Independent survives recession doing it 'his way'

Going independent and switching to using a trailer has helped Central Florida dealer succeed.


Moskalyk finds a trailer every bit as effective for merchandising tools as a tool truck. Larry Moskalyk, an independent mobile distributor in Largo, FL, learned early in his business career not to take anything for granted in running a business. He learned to pay attention to changing business conditions and to take corrective action quickly. These lessons led him to a successful career...


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Moskalyk also brought a deep understanding of the importance of offering a fair price and honoring warranties. He was able to win customers from competitors who failed in these areas, especially warranties. Moskalyk noticed that some mobile distributors view warranties as a nuisance and treat them accordingly. He won customers by honoring warranties on tools that he did not sell.

In one case, he was able to get a tech’s air ratchet fixed for free. The distributor who sold the tool wanted $100 for the repair. “If it had cost $20 to get fixed, it would have paid for itself and then some,” Moskalyk notes.

“You do them a favor like that and they’re going to be happy,” he says. “Public relations is what it’s all about.”

Something that surprised him was that the size of the shop was not always an indication how good a customer it is. Moskalyk ultimately realized that shops with three or four techs were some of his best customers. “You do better business in them than the big ones,” he says. “They (small shops) just buy more stuff.”

Moskalyk learned that establishing a good rapport with customers helps reduce collection problems, which he views as the most difficult part of the job. “Collecting money takes talent,” he says. His better customers will warn him if someone should not be trusted. In one case, he got a call from a shop where a technician had recently quit. The people at the shop asked him if this technician owed him money for any tools. They promptly confiscated the drill that Moskalyk had sold that tech and held it for him.

Moskalyk became a top producer for his flag in his first year. The franchise rewarded him by covering his convention expenses.

 

2008: recession strikes

Everything was going well until 2008. That year, the automotive industry began declining nationwide. The downturn hurt Florida especially hard, due to the large number of automotive dealerships. The tourism industry also began to suffer, further eroding business for many of Moskalyk’s repair shops. Car owners began to put off maintenance and repairs. Shops began asking him if they could return tools. The housing market also took a dive, sending shockwaves through the local economy.

Moskalyk was losing 10 customers a week. But he didn’t hesitate to react. As he lost customers, he pared his purchases so that he did not get stuck with too many receivables and was able to stay current on his payments. After six months of falling sales, however, he decided to exit the business. “I was watching the numbers every week and they were dropping. I wasn’t about to keep plugging along and see the numbers go backwards and lose everything I’ve worked for all my life,” he says.

He sold his leased truck to a distributor in another region. This gave him a financial cushion to give him enough time to consider his options. His backup plan was to sell his 1977 Corvette, which fortunately didn’t become necessary.

He had about $55,000 on the street and spent several months collecting payments. He also looked for another type of business to get into. He spent a year investigating other business opportunities.

Ironically, the more he learned about different business franchise opportunities, the better the mobile tool business looked, despite the recession. Most franchise businesses require a lot more start-up capital than mobile distribution, Moskalyk once again realized. Hence, he began to consider returning to mobile tool sales.

 

Back to tool sales

When Moskalyk first got into the business, he felt flag organizations offered entrepreneurs advantages over being an independent, such as namebrand recognition and management support. While this remains true, through research he found that independent distributors have less overhead and lower purchasing costs.

Moskalyk also realized that the flags have some proprietary tools that independents can’t sell. Proprietary tools account for 20 percent of the total. To offset this advantage, he could offer lower prices on some tools. After weighing the options, in 2010, he decided to get back into tool sales as an independent.

He began looking for trucks for sale on the Internet. While searching for trucks, he came across a 16’ trailer that a mobile distributor in Ohio was selling. The image of that trailer got him thinking: trailers cost less to buy and operate than trucks. Yet they can carry just as much inventory and can offer the same amount of selling space. “It cuts your overhead phenomenally,” he notes.

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