Should Small Businesses Have Boards?

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week Stephanie Stucky tells Paul DS and Jay gz about seeking the guidance and perspective that a board of directors could bring to stues but does a business have to be a certain size to Warrant having a board how do you recruit board members how should they be compensated and is a peer group like vistage a better alternative plus uncovering a $140,000 cyber crime coping with the night May of shipping furniture and Jay tells us why if you listen to either the artists or the accountants in your business you're likely to go broke even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conversations will if nothing else let owners know they are not alone and facing challenges same thing with our daily newsletter the 21 hats Morning Report which highlights the most important news of the day for business owners which you can subscribe to at 21h hats.com where you can also find transcripts of our podcast episodes and lots of other articles and interviews this week's lineup features Paul DS who is founder and CEO of Paul DS cabinet makers which is based outside of Philadelphia and makes custom conference tables Jay Golds whose companies in Chicago include a picture frame business artist frame service and a home furnishing store Jason home and Stephanie Stucky who is CEO of Stucky the snack and roadstop business best known for its PK and log roles the episode is titled should small businesses have boards [Music] before we get started one of the recurring themes of this podcast is that marketing is hard for smaller businesses one reason it's hard is that we are all besieged by self-appointed digital marketing gurus who overwhelm us with outlandish promises on the other hand there's Steve craw co-founder of be found online a loyal listener to the 21 hats podcast Steve understands the business owners who listen to this podcast because he is one he knows his stuff but he's also a real person who you can have a real conversation with and if you tell him I you you can get a free consultation with Steve himself just shoot him an email at Steve befound online.com to schedule your talk that's Steve at befound online.com now on to the [Music] show Welcome Jay Paul and Stephanie um thanks for joining me today we uh we haven't spoken to you in a few weeks Paul how how has it been going well I had a little surprise on Monday sitting in my office and I get a phone call from a bank in Texas very nice lady on the phone who tells me that she thinks that my company is being used for PPP fraud and she's the fraud reduction officer and she's watching her client's account get emptied bit by bit by scammers the client's an elderly lady and uh she has just seen two payments come in this morning AC deposits that have my name on them one's for 118,000 and the other ones for 22,500 and she thought she would just pick up the phone and see whether I knew anything about this and we went back and forth about the PPP thing and since I've already gotten two loans I thought that was unlikely but she told me the name of the company she thought was the fraudsters who had initiated the uh the transactions and said the name of them and I was like uhoh that's one of my big clients and then I double checked the amount she gave me against payments we'd been expecting and these were two invoices we'd sent to this client a couple of weeks ago and so clearly these payments had been diverted into an old lady's account in Texas somewhere we looked into it further and the payments had never passed through our hands these are a deposits so there's information in the payment ticket about the uh initiating bank and the target bank and the initiating bank is my client's Bank the target bank is Texas this stuff never never got to us so it didn't look like we were the source of the fraud and long story short uh 140,000 now what do I do so I called the owner of the client company that should have been paying us and told her all about it and she kind of blew me off she she didn't want to hear it she was sure that it was us she didn't even seem to understand that we got paid by AC and she T talked about having cut us a check already and so that was bad one of the payments the bank officer in Texas was able to reverse the other one had landed in the old lady's account and she'd already cut a cashier check to cash for $52,000 and giv it to somebody and so you can apparently you cannot reverse a partial a payment so that money is more or less gone and now I'm wondering how to get the owner of this company who supposed to be paying me to to own up to the fact that her accounting department is breached and uh and that she still owes me money so that's how my week's been going that's quite a story wow do you so you have no idea what's happening with the old woman's account well it's fairly likely that somebody compromised my client's email account somewhere and was monitoring invoices going in and then made a request probably spoofing one of our emails to change the routing number of the outgoing payment to this Texas account so I would guess that the scammers of that are working the old lady are connected to other scammers so that they were able to identify particular payments and say oh please send them this place instead of that place the whole thing violates about you know 10 million protocols about how you're supposed to deal with these things and we've recently been uh going through a sustained effort on our end to UPG our cyber security protocols because we got notice from the Department of Defense last fall that every company that wants to get a federal contract is going to have to really pass a pretty strict set of tests about how they're prepared to deal with this kind of thing and as a matter of fact we just got awarded a a a large contract from an extremely high level government uh buyer who was that Paul I can't say sorry we won't tell anybody yeah no sorry nice try Lauren but a big part of the of the of the qualification process was this this uh examination of our cyber security procedures but uh it just shows how how how much of this kind of fraud there is going on I had a very interesting conversation with the fraud officer at the Texas bank and she says she's she sees three or four of these every day do you have any sense of where the legal liability lies on this uh what should happen well the the question is where did the money get stolen and uh the Texas Bank lady sent me an an article uh that covered recent uh court cases for these scenarios and it seems to come down to who had possession of the money when it was um when it was sent to the wrong place but it's not entirely cut and dried if somebody had hacked our email and sent a request from us to make this change in the Target bank I think that the my client would have a much stronger case but we've been unable to identify anything that looked like that and our protocol is that if we ever got a request for someone to change a long established banking relationship and uh we would of course make a phone call and follow up and get a second verification and it doesn't appear that they did this because we haven't you know if they'd said hey do you want us to send your money to the place we're using or to an old lady in Texas uh we probably would have said I think that we'd rather have it just the way it was so um so there you go I I don't really know how this is going to play out do you have any idea what you could do differently to make sure this doesn't happen again I honestly I think it's harder to do this kind of thing with a good old paper check although someone could steal it in the mail except if you use positive pay which I have for years they they can't cash the check because we every time we do a Pay Run we do this positive pay and it it tells the bank here's all the checks we sent out here's they're going to here's how much they are so somebody can't go ahead and swipe the check I don't know how you do that electronically well I I just talked to the the cyber security firm I've engaged about this and it is a real problem when people uh email around a information there's always a chance it gets compromised and we include that information on invoices we send out in the text of a PDF because we want our clients to be able to pay us and a lot of the clients are sort of oneandone transactions where we just want them to send the money and we're always happy to get money by a cuz then I don't have to pay a credit card fee on it you know 2 and 1 half 3% and I'm also always happy to get Pap for checks same reason it's Way saves me a lot of money um but I've been told that there is there really isn't a good way to secure a information that's passing via email and that the only thing you could do is to always make sure that you're you're uh verifying Paul can't you implement a password protected system to open those PDFs and having said that we use AC PDF forms routinely at Stucky and so I'm I'm taking notes as you're talking about what we need to be doing to make sure this doesn't happen to us I suppose you could I I don't know this is the first time it's ever happened to me that's what our bank does when we send any information to our banks via PDF they give well we have one main bank that we work with and we have to give them a a code that's texted to me before I can access any documents that contain bank account numbers okay that sounds good well we should do that yeah yeah great I just learned something what pretense was the woman taking the money out in a cashier's check for oh who knows she's she's apparently I don't I know very little about her other than the the fraud expert told me that she was elderly and that the uh scammers had convinced her that she was in a romantic relationship and God Only Knows just the the usual ugly human Frailty at work so Paul if um if you can't get your client to work with you on this what's the next step I mean do you do you have to sue them I could but I've worked years to get the kind of relationship with a furniture dealer like this and we've had a nice ongoing relationship for the last couple of years and we have a lot of upcoming projects with different clients coming through her so if I pull that it's shooting her and my own self at the same time it's it's not going to be good I'm just hoping that she'll own up to the that she actually has a problem and deal with it's possible her insurance maybe her insurance will cover this it's possible have you ever tried to get Cyber insurance I think I have it um I applied a couple of years ago and before they would even sell me a policy they gave me a list of requirements that at at the time I looked at it and I was like Ah hell no and Didn't Do It um I've I've since changed my mind about that because of these Department of Defense requirements that we were we were given which are even more onerous I'm not even sure it goes under the category of cyber Insurance she was stolen from basically and I you know so that's an interesting question whether her insurance company's going to step up she was stolen from it's like someone came in to her cash register and took the money out it's not like someone came into the cash register it's like someone persuaded one of her employees to empty the cash register and throw it out the window and that's the difference the Cyber insurance is is asking me when I when I when I applied What policies do I have in place to um to train my own people to monitor what they're up to and to respond if there seems to be a problem and so it's not exactly like getting robbed by a stranger Paul if you had cyber Insurance do you think it would cover this cover you in this instance possibly yeah I have a hard time believing that since he had absolutely nothing to do with this they they took their money and sent it to the wrong person I can't imagine that if he had a policy that they would say okay let's pay you for that I mean yeah it seems like that would be a pretty open and shut court case if you sued them for non-payment I understand why you don't want to do that but yeah okay well we'll be hanging on for the next the next episode of this drama Jay have you ever had anything like this at all well 25 years ago I had a scammer comeing and and work in the payroll work in the you know my payables department but you know he did the old school he took a check off the bottom of the pile and wrote it to a phony account that he had set up and in back in the day it was completely not my problem the bank the bank came up with the money because you this people don't understand you could write Mickey Mouse on your checks and that check's going through they're not checking signatures they they get they get nailed every day for phony signatures and and um so but that was that was Ian ago that was well before that was before September 11th which changed things dramatically that was before this whole positive pay thing so they couldn't really do that same thing today but apparently the crooks are finding new ways of stealing money so something to look out for are you going to check and see if you have cyber insurance for sure J first I'm going to find out what cyber insurance is and then I'm going to see if I have it and then I'm going to see how much I'm paying for it when I was at the city of Atlanta as head of sustainability we had a major Cyber attack on the city and I learned a lot of lessons from that that I've taken over to stues with me and part of it was that they did intense training of all the employees on how to recognize fish or spam emails and our whole team at stues is very Vigilant about reviewing emails and making sure they're accurate and they're legit but having said that you really have to do your research because the other week I got an email that upon first blush appeared to be a Spam it was from a foreign country which often is a trigger but you don't want to close yourself off to Opportunities and this turned out to be a legit business it's a Mexican company that's right on the border with Texas and they want to buy a bunch of our products to sell in their stores and it's it's a major chain that could be a very big account for us and they've got a Distribution Center in Laredo Texas so we can handle the distribution pretty easily and we're working through the details so it's a challenge for small businesses to make sure that you're really being vigilant but at the same time not closing yourself off to Opportunities how would you like to be doing business in Nigeria now that anyone you call yeah right sure well I've done business in Nigeria there you go I mean we we've actually we've got we've got tables we got more tables in Nigeria than Korea my old partner uh guy from New Jersey actually spent 15 years in Nigeria in the 80s and 80s and 90s doing business and so he he knew what the deal was with Nigerian business and the the the thing is that everybody in Nigeria knows that they want to buy stuff and they have this problem and so first of all you have to know who you're dealing with like just an email over the trans and forget it but in my case we had some J jobs were brought to me by my partner and he knew the other guys but even those guys who he'd done business with for years he said the rule is you you get all the payment up front and if you don't do that and you ship the thing then they're just like oh you're an idiot too bad and uh that's just how it goes all right next topic Stephanie I understand uh you're interested in talking about the best way to uh find uh board members and retain board members tell us about that what are you thinking well we're building a board because we're rebuilding the company and we just merged actually five companies into one we've got to deal with the culture which we talked about in an earlier podcast and we need to build a board and so what we've had was a board that we purely put on paper when we did the initial merger to give us time to get our teams together and start looking at where we have gaps and skill sets and now we are starting to thoughtfully reach out and we've added a couple of board members but we're looking for more and certainly a consideration is making sure we have diversity of race and gender ethnicity we want to be be mindful that we are representing the diversity of our customers and our other business partners so it's it's a process we did get one board member that I recommended who I'm so delighted he said yes he's in marketing his name's Ted Wright he's written a book called Fizz and his company is called Fizz marketing and he's actually teaching me a lot about what you want in a board member and the first thing he said to me when I asked him if he would consider board membership he said well you do know you you can't just get a board member thinking that that's free labor and I paused and I said I can't said because I'm totally counting on you to give give some insights into marketing that's the skill set we need brought to the table and he said yes but you've you've got to know your board members are giving up their time and their energy and so you've got to get a balance there and provide something like a what's in it for them as well because if you want a really good board member they're probably already in demand and so you've got to be able to offer them a rewarding experience and be mindful of their time what does that mean 20 pounds of chocolate every three weeks right um actually I don't know if I'm at Liberty to say I did offer him um some he is getting some compensation for his board service I'm I don't know if I'm where I can publicly disclose that but it's what I think is something very reasonable Stephanie did you think about or look into what's typical for businesses of your size do do you think it's common for uh businesses of your size to to have a board well we are shooting for 10 million in sales this year so I think that a board a business that size should have a board we need guidance on how to run this company and so I think it's really important to have some Outsiders brought in who can give a different perspective we those of us who work for the company my partner and I we are so embedded every day in this to have that that perspective from someone who's not working for the company I think is really important Lauren to answer your question I've been in I don't know five business groups over the years between vistage president's Forum young president's organization so I've seen about I don't know 60 businesses up close and I can't think of any of them they have a board now you could argue well that's why they're in the business group maybe instead of a board but I don't think it's a common thing that a $10 million business has a board I'm not saying it's right or wrong I I don't think that's common Jay you're bigger than that do you have a board no Paul I do not have a board I'm 4 million I hope but I am in vistage and it it serves the purpose of a board I have people who know me well and they're not shy about telling me all the stupid things I'm doing so wow well might be worth further research but stues has had a board since the 1950s and so part of it is just how we've done business but part of it is I think they're very useful if you get the right people my question which there's no answer to Is I would I'll be curious to see how you find these people who they are and how much you're paying them to be worth their while what what are you asking of them Stephanie are you they do you expect to meet in person once that's easier to do uh how much of a time commitment is it so initially we're having regular weekly meetings or bi-weekly meetings we we've actually gone every other week for the first two months because we're doing strategic planning and that's a couple of hours during that time frame when we have our meetings and it's been very productive but after that we're looking at quarterly meetings probably one to two hours part of my background is also I've run nonprofits and nonprofits always have boards and so I'm used to that model I'm very comfortable with that style of leadership and it gives you additional capacity without bringing on additional Staffing and I think it is important to have people that don't work for the company every day to bring in their their not only their viewpoints but their networks like Ted has an incredible Network and he and I have been talking about some of the accounts we'd love to land and he's got great contacts at Delta for example we would love to have Stucky peans as a snack when you take a Delta flight so it's advocates in your court who can be ambassadors for your brand I think it's helpful to us but we've only had a couple board meetings so maybe to be continued and let's see how it goes Paul do you think your Visage groups serves the same purpose that Stephanie is describing I know what purpose they serve for me um but what would be different from the vistage group would be we have we have in our group a rotating host review there's 16 members and you know every meeting one of the companies really gets drilled down into so that means that it's only every year and a half that they take a very very close look at me whereas in Stephanie's situation the board is drilling down every meeting and so that's different and the vistage group just has recommendation power and so when you're putting together a board um Stephanie for this do you intend to hand them decision-making power or recommendation power it's recommendation power and that's spelled out our bylaws even though we're an 80y year brand I joke that we're an 80-year-old startup because we are really building this company in a New Direction and and the addition of the manufacturing capacity and a mail order business there's a lot of new things happening with this company and we're moving it in a different direction and so we are at a critical juncture where we need additional capacity and support and so that's what a board brings to the table I'm concerned that you're looking for expertise and as your marketing guy said I don't know that one can put a board together with people with some background and expertise and think they're going to give you the same input as if you went and hired a firm to do that job well it's different right I mean if you want someone to really do a specific project or a a job for you then absolutely you're going to hire that support a board is an advisory Capac capacity and so they're giving you higher level strategic advice and they've got real skin in the game when they're on your board and they're part of your team and it's also that external Ambassador piece that I think is so critical especially for stues as we're trying to amplify that we're back I would only push back on one phrase you said you said the board of advisor say skin of the game no they don't they don't have skin of the game your place blows up they're not losing a dime it depends on how you structure the relationship and how you structure the compensation it certainly can be done in a way where they do indeed have skin in the game one of the advantages to belonging to a business group is not just that they're helping you with your business you get to see the insides of 15 other businesses 12 other and that's extremely eye opening you can learn more from that than sometimes than having someone look at your business you can see what things are people doing what they're doing right what they're doing wrong as far as as paying a board member to come I question if they're so successful and good at what they do they're making a lot of money which means the next question would be how much money do you have to pay them to be on your board to be worth their while and that's why I'd be interested to hear what the number is settled on because to go pay someone who's very successful uh I don't know $300 for a meeting I would not think is going to cut it unless they're doing it just because they want to quote unquote give back or are interested in the product which is possible certainly well to be continued I I I don't want to disclose that amount fair enough you could give us a sense of what you budgeted for the entire board just so we get some kind of bottom line but are you devoting 50 Grand to board compensation or 10 grand or 600 Grand you know like give us a sense of it it's it's in the 20 grand range total as a point of comparison my vistage membership cost me I think about 18 Grand a year and so it's on the it's in the ballpark for that and you're getting a smaller group with narrower focus on you so uh pick your poison right and and um it sounds like not an unreasonable way to make sure you're getting some decent advice no in in theory it sounds great u i just like I said I'll be interested to see who who gets recruited and that all works okay next topic yeah to be continued this this comes back to you again Stephanie uh we got an interesting uh question that came in this week in response to last week's podcast uh from Jim Cobb founder of Triad components group uh who's kind of wondering about you and Laura uh being both retailers and wholesalers at the same time he called it a Fool's errand he thinks in order to succeed you need to pick one or the other but uh Jim's a good guy a smart guy he qualified at the End by saying I know I'm not living in their world um and while this seems simple to me it may not be uh as simple as it seems what what's your reaction to that Stephanie he actually raises some good points and I'll preface my my response by saying I bought stues a year and a half ago as is so I have to deal with a company that I didn't bu build from scratch and and changed dramatically from the company that my grandfather built because it was out of family hands for decades so I'm putting together a strategic plan for building this company back but it was it was purchased caveat inour right as is and so what I bought was a company that was doing wholesale and Retail and actually to further complicate matters now that we have bought a manufacturing facility we are a manufacturer we have a distribution center so we're a distributor we have wholesale clients so we're a wholesaler and we are a retail or through our online store we do not own or operate any of our Stuy store locations so we do not retail through the Stucky stores so our only B Toc component is that online retail store so having said that I this is this is the model largely that I came into when I bought the company we are looking at our books and we're realizing what is really driving our profit is that wholesale component and so that's what we're focused on and by manufacturing we are able to improve our margins for our wholesale customers and we're also able to guarantee our quality and the most important factor for us was that there's certain certifications that you need to play in the the world of big box retail it's called sqf certification so we're able now to be a better wholesale operation because we own this manufacturing facility and we've got the quality that those big clients demand the push back for me on this retail piece I think it's important for us to have an online retail store for Branding and marketing and also it's an opportunity for us to test product so we've got a for example there was a t-shirt that said eat here and get gas and our team said well that might be a little too scatalogical for stues we're not sure if that will sell and I said you know what let's order 288 sell them online see how they do we sold out in two weeks so it enables you to test Market which we couldn't have done I mean if you're trying to wholesale you know we routinely buy 10,000 and up in quantity for for the wholesale business and so that gets that's a pretty heavy investment Jay you do both retailing and wholesaling what what do you think of the issue I have a little more insight on this CU I talked to Jim about the email actually if that doesn't violate any rules of this podcast um hey I I said Jim do you like to shop and he goes no I go I guess that because the fact of the matter is having a retail store with a brand is like the new way of doing business it's been new for about 20 years 40 years ago you never went to a store with a name brand and then they also wholesale through other stores now everything from Ralph luren to K's skincare to Tumi Luggage there's there's 50 stores out there who also sell to department stores and it helps their Nike and it helps getting their brand out there he his his point was he thinks it's hard to control the pricing from the Discounters I said okay that's a different subject so on that side it gets back to can you control the pricing if you're selling wholesale as well as selling retail and the whole Fair trade thing I don't know that you can command a Wholesale customer you must sell it at a retail price that's why they call it a manufacturer suggested retail price exactly so so point is I basically am saying I couldn't disagree more with him I think having retail and having wholesale makes perfect sense and one feeds the other and I don't see why you have to pick one over the other unless you realize that you're just making a lot more money on the retail but but it all depends on you know if you just stick with the retail you're going to lose a tremendous opportunity in distribution if you just stick with the distribution and don't do the retail you're missing the opportunity to get your brand out there and catch people who you know how it is these days most people will just go on the computer and just expect that they're going to find a website called stues and they can go buy direct I mean that's the way most products are these days so I think it's very much the way the world has gone and I don't think it's a fool to eron we're doing a complete analysis of our web sales right now and what we've discovered is 80% of our sales are generated from 20% of our product so there's a lot of product that we're taking off our web we're removing those SKS and we're going to focus on a small number of items that are our best sellers and really push those out that saves us on inventory you got to be a little careful with that because sometimes having a bigger selection is what gets people to come to your business there's the accountants on one side and there's the artist on the other and if the artist just did what they want they do everything that feels good and you go broke and if you did everything the accountants want you go broke because you don't have a very cool sexy business and there's a balancing act there of figuring out to have enough selection to make it interesting but not too much that you have horrendous inventory turn over and you know it's it it's it's it's It's Tricky it's art and it's science but that's the beauty of web sales is that you don't have to have the large quantities in order to put an item up on the web I can get a hundred dunking Birds which we put in our road trip box around Christmas time to test whether people are still interested in nostalgic souvenirs and we sold out almost immediately and had to reup our order so it's a test opportunity to see what works but you touched on something really important with The Branding and I think people really need to realize if you have a web presence it is only as successful as your marketing and you don't invest in marketing dollars to let people know to go to your website you're not going to generate the sales that you need to justify all the cost associated with running a Shopify or in our case we have woo Commerce and all the shipping costs that are involved so it's really a lot of work to put together a website and it took it took us trial and error to figure out how we price how we factor in our labor costs what what box sizes we should be using and how we can standardize the product that we put out there for the web so we're getting them in the small boxes that cost us less with UPS so all of that is a lot of work to really get your cost as fixed as possible it's been an incredible learning experience Paul obviously this is a very different world from you your B2B and your you make customade uh Furniture but I'm I'm curious has there ever been an opportunity for you have you ever tried to set up a relationship where you were making tables and selling them to an entity that would then sell it to the end user oh years and years and years ago but the furniture world is really bizarre in that the product is never branded the you never walk into somebody's living room and you see facet you know all over the front of the uh sofa or something you know what I think you conflated two words there's certainly branding and Furniture they're not labeled that's different and but but people do know certain Furniture lines it would be as if no shoe manufacturers uh ever had the swoop or the stripes or anything actually on the product if they just talked about their brand in the advertising and in the catalog and in the store and then as soon as you walked out you couldn't tell whose shoes were whose which is true for a lot of shoes but companies that decided to put their brand on the product are in a different world there's no question no question I'm not arguing that I'm just saying there are some furniture lines that are quite that are quite recognizable to people Herman Miller office yeah for for a good example Lazy Boy recliners now I can walk into a room and say that's a lazy boy you would be wrong half the time because there's nothing there's nothing to prevent someone from knocking off a lazy boy having it built in in Bangladesh and and selling it for a tenth of the price you would not be able to tell you wouldn't be able to tell without expert examination of the interior of that thing and that's one of the things about the furniture industry that's weird is is that there's there's thousands of producers and none of them have really been able to establish a dominant brand the the sort of the snoody design Market where you recognize a particular piece because it was designed by corbusier or whatever that's a that's a tiny segment of the overall that's I'm sure that's true no that's true all right I've been schooled on furniture making I do have one point on furniture being online is Incredible cost right it's not like shipping a pcan log roll shipping a sofa which I do which I do I had my sofa shipped to me from Wayfair but it's expensive and it's a different model where you're talking and I I think I'm correct that Wayfair is largely built a model of of shipping online which is different than a lot of furniture stores it has but it's the it's a nightmare and nobody has actually solved the problem because you have yeah I mean just imagine trying to wrestle a sofa into to somebody's house and you receive it and that's actually the first moment that an online buyer has put their eyes on it and sat on the thing and then and then some percentage let's say it's probably 10 to 15% of the of the people are going to be unhappy with it right at that moment well you have the same thing Paul right you I mean you ship a table that has to be assembled yeah oh yeah well I I we deal with it a whole different way but we can charge $100,000 for a table so so it's not at all the same thing but it's it's a huge huge problem when as soon as it has to go by truck it's an entirely different ball game so if you're making something small that you can send by UPS without any trouble you know great you're you're in you're in a happy world since Co started this is one of those small side things that happened to me I'm signing every check again I haven't done that in 20 years so I'm I'm signing about 80 checks every single Friday 80 to 100 checks and I am taking a back as to the huge check that I'm sending to this particular company who does White Glove service they deliver this stuff I'm sending them tens of thousands of dollars uh but there are companies out there doing it and doing it okay they're not doing it okay this this is another thing is that the damage rate on even white glove for something large is going to be in the 10 to 15% range and I've never heard of a a high-end residential furniture manufacturer who's really solved this problem the better solution was to have a local Furniture Store receive the delivery from the factory and uh and then act as a sort of a local agent with a local truck and that person that distribution Point brought that damage rate down and increased the satisfaction but the online model has destroyed the local furniture stores and so now it's Furniture coming from the factory and going or from the from the distribution center on the back of a 53t truck and trying to get into a residential neighborhood and make the delivery except White Glove delivery by definition is not a 53t truck showing up there with a truck I mean there are people that are doing that stuff what are you delivering Jay picture frames no we sell sofas we sell chairs we you know I own Jason home I mean we sell Furniture I'm in the furniture business it does it come from your Warehouse house too you're still a furniture store that's servicing a local area right much of it's coming from my own warehouse and our own trucks but then I we do drop ship from suppliers and believe me I'm not arguing with you that it's not easy but I'm telling you I'm writing big checks every week to this white glove company and to some level it works though you're absolutely right it's not easy and uh it's certainly one of the more difficult things to be doing online and one of the issues we have in today's environment is some of these companies used see online are losing money on these things and they just keep losing money so one of these days maybe they won't be around some of them customers hate paying freight costs our freight costs actually run about 12% of the overall cost 12% of our re of the costs we incur and we find that we cannot get people to just pay that and so what we do is we fold a large amount of it into the price of the table so yeah thank Jeff Bezos for because we can do that but we we're not we're not selling something where someone can go online and check the price of it against some other Merchant so so they're giving away shipping and they're losing boatloads of money on it guys I want to be conscious of your time but but I haven't been able to get a word in here Lauren you still here you pushed my button that's now you now now we're talking my world so apparently I did we will come back to that but for now my thanks to Paul Downs Jay goz and Stephanie Stucky as always thanks for sharing everyone wait wait don't leave yet if you have a question or a comment that you'd like the 21 hats owners to address send it to me by replying to your Morning Report or by email at Lauren 21h hats.com that's l r n at21 hats.com do it now before you forget and don't be afraid to tell Jay what you really think you can take it and if you got something out of this conversation help us reach more business owners tell a friend subscribe and review us wherever you get your podcast follow us on Twitter subscribe to the morning report at 21h hats.com this episode was produced by J th Baron founder of blank word Productions okay now you can leave thanks for listening everyone [Music]