What Value in Volume? (October 2005)

Before you run out and draw up the papers, and tell all of your friends that you just landed the “big one,” think about this: Why not go to your employees and work out a deal with them? Tell them that instead of the $12 an hour you’re paying them right now for 10-40 hours a week, you’re willing to give them $8 an hour to work 90-120 hours a week. Explain to them that what they lose per hour, they make up on volume.
If you have any employees left standing in front of you (with some rolling on the floor laughing), I’d be surprised. Even if you could find one or two who would agree to it, any labor agency would be all over you like Angelina Jolie on her next co-star.
Depending on where you work, you need to pay your employees overtime after 40 hours. That means you (as an employer) need to make more money per job, the busier you get.
The waving of the carrot in front of the horse does not work for this donkey. I would rather have 50 well-paying customers than one slow paying, sweat-shop-owning slave driver who feels that two-thirds of the amount needed to do a job properly is great money.
Let someone else scratch out a living on meager returns. If your employees are entitled to overtime, how much more so are you? After all, you are the one who has all of the blood, sweat and tears (along with a boat load of money) invested. Your customer has nothing invested, and neither do your employees.
Now, say you do take the job (after all, some people feel they are desperate and need anything). Let’s look at two very real and possible outcomes:
1. Once you’re busy pleasing the Almighty Customer, you’re too busy to take on the customers who pay well and enjoy quality. Because you’re dependant on this one customer, you cannot afford to maintain your equipment because he is always paying 30-60 days down the road.
Your employees have been paid weekly (or bi-weekly – try to get them to wait 30-60 days), your suppliers have been paid (they have a funny way of looking at business in being paid in 30 days regardless of your troubles) and the bank (or leasing company) has been paid (like your suppliers, they seem to expect money on a regular basis as well).
Now what do you do if your one and only vehicle breaks down? Or your equipment? You’re too tied up with suppliers, employees and banks to afford a repair. So you call up the Big Customer and explain your problems to him. He’ll understand won’t he?
Instead of a sympathetic ear, you’re told that he has problems too. He’s promised the customer another six units by Friday, and if you can’t deliver he’ll have to go with the next guy who has been after his work for the last few months. Where did that friendly, reasonable business person go who convinced you that you would make all this money working for him?
Don’t blame him; it’s not his fault. He is only doing what sub-contractors have been conditioning him to do for years (or, if we look at this symbolically, centuries). Everybody in the business have always been willing to drop their price, with volume chasing the dream of easy money.
There is no such thing as easy money in business.
Look outside our stone box for a moment. When a certain rag doll from the cabbage patch was in demand some years ago, did they sell for less because they were sold in volume? What about that furry red tickle-me Muppet? He was very popular one year and sold out on store shelves. Did his price go down because of volume?
The makers of such toys know that they need to make money when they can. Profit is not a four letter word: You are allowed to make money. As the owner of a business, you should be making more than your employees – unless of course, you own a professional sports team, and the National Hockey League tried to fix that last year.
The lure of the big customer is a strong one. It means not having to knock on doors to get work. It means not spending years building a good name in the industry. But it can also mean leaving you stranded on the side of the road with a brokeN-down vehicle (with a payment due) or idle equipment awaiting parts (also with a payment due) with the prospect of losing all of your proverbial eggs in the same broken basket.
2. You develop a system that allows you to be somewhat profitable and please the Big Customer. The problem is that when you get the opportunity to do some custom (and highly profitable work), your employees are too wrapped up in the “production-is-everything” mentality and cannot adapt to the high-paying customers’ requests for attention to detail. After all, the general contractor never demands that much detail. so why is this troublemaking customer asking that we be so picky?
I’ve seen this all too often. I even have a competitor who brags about his one big customer (a casino). I’ve done that and been there (I really do have the T-shirt). 
The big jobs are nothing more than anchors that hold you back from reaching your potential. My one competitor is so wrapped up in the big-job mentality that he charges the same per-square-foot for 100 ft² as he does for 10,000 ft².
Where is the profit in that? Not only does he lose on the big jobs; when he does get the odd small job, he loses on that as well. And, he estimates are too low on his per-day time on residential jobs because he is used to the commercial-production rates. As a result, I’m constantly told by irate customers how he was there twice as long as he should have for half the price.
This one competitor mysteriously changes phone numbers every two years like clockwork). He disappears and another one appears with the same name. The only one getting rich here is the franchiser who keeps selling the territory based on the one Big Customer.
I prefer to work both residential and commercial. I prefer to get paid for what I do, and to do a job worthy of my name. It can be done. It takes hard work, patience and sacrifice, but it can be done.
Let “the other guy” chase the carrot. Have you ever noticed that the carrot is held in such a way that the horse never gets it?
Until next time, keep your stick on the ice. And get back to work: In case you’ve forgotten, you have a payment due.
Tom McNall is founder and owner of Great Northern Stone Care, a Huron Park, Ontario-based stone-cleaning and -restoration company servicing all of southern Ontario. Tom also offers corporate and private consultation and serves as a trainer for the Marble Institute of America.