Volume 34, Number 1, January 1999

THE BUSINESS

Dear Andy

Dear Andy Lamb of Arrow Glass (in downstate Illinois):

I received your e-mail letter of Tuesday, December 1, 1998, and am herein responding to it. But before I do, let me begin by thanking you for writing to me and asking for advice. A lot of people call and write to give me advice, but very few ever ask me for advice. And it is also somewhat meaningful that a person from your part of the country would seek me out, for you see, my family came from downstate Illinois, not too far from your area.

For many years, they financed their subsistence by farming and working the coal mines of that region. So, I’m pretty familiar with your part of the country. My guess is that it’s kinda rough most of the time, and I imagine it’s also about impossible to find competent help. I’ve got a few cousins still living there. They’re working as guards over at the prison . . . that makes it easier for them to stay in touch with the rest of the family. Now I don’t want to give you the wrong impression of my family. It’s not that they’re bad people . . . it’s just that they’re kinda lazy. As one of my grandfathers used to say, "It’s a whole lot easier to rob the gas station than it is to work for it." Now, lest I forever tarnish my image even beyond its current level of tarnishment, Id like you to know that my other grandfather was actually a county sheriff down there for many years. And as he used to say, "It’s a whole lot easier to take protection money from the gas station than it is to work for it." Ultimately these men made their way up to Chicago because, as both of them used to say, "There’s a whole lot more gas stations in Chicago than in downstate Illinois."

Right about now Andy, you’re probably wondering what all of this family stuff has to do with your letter and the questions you asked me to address. Well, the answer is that it doesn’t have much to do with anything other than my need to fill up an entire page for my column. And while your questions are both intelligent and meaningful, it’s probably a safe bet that my answers won’t be. So now that you’ve heard a little family history and been properly warned, here we go.

QUESTION #1: What is a reasonable overhead cost and what is a reasonable profit rate?

MY ANSWER: This is a tricky two-part question. However, I am up to it. . . the answer to the first part is "As little as you can get away with" and the answer to the second part is "As much as you can get away with." And by the way, the word reasonable does not apply to any facet of the glass business so let’s not use that word again.

QUESTION #2: Is volume as important as mark-up . . . ie: do more opportunities = lower margins?

MY ANSWER: This is a very complex question. If you’re not going to do much volume, you better have some fantastic margins . . . ie: if you’re only gonna rob one gas station, you better hope the drawer is really stuffed. Further, I don’t think that more opportunities has to have a direct correlation to margin levels although it might . . . ie: most of the gas stations in any given area will probably have the same approximate amount of cash in their drawers at any given time. Also Andy, thank’s for using that "ie" thing. I really get a kick out of those!

QUESTION #3: On accurate labor estimating. Is this quantifiable or is every new job an adventure?

MY ANSWER: I am not qualified to respond to this one because all of my jobs, old and new, seem to turn into adventures. However, it is my firm belief that there is no substitute for

experience . . . ie: you may not be able to teach an old dog too many new tricks, but the odds are very high that he’s really got the old tricks down cold.

QUESTION #4: Is it advisable to have a union glazier (local president) supervising your labor force?

MY ANSWER: Maybe . . . maybe not. I actually had a pretty clever answer for this one but it will have to wait for another time . . . ie: I ran out of room . . . Too much talk about the family early on . . . bad estimate, I suppose!

Happy New Year to you all and I hope 1999 treats you well . . . ie: you make a drawer full of money . . . especially you Andy Lamb!


USG

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