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The Exclusive Magazine for the Building Service Contracting Industry Since 1981

BSCs and Distributors: Partnering for Profit

Written by  Richard D. Ollek, CBSE
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One of the common areas cleaning contractors look to when trying to save money is the cleaning supplies and equipment they purchase. While it is commendable to be frugal, sometimes you can make decisions that cost you considerably more dollars in the long run.

When a building service contractor starts out in business, they are always looking for ways to save a dollar. I know I did. In the first few months of my business experience, I remember how we pulled trailers behind our cars with our company logo. That saved us buying a van for the first year. One of the ways many contractors attempt to save money is on the cleaning supplies and equipment they purchase. While it is commendable to be frugal, sometimes you can make decisions that cost you considerably more dollars in the long run. Cleaning supplies and equipment are such decisions. Are you really saving money by running to Sam’s or Costco, when you could be working with a reputable distributor that helps you with effective and efficient supply and equipment selection?

Several important factors come into play here. Let’s discuss just a few.

As you grow your business, many potential clients, especially the larger ones want to know what products you are using and if they are environmentally safe. This is particularly true with the latest emphasis on green cleaning. What do you say when they ask what products you use? “I buy whatever is cheapest at Sam’s.” I don’t think so.

Same holds true on equipment. I remember one of my consulting clients who had been in business for several years was doing several million dollars in revenue and was complaining how his vacuums just didn’t hold up. He said he seemed to be replacing them every few months. So I asked the obvious question, “What brand are you buying and which distributor are you working with?” I thought we might visit that distributor for a better recommendation. The answer was, “I buy whatever Sam’s has when I go in there.” Really, could that possibly be part of the problem? Duh!

When you buy all types of different products from whatever sale is occurring, you’re setting yourself up for potentially sizable fines from OSHA. Let me give you an example of such a problem waiting to happen.

Working with Contractors

When I work with contractors, I generally spend one night in the field doing a practice safety inspection. I also give them a report on how I think their staff is performing quality wise, but my major emphasis is on safety compliance.

On one inspection, I recall seeing a spray bottle that had no label and was marked “Karen’s Kleaner.” So, being the introvert that I am, my question to the supervisor was, “What is Karen’s Kleaner?” They responded, “Oh, when we took this account, one of the stipulations was that we had to keep their long-time employee Karen. When we started doing the training with the cleaning techs prior to startup, Karen indicated she would not use anything but her own cleaner that she brings from her house. In an effort not to alienate Karen or the customer, we let her use it. Don’t have any idea what it is.”

Okay, so I asked for the MSD sheet. Well, they didn’t have one. There goes a potential sizable fine if the government inspector chooses to impose the maximum penalty. On that particular inspection, I found several spray bottles without labels and MSDS books were missing an assortment of sheets on the various brands of products they were using. Are you listening out there? As I visited with the owner the next day, it was clear he was buying from several distributors based solely on price.

This highlights the importance of finding quality distributors, then partnering and working together with them. My suggestions?

Early in your contract cleaning career, it is important to make some decisions on what brand of cleaning products and equipment you want to use. Attending the annual lSSA trade show and BSCAI convention gives you a terrific opportunity to talk with the many vendors. From there, you can narrow down your choices.

In most cities, there are several quality distributors that carry the name brands you’ll find at the trade show, as well as some of their own quality private-label brand. I suggest you test the supplies and equipment that interest you the most, and then work with the distributor who is handling the products you want, so you can establish services and pricing.

Questions for Distributors

You’ll notice I mentioned testing of products and equipment BEFORE pricing. That’s because, in my opinion, there should be several services that you many want from a distributor that enter into your decision, including:

1. Do you want the distributor to conduct regular monthly or quarterly training workshops? This was a key element in my relationship with the distributors I worked with.
2. Are they to be available at night if you have a problem, or are you content to just call them the next day? I can tell you that I eliminated a distributor from the competition because he explained on our first meeting that he didn’t work at night. I should also add that after we landed a major account he was selling the supplies to he was willing to work nights. But as they say in the song, “it was too late.”
3. Do you want them to deliver supplies directly to the buildings you clean, or do you want them delivered to your central warehouse? I know contractors on both sides of this equation, so it’s simply whatever works best for you in conjunction with the distributor. This becomes even move important if you are promoting the idea of your customers purchasing their consumables from you. We chose to have the distributor deliver to our warehouse, and the sale of consumables to our clients was a major profit center for us.
4. Do you want them to accompany you on large account sales presentations to show your prospect the team you have available for support? I utilized this service on several occasions, and it was instrumental in securing some of our major accounts.
5. Do you want them to conduct periodic safety audits in your accounts to assure that the MSD sheets are there and up to date, along with all products being properly labeled?
6. Do you wish to order online, and if so, do they have the capabilities to accommodate you? Most now offer this. Or do you want to establish minimum quantities on hand and have them visit your warehouse each week and deliver products automatically to maintain proper inventory levels? We were very fortunate to work with great distributors, and we utilized both systems, depending on the area of the country in which we were operating.
7. After you have discussed with the distributor(s) which of the above services you want or others germane to your organization, there are several other topics to discuss:
8. Discuss the estimated quantities of the popular items you’ll be purchasing over the next 12 months.
9. What conditions must exist and how much notice will you require for any price increases they many need or want? I suggest you insist on all prices being firm for at least 12 months and then review.
10. What payment terms are they requiring? For example: net 10 days, net 30 days, 2 percent, 10 days, etc.

Asking About Pricing
When you have addressed these points and any others that pertain to your particular situation, you’re then in a position to ask for pricing. I contend that asking for pricing any earlier is not fair to the distributor. They need to know what your requirements are in advance. To ask for special favors after they have quoted pricing does not create a lasting profitable relationship for both parties.

While price is important, it is only one component—albeit an important one—in the decision- making process. How you can work together in total is critical.

Additionally, when emerging contractors get larger they start thinking of going direct to a manufacturer for better pricing and private labeling. I tried it for a short time. Think of all the mop buckets and spray bottles etc. with my own company name? Wow, I was in the big time.

But wait a minute. Where’s all the help if I have a problem? If I’m doing a bad job, it’s better if people don’t know I’m doing the cleaning. I had to tell myself, “Self, put away your ego, and utilize the help that is available to you with a quality distributor.”

I also learned that my prospects and customers were more impressed if I was using a recognizable brand than if I was using “Dickie’s Disinfectant.”

Sometimes distributors are able to get better pricing from the manufacturer if you provide them sizable quantities of certain products. Frankly, distributors know much more about this than I do, but let me relay a story of one distributor I had a discussion with at a recent convention.

He was explaining to me how he didn’t like selling contractors because they were slow pay, mostly in the 60-90 day column of his receivables. I gave him a real novel idea, “quit selling to them”. His answer was interesting. He said that he couldn’t because the high volume they produced gave him leverage with his manufacturers. My response was then if they were really profitable for him and probably exceeded the interest he would pay at the bank for carrying receivables 90 days. He let me know that with his profit picture he didn’t need to borrow money. So, to paraphrase that old fast food commercial, “Where’s the beef ”? I didn’t say that, but it seemed he had a pretty good thing going.

A word of advice to BSCs: Negotiate terms when you are making the decision about which distributor to partner with. If you need extended terms for a major startup, negotiate that upfront, not after you’re past due. I was always able to work with my distributors on extended terms if the need arose on a major startup.

The Takeaway
So what does all this mean? It means that with contractors and distributors working together a profitable partnership can develop that can last many years. Let me encourage both contractors and distributors to search out opportunities to work together. It makes life much easier, and you really can partner for profit.

Richard (Dick) Ollek is the senior consulting partner for Consultants In Cleaning, LLC, where he provides consulting assistance to Building Service Contractors. Prior to forming the company in 2005, he owned and operated his own cleaning and facility services company for 34 years after managing another company for 9 years. He has written 3 books for the industry on selling, human resources, operations and the do’s and don’ts of contract cleaning. He also writes a weekly blog that can be accessed through his website at www.consultantsincleaning.com. He is also a principle in Tripod Leaning Associates which produces an every Monday morning FREE podcast at www.tripodcast. com. Tripod produces CD’s and DVD’s for the industry on a variety of subjects, which can also be accessed on the Consultants in Cleaning web site. Dick can reached at 573.873.9500 or through his website.

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