ACHRNEWS

Wholesalers Prepare For Economic Uncertainty

January 14, 2002
Suppose your business is one part of a chain of businesses, each dependent on the others for success. What actions would you take during uncertain economic times in order to stimulate related businesses and keep your business profitable and stable?

Those questions were put to hvacr wholesalers by The News, and the results show a dedication to solidifying business relationships, increasing operating efficiencies, and adapting to the slings and arrows of the 2002 business climate.

“My belief is that if you wait for uncertain times to begin to prepare for them, you have waited too long,” said Monte Salsman of Johnstone Supply, Inc., Portland, OR. “There is an old adage that in good times, good companies prepare for bad, and in bad times, good companies prepare for good times.

“Start each day with an attitude that projects an expectation to succeed. Henry Ford’s ‘If you think you can or you think you can’t, you are right’ is very good wisdom to refer to. Believe you will win! Do not think it or mouth the words without emotional, gut-level commitment.

“Live and act like your business will be great. Great people and customers will be attracted to you.”

So what do “great businesses” do in times of economic uncertainty? Let’s take a look.

FOCUS ON THE CUSTOMERS

“Reliable relationships built on trust with customers become very important,” said Jim Truesdell of the Brauer Supply Co., St. Louis, MO. Truesdell is also president of the Northamerican Heating, Refrigeration & Airconditioning Wholesalers Association (NHRAW). “Work with your supply chain partners and negotiate deals to take advantage of long-term cost savings.”

“One of our core values is to focus on our customers,” said Andrew Larson of the Gustave A. Larson Co., Milwaukee, WI. “We believe that we don’t sell anything — our customers do. As a result, our job is to do what’s right for our customers to help them be successful. And in turn we will be successful.”

Communication is very important to Jim Graham of A to Z Sales, Chicago, IL. “Listen to your customers and let them know you understand what they are saying,” he said. “Respond to their needs and help them reach their goals.”

“I feel that in slower times, dealers need to look at opportunities in IAQ and energy efficiency,” said Keith Cosart of Bright-Cosart Sales, Lima, OH. “Upgrades are there for the homeowner because they are looking for ways to save money. With times being tight, these people tend to spend more time at home, exposed to indoor air.

“Programmable thermostats, air-cleaning devices, UV lighting, etc., can be money makers. Homeowners will be more aware of their conditions inside, so asking the right questions to save them money and keep them healthy becomes more important.”

Jim Janka of Potter Distributing, Inc., Wixom, MI, said, “The contractor today should emphasize the sales call. It will add a great referral process. They will be able to maximize their labor, making themselves more profitable and allowing them to enjoy a pattern of business growth even in tough economic times.”

START WITH YOUR EMPLOYEES

Building a strong core of employees, compensating them well, and providing continuous training are axioms of the hvacr wholesale trade. Business owners feel that with the best staff, a company can succeed in any economic climate.

George Wheelock III of the George F. Wheelock Co., Birmingham, AL, said that having the right people is the foundation of any business.

“Our team has worked very hard to hire the best possible person for any opening,” he said. “We put prospects through a battery of tests before they are hired. Once on board, we make sure the fit is right.

“We try not to overstaff in case of downturns in the economy. At the moment, we are lean, yet anticipating a stronger 2002.”

Larson said that his employees “are our greatest resource. As a result we must continue to take care of them in order to be successful and to weather difficult times.

“We believe in pay-for-performance compensation plans, along with outstanding benefit programs. We try to design compensation programs so that our employee’s base salary is above average compared to our industry, and then we give employees an incentive to earn more when the company earns more.

“Additionally, we have an annual Performance Management Process that sets expectations and helps create accountability for results. This combination creates the type of win-win that helps create a high-performance environment.”

Salsman is adamant about the importance of employees for a very good reason: They keep customers coming back.

“Wholesaling is first and foremost about taking care of your employees,” he said. “People are the only sustainable competitive advantage that any distributor will ever have. The reason for this is that our people are entirely responsible for the customer’s experience with our company.

“If customers have a great interaction with the company, they will come back for more. If they leave unhappy, they will go elsewhere. Satisfaction is digital; you either are or you aren’t. There is no in-between.”

Salsman added that how an employee is treated by an employer reflects directly on the employee-customer relationship.

“Employees will treat customers only as well as their managers treat them,” he said. “If we dazzle our employees, they will dazzle our customers, and business will thrive. The courage to reward and truly commit to your best people starts with an attitude from the top.

“It takes more courage to be generous when the world around seems less stable. Give your people a great environment.”

Janka, a Trane distributor, feels that his company’s policy toward new hires makes salespeople more effective and better at upselling.

“We promote the hiring of new retail salespeople, preferably from outside of the business,” he said. “These people are not caught up in price or price issues. They will spend the time and ask questions of the consumer. They sell accessories and offer the upsell, which is value and comfort to the consumer.”

BUSINESS FORECASTING

In good times or bad, a well-thought-out business plan will help level out the peaks and valleys.

“The typical recession lasts from 9 to 16 months, which puts the challenge into the realm of short-term planning,” said James Rutz of Tecumseh Products Co., Clinton, MI. “The astute businessperson picks up the signals early and begins immediately to tighten inventories, rein in bad debts, and question all new expenditures on people or capital.

“Likewise, we know within a matter of months when to expect an upturn. The proactive course is to then anticipate the upturn with orders to suppliers and more feet on the street. Change is only an opportunity if you have something loaded in the barrel. Only with pre-planned options can you take advantage of opportunities.

“Plan and execute for the long term and don’t let short-term bumps interfere with preparing for the opportunities that will present themselves.”

Larson also believes in the value of a long-term plan. “During difficult times we try to focus, as we would normally, on the long term,” he added. “There will always be up and down economic cycles, but we must be focused on preparing our business to succeed over the long term.”

“Remain positive and don’t hesitate to communicate your optimism,” said Truesdell. “Our products are not expendable luxuries. They will lead the economy back to recovery.”

Publication date: 01/14/2002