That's an ancient Chinese secret
Senior Member
That's an ancient Chinese secret
Senior Member
With two sons who have MBAs, I keep getting asked the question: "When are you going to stop thinking like a shop owner and start thinking and acting like the owner of a real business?" When those words come from sons, they sting a little, but they're right. As long as I plan and act like a little shop owner, I'm going to stay a little shop owner. When I start running the business like a real business owner, I'll start growing. Sometimes I have to ask myself whether I want to be a technician who enjoys running a CNC router or whether I want to run a business and let others run the router when necessary.
Sometimes I have to remind myself that when I bought the Shopbot, I had to throw out most of my previous knowledge about running a router. A little hand held router can't do the things that a Shopbot can. There are better, more efficient ways to cut material. Thinking that I should only make 1/8-inch deep cuts at 1 or 2 inches per second in particle board is not very productive. Learning that I can make that cut full depth at 10 inches per second is more productive. Insisting that shallow cuts at slow speed are the only way to run a router hurts no one but myself. In the same manner, clinging to my concepts of how to run a business can hurt just as much as routing the old fashioned way.
Senior Member
Rob,
I as many have mentioned here can appreciate what you are relaying. I recently refused to submit a tender for a governemtn contract, as they would not meet my policy of 50% down and balance on delivery. This was very difficult for me, and I even added salt to this wound by finding out the next day that my tender would have one as only one other sign shop supplied a tender and I was literally a few dollars cheaper than them. My concern was, mostly timim=ng of the contract. The tender needed to be submitted by the 21st of December, and the work supplied by the 27th of january. With a 2 week shutdown for suppliers it would reduce my real work hours considerably, and then they wuold not pay until 30 days after the 27th of January, which realistacly wuold be march, and that was only if all billing was accurate. This would force me to jump through their hoops to provide them with a spectacular product. It would also mean that I woul have to by material on Dec 22nd supply the job for the 27th of jan 35days later and then wait an additional 30 days in a perfect world for payment, so stretching my cash over 65 days if all was in order in the world. As I do not take terms with my vendors, I can ussaully leverage some pricing. And I also do my best to pass that along to clients. But with faceless corporations or governmants that gets lost, to the point with this contract they had suggested I increase my prices to offset the nuisance factor for waiting on the money. That pissed me off as it was a governemtn contract and who's goddamn money were they really spending at the end of the day...Mine.
I also had a what I would call a really "good" client who requirred work for the caribean that I had I great relationship with. They were aware of my policy, which even as they were aware of I repeat with each purchse.
on this job they had a time crunch for the opening of a new business in Barbados and needed a good size storefront sign. The initial opening date was set, and they had a container that would be leaving about 8 weeks before the opening date, wich would give me about 3 weeks to accomplish artwork, renderings, approvals and production. Tight but I could do it. Ok get me a deposit and let's go.... Simple enough. This opend a new can of worms, as they would have to get a bank draft on their Barbados bank accont and have it mailed to me...hmmm no deposit no starting... mail from Barbados, waiting for a draft to clear. not gonna happen.
So as they were good clients I started the sign as I knew I would be geting caught somewhere. I carved the sign components and primed them, as it was all in stock material so no real cash outlay so far. Still no deposit had been sorted out at this time to the point my main contact was mad at me for not accepting credit cards to help him with this problem. I in foresight had applied for credit card acceptance and it would be about a 10 day delay, but frankly I only would do this as a last resort, as it does cost money out of my pocket to process credit cards.
The client and I got into a real heated debate as he felt I was not being accomadating when in fact I had been more than accomadating by starting their piece with out a deposit despite our company policy (my distant Bastard, so I still look like the good guy).
In the end their construction guys were behind schedule, so it gave them some wiggle room, that allowed me to get my credit card processing in place and I was able to process 90% of their transaction before I shipped there sign and the remaining balance on the day I shipped.
So even in a perfect world with "good" clients it can be very frustrating but the best part out of that was me getting set up to accept credit cards and my Credit card sales for november alone were about $6000.00 as clients were more than willing to offer that for a deposit, it really is much easier now, and at the end of the day I do not have as much stress, yes it costs me roughly 2% but I burn up more than that in wasted man hours chasing money.
Most big companies have expense cards, that have ridiculous limits on them so They would realistacally be able to purchse big items, and they like the fact that they can earn air miles as well.
Dale
Senior Member
I think it's been pretty well stated by other posters above but to add my 2 cents...
It seems to depend on the area in which you work. In central Florida there is a lot of work floating around and I've never had a problem with large deposits. You have to do what you have to do when the bills need paid but I have turned down the few jobs where the client didn't agree to my terms. I go 50% down, 30% before first cut and 20% on delivery. This way I am covered no matter what happens at any stage in the job. Anyone not willing to pay this will probably end up being trouble in the end so it may be best to avoid them as a client. Again, I realize that different areas are not going to support this practice but there is one other factor that I would like to mention. I think that confidence and attitude during your presentation and your proposal matter. In other words, if you go in with a shy and appologetic attitude, in effect begging for your deposit, you are less likely to get it. I am not cocky by any stretch of the imagination but I am confident enough in my work that I clearly and unappologetically state my terms in a way that the prospect knows it's not negotiable. They can either accept my terms and get the quality they want or they're welcome to go somewhere else with better terms and HOPE they get the quality they want. Once I had enough in my portfolio to show and prove my quality I have had no problems with this approach.
Senior Member
Many thanks to one and all for your help here. I take it you all sense my frustration, some of you don't quite grasp what I'm saying, probably because I've vented a bit in my comments and seem to have given the impression that I'm not covering my bases. I do have a contract that states all the standards in regards to payment, penalties, etc... I do require said contract to be signed and accompanied by 50% down or a PO from purchasing. What gets me is when a large company, for hypothetical assumptions lets call them Cako Calo, signs and sends a PO then fails to abide by agreed upon terms, stretching out payments to 6 months. There's not a lot I can do about that other than just walk away from the work, which is where I am currently at. They don't give two squirts about paying that 1.5% penalty, but even that becomes a battle (more wasted time and energy) in the end.
Sigh... I guess I just wasn't meant to be a businessman, I tend to take it too personal when I fear for my family's well-being which has occured too many times when my accounts recievables top 20,000 or more at a time and I scramble to keep the cashflow intact.
My comments to the fact that there are always others to step in do the work are a bit misleading, I don't fear competition, I relish it. When my products are compared side by side to the "competitor's" 9 times out of 10 I get the repeat work due to the quality and level of detail we strive for here. This in spite of the fact that my pricing structure is usually higher than most others. That comment was thrown in there to illustrate that if I walk away, there is an endless stream of Rubes willing to take the payment abuse that I am no longer willing to tolerate. Unfortunately this weakens my position and gives me little or no leverage as quality matters very little to BIG anymore, what seems to matter is that LITTLE will gladly get stepped on to do Cako Calo's work because it's brings some level of Prestige, and because they don't realize what exactly they are getting into in terms of actually getting paid. In a lot of ways it's all a big shell game, or maybe it's more like "whack-a-mole"...
Unfortunately the big companies expect you to conform to their practices. They really could not give a darn because there are others out there who will step in and do the job, as you said.
As to being a good businessman or not, the decision to do the work on their terms is the one we, as small business, need to make.
Unfortunately, it seems to be a matter of "suck it up" or "move on".
We have put off offering our products to large companies until our grass roots cash flow improves enough to handle the payment time lapse. And even then, there is a lot to be said for staying small and keeping out of that muck.
Chip
Senior Member
Unfortunately, you are correct, that's the choice we face. It would be better if we could all band together and put our collective foot down to these shenanigans, but that ain't gonna happen, it would take a LOT more than the folks who frequent this forum to make any sort of impact.
The thing about it is that it's not just a payment policy, it's a game, it's a way for BIG to bleed the small guy out until he's just willing to lay down and take it, or he goes away and another small guy steps into the breach, either way its no good for any of us. What we are really doing is financing BIG our work for peanuts, enabling BIG to "produce" our product without having to invest anything into the process other than some measly 1.5% monthly charges, thus saving massive costs on insurance, employees, and typical overhead items that we all subsidize BIG on. If I could skip my liability insurance, workmans comp, and SS payments, and instead simply pay a 1.5% penalty on my payables... why I'd be like a pig in ...
Well, you know what I'm saying ;)
Again, this has been a good discussion, I know I whined excessively, and you all listened well, beyond that your words and ideas have helped a lot.
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