Southern California Cornwell dealer bounces back from the recession

Aggressive marketing and attentive bookkeeping keep Dave Putits in growth mode.

Dave Putits has survived the recession, thanks in large measure to skills he mastered in his first and most challenging year. When Professional Distributor first profiled Dave Putits in 2008, the article focused on how the Southern Californian used basic business skills to run his then eight-year-old Cornwell Tools business successfully. “Smile-Collect-Sell” was the motto Putits espoused at the time, and it worked...

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Keeping his balance current every week played a big role in his early success.

He was able to pay off his first truck well ahead of schedule.

Realizing he could increase sales with more inventory, he spent $110,000 in 2005 on a new, customized, 24’ truck which allows him to carry $140,000 worth of retail inventory. The truck has wood shelves and a wood cabinet for holding his laptop. There is also a wood hammer display case on one of the walls. For security, remote-controlled, dead bolts were installed on the doors of the truck.

Buying smart also played into Putits’ management strategy. He tried to buy in quantity as often as possible to get pricing discounts.

He purchased repossessed toolboxes from other distributors who sometimes offered good bargains to unload them.

He found that the Cornwell Tool Rally and quarterly regional dealer meetings were important to attend. There are deals available at these, he says. His wife comes with him to the annual tool rally. Putits went as far as to postpone some purchases, knowing he would get a better deal at a show.

Thanks to wise business management, he turned his entire inventory every eight or nine weeks.

Recession strikes

The business was on a steady growth curve until the recession hit in 2008. Annual sales fell by $82,000 in 2008, but Putits always believed there was an opportunity in every setback, and the recession was no different. It weeded some competition out of the Southern California tool market, for one thing. For another, some of the commercial property owners that previously restricted automotive establishments became more flexible in leasing space to these businesses. This gave many automotive shops more options in managing their costs, helping them stay in business.

Downsizing his inventory in response to a declining customer base was crucial to keeping the business debt-free.

Putits began rebounding in 2010. Sales in 2012 grew $44,000 over 2011, and this year he’s on track to do even better.

Challenge: Skips

Putits’ only surprise when he got into the business was the occasional customer who failed to pay him.

Minimizing “skips” is the hardest part of the business, Putits notes. He has used collection agencies and gone to small claims court to fight delinquent payers, but there is no effective corrective action to “skips.” The best strategy is to prevent them from happening.

When a customer skips on him, Putits lets the other techs at the shop know about it. He also uses this for leverage in negotiating payment terms with the other techs in the shop.

While only a minority of customers are problem payers, Putits says these problems can destroy a dealer’s profitability. He keeps his losses below 1 percent of his total sales.

Problem pays, however, are rarely with large purchases, Putits has found.

Putits services a variety of automotive stops: repair shops, body shops, dealerships, recreational vehicle stores, etc. He has found body shops to be among the best customers, especially if he can manage to visit them shortly after the scrap dealers come by. If he happens to arrive at the right time, the techs are flush with cash from scrap sales and often in a buying mood. In some shops, techs pool their proceeds from scrap sales to buy tools from him.

“A body shop has more finesse,” he says. “I tend to have better luck with those customers.”

Proactive marketing

Putits gives each customer a Cornwell flyer at the beginning of every month. He also places them in service bays and in restrooms.

The Cornwell Tools software recently added a new feature that Putits hopes to use. He will be able to create flyers using drop-and-drag art from the company’s website.

He makes it a point to carry tools with him into the shops. “I’m real big on walking-in tools,” he says.

Candy and snacks also play a big role for Putits. He buys candy in bulk from membership warehouse clubs and sells about 60 candy bars a week. He gets a 40 percent profit margin charging a dollar a candy bar. But more importantly, a free candy bar has clinched many a sale. “I’ve closed more deals on a Snicker’s bar than I can count,” he says.

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