Contractor’s Corner: Picking the right mill, supplier or cooperative – Feb 2024

By Dave Stafford

By all estimations, the path ahead may be rocky. But the right partners will only enhance your efforts in 2024. During your pursuit of profits, sales and success this year and beyond, your choice of mills, suppliers or a cooperative could make your journey more productive. Perhaps you’ve met potential candidates at Surfaces, NeoCon or other trade shows or realized that having a powerful cooperative like Starnet, Fuse or CCA Global can be key to accomplishing your dreams. Your decision in selecting the right one will enhance your legacy and can mean millions of extra dollars in sales and profits.

PREPARING FOR THE PROCESS
There is a multitude of questions that will surface, one way or the other, from potential suppliers, and my best advice is to be forthright and ready to deal in fact, not fiction. Are you primarily a retail residential or a commercial dealer? What is your brand identity? Are you a retail dealer hoping to add a commercial segment or expand your retail footprint? If you are a well-known commercial powerhouse hoping to expand, what is your current client mix? Do you have the financial strength to underwrite the changes you hope to make? What does your reputation say about you, and is this backed up by strong credit references? The more professional and prepared you are, the more likely that a potential partner will be impressed.

Have financial reports and bank references readily available. I hope you have already spent the time to write up an action plan that showcases your goals for the next 12 to 18 months. Without giving away too much internal company information, have this memorized or at hand. Look at this like an expanded “elevator speech” of financial plans. If your experience is weak in the commercial segment, start small and explain why you’re making the “big leap.” Perhaps you just hired a strong commercial talent who is bringing along significant business potential.

How soon do you plan to kick off the market niche? Are you going to use a company branding that is new for this niche or an add-on to your existing one? What are three reasons you’ve contacted this supplier or cooperative? If you are met with stony silence or lack of interest, always be appreciative of the time they’ve spent with you. I also strongly recommend that you ask, “Why are you rejecting our company?” You’ll learn a lot more from rejection than acceptance. Find out if they might reconsider by asking, “What would we have to change to turn your ‘no’ into a ‘yes’?” Maybe this rejection is because of geography. If so, how often do they re-evaluate the area? In one case, we got a ‘no’ and six months later they were hammering on our door because their golden dealer had declared bankruptcy.

THE POTENTIAL BENEFITS
What are some ways the right mill partner or supplier can help you? Whether retail or commercial, there are always some mills that carry a certain mystique that adds clout to your association with them-if you have an account with them, other suppliers will take note. Interface, Karastan, Milliken, Bentley and Shaw come to mind.

The size of the credit line offered to you can be instrumental in your long-term success. This will be based upon your current credit evaluation and the business you plan to bring. Always ask for more than you need but be willing to adjust. If you make it a priority to pay bills on time, even if you must tap your bank lines to do it, they will notice. If you have a special situation arise, talk with the credit manager before rather than after you’ve tried to place the order. In multiple cases, we had potential bids or orders and delivery times that exceeded our credit limit. We were candid with the senior mill rep, company vice president and credit manager about a temporary increase for these situations. Without that extra consideration, we would never have been able to land the projects.

If your company is a good fit with your new partner, they will refer business to you when they have some discretion and the client asks for a suitable dealer. Woe be unto you if you screw up a delivery or installation in this scenario. Seek out these opportunities and cultivate the mill rep’s view of you and the company. “Gary, we want to maximize the volume we do with you this year and could use your help by recommending us as a qualified bidder and installer for your clients.”

Mill reps can help even when they lose a specification. They can tip you off on the mill handling the job, the potential size of the bid and the products being used. They will know the likely bidders and what the client is looking for in making a bid determination. “I happen to know they are eager to get the job done with no drama and are more focused on that rather than low price.” Or, “Perhaps you can sell them on an ‘or equal’ with one of our products, stress the value-added aspect and get us back in the game.” With help like this, we’ve been able to fine-tune a bid and get the job. In one case, with a multi-year fixed-price bid, we got an award as an “alternate supplier” and ended up performing most of the work. Reciprocity can be rewarding on both sides.

The astute mill rep may be willing to provide you with a solid reference if you have installed their products with no glitches or come to their aid if there was a mill defect. On one job we installed, there was a hidden defect that was only noticeable with strong light streaming in the windows (a tufting problem with pulled-down rows creating noticeable lines). We talked with the mill rep, had him inspect it and wrangled a credit for the client. Everyone went home happy. In another case, we spotted a visual defect, and the mill rep asked us to correct it onsite during installation for a credit. The client never knew there was an issue. Mill reps do not forget when you’ve been helpful, and they will return the favor. Don’t be a fool by skipping an opportunity to help them. Suppliers talk with each other, sharing horror stories and good experiences.

FINDING THE RIGHT SUPPLIER
When having the all-important conversation to begin a new relationship with a supplier, outline specific goals of what you want to accomplish. It might be opening an account, size of the credit line extended, typical terms, product lineup available to you or pricing criteria. Are they aligned with specific dealers already or a supplier to a cooperative? Will you be accorded “key dealer” status, or is that earned over time based on volume? Do they have a policy of selling direct and, if so, under what circumstances?

Asking the right questions initially may tell you that this is not going to be a good fit. Find out where there might be conflicts. Perhaps their biggest volume dealer locally has had a long-term contract with a school system or property manager you’ve been pursuing or an established direct-selling history with a corporate or government entity.

Nothing beats being prepared for this conversation. Ask around about the reputation of their mill reps and the company. I often found a promising fit not possible because of simple things. Chief among them were pricing practices for dealers, lack of integrity, too many established dealers or below-average mill reps. The mill’s customer service always factored into any decision. When you really need an answer, will they make a timely decision? How do they handle complaints or claims; is their technical department competent and available? We once stopped doing business with a promising company after a hassle in replacing defective products. They apparently had an internal policy of “first denying all claims” and then reconsidering when faced with a well-known independent inspector’s report.

How do they view their dealer network: “the more the merrier” or “fewer is better”? Some will sell to anyone who can fog a mirror, while others establish a local structure of quality dealers. A supplier may accept orders from some dealers but only at list pricing or higher project-pricing levels. Will they support you on bid jobs generated through their own efforts and recommend you? What if you’ve been able to bring them a job through your own hard work; will that earn you some consideration or a special project price? Pose a scenario to them and listen carefully to the answer. Should they waffle around and seem to be less than candid, I’d worry. The good reps have a documented strategy for managing their regional area, and this will be supported by their mill.

What is their marketing focus for your market region? Is their product line a good fit for you, or does it lack depth? Is their product pricing about right, too high or too low to be maintained? Are they willing to work with you on an “as needed basis” without any volume commitment, and does this make sense for either of you? I recall an instance when the mill rep, Gretchen, was candid with me, “Dave, we’re looking for a new key dealer in this area, one who will actively show our products and provide consistent, quality installation. If you can do that, you’ll have our support, project pricing levels and our best mill terms. I am only talking with a select few companies where we might be a good fit. Okay?”

While we passed on the opportunity, she gained my respect.

FINDING THE RIGHT CO-OP
Are you ready for a cooperative? I had over a decade’s experience with CCA Global’s Carpet One and with Starnet Worldwide. Both added to our success as a retail and commercial dealer. Joining the right co-op is like going to a ban
quet; you can’t eat everything, but you’ll have a terrific selection from which to choose.

Here are some questions to ponder. Is the co-op a good fit for your company’s direction and business mix? Are there existing members in your own market? How willing is the co-op to make an existing member available to you for questions?

What do you, your partners and attorney think after a review of the legal agreements that must be signed? Are you willing to part with detailed financial information and agree to the stringent reporting of sales data? Are the potential rebates significant enough to warrant the effort you’ll expend in retraining? Can you handle the upfront fees and expense of accounting software changes for reporting?

After several meetings, what is your gut feeling? Write down the most tangible benefits of membership. Is taking this step, , a good decision filled with benefits for all? Will access to other product lines or a reduction in purchases from your current suppliers make sense or be disruptive? Company integration into a co-op is a journey and must be understood as such.

With cooperative membership, I found the camaraderie and networking were valuable. As a new member, we found that others were willing to provide advice on thorny issues and offer a helping hand. The right co-op selection will provide additional sparkle to your professional credentials as well as some backup when there is a problem. It is comforting to know that you now have a viable network that can offer support.

Copyright 2024 Floor Focus

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