Need Advice - Why would a recognized company delay free help to add 600K to their bottom line? (credit, commission)

[NHtoFL]

Without getting into the specific name, I have some solid aquantiances in a manufacturing company that sells to many well known retailers in the outdoor industry. The company is having financial issues. They were in the 9-11M/ year range and saw growth every year except for the past 18 months, and it is hurting.

They have in excess of $ 600k worth of old inventory, remanufactured, customer returns, etc. All working, all just sitting there and in addition to new inventory. This is where I came in. I have owned and operated a multi million dollar e-commerce site for years and recently sold my business. In search of a new opportunity, I offered to develop a B2C dot com for their old inventory. It is actually a game plan they concieved years ago but didnt know how to take the next steps.

Here is the best part.... since I know them and I know they are suffering a bit, I offered to do this on a comission basis. Dont pay me until I make you money. Additionally, I offered to revise their out of date main site that was last updated 5 years ago. They liked the plan, the number work, there is no logistical reason not to do it. But the owner wont get back to me. No return emails, calls, etc. On occasion, if he sees me there, it is very brief and doesnt want to chat.

Now if you owned a multi million dollar company that provided a luxary item in a bad economy and were in need of money, what could be better than a business owner with the skills and resources necessary to move old and out of date product on their own terms and at maximum GP effectively at no upfront cost to you?

Hard to say what is going on, but no employee can understand why. Possibly selling the company, going out of business.... who knows.

I am hoping someone may of been in a similar situation. I am tired of chasing them, so I stopped. The problem is the opportunity is so big, I dont think they even realize it. The growth potential into other secondardy or similar markets would be outstanding... thats how big their name is in the industry as they are the biggest and best at what they do.

Thoughts?

[8 SNAKE]

Originally Posted by NHtoFL

They liked the plan, the number work, there is no logistical reason not to do it. But the owner wont get back to me. No return emails, calls, etc. On occasion, if he sees me there, it is very brief and doesnt want to chat.

Who is "they"? If the owner is ducking you, who in the company is supporting your plan?

[texdav]

Maybe they are goig to do it threir selfs with no commission and skip the middle guy.Or he has contacted that already do this type of sells.

[broadbill]

Originally Posted by texdav

Maybe they are goig to do it threir selfs with no commission and skip the middle guy.Or he has contacted that already do this type of sells.

Bingo! That was my guess too.

[NHtoFL]

Upper management, VP, HR, and the head of CS were part of the plan and all support the project. It is possible that they may find someone else to do it, but that is a strech. Remember, they could not afford to hire anyone to do it and they dont know ( and still dont ) know where to begin. I didnt give them that many details.

To hire someone else.... would cost them money upfront that they dont have and assume all the risk. Frankly if they did this, it would not make any sense, but anything is possible.

[pghquest]

Numerous reasons not to do this.

1) They might have internal staff that would do the website modifications on a per hour basis and not be tied to a yearly commission.

2) They want to sell the old products but dont want it tied to their main business.

3) Since they are dealing with returns, defects etc, this would mean higher maintenance costs, higher customer service costs, wanting/needing to test products before they go out the door etc.

4) Maybe you did not approach them in a business manner. Have you created a business proposal? Estimated costs, (and dont pretend that added work isnt added cost to the business owner etc), how the products would be tested etc. Dont want to ship an item to a customer thats defective.

5) The owner probably would be better palletizing the products and selling them off to a reseller keeping their main business out of the resale equation.

[8 SNAKE]

Originally Posted by pghquest

5) The owner probably would be better palletizing the products and selling them off to a reseller keeping their main business out of the resale equation.

That was my first thought when I read the original post. With so many resellers already in place, I wonder why the company is sitting on $600k+ in old inventory?

[NHtoFL]

You make some good points. Let me follow up on this...

Originally Posted by pghquest

Numerous reasons not to do this.

1) They might have internal staff that would do the website modifications on a per hour basis and not be tied to a yearly commission.
They dont. This I know. There are only 8 people left. Even if any of them knew how to, none of them have the time.
2) They want to sell the old products but dont want it tied to their main business.
Been discussed. It is being done under a different corporate identity.
3) Since they are dealing with returns, defects etc, this would mean higher maintenance costs, higher customer service costs, wanting/needing to test products before they go out the door etc.
To clarify, these are already tested, teched, and repaired if necessary. This is working product.

4) Maybe you did not approach them in a business manner. Have you created a business proposal? Estimated costs, (and dont pretend that added work isnt added cost to the business owner etc), how the products would be tested etc. Dont want to ship an item to a customer thats defective.
Most of this is covered in respond to # 3, but yes. They received an outline of project phases. Aside that I have moved over $ 150k in product for them before via other methods in the past 2 years as a side thing. The only costs here for the company is packing & shipping.... which even then only happens AFTER they sell it and profit. They already own the dot com, hosting, ship facilities, etc.
5) The owner probably would be better palletizing the products and selling them off to a reseller keeping their main business out of the resale equation.

Offered to help with that. They didnt want to do that as their focus is profit, not trying to move it asap at any price

[DC at the Ridge]

If they are having some financial hard times, they may be using that current inventory to secure a credit line. It's an asset, so they have to sell it at a profit. They may think your plan is a great one, but it's your plan. If they have employees that are capable of doing this, your assessment that those employees don't have time to do it isn't really relevant. Management can change an employees priorities, and suddenly they do have time. It sounds like they considered your plan plausible, but decided to try to make it work for them rather than work for you.

[Dd714]

From my experience - old inventory. You can't imagine how tough it is to get a company to make a decision on it because you have to many conflicting groups involved in it, this is just a universal fact in the business world.

a.) Finance wants it valued properly, properly reserved for, and it properly controlled.
b.) Logistics just wants it gone with as little trouble as possible.
c.) Sales wants it in stock "just in case" in order to please their customers. Or they might have plans for it.
d.) For owners and executives - excess and idle inventory are typically items that are hidden in financial reports. They don't know about it and frequently don't want to know about it.