This has been bouncing around in my brain for a week now so I guess it's time to let it out.I have a friend, let's call him Alton, who built a wholesale business from scratch to success and sold it to his brother-in-law. No, this isn't another one of those bad brother-in-law jokes. On second thought, maybe it is.Alton started out buying onyx (a colored rock that's soft and easily carved) animals down in Mexico, hauling them across the border and selling them from his van to “travel stores” across the southwest.Travel stores are those roadside purveyors of pralines, purple snow cones and grape soda located alongside long empty stretches of highway that let you use the bathroom in the back of the store in hopes you'll become enamored with the souvenirs located in the front of the store. If you've ever stopped to see “The Thing” you know the kind of place I'm talking about. Alton went through a lot of heavy duty tires hauling all them rocks around.Eventually he switched from self-delivery to UPS and settled into a rented warehouse in an industrial park. That's where I met him. He'd branched out to all manner of souvenir items. If you wanted a couple of pounds of genuine Indian arrowheads (Carved by a genuine Indian – in New Delhi.) Alton's was the place to come. He mentored me as I grew my surplus business from flea market stand, to flea market stands, to quitting the day job and opening a roadside stand, to a leased storefront, to two leased stores, to a my own stand alone building on my own property. By then Alton had already done the same (maybe I was emulating him?) and had built his wholesale business up to the point where he was ready to retire. (In his forties!)About the same time I put my company name on the building I'd had built to sell my OD treasures Alton sold his thriving business, the building and the land it stood on to his brother-in-law (let's call him Bob) and retired. Alton stayed around for a few months to show Bob how to use the five by eight cards he used for contacting customers and other ins and outs of the business before going into full retirement and leaving town.To understand the magnitude of the mistakes made next requires some background. For one thing, Alton had two secret weapons.Remember, Alton was a wholesaler selling to retailers so if the fright for a few dozen onyx animals and a “Real Japanese Samurai Sword (made in China)" came to ten dollars Alton would throw in something extra which he normally sold for five dollars. Ma & Pa's Travel Store & Culinary Castle Of Corndogs could then keystone the item and retail it for ten dollars thus achieving “free” freight. The cost to Alton was less than five dollars (remember he normally sold the item for five dollars) and grateful travel stores across the country took Alton's “free freight” into account when deciding who to place orders with.Alton had also established accounts with three of the big names in travel stores. Companies the size of “Running Indian” and “Stuckey's” (although not necessarily those companies) regularly placed large orders with Alton.Once he was in control, brother-in-law Bob promptly discontinued Alton's free freight incentive (and a few small customers). He also transferred Alton's sales cards to computer files. However, he didn't bother to type in all the data Alton had accumulated on those cards before throwing them away!Those cards were Alton's other secret weapon. Each card had the customer company's name, address, phone number and Point Of Contact (the only information the brother-in-law bothered to transfer) along with names of the names of the POC's spouse and other “friendly” information Alton used to soften up the customer's sales resistance during a sales call.But the most important data that didn't get transferred to the database was Alton's notes on what that particular customer had bought from Alton. Shish Kabob Bob's (“The World Famous Home of Rattlesnake On a Stick®”) didn't have to worry about running out of Rattlesnake Eggs (Yes, Alton actually sold them, although they aren't what you think.) because Alton would ask if he needed any more during his monthly “visit” with that customer. When he'd finished updating a customer's inventory Alton would ask if Pinnacle Pete's Porcupine Ranch & Petting Zoo would like to try some of the “new” novelties or “hot” fad items “just in” this week. It was a long laborious process, but any salesman will tell you you're lucky to make a sale on ten percent of sales calls. Alton did better than ten percent, much better.Nope, brother-in-law Bob threw all that info away and sat back waiting for customers to call orders in to him. Alton's “free freight” had made his company stand out in the minds of the small travel stores. Without it and in the absence of regular sales calls more small customers drifted away.Then there were the three big travel store chains, remember them? Over the years Bob managed to alienate all three of them. One called about a broken covered wagon and was told to glue it back together. Another had a similar experience and I don't recall why the third member of the big three stopped buying from Bob. When Bob finally called Alton and told him he wouldn't be able to make the payments on the business and the building Alton came back into town and tried to patch things up with the big spenders. He managed to talk two of them into ordering again but the third was so pissed off he refused to buy from the company as long as Bob was there. Alton probably could have helped promote sales with the smaller travel stores too, if he'd had anything to work with, but it had been years and all that “useless” data had long ago been flushed from the system. One incident from that time period illustrates why Bob's business was in a tailspin. After the terrorist attack on the Twin Towers there was a tremendous upsurge in patriotism in this country.American flags were gold (we sold out in a day) and nobody had any. I'd stayed with Alton's old company, for the items I'd bought from him, as much out of laziness as loyalty to a departed friend. But, when I couldn't get any American flags from Bob I dug into my trade journals trying to find another vender. It was the same everywhere. Wholesaler's stocks had flown out the door in a day and it would be weeks before manufacturers could gear up to the new demand. I passed the information on to would be customers and watched lost sales walk out the door.But Bob believed (giving him the benefit of a doubt here) importers claims that boat loads of flags were just days away and pre-sold flags to, among others, a guy I know who then “sold” a large number of the flags, and the promise of imminent delivery, to a government entity.Weeks later, when the flags finally arrived the importer had placed a premium on them. Rather than eat the small price increase on merchandise he'd failed to deliver on time, Bob told the guy the flags would be more than the agreed upon price. The guy went ballistic and swore he'd never buy Bob's merchandise again, none of it, not any of it, never ever again!Going to the guy's shop and apologizing profusely for something he wasn't responsible for, Alton managed to talk this guy too into agreeing to at least give Bob another chance. It's a testament to Alton's salesmanship that he was able to repair so much of Bob's self inflicted damage in such a short time. Having done as much as he could, Alton returned to retirement.Fast forward to now and I've got a new (to me) freight scale, 2,800 high quality American flag pins, a few dozen flags, 71 woodland camo bandanas and assorted other goodies sitting in my store. All purchased for pennies on the dollar at the court ordered bankruptcy sale of Bob's business a week ago.
What a sad story. And the moral is never to trust your BIL. :-)
And the moral is never to trust your BIL. :-) Or maybe it's never sell your business for anything other than all cash, even if it's to your brother in law. :-)Inpho
<<And the moral is never to trust your BIL. :-) Or maybe it's never sell your business for anything other than all cash, even if it's to your brother in law. :-)Inpho >> It's easy to over value small businesses, and this episode illustrates why that's the case. The style and personality of the original owner is a large part of the reason for its success. Perhaps the extrovert type that enjoyed chatting with people on the phone and who could imagine what would work for other people.The brother in law sounds more like me ---introverted and not very intuitive. That kind of thing might be plenty to kill off a business that needs a different style to be succesfull.And good for you if you can find someone to unload your business who has lots of cash to be able to give you. Getting out of a small business is often as much of an art as building one up. The smart business owner will always be looking at how decisions will affect his ability to sell the business to someone else, if he can sell it at all.Seattle Pioneer
"Alton" still owns the building and land which he is trying to sell right now. He lost all the money still owed on the sale of the business and he doesn't want to step back in and resurrect the company so that money's gone, but he has retaken possession of the property and will get something out of that.We had lunch together after the auction. In Texas anything permanently affixed to the building is considered to be the landlord's property and he had to step in to keep the auctioneer from auctioning off the paper towel dispensers off the walls in the bathrooms! LOL
I found this a wonderfully cautionary tale of commercial myopia. I thank Dave for passing it on to all of us.
One odd thing is that lots of people don't quite realize the power ofa paper-based "filing" system (ie, the 3x5 cards). Even when I rana _computer store_, which you'd think would be the first business toautomate its processes, we realized that the expense and inflexibilityof a computer-based system wasn't worth the effort. We ended up witha scheme with each customer having a file, with all the customerinvoices and RMA's, and a bolt of paper in front of the file witha contact history. (There's software nowadays that does this sort of thing, but that wasn't true until quite recently, and only inexpensive "customer relationship management" software...) Since wedealt with corporate clients almost exclusively, the number of customers wasn't too large, so if Bob from Genutech called needing to order three notebooks for Sales and a few memory sticks, we'd know that he had a problem with a hard-drive last month that we fixed, and we'd ask himabout it. We'd also know that his daughter Jen was going to the statesoccer playoffs - so in this call, we'd ask how her team did. Alsoif we didn't hear from Bob for a few weeks, we'd call him to see if he needed anything...Ultimately, I ended up selling the business to my partner (amicably) tostart a software business (!) and the store is still in business inthe LA area. THis experience has always helped me in designing software, and to not overestimate the "need" for computerization ofeverything...--Foobarista
And the moral is never to trust your BIL. :-) Or maybe it's never sell your business for anything other than all cash, even if it's to your brother in law. :-) My take: Never enter a business relationship with someone like that. By letting "Bob" make payments for the biz, Alton bcame Bob's banker. Why lend money to such a jerk/incompetent/neophyte?
In the first tale of business failure it sounds to me that the salesperson was unwilling to go "beyond the call of duty" to earn sales.I view myself as a salesperson to a degree, and I operate a large family childcare facility. But I do very well and have maintained 80% of my client base for longer than 3 years, not to mention earning 6 figures a year for the last 2 years. But it takes doing the extras. I have taken many of parents to work and picked up my share of children from home, and delivered them when necessary. I teach the children, and not just sit them in front of a tv, or simply send them outside to play as I have seen many "providers" do. If I do not see a child for a day, I am on the phone to their parents so that I know what is going on.In this economy, if your business is to survive you cannot "wait by the phone" you must do the extras and go out of your way to make people feel special, and that you care about their situation. That is not just good salesmanship, that is being a good person.Kristy
Being a good person, Doing the right thing, Going the extra mile, Underpromising and overdelivering; these are other names for being a good salesperson.
I started my mortgage business two years ago with a firm set of values I wanted to incorporate. I have had to give refunds even when I was not the reason for the loan failing. It wasn't the clients fault either so I felt since I had chosen that particular wholesaler it was my responsibility to make it right with the customer. Or it was just bad circumstance that wasn't anyone's fault. However, it is my business name they will remember so I gave them back any money out of pocket. They seemed to appreciate it.I've kept my rates very good and fees as low as possible. So hopefully I have built up a good client base.Now that rates are moving upwards, I'll be interested to see if all my goodwill gets me a couple of loans extra. I have kept my overhead extremely low so I can stay in business with my emergency fund for quite a while. Lots of mortgage business will be out of business pretty soon. Good business is good business.
<<And the moral is never to trust your BIL. :-) Or maybe it's never sell your business for anything other than all cash, even if it's to your brother in law. :-) My take: Never enter a business relationship with someone like that. By letting "Bob" make payments for the biz, Alton bcame Bob's banker. Why lend money to such a jerk/incompetent/neophyte?>> That's easy to answer. Selling a small business can be a difficult chore, and people who may have the interest and skills needed to run it may not have the money to buy it. So owner financing of a small business is a common feature of selling a business.Unfortunately, in this case, the brother in law had neither the skills needed to run the business nor the cash.Poor decision by the seller, I'd say, if he really wanted to get his money. Perhaps he was just interested in getting out. Seattle Pioneer
Well, don't keep us in the dark, what is the name of your business.
Unfortunately, in this case, the brother in law had neither the skills needed to run the business nor the cash.Which probably highlights the common tendency to throw good sense out the window when it comes to family.Every time I have checked out a possible business to buy, some time spent on-site, learning how it works, figuring out if it's something I both want to do and could be good at, was part of preliminary discussions. Had I not already good professional ties with the person I sold my business to, I would have insisted on the same preliminaries.Lesson being: even when it's family -- perhaps especially when it's family ... bring in the lawyers, the accountants, the professionals who are trained to make this type of transition. I'm InLivingColor
A small correction ... it is not "vender" .... it is "vendor" ....madame butterfly
To: Roseanne I am the proud president of Boulder Mortgage Company in beautiful Boulder, Colorado.
A small correction ... it is not "vender" .... it is "vendor" ....madame butterfly Madame,vendorvendor (vèn´der) nounVariant of vender.Excerpted from The American Heritage® Dictionary of the English Language, Third Edition © 1996 by Houghton Mifflin Company. Electronic version licensed from INSO Corporation; further reproduction and distribution in accordance with the Copyright Law of the United States. All rights reserved.
<<In this economy, if your business is to survive you cannot "wait by the phone" you must do the extras and go out of your way to make people feel special, and that you care about their situation. That is not just good salesmanship, that is being a good person.>>Seems like a good business model is always a good business model.....at least, some of the time.Like you, I've always tried to provide a service to my patients that's "above and beyond"....not necessarily as a marketing tool but just because it's the "right" thing to do. For me, it's doing to occasional domeciliary visit for wheelchair-bound individuals who don't need sophisticated (and profitable) dentistry but who would need to arrange ambulance transportation to travel the 1/4 mile to my office to have their loose crown recemented if I didn't do this small thing for them. Opening the office for strangers who can't reach their "regular" dentist over a holiday weekend. All the other incidentals.....same day emergency appointments, on-time appointments, immacualate premises, good quality work etc. etc....go without saying.This sort of 5* service certainly gets your name around and is worth more than any other method of marketing I've tried, if you judge success by the number of phone calls I get from relatives and friends of satisfied patients. However, if my office manager doesn't answwer one question correctly, all this hard work does nothing for me.The question????......"Do you accept my plan?"....as in "Can I come and avail myself of all the advantages that you offer over the competition.....advantages that I really, really want......but can I have it for FREE?" Three guesses what the correct answer is!!For every business owner who is thriving by providing excellent customer service and quality of product.....just hope and pray that the employers in your community don't see fit to offer "employee benefits" for whatever it is you provideVivienne
<<A small correction ... it is not "vender" .... it is "vendor" ....>>A really, really, REALLY small correction.An embarassingly small correction.A correction so small, it's enough to make a person wonder why anyone would bother pointing it out.ViviennePS.....does anyone remember WAAAY back when I was asking for the crew's reactions to my dental trivia?? A load of what I thought were quite amusing factoids designed to make folk remember where they heard them. Remember some plonker felt it was a worthwhile criticism to point out that "as per Pliny the Elder" should've been "per Pliny the Elder". Talk about focussing on the unimportant
Talk about focussing on the unimportantIt should be focusing.;)yellowcard(just joking)
<Seems like a good business model is always a good business model.....at least, some of the time.>Absolutely. I was fascinated by and recommended the original post in this thread. The reasons for the demise of the business under the BILs care are only too clear. Unfortunately doing what the original owner did does not necessarily guarantee success or it may do at one stage of your life in the business but not at another.I'm having lots and lots and lots of problems with my business. Yet we 'qualify' (at about 110%!) under all the customer care issues raised by the first post. I'm currently attending a marketing course. I've been on such things before but another bite at the cherry was prompted by our current situation. My plight as the only business really under immediate threat has engaged the course tutor to the point where he is giving me individual tuition sessions (this is allowed under the course funding rules) and all the other course members have thrown themselves into trying to provide solutions too.But even the course tutor has admitted to feeling helpless in the face of the fact that comments from customers define us as just the best business ever. Yet we can't make enough for basic survival (and my accountant confirms that I've got the tightest grip on the overheads that he's come across). The tutor has also admitted that we seem to have tried just about every marketing method known to small businesses without success - or at least we've been successful in the sense that we've had the publicity on TV & radio and many of our customers have a sort of second unpaid job in recommending us to others, but in the end we are being defeated by the lack of footfall in the shop.This isn't a despairing post. The tutor came again today and he and I and the staff brainstormed one more time and we did come up with a few more approaches to try and we are going to try! But in the end you can do perfect marketing, have a really good product range, have the best customer care you can come across and still not be able to make it work.Lynn
I am currently self employed, but for years was an business banking account manager for a major Canadian bank. I have seen the story you told played out several times during my career with the bank and it was usually a business that was "sold" to children of the original owners. Often the story was painfully similar to the one you have related and reading you post brought back a flood of memories.No matter the nature of the business, I always tried to impress upon business owners that what they were selling was service. Didn't matter if the product they were pushing was hardware, books, clothing, tax accounting, fast food... whatever, if they were going to succeed, they had to believe that the product was the means to the end. The end was service.It matters little if you have the best product at the lowest price, if you don't WOW you customers with service, the guy that does will eat your lunch, even if his prices are higher than yours.Alton's downfall was not making sure that his sucessor understood the value of the service he had built up over the years. It was an asset he was selling and he should have made sure Bob understood its value.Bob's downfall was thinking that he could expect the sales that Alton had built up would continue, based soley on the fact that there was an established clientele. He did not have the necessary training to go into business for himself, and didn't realize that he was buying an asset that he eventually threw out.Sad for both parties.CheersBob (No.. not that one!)
"This sort of 5* service certainly gets your name around and is worth more than any other method of marketing..."Vivienne, let me encourage you to keep up the excellent customer service, trust me I understand your pain. My childcare facility is state subsidized (usually at about 2/3rds my regular rate). If my grandfather built a million dollar business selling hay (yes..the stuff that cows eat), all by word of mouth and referrals of other customers, I have faith that you as a dentist and I as a childcare provider can as well! Greatest of luck to you, the money will come.Kristyps: I do not need any spelling corrections from any future posters on this thread ;)I already know that my spelling sucks!thanks!!!
But even the course tutor has admitted to feeling helpless in the face of the fact that comments from customers define us as just the best business ever. Yet we can't make enough for basic survival (and my accountant confirms that I've got the tightest grip on the overheads that he's come across). The tutor has also admitted that we seem to have tried just about every marketing method known to small businesses without success - or at least we've been successful in the sense that we've had the publicity on TV & radio and many of our customers have a sort of second unpaid job in recommending us to others, but in the end we are being defeated by the lack of footfall in the shop.Lynn,Is it time to move to a better location?
<Lynn,Is it time to move to a better location?>Yes! And I'm trying to do just that but I'm tied into the current lease for another 18 months approx. I have the right to sub-let and got one or two interested people but they felt the remainder of the lease was too short given than they both wanted to put money into internal alterations because they wanted to run businesses which were very different to mine. One of these however was willing to negotiate a new lease with the landlord - this would give her a few years security onsite and free me from the lease. However under UK law as she want to run a cafe (upmarket Continental type)and I'm a retailer she has to apply to the local Council for change of use. I don't know how this relates to US law - the law re: business seems very different US/UK.We've just come to the end of the period during which members of the public and surrounding businesses can 'comment' or object to the proposals and now have to wait for the relevant committee to deliver its verdict. Actually the proposed new business would be very good for the street concerned - just wish it had opened in an adjacent building as it would have helped us a lot - so I'm hoping it will go through. But the person proposing to take over the shop has only a verbal agreement with the landlord so far - not wanting to get into the costs of negotiating a new lease via solicitors until she's got change of use.My landlord is pretty positive re: negotiating a new lease with her - I think he's seen the writing on the wall with the reduced footfall in the area and is afraid I'll go bust and he'll be left without the rent. I know he is heavily over-committed after buying up buildings and converting them as fast as he can and being caught in the local downturn in the economy. Nevertheless it is second nature to him to drive the hardest bargain possible and I'm afraid that my proposer who has done her costings down to the last penny will pull out if he tries to push things.It's all taking so long and I can't really look for new premises myself until I know it is safe to start paying rent on them because I'll definitely be getting out of the current lease.Sorry, I thought I'd explained this before but I post on both UK and US Self-Employed (find both very useful in different ways)and I sometimes forget what I've said on each!Lynn
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