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Issue Date: Vol. 48, No. 5, May 2008, Posted On: 5/15/2008


UPFRONT: If We Believe In Our Businesses, We Have A Responsibility Beyond Our Own Self-interest To Defend And Preserve Them


Alicia Lavay
Alicia@vendingtimes.net

The rising cost of commodities has been on everyone’s mind lately. But when you’re the operator or merchant who is forced to implement price increases as a result, you are confronted with a whole slew of potential roadblocks.

“Consumers” who aren’t involved in a business and have no first-hand knowledge of pricing decisions often speak as though they believe merchants and producers raise prices arbitrarily, to fatten profits. Those who are professionally involved in selling things know that most price increases are enacted reluctantly, to preserve profitability.

What strikes me as odd, though, is that many of these knowledgeable people seem unable to relate their own situations to their suppliers’. There always is room for disagreement about timing, and for complaint if the increase does not seem equitably applied across all classes of trade. But, beyond these rational objections, there evidently is an emotional component too. As vendors and their suppliers confront the worldwide increase in costs and the resulting urgent need to adjust prices, it may be worth trying to understand that emotional response. (Leave it to a woman to bring up the emotional issues associated with running a business!)

I think it can be summarized as: “If you loved me, you wouldn’t charge me more.” The correct reply is (to quote Tina Turner): “What’s love got to do with it?” Of course, we can sympathize with our customers, especially our loyal ones. We also may suffer doubts: Will I be perceived as a cold business person? Will I risk losing their business to a competitor? My customers have struggles of their own – how can I make matters worse by charging them more, or asking them to pay on time? 

But they are in business too, and can understand your situation, just so long as you communicate with them in a forthright manner and don’t take them by surprise. Those who don’t understand your predicament, you may be better off without. 

The good news about dealing with slow payers is that it becomes easier with practice. When I started this column three years ago, I pledged to get to know my readers better by allowing them to get to know me. I decided to call my column “Upfront with the Publisher” to spotlight that goal. If you have been following these editorials, you’ll know that I have tried my very best to keep this promise. 

Like you, I have faced the challenge of raising prices and collecting money from my customers, and there may be value in sharing my experiences. Most of you know by now that I assumed the role of chief executive officer when my father died unexpectedly four years ago. While I had worked in and was familiar with most of the ongoing functions of VENDING TIMES, from circulation through editorial to marketing and advertising, my responsibilities during my first 16 years had little to do with the financial end of the business. Much of what I have learned about running a company during the last four years was a wake-up call – and often a rude awakening, to be sure, but one that was vital to the survival of the magazine. My perspective will never be the same, and I think I’m the better for that enlightenment. 

During profitable times, we often ignore (or indulge ourselves in) certain expenditures, because we don’t usually examine the balance sheet with the same sharp eye that we use when economic changes put the squeeze on us. Similarly, during prosperous times, we can afford to let a predictably good but slow-paying customer ride a little longer. We know we’ll get paid eventually, and having some money “on the street” is not such a bad thing. But profitability is not the same as positive cash flow. And during leaner times, you need that cash to pay your own suppliers on time. 

We all know that we are doing business in an economic environment that’s very different from the conditions that prevailed four or five years ago. So, when I unexpectedly found myself in the driver’s seat as chief executive officer of VT, I faced the urgent need to establish a new relationship with certain long-time advertisers. And I had to take charge of collections. Initially, this made me uncomfortable; I felt sorry for some clients who were old friends and had fallen on troubled times. As an old friend, they looked to me for understanding and patience. I did my best to work with them, until several of these companies filed for bankruptcy and VT was left with 10¢ on the dollar – when we were lucky. 

The publishing industry also had fallen into a relaxed way of doing business, and we had enjoyed some leeway in payment terms. So we were tolerating slow payment and engaging in it ourselves, a pattern that will be familiar to many OCS operators with long memories, and which represents – believe you me! – a vicious circle. But printers proved to be no more immune to economic changes than anyone else. While the handwriting had been on the wall for some time, I still felt reluctant to make a real change – sound familiar? For me, the great awakening occurred when my longtime sales representative explained, politely, what I had been trying to explain to my own clients: Even valued customers need to conform to payment terms, or doing business becomes impossible. I certainly could understand that, and it helped me to recognize that I could no longer be a bank for my customers. VT offers a valuable service, and I too had to pay my suppliers, or there would be no magazine for my customers to advertise in! 

The point is, and remains, that a business owner is responsible for an entity that’s separate from herself or himself. Just as a politician has no right to claim “generosity” when spending your money, a business owner cannot assert compassion as an excuse for destroying the business. If we don’t think that what we are doing is worthwhile and important, we ought to do something else. If we do believe in our businesses, we have a responsibility beyond our own self-interest to defend and preserve them.

The sooner you truly believe that your company’s continued health is in the best interest of everyone involved, the sooner you will communicate with confidence and conviction, and the more respect you will earn from your good clients. Of equal importance, you’ll weed out the bad ones. So, go ahead and make those changes that are necessary to the profitability of your business. The industry will thank you.


Topic: Upfront with the Publisher

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