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Over the past few days I’ve tried to explain this to a few people with varying degrees of success but I’ll try to set it out in a short and clear form. 😕
I hold a strong belief that working with anyone is a partnership, it is a two-way thing and that a lot of what we do for anyone is an unseen cost saving.
Anyway, in days of old in a land far away manufacturers used to actually hold their service agents in high esteem and give them many mechanisms to support themselves, financially and otherwise. Sadly those times have passed it would appear and this is partly the reason for this post as well as to provoke a bit of thought.
If a manufacturer approaches you to work on their behalf instead of being greedy think it through a bit. Think on what you are actually being offered and look at it from a different angle, myself, I like to look at it through the eyes of a breed I don’t much like, the business manager at the bank. 😉
You have to sit back and look at the offer on the table as an investment in your business. Is the contract an investment or a liability, is there any security in it, is there longevity in it, can you recoup any potential costs to service the contract? All these things are vital in deciding the value of a contract, it’s not just the rate that is all important, it has a huge bearing on it I grant you, but it’s not the only thing to be looking at.
On most of the contracts we are offered in this industry, barring a few that run on the strength of a “gentleman’s agreement” with people we trust, have little or no value in the agreement. We are offered little more than three months security and we all know just how secure that three months is through bitter experience. There is not high margins on offer so there is an extremely long payback time on any investment that has to be made in staff, vehicles or anything else required and when you take into account the short period of termination notice many contracts instantly pose a serious risk to the business. You don’t need to go to business school or do a degree in economics to work this out, it’s plain common sense with a little applied thought.
However the true value can be seen if you ask the bank for a loan on the strength of these facts, they are not exactly falling over themselves to offer you cash are they? They’re not stupid, that’s why and they see the above as a liability, not an asset. If you decide to wrap it up then there is little, if any, value in the business and that’s been illustrated on many occasions by businesses failing in this game and nobody wants to buy them, simply because there’s nothing of any real value to buy.
So that makes me wonder, if I can’t see any value in the contracts, the bank can’t see any value in the contracts and looking at it from that angle I can’t see any value in the business then I would not invest in it. I have, but that’s through a history in it and being “roped in” to a degree, but I’m sure many of you will understand that.
But it illustrates a far more worrying aspect to me. If all the above is true, which in my opinion it is, then a manufacturer coming along and offering little or no support, no stock without cash up front, no backup in any other way and a three months termination also can’t see any value in my business and they are not prepared to invest in it.
If the bank isn’t game, the manufacturers don’t want to know and we can’t see the point then why on earth do we invest in the businesses to scrape a few pennies out it at the end of the month after all the other vultures have had their fill?
K.
Re: Invest In Your Business?
Ken,
Can I suggest you also ‘copy & paste’ your comments in the General Trade Forum AND the Rumour Mill as well for even greater impact 🙂
Martin
I may well just move the thread over sometime over the weekend if you think there is the interest in it. I won’t “cross-post” it.
K.
Re: Invest In Your Business?
Ken,
You must!!…..posting it here is fine, and thanks for that, but Hey! you’re ‘Preaching to the Converted’ here mate 🙂 . We know, we are with you, now get the message across to those in the open forums… ASAP 🙂
Martin
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