The Trouble with Suppliers

By William May
Published: 05/19/04 Topics: Comments: 0

Most owners focus 80% of their energy on creating more demand, upping rates and increasing occupancy. I can think of a hundreds Emails and phone calls where the only question is "How to I increase sales?" As all large companies know, lowering costs can be just as important to and much easier to accomplish than selling every available date at the highest possible price.

Long time readers will admit that this newsletter devotes a lot of words to sharing revenue items. Plus we've frequently included cost saving ideas from the major to the minute. But recently I as reminded that who we choose as suppliers and how we work with them can be a significant factor in keeping costs down, minimizing guest complaints and making sure we all sleep well at night.

THE WAKE UP CALL:
At one of the homes we own (a four hour drive from our primary residence) we have employed a personable young gardener (lets call him "Richard") to do the and lawn mowing and gardening for the past few years. He does fairly good work and has been reasonably reliable. But there had been certain behaviors that, as an experienced (you can read that "old") business person I should have paid more attention to.

First it was the stories about his unreliable truck, then his seemingly quick marriages and divorces (yes plural). Often invoices arrived months after work was to have been done and the gardener's ledger seldom matched ours. Last summer we sat down together to compare ledgers and make sure everything had been paid. The summer before last he had assigned someone else to do work at the houses without our approval. Later we received a time sheet for 56 hours for what was to have been a two day weeding project.

ATEMPTING TO BE REASONABLE:
I've been self employed pretty much my whole life, starting at the age of 15. Until I was in my early 20's I reacted to supplier over-billings perhaps too stringently. So in the case of the gardener I listened to the excuse, paid the bill and gave specific instructions that the other no work was to be subcontracted without our approval and all special assignments must have our prior approval.

Sometime after that we instructed Richard to trim bushes at the house to make sure we were in compliance with the Home Owners Associations Rules. This project had been ordered in previous years and the cost was in the $50 range. A nip and a tuck, so to speak.

My father used to say, fool me once - shame on you, fool me twice - shame on me. So I should not have been surprised when the invoice arrived for $500 for "tree trimming." When I questioned the gardener he said, "Well I subbed it out to someone else, and I guess I forgot to get a bid." Richard acknowledge that the sub-contractor was renowned for taking advantage of customers" and that he failed to get a bid or call for permission. "I didn't ask your permission because the work needed to be done to bring the trees into compliance."

Had I known of this excessive cost I would surely had avoided it by turning the trees into firewood with my handy chain saw and an hour of labor. And I'm always ready to make (or save) $500 per hour.

If this problem had arisen with a large company, the simple solution would have been to return the invoice with a note notifying them that the work had not been ordered and would not be paid. But the gardener is a small one person company. He frequently claims to always be dead broker due to family problems and child support. So I attempted to reason with Richard and eventually sent a payment for $250 even though the problem was totally on her end.

That action has now resulted in numerous "flame" Emails from Richard and errant letters from his bookkeeper. Most recently Richard has taken to going door to door in the community to slander us and plead his case. Luckily, we have gotten calls from those he has spoken with telling us the incidents and acknowledging their belief in how unstable Richard is.

THERE IS NO ANSWER:
Unfortunately there is no acceptable solution to this problem. Many of you may see it as a small issue, and I agree, but if we value our reputations and hope to conduct our affairs ethically then it is a good time to examine who to choose as vendors and how to deal with them.

These are rules I have learned the had way but unfortunately I have not always followed my own guidelines. As far as I can tell, no business school teaches these expensive lessons, there is no book specifically on the subject and even in trade associations like VROA we seldom share experiences or devote time to grasping this little rules and adapting our actions to them.

NO NUTS: Long ago I spoke with a Human Relations hiring expert. When it came to hiring employees he said he could throw out all the IQ tests, Skills tests, past employer interviews and reference checks. His number one criteria was, "Don't hire any weirdos." I think the same is true for vendors. If they have peculiarities, personal problems or can't have a nice social conversation its best to stay clear. There are usually multiple suppliers for every task you might require at a vacation rental home. Avoid the nuts.

PUT IT IN WRITING: Every lawyer every handling a case has had to repeat these words to clients (big and small), "Why the heck didn't you put it in writing?" And now with the advent of email it is easier than ever before. Every little task, every chore and every on going project must be confirmed in writing. If you don't send the supplier an email or letter, then keep notes and put them in the vendor's file.

KEEP RECORDS: If you've been in litigation you quickly learn that what you think you said is almost never what the other party heard. Sometimes they are lying and sometimes they harbor wishful memories. What counts in court is what someone, anyone, wrote down. If you have it in writing, you win. If you don't, you lose. So keep careful records. At a minimum that means a vendor file must be kept with all paid bills, notes and any other correspondence.

BE SPECIFIC: Whether for your rental or your personal affairs, when buying a product its prudent to be very specific when purchasing. Ask the price (and whether you can get it cheaper), the date it will be delivered or received, whether there is a warranty date, and how you would go about getting it repaired if need be. Don't accept platitudes from a sharp taking sales person. Get that warranty in writing. And jot down anything else that they say. Make sure you let them know you are writing it down. Always put the date on the note, where the conversation took place (even if it was on the phone), who you spoke to and what their title was.

THE BIG GUYS: When dealing with a large company be extra careful to identify who helped you. Even with phone companies, utilities and so forth early in the conversation ask person's name and their employee ID number or telephone extension number. If you place an order or a change order always ask for an order number or confirmation number. Virtually all large firms enter all customer communications in to a computer data base and those records surely will have a record ID or other unique identifier. If you fail to get the number its as if you never called.

REACT QUICKLY: If you have a problem with a supplier always contact them immediately. Spell out the problem in detail and then, very generally, ask for a resolution. Asking for something specific may not get the intended result. Often they may offer more than you require. And if they don't, move on to say "That doesn't fix it, what else could you do?" Only resort to demanding specific answers when they seem willing but unable to think of a reasonable conclusion.

Also, by demanding very specific answers or being inflexible you may cause the supplier to question your sincerely. You must appear to be, and must truly be, willing to listen to the other parties point of view, determine if they too are genuine and then attempt to find a mutually acceptable solution.

BE CORDiAL: You know what its like when a guest calls and complains unreasonably - you block them out and are far less likely to be accommodating. In reverse don't be turn into that kind of dumbbell when you are the customer. Never ever lose your temper whether you be customer or vendor. Sometimes it is necessary to be assertive. You can even let your personality out and laugh at a vendor who lacks the intellect to solve the problem. But no matter how you respond, don't resort to anger, or raised voice or threats. It simply does not work.

BE LITIGIOUS: Most folks find court a fearful exercise. Many people never set foot in a court house in their entire lives. But if the supplier is unreasonable or unreliable the only way to end the conflict may be to submit it to an independent neutral party and let them decide. And those people are called judges. Filing suit should be the last resort. But if the amount is sufficient then, before you even begin to rent you home, you must be willing to petition the court to protect your financial interests

Small amounts can be pursued in the "Small Claims" court offered in most jurisdictions, and you can prepare and plead you case yourself to save attorney fees. If you've never been to small claims there is a way to triple your chances of success. Like most skills you can learn by doing or learn by observing. Surely you don't want to "do" any more than necessary. And the way to learn by observation is simply to go to the courthouse and sit in the audience and observe at least a dozen other small claim proceedings. You might be amazed. Its nothing like Judge Judy. And it can even be boring, but you will pick up a wide-eyed understanding of how to present your grievance.

Large matters, on the other hand, require the help of a competent attorney. Be careful in picking an attorney. Buy his or services with the same rules used to hire any vendor. The attorney will want a blank check for whatever hours he dreams up at an hourly rate that even rock stars don't earn. Don't put up with it. As I said above, ask the price, get dates, set limits on costs and keep a tight control of what is to be done, when its due and what end result you can expect.

IT WAS MY OWN FAULT:
So back to the gardener. Why should you accept recommendations from a guy who didn't follow his own hard won guidelines? Unfortunately dealing with vendors is nothing more then dealing with humans in general. We're flawed and erratic organisms.

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INPUT:
As always I seek your input. Please share your tips, techniques, compliments, and complaints on this or any other subject by writing me at Director@VROA.orgDirector@VROA.org.

HOME OF THE WEEK:
Maybe I like this Dominican Republic hideaway because the name sounds so Hawaiian (you know I love Hawaii). Ted Riskin's home is pleasant, sunny & bright. A fun place to play. Take a peek at (tedriskin.com/DR/)tedriskin.com/DR/ (If you want your place considered for Home of the Week please drop me an email.)

ONLINE:
See the nice article that mentions VROA in the Press Section of the member's only website. (VROA.org)VROA.org.

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Author: William May – Volunteer, Vacation Rental Association
Blog #: 0047 – 05/19/04