Supplier vs. Partner?

When your buddy and his buddies want a ‘favor,’ say no.

I didn’t go to a four-year college and come home with a degree like most of my six siblings. It wasn’t my style. I knew from the time I was out of high school that I wanted to do exactly what I’m doing: running an auto repair shop in my small Iowa hometown.

I took the usual steps to get where I am. I worked for my father, then my brother-in-law. I moved on to a couple of new-car dealerships, then an independent shop again. I returned to be a partner (and that could be a separate “lesson learned”) in my present facility. At the ripe age of 32 I was pretty seasoned, or so I thought. Funny how the older and smarter you get, the more you realize just how dumb you are – or were.

This prefaces my lesson learned. I jokingly refer to it as: “One of the classes in my four- or five-year college-equivalent education,” because I think the cost of the mistakes I made in the early years could have just about paid for a four-year college education.

As a small-business owner, you talk to your accountant. You talk to your banker. You promise your significant other that you will work less and make more money someday. And you know, per these conversations, that they’re rooting for your success. After all, they want you to win, make money and suffer less stress.

Where I am going with this? You’re in the daily grind, working away, and then in walks your old high school buddy, or a neighbor, or a kid you grew up with. This person may have helped you out once in the past, and he’s looking for what I call “the hookup.”

It’s the idea that you’ll treat them differently than other customers. They come into your shop, and they don’t talk to anyone but you. They don’t say they want or need a “discount” or “favor.” But the implication is hanging out there in midair. It’s so thick that you almost need to turn on a fan to blow it away.

I hate to admit it, but I fell victim to these people in the early days. They spread like weeds. One tells 10 others, “Go down and see Tim. Tell him I sent you, and he’ll hook you up cheap.”
Sometimes, they bring cash. They ask, “Now, what is your cash price?” If you have been, or still are, in my shoes, it can be hard. But the fact is – I credit my older sister for clueing me in on this – if you gave all your friends a discount, then you would have to give every one of your customers one because they all eventually become your friends.

Someone also asked me this question: Think of your employee payroll, your utility company, your sales tax, your property tax and other expenses. At the end of the month, will they give you a cash discount? If not, then you’re the one getting cheated on your paycheck. They’re all in line to get their money in full first, and what’s left over is yours. Now you’re shortchanged.

So set your prices like a businessperson needs to do, and stick with them (this may involve removing yourself from the front counter). And be happy if you lose some customers. They’re the ones who are draining your profits.