Texas Independence: newcomer carries the torch in a changing economy

Clint Maxwell never planned to be in business for himself. As a young man, he had aspirations to be an engineer or an architect. But while attending the University of Texas in Arlington, he realized he wasn’t sure what he wanted to do.

Fast forward to today, and the 35-year-old Maxwell has established himself as a reputable, independent mobile distributor in Stephenville, Texas, a rural area just west of Dallas. In the past two and a half years, this largely self-taught Texan has paid off half of the money he borrowed to get himself started in tool sales and is now looking to invest in a larger truck and a computerized management system. He proves that an ambitious, dedicated individual with good people skills can be successful in mobile tool sales.

Like many successful business owners, Maxwell has been able to use his natural gifts – in his case, an outgoing personality – and leverage his familiarity with his region to take advantage of an opportunity that until a few years ago he didn’t even know existed. But his ride – no pun intended – hasn’t been smooth.

After a stint in college, Maxwell went to work at DHL, the courier service, as a driver. Over the next 13 years, he worked his way into management at DHL as a supervisor, and was moving up the corporate ladder. He was upbeat about his future.

A setback and a new beginning

Then the recession hit. In 2009, Maxwell fell victim to a massive downsizing at DHL. He immediately teamed with a “downsized” fellow employee on a startup business, an airline luggage delivery service. But the venture fizzled in less than a year.

Things weren’t looking good for Maxwell in late 2010. He had two young children and a wife to take care of.

Little did he know that his next opportunity was awaiting him in his own backyard.

Maxwell’s Uncle Bob owned an independent mobile tool truck, WB Tool Truck. When Uncle Bob suddenly took ill, one of Maxwell’s cousins took over the route on a temporary basis. WB Tool Truck had a client base of 150 accounts established over 22 years in a 360-square-mile area.

When his cousin asked him to help out on the truck, Maxwell obliged. Little did he know he would soon be asked to buy the business.

No decision was made until Uncle Bob passed away. At that point, Maxwell decided to buy the small company from his aunt, who was also the business’s bookkeeper. They agreed on a purchase price for the inventory, the truck (a 1979 16-foot Ford Kubmaster that was originally a ServiceMaster carpet truck), the customers and the goodwill.

Maxwell borrowed $10,000 from a local bank, but carried a much larger balance with his aunt who sold him the business under a seller financing arrangement.

Tool education begins

Maxwell knew almost nothing about the tool business except for what he learned driving for a few weeks with his cousin, who was also a novice. His aunt was able to give him a good overview of the inventory and how much he needed to sell to cover his costs and make a profit. His uncle had grossed around $200,000 a year, yielding a reasonable income for the couple.

Integrated Supply Network (ISN), his main tool supplier, advised him on what inventory to stock. Maxwell fitted the truck with 280 stock keeping units worth about $10,000 in retail inventory.

His aunt taught him how to manage Excel spreadsheets for keeping track of sales and collections.

Maxwell knew very little about tools, but fortunately, he wasn’t shy about asking his customers what the tools do. He found most of them were willing to help him, thanks largely to their loyalty to his Uncle Bob. One customer, for instance, told him to tape his business card on all toolboxes he sold as a way to promote the business. Some customers have taught him how to fix tools.

The customers told him they liked his uncle and would keep buying from WB Tool Truck if he served them well. Uncle Bob had a reputation for being fair and helpful; he would make an emergency delivery when asked. Maxwell realized he needed to do the same thing to keep his customers satisfied.

Fulfilling his uncle’s reputation for attentive service wasn’t easy. From day one, Maxwell made it a point to respond immediately to all customer requests for tools. Meeting these requests, he learned, takes perseverance. Finding a specific product in a catalog, on a website or over the phone can take 45 minutes, with no guarantee of a sale. But Maxwell realized that responding to requests is a key to establishing credibility. “Guys (customers) have learned I can find things,” he says. This is something that not all of his competitors are willing to do.

Professional Distributor was able to confirm this independently by speaking with some of Maxwell’s customers. A tech at one stop said Maxwell is one of two mobile distributors who visits their shop every week. Because of this, and the fact that Maxwell is friendlier than the other distributor who comes weekly, the tech said he and the other techs prefer to patronize Maxwell.

Maxwell also learned that his uncle was known for providing the same quality tools as the flag trucks but at a lower price. Hence, he began studying the flag catalogs and learning which manufacturers make products that can compete with the flags on quality and price.

He realized that his uncle’s niche was good quality, warrantied tools at a lower price than certain brand tools. But Maxwell also recognized there are some exclusive tools that flags carry that he can’t offer. He realizes that some customers are loyal to certain brands and will not change. “I’m not here to compete (100 percent of the time) with franchise trucks,” he says. And these flags exist throughout his market.

There is, however, a sizeable number of customers who want the tools he carries.

In search of growth

His uncle’s reputation, combined with his own people skills, enabled Maxwell to meet the monthly sales goals he set for himself in the beginning. He was able to generate an income similar to his uncle’s. But he believed he could do even better if he served larger customers.

In the first year, he culled half of the accounts – the least profitable ones – and sought others to replace them. He visited two prospective accounts every day, and in the course of two and a half years, he rebuilt the individual customer count to 150 in 115 stops. He visits all but 20 stops weekly; the rest are bi-weekly.

Placing his best foot forward

His uncle’s reputation has helped him win new accounts. Maxwell tells prospective customer his truck has served the market since 1989.

Another advantage Maxwell brought to the role was his personal history in the area he serves. It is not unusual for him to see former classmates at his stops. “It helps being able to know something about their personal lives,” he says. “It helps me relate to them personally.”

Maxwell has a gift for gab, and he found it helpful in sustaining customer loyalty. His other sales techniques have been self taught.

When approaching new customers, Maxwell makes a point not to badmouth the competition. He tells them the established players carry good quality products. This carries no downside for Maxwell; by comparing himself to the competition, he places himself in good company, thereby enhancing his own credibility.

He even tells customers that they should shop different trucks to see who carries what tools.

He sometimes fixes tools that he did not sell. “When you do that for a customer, game over,” he says. “If there’s something I can fix for them, it makes me look better.”

When he gets a new stop, Maxwell encourages the techs to learn about his tools and ask questions. If he doesn’t know something, he goes to the supplier’s website. He believes an educated customer is a better customer.

He doesn’t hesitate to let a trustworthy customer borrow a tool before buying it. Because the tools he carries are good quality, Maxwell has learned that most of them sell themselves. He recently sold a diagnostic tool to a repair shop after letting the shop use it for a week.

One thing that surprised him early on is how much techs will spend on tools.

Conversations and other sales techniques

One of the most important insights he gained on his own was how much the techs buy on impulse. Hence, he tries to keep them on his truck as long as possible; he does this by actively engaging them in conversation. He will spend as long as an hour talking with a customer about their personal interests. He insists this helps build strong customer relations. “If I get people (talking) on their things (hobbies) five more minutes, they’ll tell me something they want. I’ll spend the extra time,” he says.

Maxwell has found that sometimes a product sells better if it has been off the truck for a while. “Absence makes the heart grow fonder,” he says. An example is pry bars. Pry bars sold well when he first put them on the truck, then fizzled. After a two-week absence, some customers began asking for them.

Package deals also drive sales. Maxwell says it takes time to learn what tools to pair together as a package deal. The goal is to allow a customer to buy an item at a lower price by buying it as part of a package.

Sometimes he finds it helps not to put prices on packages. This causes a customer to ask about the price, which can lead to a sale, whether or not the tool in question gets purchased.

Maxwell uses Facebook to get the word out to customers about his promotions. He runs drawings for customers to win free tools periodically. He has found this a great way to market new tools. “The next thing you know, you’re selling three or four (new tools) in a shop,” he says.

During holidays, he carries a lot of toys for customers’ kids. This past Christmas, remote control helicopters, tanks and stun guns were popular. Pink-colored gifts were popular on Valentine’s Day.

He offers more liberal payment terms than most of his competitors: 10 weeks for most tools.

He also offers credit.

How does he decide whom to extend credit to? The main consideration is the condition of their teeth. “Good teeth indicates they are responsible,” Maxwell says. Bad teeth, on the other hand, means they are irresponsible at best and a crack addict at worst.

Maxwell is wary of customers who want to buy high-ticket items without asking questions first.

He is especially wary of young techs who want to buy new toolboxes. “He (the young tech) wants to show (off),” Maxwell says of such people. “You have to see beyond the dollar signs of the sale; you have to see the actual dollars. It’s little things like that you have to watch out for.”

Administrative challenges

One of the most challenging things about doing business in Texas is the varied tax rates that counties and municipalities levy. Maxwell uses colored stickers to designate the local and county taxes which he attaches to all of his inventory. When he quotes a customer a price, it always includes the taxes.

Tagging the inventory with stickers and managing the books with Excel spreadsheets takes a lot of time. But Maxwell has found that paying his taxes monthly allows him to feel in control of his business. It helps him stay current on his receivables. He also gets a 1 percent bonus from the state for paying taxes monthly.

He normally stays within a $14,000 purchase credit limit. “If I stay there, I’m fine,” he says.

Maxwell expects his inventory to turn every two or three weeks. If an item fails to meet that goal, he removes it from his truck and replaces it. “With a smaller truck and a smaller wallet (compared to the flags), I have to pick and choose my battles,” Maxwell explains.

The hardest aspect of the job, however, is the dedication required to succeed. Maxwell has his cell phone with him at all times, and he’s always on call. “You’re never ‘off,’” he says. And when you’re having a bad day, you can’t take it out on the customers.

Dealing with collections

Maxwell is like most other distributors when asked what he most dislikes about the job: collections. While only 10 percent of the customers give him problems in this area, that 10 percent is enough to threaten his profitability. About 5 percent of the customers have to be reminded to pay and another 5 percent have to be chased.

One technique that has helped with collections is a “used and repo” bin placed prominently on one of his shelves. These are mainly tools that have been repossessed and sell at discount. “Guys pay attention,” he says. He cites this as one of the most effective techniques he’s used for getting paid.

For the 5 percent of customers who have to be reminded to pay, Maxwell tries to find out why they can’t pay. Having been laid off himself, he empathizes with people in financial straits.

If a customer has made some payments but can’t stay current, he credits the customer based on prior payments.

For those who skip, Maxwell follows a plan. If someone owes him money and doesn’t return phone calls or emails, he visits them at home. He gets home addresses from drivers’ licenses, which he requires of all customers.

He also uses social media to find information about delinquent payers. “Facebook has been valuable because people put so much information on it,” he says.”People put all their information out there on the street.”

“The easiest way to make sure you get paid is call their mother,” he says. “Guys don’t want to look bad, especially to their mother.”

He also visits spouses at work to pass the message along. “No one (spouse) wants to be married to a loser,” he says.

Maxwell says it’s important not to invest too much emotional energy in skips. “You do your best to chase them down, but you don’t get consumed by it,” he says. “It will eat you.” This, in turn, will affect how you treat other customers.

Outlook positive

Maxwell is optimistic about the future of his business. One reason is the tool manufacturers keep coming up with new and better products.

Maxwell recently learned that metric tools are popular with some customers. He has noticed that a lot of his technician customers need specialty tools for work they do around the house and in the garage. “They have ‘standards’ at work and metrics at home,” he notes.

He has also noticed that diagnostic tools have become popular of late, as have cordless hand tools with longer-lasting batteries.

One of the things he likes best about the job is there is always something new to learn. “Cars change and technicians change,” he says.

While the market is still challenging because of the recession, Texas has fared better than most regions, largely on account of the energy industry. Some of Maxwell’s best accounts are shops that service oil and gas fields.

He is also grateful to have a supportive wife, both morally and financially. His wife recently took a job as a full-time nurse, allowing Maxwell to pay more of his debt.

He has already paid off about half of his business debt. He next hopes to buy a new truck and install ISN business software. With more tools to display and automated business management, he thinks he will be able to increase his sales significantly.

Looking to the future, he would like to see independent distributors pool their resources for buying and warehousing.