Can Too Much Business be Bad for Your Company?
When I started in the glass business in 1980 (it seems like only yesterday) as an outside sales rep in New England, I will never forget something a customer shared with me early in my career.
At the time, I was unaware that you shouldn’t ask to see the owner of a large company when you sell gloves and razor blades. So, when I called on a large contract glazier in Boston, Rubins Glass, and asked for the owner to start my sales pitch, I was taught a valuable lesson.
Lenny was gracious as he spent time educating me on the glass business. I will never forget the two points that Lenny made: one, a company doesn’t go out of business because of lack of work. They go out of business when they have too much bad work. The second point was that most large contract glazing companies are only one job from liquidation. Unfortunately, I have observed both of these points over the years.
The 1980s remind me a lot of our economy today. Inflation was a real issue, and most companies had trouble dealing with it. In today’s market, inflation can cause your business to end up with bad business. You need to be careful not only to watch your costs and be able to share any increases with your customers but avoid other issues that can affect future work you have already booked.
One tactic is to delay projects.
This tactic can get out of control when other trades experience the same material and labor issues that delay your ability to get on the project. A week or two of paying a full staff when you are waiting for the call to get started can eat into your profits at the end of the year more than you think. It also will limit the amount of work you can bill that month, which can interfere with your next job and lead to late payments to your supplier.
Another issue that can put you into bad business is not watching the general contractors and building owners that you work with upstream. You might have worked with them for years and always done well. However, in today’s economy, they too can be victims of the same issues. As Lenny said, large contractors can also be one bad job from holding up payments to you. Don’t be afraid to run credit checks on your large customers. This is a time to add penalties to your contracts for delayed contracted job dates or to get payment on products that you have already paid for that just sit in your shop.
Last week, I was at a glass conference where everyone seemed upbeat and busy. I did talk with one large Los Angeles glazing contractor who told me that he saw too many of his competitors underbidding jobs and not including some of the glass price increases in their future quotes. He was staying away from these projects.
Rubins Glass is long gone, as are many large glazing contractors that I knew in the 80s. Keep Lenny’s advice to a young upstart and you won’t fail.