Tolerating Imperfect Business Relationships (Dancing with Dirtbags)

2016-04-08 11.46.34If you are in business for more than a day or two, you’ll run into vendors that consistently fail to deliver on their promises. Maybe it’s a tabletop games supplier who frequently gets your orders wrong, never has what you want in stock, and doesn’t return your calls, anyway. Maybe it’s a comic book vendor who frequently damages your books, or charges you to ship a quarter-inch catalog in a medium flat-rate box. Maybe it’s a parts supplier who takes forever processing returns and then hoses you on half of them.

Your options in these situations always fall into one of these categories:

  1. Scream and cry on the phone to a customer service representative. Write long, public Facebook posts about how awful this vendor is. Concoct Machiavellian schemes to play your bad vendors against each other. Travel to your vendor’s offices and key some cars.
  2. Make reasonable requests of your vendor, complain when standards aren’t being met, and move your business elsewhere when you find that you no longer want to do business with them.
  3. Accept the mistreatment.

#1 is right out, of course. We’re professionals, right? Except that, uh, I may have flown off the handle at vendors one or eight times when I was just starting out. Every slight was a personal offense. Long emails were written. Empty legal threats were made. The light of those burning bridges lit my path for years and can still be spotted in the distance when conditions are just right. There are vendors with whom it would be mighty convenient to trade with now, but who will likely never return my emails again, because I was a jerk.

#2 is how it’s supposed to work. I address a behavior that I find unacceptable, and the vendor either shapes up or gets replaced.

But what happens when that vendor is the only place to go for what your business needs? What do you do if eliminating that vendor will result in a significant loss of income?

You go for #3. You accept the mistreatment. Oh, sure, you should find ways to mitigate the damage it causes, but ultimately you’re making this decision because it’s a win for you.

That win for you can frequently be assigned a number, and I call that number the Dirtbag Dividend.

I have game suppliers who didn’t treat me the way I want to be treated. I asked that they change the behavior. The behavior didn’t change, so I don’t do business with them, uh, except when I need to get something only they carry. I’d rather swallow my pride and accept the fact that I’m going to have to carefully check everything I get from them. My reward, my Dirtbag Dividend, is the money I’ll make on that item that I couldn’t get elsewhere.

The dominant comic book distributor has a nasty reputation among store owners for being difficult to deal with, for frequently shipping damaged items or shipping undamaged items in silly ways. This is frequently the FIRST thing that comes up when someone asks about comic books. Many store owners will tell you that they stopped carrying comics rather than deal with this distributor. And yet, many comic stores continue to exist, and many hybrid stores make comics a part of their mix and make good money doing it. I’ve seen their numbers, and the profit is real. That profit is their Dirtbag Dividend, though calling it that may be unfair. I’m beginning to suspect that this particular distributor does the things it does because it deals with thousands of unique SKUs that change every single month and have strict release schedules.

We deal with phone parts suppliers in China. The defect rate is about 12%, and they hose you on about half the returns. Between getting hosed on rejected returns and pulling teeth to get the good returns pushed through over months, I figure it adds 10% to the cost of the parts. I could deal with American resellers of the same parts and have them deal with all the hassle, but it would cost 30% more on the front end. That 20% gap, even at my low volume, is enough to make the difference between driving an old Chevy and a new Lexus, or maybe the difference between toiling to make one store work and rolling toward expansion to multiple stores. To earn it, I have to go to sleep at night trying not to think about the fact that my rep lied about the condition of the parts I returned. It hurts, but the Dirtbag Dividend makes it all work out in the end.

I recently heard a theory that a guy who runs a restaurant is angry sometimes. A guy who runs two restaurants reaches peak anger: He is ALWAYS angry about something. The guy who runs six restaurants isn’t angry about anything anymore. That old cliche about having the serenity to accept the things you cannot change? There’s money to be made wading through that serenity. Money that your peers might be leaving on the table. Take that money and serenely live better than your peers with it.

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