What seemed a good way to deepen the bond with Motorola turned into "a total nightmare," Taylor says. "What did we really know about telephone operators who make $7 an hour versus $40,000-a-year professional technicians? The turnover was just tremendous."
As a result, with costs soaring, Taylor's profit on the account took a beating. "I spent more time going out to the client to resolve little issues. I thought, 'Why am I doing this?" Every time one of the phone operators quit, Taylor had to find a replacement that day, forcing her to hire temps for only a dollar less per hour than she was billing Motorola. She wondered, "Am I really making any money?"
A year later, when the phone contract was up for renewal, Motorola offered to expand it. Taylor passed, and instead found a good replacement-temp agency to smooth the transition. As a result, she retained that part of the Motorola business that had been most profitable for her.
* * *
David Sluter: "I don't want to commit a project manager to something that might become a heartache."
"I just turned down a deal today," David Sluter, CEO of $6-million New England Construction, in Rumford, R.I., says matter-of-factly. It's not the first time in his company's six-year history.
The circumstances: Sluter recently carried out a preconstruction service agreement for a client, a family-owned business whose patriarch Sluter respected. But during the course of the work, the man's son took on an increasing managerial role. "Junior," as Sluter took to referring to him, was being groomed to take over, and his inexperience working with suppliers became painfully obvious.
New England Construction got paid, but not without a dispute over the deal. Finally, Junior canceled his plans for a new building and decided to renovate instead. Sluter was asked to bid. "I knew we could probably get it," he says, but he'd had enough and was wary of future dealings with his old customer. "I don't want to commit a project manager to something that might become a heartache. It's a risky business as it is," he says. "We do 15 to 20 projects a year. If one goes bad, that's a tremendous impact."
* * *
Lynette Hegeman: "My fear was 'What if it doesn't sell because those big companies don't get behind it?"
Lynette Hegeman worked for two years to produce a skin cream for pregnant women. She devised the formula with a Stanford dermatologist and consulted with a network of ob/gyn offices. By the time she started to manufacture Belly Butter for stores, last summer, her savings were dangerously close to being depleted. The San Ramon, Calif., business could have used a big order right then.
And that's when Hegeman received a visit from a salesman representing several major retail distributors. After hearing in July about her modest marketing plans, he said, "I can bring you across the country in a heartbeat." He left that day with a jar of Belly Butter, promising to talk to an executive at McKesson, the large San Francisco distributor that services Wal-Mart and other mass-retail chains.
Hegeman was floored. This was no fly-by-night salesman. She knew he had previously been a rep for a major drug company and now made a living discovering new products for mass merchandisers. He'd recently scored with an arthritis cream.
"He came back to us with a proposal to take our product mass merch -- he could get it into Long's, Raley's, Wal-Mart, Target, everyplace," Hegeman says. But he added this warning: "You need to look at your distribution and manufacturing. Your first order could be 100,000 units, easily." A call to her manufacturer and chemist confirmed that Hegeman could ramp up quickly enough.
She agonized for a month, though, over product positioning. "I thought, 'I'm going to be all over the place, but nobody is going to know my name.' Pregnant women don't go into Target to look for a pregnancy cream. And the price would obviously come down. Instead of being upscale, it would just be another cream." There were other marketing issues, like her lack of advertising dollars. "My fear was 'What if it doesn't sell because those big companies don't get behind it?"
Finally, Hegeman weighed the short-term gain against her long-term goals. In the end she realized that the endorsement of obstetricians and the loyalty of specialty maternity and baby shops were worth more to her future than sitting on a shelf at Wal-Mart (or, worse, a half-off shelf at Wal-Mart).
"So we said, 'Thank you, but no, no thank you."
20 GOOD REASONS TO SAY NO TO A SALE
1. The overhead. Or, put another way, you're in over your head. You could pull off this sale if you had an unlimited credit line, more space, triple the staff, and . . .
2. You'll get paid, but on their terms. Remember, you didn't start your own business to become a collection agency.
3. Taking the sale would force you to make hasty hiring decisions. Long after the sale is over, you could be stuck with employees you wish you'd never met.
4. The deal is about money only. And the money is never enough.
5. It's the vision thing. Their mission doesn't mesh with your mission.
6. The "honeymoon" is killing you. If this is what the first sale is like, you don't need the repeat business. Get out now.
7. Getting the sale was a little too easy. There's something fishy here. Do a credit check, pronto.
8. Less is more. You're as skilled at outsourcing as the next entrepreneur, but resources are not unlimited. Peter Drucker writes, "In business service firms . . . the question of the absolute limit should be taken most seriously."
9. The numbers don't add up. If you can't see how you'll make money on this deal, you won't.
10. Your chief financial officer loves this deal. It looks good on paper, but you know better.
11. You're dealing with a dictator. Your hot prospective customer wants to tell you how to run your company.
12. Your cash flow can't take the hit. You can get the sale only if you bankroll a customer the size of a small Latin American country.
13. Saying yes now means saying no later to the customer you really want. Trust us, there will be a next customer.
14. This customer doesn't make your top 20 list. If it's true that 20% of your customers provide 80% of your sales, why waste your time?
15. That's not the business you're in. It's a nice sale but in a marginal market.
16. Taking on this project would render your business unmanageable. Diversification is one thing; anarchy is another.
17. This sale is the same old thing. Your people are tired of doing the same sort of projects over and over again. They need to stretch -- and so do you.
18. It's growth for growth's sake. And the sale will come back to haunt you.
19. The sale is good for the ego, lousy for the business. Really, now, must you do business with the largest company in your state?
20. It's a case of diminishing returns. It's taking every last resource to service this account, and it's no longer profitable.
