Lessons From the School of Hard Knocks

Jonathan Winstel, who operates Matco Distribution Inc. of Monroe, Ga., has managed to survive six years as a distributor despite a difficult economic climate. The 31-year-old Winstel has learned how to survive largely through trial and error. His story...

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Jonathan Winstel, who operates Matco Distribution Inc. of Monroe, Ga., has managed to survive six years as a distributor despite a difficult economic climate. The 31-year-old Winstel has learned how to survive largely through trial and error. His story offers some useful insights for others who are just starting out in the challenging business.

Two years ago, Winstel learned his most expensive lesson when his tool truck was stolen while he was attending a distributor convention. Because he didn’t have sufficient insurance, the loss set him back big time. He has since emerged a stronger distributor in an industry that doesn’t allow its members a lot of room for error.

“Insurance is a huge thing in this industry,” says Winstel, who realizes he could have protected himself against the loss at a much lower cost than he thought. For just another $50 a month, he would have been covered for the $60,000 he lost.

As hard as the knocks have been over the years, Winstel loves the tool business. “I like the fact that I see direct results of my work. The more I put in, the more I get out.”

He was introduced to the business while working for an automotive body shop as a teenager. He bought tools from a Matco Tools truck. The tool truck owner eventually hired him to work on the truck part-time. “Ever since then, I wanted to do it,” Winstel says.

Winstel was 25 years old when he was able to qualify for enough credit to buy his own tool truck. He acquired a franchise that he had previously bought from when he worked as a tech in a body shop.

Pre-recession was his best year ever

Winstel was able to build the customer base in his first year, which was his best year ever. In 2006, the market he serves, a 35-mile radius region located an hour east of Atlanta, had not yet been hit by the recession. Visiting an average 20 stops per day, he did about $500,000 in sales in his first year, doing little in the way of promoting products to customers.

Everything changed in mid-2007 when the recession hit. Many of his auto dealer customers closed. The automotive shops he sold to had less business as consumers had less discretionary income. Credit card companies became less generous with customers, leaving them with less money to spend.

Winstel worked at finding independent repair shops to sustain his customer base. He also learned he needed to find new ways to encourage existing customers to buy more products. “You just have to find different ways to approach it and bring your sales up,” he says. “You definitely have to ‘tote and promote’ more than you used to.”

Winstel began to run contests, a practice he continues. One of his favorite techniques is to have a “punch board” in his truck. This is a board with 1,200 holes in it. Every time a customer makes a purchase or a payment, they get to punch a certain number of holes based on the size of the purchase or the payment. A $50 payment or a $100 cash purchase will allow a customer to punch three holes, for instance. Customers are later awarded prizes, such as apparel or tools, based on the number of holes they punch.

“The more you bought and paid to your account, the more punches you get,” he explains.

Winstel makes the holidays a special time for customers by giving away merchandise he has earned from his own credit card purchasing and freebies from his suppliers. These giveaways, however, become challenging at Christmas since customers come to expect free things at that time of year. “They always expect something for Christmas from you, and they’re never happy, no matter what you give. For some reason, they expect a shirt, a hat, a jacket, or a tool, all for Christmas.”

He dresses a toolbox with Christmas décor and divides it into four sections, based on how much customers spend during the week on average: $20, $40, $50 and $100. Customer receipts are placed in the appropriate section and are redeemed for prizes. “The better customer you are, the better prizes you get,” he says.

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