BrutulTM
Good, bad, I'm the guy with the gun.
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So what are you worried about? Just tell him that at this price, you're not interested in his business and if he can find a company that he is happier with, he should use them.
Adventures with Lyrical: Buying a Business (REPOST)
- Thread starter Shonuff
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Cad
scientia potentia est
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I wouldn't say any such thing. When his business comes up for renewal next time, just give him a non-discounted price and when he negotiates with you don't go lower. If he leaves, he left of his own free will. No need to say anything about being interested, or any of that. He'll figure it out on his own without a business owner being smarmy to him.
Shonuff
Mr. Poopybutthole
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As I said, he has a lot of clout in the community. We do work for all of the municipalities in the area, and they all talk. I need to let him think he's fired me. At the end of the day, it's insulting that he's constantly trying to get me to lower the price. I keep a steady backlog of work, and I'm not desperate. I was talking about him with my employees today. I asked them, they've worked for me for eight years, how long would they work for me if every morning, I kept trying to get them to accept lower pay. Eight years now, and I get hammered every time he calls, even when I pre-discount the work. He will literally get you in a room and wear you down for an hour until you cave.
He's a good negotiator, I'll give him that. At one point in time, when the company was smaller, I needed him. I looked at my database compared to the previous owner's. He had about 2,000 customers, I have 3,500. I don't need him like I did. I want his business, I don't need it.
Shonuff
Mr. Poopybutthole
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Let the chips fall where they may. Sometimes, these big companies talk a lot of shit, and when you call them on it, they fold. We became an approved vendor for a major auto parts company (think O'Reilly's), and they did everything they could to get us to lower our rate. They even told us we could go fuck ourselves, they would get someone else. The next day, they call and tell us we are approved to do every location in the state.
The games these guys play
The first rule of business is to have more than one customer. If you don't diversify your customer base, what will you do when they come in and demand a 10% reduction in cost? Beware anyone sending you a contract limiting who you can do business with.
Palum
what Suineg set it to
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So, I'm just curious but are the jobs consistent enough that he will notice if the initial offer changes? If they're even slightly variable, can't you just give him a price before the absurd discount he'll attempt to get knowing full well to expect him to want a 20% discount? Then you could just feed him the negotiation without actually losing anything.
Shonuff
Mr. Poopybutthole
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I don't play games like that. I've made a conscious decision to be honest always in my dealings. There was a study done for Black Friday, for 30,000 SKU's. You know those Black Friday sales where they give 45% off? Not real. We know the anecdotal evidence, but empirically, the overwhelming majority of those SKU's were marked up a few weeks before the event. It all becomes who is the biggest liar.
When I give a 10%, it's a true 10% discount. I also pass on selling people work they don't need. One day, we figured out we passed on $10,000 in work a week this Summer, because it wasn't the right thing for the customer. Technically speaking, I can sell customers a bunch of crap they don't need, by confusing them. Just yesterday, I bid a job for $1,500, and the nearest competitor bid it for 5,000. They fed the customer a bunch of nonsense, and just made shit up. My guys got done, and my bid was on the money. The competition was going to take 4x as long, and milk the customer for all she was worth.
My business flourishes because I don't play games, or do the semi-legal stuff that the other guys do. I pass on work, I let the customer know where I could have ripped him off (and what to watch out for), and they send me four or five referrals. When I show a customer how to reduce a bill by $1,000, they love me for it.
Palum
what Suineg set it to
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Guess you only got two options then. Take your losses and the hassle for his 'good will' and referrals or kindly tell him to find another company. Sounds like you know where the money angle on this lies after looking into a bit more, so the only question that remains is a risk assessment in losing him as a customer.
Sounds like he talks a lot of shit but if you have always had honest dealings with customers it'll all be his bluster vs. your good service in the eyes of the other customers. If your company is indeed good at what they do then that's going to weigh into the equation. Now, if you had a shit company built upon one dude's patronage like some shitty B comedy involving Adam Sandler, it could go south quickly as you suggest.
Sounds like he talks a lot of shit but if you have always had honest dealings with customers it'll all be his bluster vs. your good service in the eyes of the other customers. If your company is indeed good at what they do then that's going to weigh into the equation. Now, if you had a shit company built upon one dude's patronage like some shitty B comedy involving Adam Sandler, it could go south quickly as you suggest.
BrutulTM
Good, bad, I'm the guy with the gun.
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I'm saying if he's always come back, he probably will again unless you suddenly have some new competitor that's a better value than you.
Cad
scientia potentia est
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The way people negotiate drives me up the wall, as it is intended to do.Let the chips fall where they may. Sometimes, these big companies talk a lot of shit, and when you call them on it, they fold. We became an approved vendor for a major auto parts company (think O'Reilly's), and they did everything they could to get us to lower our rate. They even told us we could go fuck ourselves, they would get someone else. The next day, they call and tell us we are approved to do every location in the state.
The games these guys play. When they are bigger than you, they think they can push you around. Thankfully, I do enough advertising and good work. Every time one of them has "taken their ball and gone home" sales still increased that year.
The first rule of business is to have more than one customer. If you don't diversify your customer base, what will you do when they come in and demand a 10% reduction in cost? Beware anyone sending you a contract limiting who you can do business with.
The ONLY way to negotiate is to have a fixed price, an allowed deviation, offer the deviation, and past that, tell them to fuck off. Same as with car or house purchases/sales. You cannot go into a car dealership without a fixed number you won't go lower than, and a clear plan to get there. Or they'll "it's just $500 more" you into the ground.
Same as these fucking guys, they lowball you, tell you to fuck off, then you think "shit I need the business" and it's basically a shit-test like from a woman. If you really do need the business, you'll probably agree because you don't want to take the chance that they are serious. If you don't, you walk, they call you back the next day. It's common.
Lawyers trying to settle cases are worse, I could tell you some stories. We had a $60M damages case and the other side came into a 7 hour mediation at $20k settlement offer. At hour 6 they were at $100k. At hour 7 they walked out at $250k calling us names, calling our client names, telling us they would see us in court and get sanctions. Mediator's proposal was $12M and they accepted that 2 days later. What in the living fuck?
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jesus Christ that sounds like some Clockwork orange level of sadism. Don't those fuckers value their own time? wtf
Shonuff
Mr. Poopybutthole
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He sent me an email this morning, telling me he found a comparable company for 35% less than the industry standard. I fired him diplomatically (I think):
"Mr. X:
35% lower than the industry standard is insane, and referral-wise, we've only had one customer a week calling to say your organization referred them. Those tickets have been lower on average, and the last few of them have called demanding the same rate that your organization gets.
No hard feelings, but we don't need to be selling work at a 10% discount, much less a 35% discount, we keep a backlog all year round that pays industry standard plus.
If you've found a better value, we understand."
"Mr. X:
35% lower than the industry standard is insane, and referral-wise, we've only had one customer a week calling to say your organization referred them. Those tickets have been lower on average, and the last few of them have called demanding the same rate that your organization gets.
No hard feelings, but we don't need to be selling work at a 10% discount, much less a 35% discount, we keep a backlog all year round that pays industry standard plus.
If you've found a better value, we understand."
Shonuff
Mr. Poopybutthole
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The reason why I'm being nice is that the influential people around here all talk. One time, we had a construction company (our biggest client at the time) that we fell out with. I was pissed, they made me buy a bunch of additional insurance policies, and didn't pay me for them. There was nothing in writing, just a verbal promise. At that point in time, we'd done business with them for years, and they'd given us study business, so I had no problem with their verbal contract.
I still kept a good relationship with them. They haven't used me since, but they constantly send me large clients. One client they sent me, the job was huge. It was more work than that construction company had sent me in the previous three years, and all on one job. And we just got another big job last month, that was a referral from them.
I have to be a diplomat, even though I want to tell him to go fuck himself. Do you go to the Post Office and demand ten cents off of the stamp before you buy it?
I still kept a good relationship with them. They haven't used me since, but they constantly send me large clients. One client they sent me, the job was huge. It was more work than that construction company had sent me in the previous three years, and all on one job. And we just got another big job last month, that was a referral from them.
I have to be a diplomat, even though I want to tell him to go fuck himself. Do you go to the Post Office and demand ten cents off of the stamp before you buy it?
Shonuff
Mr. Poopybutthole
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I'm pretty pissed right now. He's demanded a higher service level than everyone else, and demands to jump ahead of everyone else on schedule, but at a lower rate. I've done my best to diversify against the bigger clients over the last eight years. If you only have one, or a few customers, than they have the power. When I bought the company, a few customers were a large percentage of the total. I have roughly double the amount of customers the seller did. If this guy packs up and takes his ball home, I wouldn't know it.
At some point, you have to fire customers, if they pay too little and demand too much. This guy has not only extracted every ounce of profit, he's got me paying him, in the hopes that I might somehow make money his non-existent referrals. A few months back, I took your advice, and told him to start telling his referrals to identify themselves.
Palum
what Suineg set it to
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No offense, but I would have worded this a different way, maybe something a little bit less antagonistic (or more specifically not able to be misread and turned into an attack).
Mr. X:
I thank you for your continued patronage, however 35% lower than the industry standard is not something I can match at this time. As I am sure you are aware, we hold high standards for quality and service. We have priced our work to ensure consistency in those areas.
I appreciate your referrals and business and we are ready to assist you in the future should you have need of us.
Sincerely yours,
Y
opiate82
Bronze Squire
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Shonuff
Mr. Poopybutthole
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I'm being less aggressive than he is. In the past, the only thing he's understood has been bluntness. Other than that, he'll sit you in a room and yell for an hour to get you to lower the price. He only takes notice to aggression, if you are a pussy, he won't even know you are talking.
If you walk away, you have all of the power in the deal. I walked away from a contract with that Billion dollar auto parts store I talked about earlier, and they told me to fuck myself. And then the next day, they emailed me the signed contract.
I remember I walked away from him four years ago, and then he called the Secretary to agree to my terms. If he doesn't, it literally isn't costing me anything, as the deal as-is gives me no profit. I didn't spend one million on the company to make $5 a day. He wants to rent out the company for a day and let us profit $5 for that day.
Shonuff
Mr. Poopybutthole
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The previous seller was more terse. Literally, he would tell them he didn't appreciate them wasting his time, tell them to have a nice day, and walk away. What do you know? He got a higher rate than I am.