You need to re-negotiate the contract every time you sell a customer with a balance of more tools. Say a customer with a $25 weekly payment and three weeks left buys a new $100 screwdriver set. He can't just go on paying $25, or he's stretching your turn to eight weeks. You need to work to get him...
Welcome! This content is housed in a special section of our website designed for mobile tool distributors selling tools and equipment into the automotive aftermarket.
Articles written for mobile distributors are now only accessible with a unique login, to ensure this information stays exclusive to the mobile distributor community and isn't available to the public.
By registering to access this special section, you get full access to all of the content in VehicleServicePros.com magazine, along with exclusive online content that gives you an inside scoop on hot new products, exclusive stories, sales tips, technical information and more!
You will also need to be a qualified subscriber of VehicleServicePros.com to gain access. Subscribe to VehicleServicePros.com now or have your subscription ID ready.
It only takes a few minutes to register and verify your credentials. Register only once and simply use your login information when you return.
Login now to access exclusive content and learn more about how to make your mobile tool distribution business more efficient and profitable!
You need to re-negotiate the contract every time you sell a customer with a balance of more tools.
Say a customer with a $25 weekly payment and three weeks left buys a new $100 screwdriver set. He can't just go on paying $25, or he's stretching your turn to eight weeks. You need to work to get him to $200 outstanding over, say five weeks, so now he owes $40 a week – or more if he offer to pay more.
If you don't renegotiate you could end up with a cash flow crisis. Over time a five-week turn can become a 10-week turn and you will find it hard to meet your tool payments.
Cornwell preaches a five-week turn, says Cornwell Tools Training Manager, Mike Boyhan. That is, if you sell a tool today, you should negotiate to collect all your money back on that tool by week five.
The best dealers get their first payment the first day they sell a tool. You're basically saying to your customer: "You've got the tool today, you make your first payment today."
This makes the best use of your money, says Boyhan. In fact, if you can make this work, you can sell tools by rarely putting any of your own money out there.
Here's how: Say you sell a $100 wrench with a 40 percent margin. If you collect day-one on a five day turn you get $20 a week for five weeks, At the end of the third week, your customer has paid the $60 you owe your supplier. If you have 15-day terms, your customer has financed the purchase with no cash out of your pocket and you can pay your supplier. Then, the next two weeks you just collect your profit.
Have a sales strategy or helpful hint you'd like to share? Send your "30-second sales seminar" to firstname.lastname@example.org, and see your suggestion featured here!
Being upfront with a new customer pays future dividends