Lazar talks about what he does and what he’s seen along the way in this edition of Meet The Wholesaler.

One question we often ask people: What’s the worst business advice you ever got?

Lazar: I had started a surplus business called Speedway Supply. I was selling a lot of equipment to contractors all over the country, so I had a lot of this inventory in the warehouse, about a million dollars’ worth of inventory at the time. And I made a decision, based upon many things, that I was going to change my model from a warehouse to a sell/buy operation, which is what Lazco does today.

So I connected with an auction company. This was something totally foreign to me, but they said, “You know, with your inventory, you will do very, very well.”

To make a long story short, it was a bad day in Chicago. No one showed up, and it went for under $1,000. And that was one of the most difficult situations in business that I had. Here I am always telling companies to turn their surplus into working capital, and now I’m dealing with the same problem myself.

But the good news is, I was still able to change the model to what we do now with Lazco Corp. and move on with life.

The situations and problems that your customers need help with — space challenges, changing brands, etc. — are recurring issues. It makes sense that a business would help facilitate solutions for them. So why don’t more companies do what you do?

Lazar: Because it really is a skill set. And it’s not that easy. I don’t think there are too many who have the pulse, viewing the situation from the perspective of the manufacturers, the distributors, and understanding the dynamics.

One situation that might come up is that 13 SEER product, for example, is able to be sold in the Midwest and East Coast but not in other areas. So this is one benefit, that we can go where a product is but where it cannot be sold by law, and we can make it available to those who can sell it in regions of the U.S. where it’s acceptable — or overseas.

Another challenge we see in the industry is inventory accuracy: the difference between what their computer says that they have available and what they actually have available. It’s actually something that really needs to be addressed, and it’s an issue whether you’re talking about manufacturers or distributors.

Frequently, what happens with us is that our customers pay wire transfer funds to us in advance of the order. We wire transfer the funds to the seller, and then we ship it from A to B. But what can happen is that when the sellers are ready to ship to the buyers, we’re told that [the amount of actual stock] is 20 percent off.

So what I’ve been trying to do now is say to the sellers, “Here’s our purchase order, but before we wire the funds, we want you to do a physical [count] to make sure it’s there.”

But you have to ask yourself, why is it so far off? And there’s a couple of reasons. No. 1, I believe more equipment is being stolen than we think. How does that take place? Someone would go ahead and basically take the cash and give it to a contractor. The unit would go out the door, and there’d be no paperwork. At that point, it’s still showing on inventory. That’s one possibility.

Another possibility is post-dated sales. I had that recently with a company where the inventory was still there, and it was to be delivered at a future date for a project, but it was not taken off the inventory. So it was showing as available, and that’s how someone can wind up overly committed.

We need to have more physicals, and I believe it’s important to actually separate inventory that would be classified as surplus, excess, obsolete, or damaged, and actually put it into its own area within the distributor’s or the manufacturer’s location so that it can be identified.

In the overall market of what you buy and sell, is there a type of equipment that you see trending up or down these days?

Lazar: Not really; it just depends on the circumstance. Every distributor and manufacturer has the situation arise from a canceled project. Or as we just discussed, it could be excess, obsolete, or it could be scratched.

I have a more difficult time when I have inventories of what I call “onesie/twosie,” where you’ve one of this and one of that and one of this. What I tell people when they have those kinds of inventories is that they’d be best donating to their local trade school, and they could write it off at basically dealer prices.

That’s interesting. I’m sure the trade schools appreciate it.

Lazar: Well, you know, I worked as a contractor with my father’s company, and I think it’s a good way to start training young people and [attracting good talent] — donating to the trade school and actually speaking to the students, so that they can go on an internship while in school. Because it’s so important to learn the business from not just a school concept, but from a practical concept.

I want to back up just a second. Would you talk a little about your experience working as a contractor?

Lazar: When I worked for my father’s company, Air Wise, they had 10,000 customers and they were in Chicago, a Carrier/Trane/York dealer. The first thing that I did is I took the 10,000 customers and put them in a database. So I could show sales by ZIP code, and they could look and find customers that they would know personally.

I was also selling a half a million dollars’ worth of equipment, going out and doing estimates. I had a simple approach. I would present options, and I would always ask them, “How many estimates have you had?” And they’d have, let’s say seven. And I would say, “One thing I’ll tell you is AirWise will not be the highest or the lowest, but we’ll come in the middle. But what you’ll find is you’re dealing with a company that’s been in business for over 20 years, and we have excellent service.”

I would pull out a book of letters of testimony, and I had a very high closure rate because people were interested in a quality company, not just price. I had a quote, “The bitterness of poor quality lingers long after the sweetness of a low price.”

From there, I got to know friends of mine in the surplus business of general commodities, and I decided to see if I could apply that concept to the heating and air conditioning industry.

Would you talk about one of your hardest moments in business?

Lazar: I actually got burned on a deal. I sold a truckload of window air conditioners to a customer in Canada. The guy gave me a 50 percent deposit, and he said that after the equipment passed through customs, he would pay the other 50 percent.

So I actually flew to Montreal to meet and get the truckload of window air conditioners to them. Then all of a sudden, they ended up telling me, you know, they’ve got issues. It’s not going to pass with customs, and you’re going to have to wait.

Well, what happened is: They paid off customs, took the inventory, actually put it in a warehouse, and set it on fire. I got ripped off, then I was in court in Montreal with an attorney and they’re all speaking in French.

And this guy was like some celebrity. What he would do is set up companies, and he basically would do business for a little bit and then pull a scam.

Last question: If you weren’t in this industry, what job would you like to have outside of HVAC if you had to have another job?

Lazar: Well, I do have another job. It is our ministry, Yeshua Messiah Ministries. We are on shortwave radio now, going all over the world. So I keep very busy with that. I have a very full plate. I’m very content and blessed where I’m at, and I feel that I’ll continue to be doing both for quite a long time.

I do realize that America will be going through many, many challenges, and when you have a lot of uncertainty going on about the future, it prevents businesses from sometimes making the decisions that they need to make. But I am definitely an optimist — Lazco actually can do even better sometimes in challenging times, because companies will realize they’re better off getting the cash than sitting with inventory. I say, “Surplus inventory is not like fine wine. It does not grow in value over time.”

See more articles from this issue here!