The Void #31 – Vendors Help You Succeed – May 22, 2022

In this episode, we talk about how selecting the right vendors for your business can make or break your business. We dive into the fact that proper vendor selection has more to do with you than it does with the vendors you may choose to work with. If this show raised questions you’d like us to answer, please feel free to email them to [email protected] Thanks for listening and thanks for sharing! Enjoy the show!


hey everybody and welcome to the void a show dedicated to filling the void between being an employee and becoming

self-employed most people refer to starting your own company as taking the leap as if they’re

blindly jumping off a cliff and into the unknown this show is here to help you understand that it doesn’t have to be

that way as always if you like what you’re hearing on the show please do us a favor and help share the void with

someone who might also be wanting to start their own company we saw an opportunity to help others understand

that self-employment is well within your reach and just as our businesses have grown organically and by word of mouth

we want this show to grow the same way so if you see somebody asking questions about starting their own service-based

company please do us a favor and send them a link to the show i’m your host mitch smedley and with me

as always is david hilton mitch david i saw you wearing a poop ditch again today it’s there’s a theme going i saw that

you posted that and i was like yeah what i didn’t understand though is i i got it and i saw it but then all

your clothes were really clean oh i stay super clean so i’m i’m thinking it’s a scam like your guys were there and then

they were you were like okay i’m gonna come over and jump in and then be like okay no yeah i’m in a poop ditch again

today i that’s that’s a unique thing with me like i would work with guys that i swear the first thing they would do is

like roll in the mud to feel like they’re accomplishing something on their face like just smear it on

there i’ll stay incredibly clean the entire time it makes cleanup easier it makes everything easier how do you stay

clean you just don’t slop around in it oh you mind your p’s and q’s yeah like

you get a shovel full of slop you don’t just like plop it on the ground you place it on the ground so it doesn’t splatter everywhere

stuff like that you can make it as gross or as clean as it yeah yeah yeah and this one was this

one was like there what was it uh we should have asked you before the show

yeah that’s all right when they when they installed their sewer they must have uh well i not must have they did um they didn’t

over dig enough and so the sewer line was sitting right on a rock and then over time it broke the bottom of the

sewer out and tree roots got in there and filled it all up and we couldn’t auger through it we couldn’t do anything

and so we cut that section out and it was like mount vesuvius coming out of there with like a couple of weeks of stuff it was gross

so for all of you eating breakfast on the drive to work today right yeah vomit brought to you by mitch medley

if you enjoyed your oatmeal you don’t anymore right right so um

but yeah yeah uh that that’s uh keeping with the theme of things and and ironically so usually this is thursday

here people uh usually we record on on tuesdays [Laughter]

usually we record on tuesdays as well and tuesday i was in another shit-filled ditch

we didn’t record on tuesday because my son had an orchestra concert and let me tell you what good oh man that’s there’s a what

grade’s he and i can’t remember uh seventh grade so it was bad it’s

not pleasant rough it’s rough and you’re in this giant auditorium it’s

not like choir where they stand on like risers yeah you can see them yeah so you can’t even see my kids no it’s like

going to watch band you know it’s just they’re all in a yeah yeah they used to do it

like when i first started in sixth grade fifth grade so the parents would sit in the bleachers and then the kids were all

on like the basketball floor and then you could see your kid right you know that was before cameras though that’s where

that’s where these used to be ah now they’re at the high school now they get an auditorium fancy auditorium

yeah go to so yeah it was uh it was rather ear piercing for anyone

that wants to talk about business it’s going to be a while so just listen for a little bit it’ll be maybe entertained we

could we could start talking about business right now what do you want to talk about what are we talking about talk about

third party vendors and how they are the key to your success or your failure

in a new business venture i know what a third-party vendor is what’s

a third-party vendor mitch a third-party vendor would be like i’ll just use us for an example

we’re a plumbing service company third-party vendors for us would be like our material supplier

our excavation rental provider when we rent excavators to do all of these sewer jobs and stuff

third-party vendors would be the people we buy vehicles from the people we’re buying shelving from for our vehicles

um the the person that i buy and repair our sewer drain augers with

um have a very close relationship with that guy you kind of have to are you a spartan man or yeah yeah yeah so we got

jason roby that’s uh he’s your spartan he’s my distributor

he’s awesome too uh you want to talk about an example of a great third party vendor that’s right there like yeah like

i don’t even i can just text him and say like hey can i get a couple more cables for these machines

and he’ll say sure thing and three days later here they are on my doorstep jackpot yeah got him it’s pretty sweet

yeah it’s frustrating when you don’t have one that’s good or you don’t have one that’s reliable

yeah you know what i mean when you’re expecting the problem is

your customers expect something from you and when you have to wait on a third-party vendor to get something now

put you in an awkward position if they don’t have it right or they’re lazy or they can’t get it for two weeks it just

makes you you know this goes back to the last show we we talked about difficult conversations it brings up difficult

conversations that you shouldn’t have to have right you know what i mean oh i i can’t get that two-ton ac

it’s gonna be three or four days well meanwhile the guy that bid a linux system over here his distributor is like

oh no i got ton of tons of them right so that customer may just call them and say hey you know what it could cost you a

sale right there right cost you 3 000 bucks yeah for nothing just and it’s frustrating yeah when you start

losing sales or you start having serious problems it’s really tough and it’s really tough when you don’t have a lot

of options yeah you know what i mean what like when we first started out in plumbing there were there was war and

supply there i’m trying to think of all the ones that were around us warren neenan nelson

ferguson um and now it’s i mean really there’s there’s two

good ones there’s neenan and ferguson and that’s really kind of it yeah so if if both of them are one of them you know

hosing you around you can’t just go down the street anymore you just got to deal with it yeah you know it makes it tough

yeah where um you know where i where i think a lot of people go

wrong is they’re so focused and this is we’ve talked about it in

previous shows about opportunities to practice to be the customer you want for your business

um where a lot of people go wrong is they will price shop to the nth

degree and cost themselves relationships and cost themselves dramatic amounts of time

and everything just because they’re trying to price shop to the nth degree yeah they’re trying to save 20 cents so

if they if they were literally paying themselves five dollars an hour and they price shop so much that

they spent a thousand dollars on themselves doing it and they saved a hundred dollars yeah that’s a 900 hole

right a lot of guys uh we know one specifically that

he does this all the time and literally if he just spent half of his focus on

something else yeah he you know make 20 more money yeah i mean just what are you doing dude yeah i

mean there’s price shopping and then there’s taking it to a whole another level yeah there’s there’s you know if if a fitting cost six dollars

and then you you call five different places and you can find it for

you know 610 590 620

you know okay i got it it’s around six bucks right yeah so i’m gonna price that

job based off of that fitting costing around six bucks

whereas other guys would be like hold on let me see if i can find it cheaper and they’ll spend another 15 or 20 minutes

trying to find it for like five dollars yeah right so it

they’ll they’ll what’s the cliche saying they’re tripping over dollars to pick up dimes

yeah they’re spending a dollar to save a dime yeah um where i’m holding up a dollar

where we uh we were talking here recently on that show about difficult conversations and

the difficult conversation i had to have with our parts supplier we we use ferguson for our parts supplier um

they’re not known for being the cheapest right and you can get on any internet forum out there and hear it until you’re

blue in the face that ferguson’s not the cheapest however they always have it

and and there was a time where they weren’t having it and and they were always out of stock and all this stuff

well i had to have that difficult conversation with them and let them know well after we had that conversation

they’re right back to where they were before and that makes a huge huge difference

yeah they might be just a little bit more i actually price shopped them today i bought i bought four items

i bought four items um that were um right at about 50 bucks each from

ferguson and then ironically four or five hours later i’m in the home depot and i happened to see those exact

same items at home depot and at home depot they were like 44 bucks each right so they’re six dollars

cheaper at home depot it’s actually 12 percent cheaper okay yeah well

it’s not a big deal but it’s a big deal if you had to have 200

well maybe but you know i’m looking at it like home depot may or may not always have it home

depot’s quality is never anywhere near what ferguson’s quality is and so i’m

okay spending the extra money and it just kind of reaffirms it yep ferguson is just a tad bit more expensive however

they never let me down and you know every time i go in there they’ve got what i need

so um and then i mean they don’t for all i know they’re gonna get mad that i’m talking about them like that but

i’m not i’m not badmouthing them they can’t they can’t sue us they’re not a sponsor of the show you’re not what i’m trying to say we’re not making any money

yeah what are they going to do we’re going to shut you down why you’re not getting anything right you know

what i hate is and this gets back to the other uh the show we just had too is guys will

literally i’ve seen it happen they’ll be at um i’m not gonna say any of the ones i

work at or four but they’ll be say they’re gonna be buying a jugger

refrigerant okay and say the jugger refrigerants four hundred dollars right and they’ll call down to north kansas city and be

like oh we’ve got it for 380. oh okay well i don’t want that i’m gonna

go down here and get it and they will literally leave drive for 20 minutes

get it drive 20 minutes back and spend gas money to save 20

right even if you weren’t paying yourself an hourly wage you’ve lost money and time

in the day i try to tell guys all the time you cannot buy more time right this time

this gets into life this gets into everything when you whether you’re super rich or super poor

at the end is the end yep okay you cannot buy more time same thing in day

during the day in business you cannot buy more time if a job has to be done by this

you’re not get if you don’t have it you don’t have it yeah it’s over so try don’t just think of it as money think of it as time as in

you’re trying to save it and we talked about that in the other show that’s what i was getting at about um guys that

uh seem very productive versus guys that don’t sometimes they’re using that okay

yeah do i really want to drive down there and waste an hour to save say it’s 50 bucks

it’s still saving you more money exactly to just spend the 50 bucks and move on with your life and wear and tear on your

vehicle and everything else and get and getting to the next call getting say you could get another call in that day guess

what you just made that 50 bucks plus back yeah and guys they have a real difficult time

when it comes to spending money and seeing it as a broader vision you know and i it took me a long time to

realize that you know i was trying to pinch pennies you know i don’t have money for this i don’t have money for that and then you sit down and you think

about it and you’ve had a couple beers and you’re like man i burned up an hour and a half today doing literally nothing right and just i

mean wasted all that time i could have been doing this or i could have been doing that and if i’m in a customer’s home for an hour and a half how much are

they paying me right so then you call that like an opportunity cost of right how much did it actually cost me to save

20 bucks on this venture across town so um

i i operate out of like so our price book is built off of the

pricing that we get from ferguson for our plumbing parts right and the price is the price it is what it

is ferguson just sent me an email the other day pvc fittings are going up another eight percent you know it’s it’s just it is

what it is a four inch pvc pipe eight dollars a foot yeah i i adjust my pricing used to be a

dollar i adjust my pricing and i move on yeah right i don’t you know these guys are griping about oh the

price of i’m gonna go out of business and the price of fittings and all this stuff like guys material pricing is not

your problem no it’s your customer’s problem yeah and that gets to control the things you can

control right that’s one of those things and look we’re not saying it’s easy because it is hard it’s hard especially

you have a big customer that does a lot of work and that little pricing like in your industry or

what you do specifically all of those increases aren’t going on a big invoice

for one big customer you know it’s broke up it’s a little easier say you’re in new construction and that means the price of

a house went up 15 and you’re doing 20 houses a year for a guy i mean that’s

a big chunk of money for him and i see why guys stress about it is my point and

i mean it is tough you got to figure out you know if you’re doing new construction work then you just need to

be writing your pricing that the this price is based off material pricing as of this day

yeah and depending on when this project starts the bid price will reflect any changes

in material pricing based off of when the project starts so that way you put the accountability back on the builder

say look if you drag your feet four months before this starts and the pricing of material went up eight percent for four months in a row well

guess what my bid just went up to reflect that over those four months but that’s

that goes to my point of why guys stress out about it so say they say you do do that

and say hey this is my bid this price and then it goes and they’re worried about it the whole time and it goes four months like man are we gonna start that

job or what and then the builder says okay we’re gonna start to this i need new pricing right well that guy’s

already nervous and has anxiety because he already knows in his mind you know the builder may come to me and

say no i’m not going to pay that and go look at someone else right that’s where that comes from and i mean i get it but

it is the responsible thing for you to do is what you just said you know you’ve got to have that in writing and say hey

yeah guys this is where we’re at and i know a lot of guys that’s what they’re doing now they’re like hey and when you get prices from i have a

funny example of it um when you get prices from uh ferguson or neenan or wherever um

they’ll put a date on there now yeah good till what good you know what and those dates are getting closer and

closer i’m not kidding you we priced out some uh stuff the other day and literally we got it on may 5th and it

said on there this price is good till may 4th and i’m like

are you this price is good till yesterday are you freaking kidding me i’m like what i’m like surely that’s a

like you know somebody just screwed up but i was like right come on man that’s basically where we’re at right now yeah

the way the economy is going there there’s thanks for channeling you know thanks for that buddy let’s go brandon

uh the um the easiest way to handle all of that is

you just have to split up like how much are you making on your jobs and how much is material costing

and then you hold what you’re making like you can control your your labor portion of things right

so you hold that fairly steady but your price can move to reflect the material cost

quite a bit so let me just use like round numbers like for what we do

let’s say i’m going to do something do some form of repair where there is three hundred and fifty dollars

in material cost and fifty dollars in or i’m sorry three hundred fifty dollars

in labor costs or labor charges to the customer and fifty dollars in material

charges to the customer we don’t split that out in our invoices we bundle all that together so that

repair would be a 400 repair right well on the back side of things on my

side of the price book i can see the difference right i can see that we’ve got three hundred and fifty dollars for

labor and we’ve got fifty dollars for material well when my vendor comes up and has an eight percent price increase

on material well all i have to do is adjust my material pricing in the book and now instead of fifty dollars it’s fifty four

dollars and so now that repair goes from four hundred dollars to four hundred and four dollars

and it doesn’t really you know my labor doesn’t change because the material pricing went up and so i’m

still making the same amount of money i’m still covering my material cost and i’ve passed that material pricing

increase on to the end consumer and that’s who really should do it and if you’re of the mindset

that that’s who really should pay for it and if you’re of the mindset that

um that you should somehow be eating rising material costs because it’s it’s not for your customer

to pay for you’re not gonna make it bro you’re not gonna make it in business beyond the week yeah um i mean

ultimately you’re gonna be spending all your profit to make your customer happy right

or to keep your price down yeah and you’re not gonna make it so what you were afraid of happening is

happening yeah you know if you’re afraid you’re gonna go out of business so you keep your prices down but then you go out of business because

you ate up all your profit you’re still out of business yeah yeah your fears become reality really fast there yeah

um so so i do it that way i have a very simple spreadsheet that i track all of

that material cost on and it and it handles that really really well it helps that i have a vendor that reciprocates

that um the we do that with all of our vendors we

like when we rent a machine to dig a sewer we factor that into our cost and those machine rental prices are going up

like crazy you know with the price of gas going up and they have to deliver them out to us and everything else and

so you know we just factor it in and so our our price for a sewer replacement went

up a little bit because the cost of an excavator to rent went up a little bit um

so like step one for having successful vendors successful third-party vendors

is going to be to understand that their price is just like you’re passing their price right through

you and on to the customer and if their prices move up and down your price with the customer needs to move up and down

and fairly quickly the the safety net there is marking up their price a little bit so like when

when i get an email from ferguson that tells me that pvc pipe’s going up eight percent i don’t sweat it

like just update what you’re doing yeah i mean i’m marking up my material well over eight percent

so um they can it just means i’m making a tad bit less money on the material

until i adjust my prices yeah so it you know ferguson sends me those emails and

it gives me a moment to yeah okay i need to carve out some time and update my pricing again let me

ask you a question because this was brought up to me say

say material cost is a hundred dollars and you mark that up

ten percent okay that’s ten bucks right that price goes up to a hundred and

fifty dollars but your markup is still ten percent

right so that’s 50 so you’re making 15 on that yeah okay that’s good for you right what happens when the people you

know the people that you’re doing work for know that you mark up price

and then they come to you and they say hey look i was having to pay a markup of this and

it was costing me x and now every time that that price goes up i’m actually paying you more for the

same piece of pipe that i was getting before not just because not just more of the inflation

price of it or the price going up but also your profit margin is going up on that pr on that pipe well you’re paying

margins not because you’re staying you’re maintaining you’re right you’re marginalized your margin is not but what he’s paying for that piece of

pipe is a higher percentage than what he was paying before does that make sense yeah

and and now he’s he he’s a smart guy right he knows and now he’s thinking man so

he’s he’s marking it up but instead of making ten dollars he’s making 15. oh it’s gone up again instead of him making

ten dollars he’s making 20. and i’m having to foot that like the company’s not right but i am so if i go get it

myself why would i continue to pay you to do that right it’s basically that was what

he was saying and i get it i was like yeah i understand i mean i get it yeah you know he’s like

so if it keeps going like this and i’ve been seeing this trend for a year a year and a half two years and i just keep

going with it i mean how do i overcome that what’s the conversation you have with him is my real question the so the

conversation that i would have is that we the reason we mark our material pricing up is because that’s what allows

us for one the overhead that it takes to round the material up um for two

that allows us to warranty that material so um and in full disclosure i don’t have

any piece of material that i only mark up ten percent we mark our material up by like

a lot yeah um i was just saying that for yeah easy math yeah most guys are double

you know the rule of the rule of thumb in the early 2000s was double yeah you know

on really small stuff it was times three you know just depending on what it was right and so

that’s i’ve got a sliding scale so like my spreadsheet with all of my pricing in it it’s set so that items between one

and five dollars are marked up at a different rate yeah than items that are 500 yeah right um and so

uh but they’re all marked up um and and the reason we mark up

uh material is not so that the business can make extra money it’s so the business can afford to be

the material supplier to the customer it costs a lot of money to get that stuff stock that stuff do all that it’s

you’re marking up equip or price i say equipment because i’m hvc equipment and

parts and stuff so that it doesn’t cost you money extra money to have them right that’s why that stuff’s marked up yeah

our trucks carry 14 000 in inventory on them and there’s there’s carrying costs with

that right so for one the business has to have fourteen thousand dollars to buy it all

that’s that’s why we mark it up for two our trucks are a lot less fuel efficient when you load them down with

fourteen thousand dollars in material that’s part of why we mark it up is to cover the fuel bill yeah

and then for three we have to go to the supply house and replenish all of that material

that’s time that we’re not being paid for so that’s why we mark it up yeah um

i’ve never had a customer hit that point like what you just did there with uh you

know as material cost increases and your markup stays the same you actually are making more

with this um but well not i would imagine you would get

that on like a larger commercial account commercial account or somewhere where you do a lot of work

consistently yeah somebody someone that’s spending a lot of money on your company

every year yeah and they’re smart enough to sift through all the invoices and they’re you know maybe they do a lot of

stuff on their own also so they’re going getting parts and doing you know a little maintenance here and there and you know

guys guys aren’t stupid you know and you just i bring it up because it was a it wasn’t

an awkward conversation to have i mean i know it i you know i see what’s going on and he did too and the guy still uses us

i mean you know but he’s just like hey where is the point of enough’s enough yep you know where i

mean if i spend you know i’ve had guys say stuff like if i spend over this on

material do i get a break and i know lots of companies that give that break

but i mean we’re talking about a lot of money for a lot of big material yes you know you should probably give them a

break right you know if they’re buying that much material from you is labor going to be no they’re still paying the same in labor yeah it’s just

you know and i’ve i’ve done work for guys i don’t like doing it i’ve only done it a few times where they

um say they had an account they were big enough they had an account somewhere and purchased the material on their own

you know and then i just i don’t do it on a hourly scale it was bid scale i would

always just work a little bit of that you know for you know miscellaneous try to you know get a few

of those bucks back right you know you just got to be thinking about all that different stuff and those scenarios when

you’re dealing with those vendors yeah yeah we um you know we we have customers all the

time that’ll ask us like well how much is it if i provide my own dot dot dot

you know toilets is a very very common one yeah because they can all go to home depot and get that american standard 12

golf ball flush toilet for i don’t know what it is right right and so we we just

you know we let them like we have two prices for toilets one is for a toilet we provide and one is for a toilet you

provide and those prices are about 350 bucks different yeah so we i mean we’re

full disclosure you’re gonna spend 350 more for a toilet that we provide

and they’ll say was the toilet cost that much no you can go buy one at home depot for

like 200 bucks yeah but you’re spending the time to go buy it but do you want to drive up to home depot do you want to

and also at home depot they all come in one box yeah they’re heavy you know when we buy them which is three different

boxes you got the tank in one box the bowl in one box and the seat and another a lot easier to handle so if you want to go through all

the hassle it takes to save 150 bucks then have at it and guess what when that

thing has an issue exactly you’re not handling the warranty on that you’re going to tell them hey

look if this has an issue and it’s not something we caused like if there’s not a leak between the supply tube and the

valve and there’s not a leak at the wax ring it’s on you right you’re gonna have to call you’re gonna have to deal with

it will we come out and repair it of course we will right we’re gonna charge you to work on it yep it’s not gonna be under warranty yeah

most of the time people will say okay yeah just yeah and usually you never even have to dive that deep into the conversation you know and you if you

find yourself having to dive that deep into the conversation it’s probably because you steered the conversation in that direction because you

personally have a problem marking up material like you you aren’t okay with it yeah

and you feel guilty you feel guilty about it don’t feel guilty about never ever feel guilty about marking it up

yeah so i mean like literally we will like i mean our our modifier for five dollar items

and less as we mark them up times four so when we’re buying five dollar items

we’re selling them to the customer for twenty dollars yeah it’s i mean look at it this way they’re gonna pay twenty

dollars to have freaking mcdonald’s delivered to their house they’re they’re gonna spend twenty dollars

to avoid going through a drive-through they will they will not have a problem at all

giving you twenty dollars for a five dollar flapper yeah they can go to home depot and buy that

flapper exactly yeah exactly so um you know that’s that’s how we handle it

now we don’t mark up our water heaters times four right no they’re you know it’s a much more expensive item so

they’re reduced down but yeah you can’t price yourself out yeah so and the reason we’ve kind of dove deep

into the pricing side of things is because in order for you to be successful with your third-party vendors like your

material suppliers and stuff like that most of that success hinges upon your

mindset and your mentality of how are you using that vendor if you’re constantly searching for the

cheapest vendor out there you’re not gonna ever see success with a vendor you’re gonna you’re gonna always and

forever let’s say you have four different places to buy material from but if you’re the price shopper that’s

constantly comparing prices you’re gonna have a bad taste in your mouth with all four of them because you’re gonna

remember the one time where they were the highest on this or the one time where the other place was the highest on

that yeah or or whatever and and so it just puts you into the mode of

they’re out here to screw me and i’ve got a i’ve got a price shop it’s like like yeah the rising cost of gas right

now right i was i was looking at a community page on facebook and somebody mentioned like gas just hit

four dollars a gallon here in kansas city yeah and you know it’s all this uproar right well

somebody posted the other day oh cass is 379 over here you know hurry as if they’re gonna like run out

or whatever maybe they’ll change the price i don’t know but okay so it’s 20 cents cheaper how many

gallons of gas do you think an average car holds i’d say the average is probably 20 gallon tank 20 gallon tank so that’s four bucks yeah these people

are going to go way out of their way to drive across town to save for to save four dollars like that doesn’t

make sense at all yeah right those are the people that are never ever

happy yeah if it’s four dollars a gallon and their car gets 20 miles to the gallon and it takes them

miles to get there right you just cost yourself money yeah and time yeah that

gets back to what we were talking about earlier time management yeah i mean you just

i don’t know what causes people to do that but it it makes people insane yeah

it drives they just they are insane about certain things and they will just do it yeah you know and and therefore

they will never have a successful relationship with that vendor because they think the vendor’s always trying to screw them whereas i’ve gone the other

way with it like we literally our whole hog everything we get is from ferguson and they know this

and and and like the only time we will not buy from them is if we need a specialty item that they don’t carry or

if we run out of something and it just doesn’t make sense to drive 40 minutes to ferguson when another vendor might be

five minutes away like yeah we don’t even price shop we just time is money we go to the closest

fender and we get it right and you know it makes if you think that these vendors don’t

talk to each other or move from one place to another or or other plumbers don’t talk about you

it gets around real quick when you’re the sheisty cheapskate that’s calling everybody and a lot of those guys will

be like you know what when they call i’m adding they can go guys listen they can go into

their computer and add or take off money whenever they want yup okay so if don’t be a dick yeah because it may cost you

four dollars per item from now until you retire yeah you may have pissed one guy off and he’s a real passive-aggressive

person and he’s like i’m changing his multiplier he may never even notice click guess what

he could have cost you twenty thousand dollars over a ten year span right just because you were price shopping him to save four cents and then we’re an

about it after right right you’re annoying when you do that right yeah so

um another thing like with ferguson we just bought all of our plumbers uh pro press

machines right and losers if you’re if you’re not a plumber listening to this show a propress machine allows you to

make water pipe connections without using flame and torch and solder and all that kind of stuff it’s for plumbers

that aren’t plumbers got it check sure understood dave’s firing shots over the bow

until he learns that they make them for hvac too i know they do and i refuse to use them so

uh we just it pains me to use pecs let’s just say oh man i like

i like the smell of flux and burnt flux and burnt solder and burnt copper yeah

so um so we just got all of our plumbers these pro press machines right and so i’m looking at buying quite a few pro

press machines you know a lot of guys are like oh can i get a deal i’m getting one well we’re buying like multiples

they’re so heavy too yeah yeah well we got the small compact ones two

inches jaw on that thing um you know they they were talking they they had this deal coming out they were

gonna have like the we got milwaukee brand pro presses and they were gonna have like this milwaukee vendor event coming up in six weeks

you know be ready everything you buy is gonna be like 10 off yeah that day right yeah we’re gonna have hamburgers and hot

dogs come out and check it out and and i had already made the decision that we were gonna buy these pro press machines and so i talked to my contacts there at

ferguson and i say hey um i was gonna buy these however i see that you’re having this event where

they’re 10 off in six weeks i want them now but i want the 10 off too like

i i budgeted for them to buy them now yeah i just i don’t want to wait six weeks for them but i want that to like

it seems silly that you’re gonna give me 10 off if i wait six weeks yeah right and so they were like don’t worry about

it we got you and that company says that a lot about stuff yeah and i don’t even buy a lot from

them and and so i uh i’m like are you sure and they’re like oh yeah totally

don’t worry so here three or four days later they order them three or four days later they show up and here i’m walking out with cart

full of pro presses and um and they’re like we’re not even like

we’re just gonna pin the invoice in we’re gonna date it for the day of that thing like you don’t even notice anything until that day and i’m like i’m

happy to pay now like like they’re they’re telling me not to even pay for six weeks jackpot and

i’m like i’m a hat i just wanted the 10 doubt and they said no just wait

well over the six weeks they kept coming out with more promos and more promos and then like the more you spent the more

promo you got and everything else we ended up getting 10 off and 350 off each

machine jackpot yeah and it’s all because i was very direct and very clear with my vendor i wasn’t asking for

anything crazy yeah right like i’m telling them i want to spend a bunch of money with you but i see that you have

this 10 thing off coming here since six weeks yeah i’d like to have the product now but i kind of want that like you know

and they’re like we got it we totally got it so keeping those onus honest relationships

and ferguson knows that i shop everything with them so like they’re happy to take care of me

on things like that so you end up getting better deals when you show some loyalty and some allegiance to your

vendors your vendors are more willing to work work harder for your business even

though they know they have it and they’re more willing to bend over backwards for you when when they know that you have some

allegiance there so and they also highly respect you when you do have those

difficult conversations with them because it s it sets the tone that you’re not going to get walked over yeah

and another thing too is if you have good relationships with your vendors

when because they sell to walk-ins when walk-ins come in and say do you recommend a plumber yup guess what yeah

they’re giving out your name yeah okay if you treat them with respect they like you i know it sounds so stupid high

school crap well if they like you then well you know what it unfortunately real life is kind of like high school

sometimes yeah you just i mean you set those relationships up if it gets you three sales

yeah i mean those were just sales you weren’t gonna have and all you had to do was do the right thing let’s not be a

dick yeah right yeah like not not bust their chops over them being five percent higher on price on something yeah so all

you had to do is be respectful and stay in your lane and you’ve got more business you know and that gets back to the mindset of um

just i i don’t want to say millionaire mindset that we’ve talked about before but it’s just the mindset of do try to do the

right thoughtful thing all the time no matter the situations be conscious of where

you’re at what’s going on what your customers think what vendors think what other plumbers think about you or other

lawn mowers or whatever your trade you’re in yeah you know just be conscious and be aware of all of those

different things and it will work out for you 99 of the time right right yeah

the uh um the opportunities for you to be a customer

be like a customer that you want for your business are there every day and you’ll realize just just like

you know everyone out here or everyone listening if i told you like who’s your best customer

you’re gonna you’re gonna immediately picture a customer that is super easy to work with that never gripes about the

bill that pays on time calls you back holds you back right yeah go be that guy

that guy could shop you around that guy could find a cheaper price that guy could nickel and dime you on every

invoice well if he did that he’s not your best customer yeah right

who’s the customer you’re willing to bend over backwards for it’s that guy yeah so be that customer with your

vendors and if you do that man it’s it’s it changes the game wildly yeah it i

mean it just changes the game immensely another thing that i do with our vendors

is i hate the idea of like net terms on

on vendors yeah um i i look at it like customers have paid me for the parts customers paid me for

the work and here you aren’t asking for money for 30 days plus

right like you’re gonna wait until 15th of the next month before you’re asking me for money that just doesn’t set well

with me so i we worked up a deal where we pay our vendor weekly

like literally every invoice every item that we’ve bought that they’ve processed an invoice on

will go through all of last week’s items that are all of last week’s invoices that they’ve processed

and then every wednesday we pay our our ferguson bill every wednesday um and so like we have an account with

them the accounts not even ever in like it it’s never

it’s always in the positive i guess i should say because yeah because credits and whatnot yeah like there’s there’s

never a moment where we’ve even had to hit the term right because we’re always just weeks out

and and there’s times where we are you know cash flow heavy or cash flow poor

and so um there was a time where i had to add another plumber to the crew and i did that sooner than i was expecting and

so we were at a cash flow point where i wasn’t quite ready to plunk down 14 000 on material and so i told her that my

sales lady i said i need to buy 14 000 material um i’m just giving you a heads up now i

probably won’t have this paid next week like every other invoice like i may actually run you to your net 30 terms on

this one yeah and they’re like dude you’re totally like everyone else like we’re calling them 90 days later begging

them to pay us yeah if you have to go to the standard term on this one it’s fine you’ll be fine and sure enough we never

even had to do that it was like two or three weeks later and we got them all scored away but um that is those are the

types of things that happen when you show some allegiance to your vendors you’re going to get vendors that

are bending over backwards for you and make you look really really good to your customers yeah i don’t know if we’ve talked about this before but i hated

having accounts like that so i oh i just had a company credit card right

because i hated that you know one vendor would send you’d get them on the fifth you know one you’d get them on the 15th

or if it was a big one like you said and they’re just rolling them you know on their term you may get two in one month

or you’d get this so i shut all the accounts down got one credit card and

then i used that because i knew that that came the first of every i think it was the 12th or something the 12th of

every month and then i could i had a paper copy that i could verify all my receipts on and then i could write one

check yep and everything was done that way and i i liked getting the points i had cabela’s card you know so then i got

free guns and ammo and what else who doesn’t love free guns yeah i think and i think for me

at the time um i’ll just be humble here it was easier for me to do that because i

didn’t know how to keep track all that stuff dude is it like i should have and i didn’t have a secretary so it was

easier for me to just get that card you know the dave ramsey program is never have a credit card ever in the

history of mankind well you know what i don’t i don’t agree with that one well his program’s for personal it’s not for

business yeah i like to be able to have all that stuff in one wack and i know lots of guys that do it that way and

that’s how i got the idea because to be honest i was like man i got you know this i got this and i you know i’m

running calls i’m answering the phone how am i gonna you know organize all that and uh literally like a light bulb

came on i was like you know what why don’t i just go to my personal bank and say hey i need a business credit

card and i need it to have x limit on it will you guys do that

sign up the one dealer like here you go right you know and it was so much easier for me so guys if you’re thinking about

oh say you have 10 vendors and they’re all coming at different times maybe do it that way yeah if you’re a lot easier if

you’re a one-man show that’s probably the easiest way to do it yeah we we did the account thing because we

always knew we wouldn’t always be a one-man show and i didn’t want to give everybody company credit cards well and you have well and you have a staff yeah

you know you have someone that can keep track of all that stuff it’s easier you’re not trying to juggle all that yourself right right yeah if you’re a

one-man show there’s that is no doubt the easiest way to handle it it’s the easiest way and if you like free stuff

you know i know guys that literally own that do two million dollars a year and have black cards and they

seriously put everything on it yeah everything on it yeah and they’re literally getting you know ten thousand dollars a

year and free stuff yeah you know i mean it’s a little bit more and you have to have some deep pockets to get that

credit card that’s worth that’s got you know an 80 000 limit or 50 or whatever you know whatever they’ve got on them

right but you know if you ever get there get there hey yeah three miles it’s going to happen

you know whatever you get send the family on a trip for maybe get that what’s the one card that’s got the one and a half percent cash back i mean

that’s cash back right off the top right free money baby coming back yeah coming back

uh yourself something nice the so so

what we’re getting at with this whole show is that your success with customers relies on your ability to have great

relationship with your vendors and your ability to have great relationship with your vendors relies a lot on the mindset

at which you enter that vendor’s business with so look at them

um look at them like they’re there to help you not screw you and set your pricing up in a way that

you’re basically just adding on top of whatever the vendor’s price is and that

allows you to look at them a little bit easier and you know ferguson’s price is higher than

everywhere else i don’t care because my pricing is built to handle it so it’s it just it just gets passed off

right so so that helps um if you do that with all of your vendors

or have some kind of a system like that with all of your vendors it will help dramatically so the only ones that

doesn’t work with are like what i would call like dead cost vendors um vendors where you have to buy

something and they’re you’re not it’s like a true overhead cost of the business for instance like where we get

our uniforms from you know i could shop around and maybe try to get our uniforms a little bit cheaper because i’m not able to like

mark that up or anything yeah that’s just raw overhead cost yeah um what we’re paying for cell phone plans and

you know all of that kind of stuff i may be able to find that too yeah but that doesn’t necessarily directly correlate

to the customer’s experience exactly you know what i mean like when we first started talking about you know doing

this show i was thinking of a specific example of like

say you didn’t have a water heater on your truck and these were questions i was going to ask mitch say you didn’t have a water

heater on your truck and you told the customer okay i’m going to yank this out they’re supposed to be bringing me one here in an hour you know you have your

guy show up you’ve got that one yanked out the vendor calls and says hey

we don’t have that something got screwed up and now you’re in serious frustration

pissed off mode the customer thinks it’s coming you’ve already told the customer it’s coming you’ve already quoted the customer a

price based off of their price and now you’re not going to get it at all right i mean what i mean what do you do do you

just you just get on the horn and start calling other vendors and trying to get it as fast as you can do you go up to

home depot and then how do you handle that with the customer uh well for one hey first off uh home depot

sells ao smith now no yes well state they sell no it’s well is

it lowe’s sells ao smith okay that’s what i was thinking of yeah but it is not yeah

it is not an ao smith water heater like what you’re seeing in a professional plumbing supply store yeah they’re the same junk

uh no still the same liner so i happen to be friends while we’re on this tangent

i happen to be friends with the honeywell representative okay

um honeywell makes the gas control valves for a lot of water yeah right honeywell makes me so mad so

i noticed i was doing some work in their personal home and i noticed like a lot of the

water heater control valve failures i go on are on on water heaters that originated from a

box store these aren’t like professional plumbing like they they’re different units right yes and that control valve

is 100 different yeah and so like we we’ve known for years that

they’re making the steel cheaper the glass lining in the tank is cheaper all of the brass parts are cheaper a lot of

the brass parts have been replaced with plastic parts which are cheaper like every part of that tank is cheaper it’s

so they can sell more of them later yeah yeah oh it went out i’ve got to replace

it what do i do i go buy another one yeah it’s the consumable market right yeah well i never dreamed that honeywell

would make a completely different control valve because they look identical i didn’t dream that honeywell would make a completely different

control valve well i asked this rep i’m like hey all these control valve failures i see they’re on like box store water heaters i never see can fail

control valves on professional plumbing supply store water heaters and they’re like yeah it’s it’s different and let me make a

phone call real quick and i’ll tell you the parts that are different and she makes a phone call calls me right or you know i’m standing in her house she you

know hits me right back and she’s like yeah this part’s different this part’s different and this part’s different so yeah they’ll fail faster

i’m like holy so that’s that’s why you want to avoid buying a lot of stuff

from home depot is it it’s truly inferior let’s let’s talk about that real quick the fact that they would do

that drives me insane yes absolutely that is not that is not

the right thing to do no from a from someone oh man it makes me

so mad i can’t even think of the right words to say why would you do that you do would do that to intentionally

screw people you would do it to intentionally screw people that’s what they’re doing to make more money there’s there’s there’s a way to

make more money and then there’s the wrong way to make more money that’s the wrong way to make more money that is that is driven by corporate

greed yeah which is driven by trying to squeeze an extra margin point over here

yeah and trying to squeeze an extra margin point over here and you know yeah we’re going to try and

sell more units but if we can also make more on the units we are currently selling

then we look good to our shareholders yeah and instead of

giving better customer service we’re going to make cheaper parts we’re going to make cheaper parts yeah

so um that is a corporate level example of

looking at your vendors poorly right yeah instead of instead of telling your vendors like

charge what you have to charge give me good product be there for me and my customers they’re

going the other way yeah they’re going i don’t want to pay that i need cheap i need cheaper i need cheaper i need you

and look at the end result yeah i mean literally i walked into home depot the other day and there’s five

failed water heaters sitting at the door that people have dropped off under warranty there are five failed water heaters

sitting at the professional plumbing supply store and they sell a hell of a lot more of them i love how they if they say right on the box do not take this

back to the store yeah i’m taking that dude back to the store every time and i’m dropping it off in the front and

saying yeah where’s my next water heater yeah that’s it’s just you can’t be making money that way right honeywell can’t be

making money that way home depot and lowe’s can’t be making i mean they’re making money on their other stuff yeah but on those they can’t be

making money i’m not even going to try to figure that part out they can’t they just can’t if you sell

five and one stays in and you have to return four how have you made money yeah even the raw costs alone you can’t and

not to mention the guys unloading it the guys you have to have there to sell it i mean it’s just it blows my mind yeah

that’s not a that’s not a section of business i want to be no it’s not now i can’t even remember where we were going before we got on

that tangent it doesn’t matter yeah does it matter no i don’t think it does [Laughter]

so um yeah guys to kind of wrap this up here a little bit

look at your vendors like they’re to help you be incredibly successful in business don’t look at your vendors like

they’re cutting into your profits your vendors are what’s allowing you to make profit they’re supplying you with

the pieces that you need to make profit so if you can look at them in that light you’re going to have

a lot better relationship with your vendors and that is going to transfer over to your relationship with your

customers and you’re going to have a lot better relationship with your customers so treat your vendors well

be a customer of your vendors just like you would want your customers to be of you

and you’re going to start seeing a lot more success if you do that agreed yeah so guys simply said that

wraps it up for this show um do us a favor if you like what you’ve heard on this show if this show brought

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all right hopeful enough we’ll catch up with you later alright guys