Cultivating Good Customer and Vendor Relationships

I’ve been in the lumber business for fifty years. Many things have changed over the years, but we have been blessed with an abundance of success. Managing cash flow is important, but what makes that task, and every other aspect of running a business, so much easier? Relationships. Work on building good relationships with everyone involved in your business, and you’ll find that success will come your way.

Building a Strong Customer Base

You can’t manage cash flow if you don’t have revenue! I have worked hard over the years to build a strong and loyal customer base. I always say, “once we get them, we never lose them.” We do more for our customers and do a better job than anyone else in the industry. The service that we give and the integrity that we put into our operation makes people want to come back. We are constantly looking for ways to save the customer money and provide additional services. Because our relationships with our customers are so strong, many of them are willing to pay more for our product than they would pay for someone else’s, simply because they prefer to do business with a company they can trust.

We are very selective about taking on new accounts. We supply lumber throughout our region, north to Boston, into the southeast, and we’re currently supplying projects in Africa, Brazil and China. People hear about our quality of service and they inquire about establishing a relationship with us.

One of the reasons we have such a strong reputation is our price guarantee policy. We will guarantee any price we give. Just the other day we had a call from a client who chose a competitor for a large project. The competitor “walked on them”, so they called us to handle their needs. Since we made the quote, the lumber prices went substantially higher, but we had guaranteed our price. We’re not making the profit we could’ve made if we had taken advantage of the situation, but that’s not the way we do business and it will help us in the long run. We stand by our commitments.

Not all customers, even when well-intentioned, are able to meet agreed upon terms. We know some of them that when given a thirty-day invoice will struggle to pay on time. We understand that they may be cash poor at a particular time and we stand by them. There are occasions when we have to massage a few. I know this year we’ll be writing off some money. It’s more than we’d like, but percentage wise, it’s considerably lower than the rest of the industry.

One way to minimize our risks is by choosing our customers carefully. There is business out there we could have right now if we wanted, but it isn’t worth the risk. So we walk away. No point having a large contract that may never be paid! Some of the best deals are those you don’t make.

Working with your Suppliers

It’s equally important to have a strong relationship with your suppliers. We have worked hard building long lasting loyalty there too. We ask two things of our suppliers – to discount every invoice they possibly can, and at times, to guarantee their price for as long as six months. When we ask for a six month guarantee, we don’t expect a discount. We pay a premium for that. We wouldn’t expect anyone to suffer because of us. Each month, we also give them an add-on payment incentive to compensate them for carrying the price and the merchandise for a six-month period. Because we’re true to our word, the suppliers understand this and are willing to work with us. In turn, this assists us to limit our risk on the price guarantee we offer to our clients that I mentioned earlier. We have very good relationships with our suppliers, and consequently, I believe we buy at more advantageous pricing than any of our competitors.

It’s also important to do the right thing. For example, recently a supplier was shipping two railroad boxcars of lumber from the West Coast to a customer in the east. Halfway through the trip, the client pulled out of the deal. The supplier asked us if we could assist. We sold the lumber for them at a reduced price and didn’t take any money for helping them. The supplier still lost money on that deal, but has given us great opportunities on about a dozen other shipments since that time. They appreciated our help at a difficult time and from there, we have built a great relationship that is profitable to both of us.

Managing Inventory

This is one of the toughest parts of the business. I’d like to say we have a perfect track record of buying when the price was at its lowest, but that wouldn’t be true. I would say that for the most part we have been very fortunate. Just the other day we bought forty railroad cars of a particular item thinking the price wouldn’t go any lower. Well, it did go lower … briefly. Then it took off like a rocket, so we were right in the end.

We try to make smart decisions, but I tell everyone here if we make a bad decision, we’ll get out of it. You can’t be perfect in a free market, but you can be sensible and use your best judgment. Just as long as you’re not too hard on yourself when you get it wrong. You battle your way out of it … don’t dwell on mistakes – overcome them.

There are times when we do suffer some pain. Especially when projects are delayed for any number of reasons. We may reach the end of our six-month guarantee deal with our supplier, and the client still isn’t ready to take deliveries so we’ll buy the lumber and add it to our inventory. Even though it may hurt, it usually pays off beautifully in the long run as we’ve accommodated our customers and kept faith with our suppliers.

The Importance of Staff

Our employees are the biggest reason for our success. We are like a family here where everyone loves to come to work.

Our truck drivers are especially friendly people. We don’t want rude or unhelpful people delivering our product. So they arrive with gifts – sometimes donuts or aprons with our logo on the front. They help wherever they can.

We post our daily sales figures in the office for everyone to see. We also show them what we did this month compared with the same month last year. They love it – it makes all employees feel part of the business and fully informed. Of course, the big reason they enjoy keeping track of the figures is because we have a profit sharing plan. Every single employee gets to share in the company’s profits. Why shouldn’t I share it with the people who help our business be successful? They’ve given my family the security we enjoy and I want to return the favor … sharing our well-being with them and their families.

In return, they do their best for the company. They look for ways to increase our profits and reduce our costs all the time because ultimately they know it will benefit them. I know they’re doing things I’m not even aware of to help make the company even more successful.

I also like to do things for my staff whenever possible. We have lunches, golf days and organize weekend trips for people to give them a break and reward them for hard work. When I talk about building relationships, there is nothing more important than having a great relationship with your employees.

As a result of all this, we provide the very best service to our clients. I am more proud of my staff than I am about any other aspect of this business.


I think it’s important to have some diversity in your business. We now do a lot of milling here. We have customized saws, computerized saws, and we constantly upgrade our equipment. We are doing things now that many people in the industry wouldn’t believe unless they came here and saw our operation.

Doing these extras gives us some protection from the ups and downs of the lumber market and allows us to offer more services to our clients, which helps build the relationship.

We also try to be diverse in the clients we serve. Initially, everything we sold went to the maritime industry. A lot of that business has been phased out, most of it because containerization came into place and they didn’t require the blocking and bracing in the amounts that we sold them for many, many years. So we have changed with the winds. Nothing stays the same forever.


We’ve been at our present site – underneath an overpass of the I-95 Interstate, for more than twenty years. I’m often asked what I see as my legacy.

We do have a great thing going and I truly believe we have laid a foundation that will keep it going long after I’m gone. The resources are here. But more importantly, the people are here. The right people. It is a real joy to tell you it’s a family. My son Grant is now president of the company, and I’m proud of where he is taking us. It’s not a phony issue about how we treat our employees. What we do for them keeps coming back to us all the time … many times over.

One of the truck drivers brought me a dozen ears of corn today. He was driving by a roadside stand, so he stopped and bought some corn. Things like that happen all the time and in return, we do the right thing for them.

Running a business, managing cash flow – anything at all – is really about a two-way street. With suppliers, with customers, but most importantly, with your staff. It is also extremely important to give back to the community. We are and will continue to be a good corporate citizen. If you take care of those fundamentals you’ll not only be successful, but you’ll also be extremely proud of what you’ve built – just as I am.

More like this: Money, Planning and Strategy

You have an idea for a business. Now what?

Kauffman FastTrac can help you clear the path from idea to business start. Access the tools, resources and guides necessary to start and grow your business — anytime, all online, at your own pace.

Try FastTrac

Go mobile with 1MC!

Why limit your boost of community, entrepreneurship, and connections to the live events? Download the free 1 Million Cups app and keep the #1MCnation spirit alive!

Download the 1MC mobile app!