Communicating With Vendors in Tough Times by ProQuest


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									           Bettering Your Bottom Line

         Communicating With Vendors in Tough Times
            As tough as this recession has            2. What if you owe $50,000          bankers that your firm is a worthy     your doors knowing that you still
            been, I see nothing but good, even    (or more) to a key cabinet vendor,      risk for a long-term loan and/         owe money to key vendors? It takes
                           great, opportunities   and the credit manager wants            or credit line. Please contact me      courage to make the calls, but
                           for smart              this paid off before processing         directly if you need a Cash Flow       that’s what you must do if you still
                           businesspeople in      your next order? Time for some          Forecast and an explanation of         want a decent livelihood of some
                           the kitchen and bath   serious planning! Actually, you         how to implement it.                   form in this industry. If your firm
                           industry. To finally   would be rather late. Because if            Once you have developed this       goes down without warning, you
                           get your operation     you had capitalized your business       3-Month Cash Flow Forecast, you        will be treated as a pariah for years
                           “lean and mean,”       adequately, budgeted it properly        will be in an informed position        to come. Indeed, you may never
                           to diversify into      and reviewed your financial             to discuss realistic payment           live down the stigma. It’s not so
                           new products and       statements carefully every month        arrangements with the vendor’s         much that your firm failed during
                           markets, to gain       to see what they are saying about       credit manager. It’s unlikely that     the worst economic decline in the
 Ken Peterson              market share over      the state of your firm’s financial      the $50,000 can be paid off in one     last 80 years, it’s how it failed –
 CKD , LPBC                the competition and    performance compared to budget,         lump sum unless you were able to       without notice – that will be the
                           to earn more value     you wouldn’t find yourself in this      secure additional financing. But       sticking point.
            from a key industry organization      untenable and embarrassing              if you use customer deposits (i.e.         As painful as this process
            to which you belong are but a few     position.                               50% at contract signing, 40% upon      will be, you need to articulate
            of the opportunities that present         It’s every owner’s responsibility   cabinet delivery, and 10% upon         your showroom closing plan. If
            themselves now.                       to be properly capitalized at all       substantial completion) for working    your displays have not been used
                But none of these is more         times. Vendors should never be          capital purposes like most dealers     as collateral in securing a bank
            important than the opportunity for    put in a position of serving as your    do in this industry, you should be     loan, then offer them back to
            dealers to forge tighter bonds with   bank, since it imperils both your       able to pay down this debt over a      specific vendors to help pay down
            key vendors. The need for each        business relationship and your          few months. If you are a valued        your debts with them. If you had
            other’s support is paramount for      operation’s viability.                  customer, and you show solid proof     to sign a personal guarantee in
            both parties to emerge from this          Once a business is underway         of judicious financial planning,       setting up the original account, be
            deep recession relatively unscathed   and making profits, the owner’s         most credit managers will work         prepared to negotiate a satisfactory
            and prepared to grow again.           first financial objective should be     with you to arrive at reasonable       resolution to any outstanding debt
                                                                                                                                 – or face a possible lawsuit.
         Yet in my travels, I encounter            Business owners in the kitchen and bath industry don’t                        THE RIGHT PLAN
         dealers who have made egregious                                                                                         In conclusion, business owners
         mistakes – perhaps, but not               plan to fail, most just fail to plan.                                         in the kitchen and bath industr
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