Stocking Up

This story appears in the December 1996 issue of Startups. Subscribe »

Small-business owners today face a daunting challenge: learning how to survive, let alone flourish, in an arena where the big corporations get fantastic wholesale prices by buying hugh amounts of product in bulk. How can entrepreneurs hope to compete? By using simple common sense, and employing the one weapon that corporations don't have in their arsenal: the personal touch.

The smart way to start your business is by building a more personal relationship with your suppliers. Anthony Dell'Aquila, who started his second major operation two years ago, learned this lesson through a painful trial-and-error process with his first business. Today, he's applying the universal lessons that he learned to his new enterprise, the Hoboken Brewing Company, a company he started with his brother Mitchell, a home-brewing enthusiast.

While Dell'Aquila considers a number of factors when choosing suppliers, he highlights service as the single most important attribute in a good supplier. "It's a combination of things, but look for service-oriented companies," he advises. "Make that your number-one priority."

Dell'Aquila opened his first business, Textiles by Anthony, 14 years ago. Today, the Passaic, New Jersey-based company thrives, at least in part, because he has made the search for service and the development of a personal relationship with each vendor a key to his decision-making process.

"I get much more out of a company when I become socially involved with them," Dell'Aquila says. "Obviously, you can't have a social relationship with everybody you do business with. But, for instance, there's a thread guy I do business with. I found out that he likes salmon fishing, so I invite him to come with me every year. Even if they're not a service-oriented company, they serve me well because we've been socially active."

While Dell'Aquila swears by his conviction of finding suppliers that offer a personal touch, his business lessons have also taught him that finding those who are customer-oriented can require a lot of work. The first place he begins this search is in a standard reference book. "The Thomas Register is a big investment, but it's well worth it," Dell'Aquila says. "Every manufacturer in the world is listed in here. It's like the encyclopedia of vendors."

Once a supplier is located, the process of checking up on the company's references requires some persistence. One instance that Dell'Aquila recalls occurred during his search for beer distributors, in which he went through the painstaking process of interviewing liquor retailers to see who was the best local beer distributor in county after county.

"You sacrifice one day and do your homework, and get the answers you're looking for and use them," he says. After discovering one distributor had a fabulous reputation among retailers, Dell'Aquila came to the conclusion that this was the right distributor for his company. It was the kind of reputation that could only be earned by providing top-flight service.

In many cases, particularly if a company is looking to check up on a potential vendor who is not located nearby, Dell'Aquila says that getting four or five references and making some telephone calls will produce the best results.

"Every businessman is going to tell you pretty much how a supplier is," he says. "You call up and introduce yourself, and just say that you are calling to ask about their business relationship with this supplier that you're considering. Try to contact the owner of the company and talk to him as one businessman to another; he'll usually respect that and give you honest information.

"A lot of times, they'll say something like, `Don't say it came from me, but you've got to watch your invoices--keep an eye out.' "

As the relationship between supplier and buyer evolves, Dell'Aquila says it takes on qualities that transcend business. The trust and friendship that often grow within this relationship can lead to some insights and friendly advice from a supplier.

"By having that relationship, it allows me to say, upfront, to that person, `I can get it better, I can get it cheaper from another guy.' I'm not telling him that he has to lower his price or I'm going. I'll tell him in a way that maybe he'll suggest, `Oh, I can beat that.' Or he'll tell me, `Anthony, the reason that you're getting it cheaper is because your giving up this.' Sometimes cheaper isn't better, and your supplier will be able to tell you that," he says.

Regarding the question of paying for supplies upfront or finding a way to establish finance terms, even if a start-up business has cash on hand, Dell'Aquila strongly suggests pushing to get a finance agreement.

"Credit is something you have to go out and get," he says. "At least with your main suppliers, you have to establish credit terms with them before you go into something. Because if you wind up in a situation where you have to hock your house to get credit, you're already starting out behind the eight ball. Business is tough enough; you have to go into it with a game plan, with a business plan, where you start out with no strikes against you."

Beyond just having a straightforward buyer-seller relationship, Dell'Aquila has found advantages in joining forces with a supplier to provide a joint venture to a third-party buyer. The advantage in the joint venture is that the supplier and their small-business partner have an opportunity to produce goods on a large-scale, specified-order basis. Though his brewing company has yet to participate in a joint venture, Dell'Aquila has been very successful using this practice with his textile company.

"The key to a lot of success is companies developing cooperation," he says. "A fabric guy, which is called a piece-goods guy, and a contractor like myself, we get together and do a deal with Wal-Mart. They give us a guaranteed order for a very large quantity of shirts. Wal-Mart is getting the best possible price from the vendor, who's supplying the fabric, and they're getting the best possible labor price from my textile company. With all three companies working together, no competition can touch us."

The 37-year-old was able to parlay his own advice into $100,000 in sales in his first year as a microbrewer. But no matter how big his business may get, Dell'Aquila will stick to his notion of making personal connections with everyone with whom he does business.

"No matter who you're doing business with--even the guy on the corner selling hot dogs--always make a relationship," he says. "That company will do more for you. It will treat you like a customer and a friend."

Food For Thought

The Thomas Register is available from Thomas Publishing, and comes in a set of 33 oversized bound volumes for $240, or on CD-ROM for $395. To order, call (212) 290-7277. The Thomas Register is also available on the Internet. Visit their Web site at http://www.thomasregister.com.