”

She was right, I kind of figured out what the sermon was all about after that. Basically, this world is full of wolves, and we need to be shrewd like snakes. The part I didn’t get yet was the dove. Why do we need to be harmless as doves? Well, at least I learnt something that morning. Watch out world, the snake within me is coming out to bite all of you wolves.

I did meet with Dave after our little price war saga. I tried to have a civilised conversation about it. Interestingly, he told me it was ok because it was just business. I was not sure if he was drunk or on drugs.

Wasn’t I the one who supposed to say that?

He stole from me, and he said it was ok?

Anyway, I didn’t want to pursue it. We said our goodbyes.

The words on the street were Dave couldn’t cope on his own and struggling to make ends meet.

Everyone in the auditorium suddenly stood up. Oh, time to sing the final hymn.

***

“Fred, how are you doing?” Tim, our old preacher, came to say hi.
“Good, everything is good,” I said.
“I heard you had few issues with your ex-staff?”
“O yeah, did my wife fill you in on that?”
“Yes she did, she also sent me here to talk to you,” Tim smiled.
“Actually Tim, I do have a question,” I said.
“Yes, fire away.”
“You know how you talk about Wolves, Snake, Doves, and Sheep?”
“Yes.”
“I understand the part about wolves and snakes,” I said. “But what’s the thing about being harmless as a dove?”
“Well, it is straightforward really,” Tim said.
“Tell me,” I said impatiently.
“Being harmless is for your own good.”
“So people won’t retaliate?”
“That’s one, but there’s another,” Tim said. “How do you think you will end up inside if you keep causing harms to other people?”
“Oh I see, I will become a bitter, back-stabbing, revenge-seeking person, with no friends.”
“That’s it.”

***

I did meet with Dave one more time after that. His business deteriorated to the point that he didn’t have a warehouse or any kind of storage places for his stocks. Everything from pick up to delivery was run from his car. I did wonder if he also slept in there, judging from the number of pizza boxes I spotted on the rear seat.

Anyway, we had a chat.

He lost few more customers and apparently decided to burn a couple more bridges with some suppliers. The way he was going, he would have nothing to sell in no time. He had to stop acting like a big bad wolf and causing issues left, right and front.

Anyway, I didn’t offer help considering how bad he burned me last time. So I wished him the best and waved bye-bye.

You know what, maybe that old preacher was right.

We are in the dog-eat-dog world. It is crucial to be shrewd like snakes.

But I realised now it doesn’t matter how shrewd we are, no one achieves success on his own. And who would want to work with someone who would stab you in the back?

Who would cause harm to your business?

Ironically, in the dog-eat-dog world of business, we are to be harmless too. And only then we could build our reliable and secure network of support.

I am glad my wife dragged me to the church that morning.

***

“Be careful the bridges you’re willing to burn when trying to get ahead. You never know when you’ll need a friend again.”

How to ruin relationships with your suppliers

***

The day is coming to an end and it’s time to load up. My customer asked if I could deliver these goods straight to his house. I don’t do this too often but business is quiet and every dollar counts. The rain started to pour ss I loaded up the goods, and it was getting heavier too.

The rain got worse as I pulled up on his driveway. I unloaded all the bags and rang the bell.

No one answered.

I tried again, same thing. Silence.

I called his mobile, then sent him a text message. No reply whatsoever.

After almost half an hour trying out the bell, the phone, and more text messages I gave up. He’s not interested in getting these goods despite his numerous remarks of ordering in bulk, growing his business, and so on.

Customer is king, they said. Not this time, this customer is just a waste of time.

***

In the world of entrepreneurship, the word ‘hustle’ seems to be the new trend. Those dreaming of becoming business owners often call themselves ‘the hustlers’. It sounds a lot like one of those Marvel’s superheroes. The problem is off course when these ‘hustlers’ try to hustle everyone in everything. Then they become ‘the shushed’ because no one wants to deal with them anymore.

There is nothing wrong with hustling, it will come naturally anyway after spending few years in the joint. You begin to notice that other people also try to hustle you, some are very subtle (pro) while some are dead obvious (beginner). Some just have no idea what they’re doing and they become what is widely known as ‘trollers’. Avoid these trollers at all cost because they bring nothing but destruction. If you’re lucky enough you can send them (trollers) to your competitors and let them do the damage there.

There is one entity you don’t want to hustle yourselves out of the market. It is your own supplier, especially the good ones.

It might seem counterintuitive since you being the customers, you should be the king, right?

Wrong.

In the world of business, no one is king. We all work together, providing different products and services. Only through a carefully crafted collaboration between suppliers, you, and customers (yes, customers too) that a business can truly survive, and prosper.

Try hustling your supplier too much and the triangle will break. Break the triangle and you break your business.

If the following items are in your to do list when dealing with your supplier, it’s not a bad idea to re-think them:

  • Pay late on purpose to maximise cash flow
  • Demand as much services as possible
  • Play the pricing game at all chances
  • Always try to buy in small batches instead of in volume to reduce cost

Show your supplier that you support them and you are in the game with them for long term. You will be amazed by the amount of support they will give back to you.


Did you enjoy the short article? I also send a dose of perseverance every week for free. Join me to get your personal supplies. (hint: click here to get them) — Fredy Namdin


Pricing In Essence

How do you explain to your customer the fact that price is going to increase again, although economy is as slow as ever?  That’s our new dilemma in recent 20% price increase from our main supplier.  We however, happily comply and in due course will pass on the increase to our customers.

The way we look at it, the cost at which we can acquire the goods matter a lot.  However, it matters more that we can still sell them at good margin without losing any previous profits.  When we start to struggle to recoup our margins then we can be sure that the price increase cannot justified, i.e market determines otherwise.

This same principle applies even when suppliers drop their price.  It might sounds fantastic knowing cost of goods are dropping, but guess what – the end results might not be so great.  Because it might be an indications that market price is also dropping.  The big question is then, are we selling at the correct pricing point?  And if we’re not, can we recoup the margin if we do sell at correct pricing point?

Seems like at the end of the day, it’s not really about choosing the cheapest suppliers out there.  Maybe it’s more important to choose those suppliers that we can work with, where we can get market insights, who can appreciate long term relationships, and definitely not those ‘playing the games’.

So, is pricing related to cost of goods, sales price, and margin?  Or is it more closely related to which suppliers you get your goods from?