I recently had a new kitchen floor put in. The floor covering company through which I made this purchase is a local small business, one that’s been around for years. Their prices are a magnitude lower than their larger competitors, probably because the competitors have much larger showrooms and more employees. Since the appearance of the floor covering in my home is more important than the appearance of the showroom where I bought it, I enjoy doing business with this local company.
This firm has a small showroom, but other than that uses a virtual company model, with a minimum of permanent “W2” employees and use of outside contractors who are essentially self-employed. Clearly this helps keep costs to a minimum as well, and the owner passes the benefit along to his customers in the form of lower prices than the competition.
While the installer was at my house doing his thing, I had a chance to chat with him while he worked. Not too much — I didn’t want to distract or delay him — but enough to hear some of his perspectives. One of the things he mentioned was that he could work for other, higher-priced competitors, and probably make more per job. But he recognized right away that those higher-yielding jobs would be far fewer in number.
With the “Great Recession” a couple of years ago, and now the stubborn recovery, those higher-priced jobs became very scarce, as floor covering is typically a discretionary expense. The installer has worked with the floor covering firm for years, and stays loyal to the owner, because while he knows that he doesn’t make as much per job, he continues to get a steady stream of them.
And in his view, he’d rather have a steady stream of quarters than an occasional trickle of dollars. So, even the floor guy knows.
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