Vintage Blog – Do I Push Aside Existing Customers to Take A Big Order?

PDC Existing Customers BLog

Enjoy this Vintage Blog from Paul’s contributions to the New York Times’ You’re the Boss Series.

 

Do I Push Aside Existing Customers to Take a Big Order?

By  PAUL DOWNS  September

Thanks for all of the comments on my recent post about my three problems. I reviewed the first problem on Monday, the second Wednesday. Now, let’s turn to the third. I’d like to add some further thoughts — and tell you what I have decided to do.

What I asked: A salesman who used to produce a large percentage of my business didn’t bring in much work for more than a year. In the meantime, I developed alternative sales channels and my shop has been busy. Recently he showed up with a prospective job that would book us for a month. I can’t double my production on a short-term basis, so taking the business would mean I’d have to push aside my existing customers to make room for his job. Should I take the work?

The consensus opinion: There was no consensus on this. Some thought I should take the job, others that I should stick with my existing customers.

My thoughts: Let’s get one thing out of the way immediately: Hiring one more worker — which goes back to my first problem — wouldn’t increase my output enough to make taking all of the work feasible. When I said that I can’t double production on a short-term basis, I meant it. Our work is physically demanding, and I can’t just make the guys work twice as many hours.

Now, on to the question itself. I probably should have given you more information about the nature of the salesman’s job and the nature of the work I get. As some of you may recall, my company makes custom conference tables. The salesman targets New York architects who work for corporate clients in Midtown. This is the plushest of corporate work, with the most expensive materials and details, and the fussiest customer requirements. We do not design these tables from blank paper but rather are given a design to build. We do not control the schedule, either, and are required to get approvals on everything we do — from the architects and from the customer.

Because furniture is the last item required to complete the job, we are subject to all of the delays that accumulate throughout a project but are required to be ready when called upon so that certificates of occupancy can be issued. Add all of this up and you get jobs that, while large in dollar amounts, are difficult to execute profitably. In contrast, the work we get through our Web site is much easier to manage. Each job is smaller, so there is less risk if one has problems. We control the design, the approvals, and the start and end dates.

So this question is really about what kind of business I want to be in, and about the consequences of letting a problem fester. Throughout 2007 and 2008 we were driven by the salesman’s work, mostly for banks and investment firms that contributed to the financial crisis. And we were losing our shirts. Delays in approvals and difficulties with production led to massive cost overruns on our shop floor. It nearly killed us. When the New York sales dried up, I was left with the other stuff, and through diligent work on our production and marketing, we’ve built a viable business doing it. Frankly, I was pretty happy that I wasn’t getting anything from the salesman. Those jobs are the devil’s bargain: so big they’re tempting but so risky that if anything goes wrong it’s a disaster…….

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Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside of Philadelphia.

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