Advice needed fast!

[Bill Soukoreff]

I was working with an owner-operator servicing the high end residential market and am now prepared to go on my own. I know what my real bottom line is and what I need to do to slowly build up a business.

However, I know personally the owner of a medium sized premier flooring store he has approached me to like enter into a business relationship with me. They would "soft sell" me as their preferred service provider in exchange for a commission.

One idea of theirs is use me as kind of like a sub-contractor. They would book the jobs, invoice, collect and pay me a cut. I am definitely NOT interested in that arrangement. I want to keep by business totally separate and run it the way I want.

What kind of percentage would be considered normal? You hear the 10% figure being tossed around allot. But I am sure they will want more. If I run my business separate but I don't have look for work or advertise, would 15-20% be an acceptable compromise? Would that be just the initial clean, or for as long as I am referred to by them. Any ideas on how many clients a medium sized carpet store could generate if marketed to in this way? Would it quickly outgrow a owner-operator? I

I appreciate some of these questions are very general, but any advice would be appreciated! I have no locally that I go to for advice.

Thanks

 

[bob vawter]

don walk away.....RUN!

 

[Lee Stockwell]

Why would he go with YOU instead of your former employer?

In other words, if this is such a great relationship something smells funny.

 

[Bill Soukoreff]

They have their reasons. They want to benefit from this. They don't want to open up their customer database to just anyone. The initial two casual conversations I had with them do make me want to run (only because of the sub-contractor route), but I still want to see if there is way for both of us to be happy.

 

[SRI Cleaning]

I say do a good job and keep him and any customers he sends you happy. Pay him a good referral fee and charge a premium for good work. By having him feed you work you are indeed saving on advertisement expenses and what do you have to lose? If he recommends you then the custy probably wont price shop, they already have a reliable refrence of your work. Just dont go signing any no compete contracts. And no, i doubt he will give you "too much" work, so i wouldnt worry about being too busy you can always turn work away.

 

[hogjowl]

Pay him 20% of any sale HE initiates. Once you've cleaned for someone, keep in touch with them in hopes they call YOU for subsequent appointments.

 

[Greenie]

If the jobs are truly "premium" then 20% will be no problem, and hopefully this will keep you with a quality customer who purchased quality goods and actually cares, this would lead me to the next question, id your friend selling PET crap or pushing for nylon on the majority of his sales? (shut up Marty).

 

[hogjowl]

Would you mind giving me a chance to be pissy before you shut me up?

 

[Bill Soukoreff]

Thanks everyone. They push high quality nylon and a good chunk of wool as well. PET % is there, but low. It seems the consensus here is that initial 10-20% would be reasonable. Would it be unreasonable for them to demand that on future repeat work, as long as I am still their "preferred service provider"?

 

[Jimmy L]

They will never find out on the repeats because they will be calling you.
You are in essense "Buying" a new customer from them.

 

[Bill Soukoreff]

Awesome. That helps me know where to draw the line.

 

[Rex Tyus]

Would it be unreasonable for them to demand that on future repeat work, as long as I am still their "preferred service provider"?

Completely unreasonable.

 

[Al]

I Concur, only pay them the 20% on the initial job they give you and only on the carpet. If you do any up-selling like furniture or tile, that should be yours.

 

[Kevin B]

First of all, I would NOT pay anyone 20% to send me work. If they think its such a good deal, have them go buy the truck and they can do it themselves.

I would just kick them 10% (quarterly or monthly), refer your customers to them in return. In no way, would a repeat ever get a commission. That would be residual, and not part of the deal.

There is plenty of work out there, the right franchise will charge you 20% and probably get you more work.

 

[John Buxton]

I have tried that in the past and it didnt work out for me. Its a pain in the ass to keep track of, and their service is always more valuable than yours.

Keep an eye out for this crap. Your service is discountable but when you go to buy carpet from them it'll be full price.

 

[steve r]

and heaven forbid a referal complains to them and not you.

 

[Bill Soukoreff]

Thanks everyone for the great advice.

 

[Numero Uno]

I would also contact some one like Neil Seymour to have him work out all aspects of the contract.

To make sure it is in your best interest.Nothing like a lawyer who cleans carpet.An he is a great fella...

His email address should be floating around in a Cleanfax archive...

Great point Jimmy...

 

[steve r]

i wouldnt sign into any agreement just verbal. its easier to walk away from.if hes honest and a good guy it shouldnt be a problem otherwise i wouldnt want to do buiseness with him.

 

[alazo1]

I think 10% is good. As an incentive, you may want to offer more of a complete solution and have some of your spotters as well as a guide to how to maintain flooring for the customers (at cost).

Albert

 

[Josh Adler]

10% is a more then a fare Number. You need to make sure that they realize that you also are bringing a "Value Add" to there carpet store. There customer will be getting a reminder to holdup there warranty which shows that the carpet store cares about its customers. it also works great when the carpet company makes a mistake and has to fix it, they will have you as there hero. You will be the one fixing the mill defects(roll crush, loom oil, pile distortion) and saving there ass from replacing carpet.. Remember you still need to make a profit and things need to be discussed such as who is paying for the marketing materials of the program (letters,envelopes,postage) if they are willing to fork up all of that then you can afford to pay them a higher percent commission then you could if you were putting all the money in

 

[timnelson]

The initial two casual conversations I had with them do make me want to run

Never make any contract (oral or written) with someone you do not completely trust. By the way, you need to cut yourself some slack. You say you are not as astute as the guy on the other side. Yet here you are searching for -- and getting -- some very good advice. That's pretty shrewd in my book.

Good luck!

 

[TonyM]

William please e-mail me about this. My e-mail is tmar@wi.rr.com