We’re Still Buying Inventory

Introduction:

This week, Jay Goltz tells William Vanderbloemen that even with an inventory glut, a cash crunch, and a weakening economy, he’s not going to stop buying goods for his home store: “It’s kind of like cutting Samson’s hair,” Jay tells us. “I don’t want to mess with telling the buyer, ‘Stop buying stuff.’ Because that’s the business we’re in.” All of which has Jay feeling some pressure, but he’s very glad he’s been maintaining a credit line equivalent to 10 percent of sales. Plus: William explains how hiring can go wrong even at a staffing company and how he managed to raise his prices without actually raising his prices.

— Loren Feldman

Guests:

William Vanderbloemen is founder and CEO of Vanderbloemen Search Group.

Jay Goltz is CEO of The Goltz Group.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome, Jay and William. It’s great to have you here. So we’re just about done with another quarter. I think you both came into this year feeling somewhat optimistic. How’s this year been going for you?

William Vanderbloemen:
Well, we’re recording on the day before the end of the quarter. So I’m a little reluctant to say things that might ruin the end of the quarter.

Loren Feldman:
You’re expecting a big day?

William Vanderbloemen:
Well, we are a lumpy business. But yeah, there are a few things that should come in today and tomorrow. But even if nothing comes in today, or tomorrow, I think Q1 is better than last year’s Q1 across the board.

Loren Feldman:
Nice.

Jay Goltz:
How was last year, though? Is it just because last year was slower?

William Vanderbloemen:
No, last year was our record year.

Jay Goltz:
Good for religion.

William Vanderbloemen:
Will we finish 3 percent ahead of last year’s first quarter or 12 percent? That’s what I don’t know. And I’ll find out in about 36 hours.

Loren Feldman:
Wow, that’s a sizable range.

William Vanderbloemen:
Well, that’s why I said I’m looking for wood to knock on.

Loren Feldman:
And do you think you’re having a good year for reasons that are related to your own business? Or the labor market? The economic climate? What do you attribute it to?

William Vanderbloemen:
Well, I’m not an economist. So I don’t know how to comment on fears of what the economy may or may not do. A couple of things have happened for us that are really pretty interesting. We do searches for all kinds of organizations that are values based, but it all started with the question: Could we help churches find their pastor faster and better? Could we fix that? And it was a new idea for churches, and churches are not best friends with new ideas—not the most innovative organizations, as a whole. So just the idea of even calling a church to say, “Would you be interested in us helping you find your pastor?” That would be anathema.

And so for 15 years, I thought, “Well, maybe by the time I’m done doing this in another 10 or 15 years, it’ll be a more normal idea.” And we were getting there. It was starting to become more normal. I think, Loren, that the pandemic actually accelerated that trend. Several things happened in the church market that got accelerated by the pandemic.

Online giving was already a trend that was happening, but now it’s just de facto. Whether or not you can have services online, it was happening, and it was going to eventually become normal for everybody. But the pandemic accelerated that. I didn’t foresee it accelerating the trend of churches hiring a search firm, but it seems to have, because now we’re much more proactive. We actually have outside sales, which we’ve never had.

Loren Feldman:
When did you start that?

William Vanderbloemen:
In August of last year.

Loren Feldman:
And it’s gone well?

William Vanderbloemen:
Better than I ever thought it would.

Jay Goltz:
You know, now that you mention it, I think it gives a whole new meaning to the phrase, “We’ve always done it this way.”

William Vanderbloemen:
That’s right.

Jay Goltz:
Yeah, no, that makes sense.

William Vanderbloemen:
And rightfully so. You know, if you’re a layperson, if you’re looking for the person, you feel the weight of responsibility. Like, “This is a holy task, and I’ve been asked to do this. And if I ask for help, that’s like…” First-time clients, for the longest time, I’d say, “You know what? You sound like I felt the first day I went to counseling. ‘Why am I here? I’m a little embarrassed. I don’t need your help.’” And that’s shifted and changed. And I think the pandemic accelerated that. It’s too early to call—and we’ve only been doing outside sales for six months—but I really believe the biggest lid to our growth is not having more salespeople right now.

Jay Goltz:
There’s a definitely a shortage of rabbis out there. There are far less graduating than there used to be. Is it the same thing in other religions?

William Vanderbloemen:
Well, I can speak most fluently for the Protestant church in the United States. We work all over the world, but that one particular market I know better than others. And I think there isn’t quite yet, but there will be. You know, by birth rate, you’ve got Boomers still retiring, which will probably happen for another 10 years or so. And then the group right behind them, there just aren’t as many. There weren’t as many babies born. And then you get to Millennials and Gen Zs.

And the average age of a seminary graduate in Protestant U.S. right now is about 35 years old. It’s usually a second career choice. We don’t really know yet what the Millennials and Gen Zs are going to do. So I foresee it being a huge supply-demand issue. There already is in student ministries and children’s ministries, which are usually much younger people. But more than that, the concept has been proven that you can hire outside help. And it’s not unfaithful, and it works. And it’s worth the investment. And I think that’s some of what happened.

And, Loren, the other piece is not just the sales side but actually the delivery of the service. Our COO is just doing a phenomenal job building a great team. And she’s had to change a lot of people out, but she’s just done a really great job.

Loren Feldman:
Tell us about the approach of your outside salespeople. Are they pounding the pavement? What are they doing?

William Vanderbloemen:
It’s probably more like wading into the water. So like, as you know from when we met, everyone in our company is required to produce content for our blog. And the sales that we’ve had traditionally have been people who read our blogs and attend a seminar, or maybe they listen to this podcast. And eventually on our site, they get to the point where they’re like, “I’m filling out a form. Please contact me. I’d like to talk about whether or not you can help us.” So it’s all inbound.

So the way we’re currently dealing with outside sales is, “Okay, we’ve got three pretty solid leads in Atlanta”—pick a number, five, seven, three—whatever would justify flying a salesperson there. “While you’re there, go pound that pavement.” So it’s not purely cold. It’s, “I’m already going there anyway for these things, so let’s see what I can rustle up while I’m gone.” And it’s been, “If I send Will out to Denver with four leads, he comes back with eight contracts.” It’s been kind of like that.

Loren Feldman:
Wow. That does sound good.

William Vanderbloemen:
Yeah. And as you know, I’m not chasing meteoric growth. I mean, you’ve known me a long time. I think 5-to-15 percent growth is really underrated these days. I think it’s just such a solid, compound interest to chase. And the whole fake-it-till-you-make-it, and, “We tripled this year, but we’re not making any money,” I just think that’s a house of cards.

Jay Goltz:
Well, if nothing else, it’s extremely demanding. If you grow 30 percent a year, when you add in just the natural people leaving on their own, you’re going to be replacing half your staff every year. Like, how do you do that?

William Vanderbloemen:
That’s right. You hire a good search firm, Jay. [Laughter]

Jay Goltz:
Yeah, hmm. I’ll make a note of that. Let’s talk about what’s changed since the last time I used a search firm, which was about 25 years ago. I recognize that the world’s changed dramatically, and that perhaps, being a search firm now has more advantages than it might have had 25 years ago. Because 25 years ago, they were just sticking ads in the paper just like I was and getting people and sending them over, versus now they’re probably more—not probably—they’re more skilled at going through LinkedIn and figuring out how to actually recruit people. Can you speak to that?

William Vanderbloemen:
Well, I’d say there are different advantages than there were 25 years ago. It used to be, you hired a search guy because—now, I hope that we have listeners who don’t know this word, okay? My staff didn’t know this word. But you would hire a search guy because he had a great Rolodex.

Loren Feldman:
We know that word.

Jay Goltz:
Yeah, I have one on my desk with my Day-Timer. [Laughter]

William Vanderbloemen:
You don’t have to share everything, Jay.

Jay Goltz:
Full disclosure: That’s how we are on this show.

William Vanderbloemen:
So I mean, that was the value. It was, “Oh, I’m gonna hire him because he knows people. And he can go talk to them offline.” I mean, like every show and movie where there’s a search guy, it’s always in a dark alley or a smoky room. Or it’s pretty clandestine, and, frankly, unsavory.

So the reality is, now, unless you’re dumb, everyone has the same Rolodex. It’s called LinkedIn. And it’s not a matter of finding people. It’s finding the fit. And frankly, I think that’s why we’re growing. It’s not because I know people they don’t. It’s like, “No, will this fit?” And if you hire this one, you’re going to definitely get these things, but you don’t know about these things. When I talk to people now, we act like a Sherpa. Like, “You’re going to summit this mountain, and we’ve been up and down it 3,000 times. So we can tell you, ‘Don’t step here, do step there.’”

Jay, here’s a cleaner way to say it: We survey new clients. What do you think you’re gonna get out of this? What are your expectations? Top expectation of a brand new client every time is, “You’re gonna bring us names we don’t know.” When we’ve finished the search, we say, “Okay, what happened in the search? What benefit did we bring? What value did we add?” The number one answer almost all the time is, “Wow, you managed the process and helped us understand who would fit.”

Loren Feldman:
William, you mentioned that your COO had to make some changes in your own shop. Especially given what you do, that’s kind of intriguing. Was there a theme to that? Was that an issue of fit? What were you talking about there?

William Vanderbloemen:
Boy, I don’t know how much I want to share publicly.

Loren Feldman:
Without getting into details, which I completely understand, can you tell us—as a recruiter, did you learn any lessons from what your COO went through? What did he take away from it?

William Vanderbloemen:
Yeah, well, our prior COO, who did a nice job for us and really did a great job steering us through the pandemic, had hired a lot of people. And I think I was negligent in delegating that hiring to him without looking at it more closely, because he is great at getting tasks done. But I think he hired some people just to fill spots. And he hired hastily. And we got some people who were nice people, who had a lot of talent, but frankly, had no business working for us. We didn’t run through our normal hire for culture.

It was just done hastily. It’s in the middle of a pandemic. We’re all working remotely. We had a staff who, frankly, had not met each other. And as we came out of the pandemic, it just got clear. Like, man, not all these pieces fit together. And so we didn’t have to go firing a bunch of people. But Jen, our COO, did a really great job of raising the bar enough times that some people just sort of said, “I don’t know that I want to jump that high.”

And that could be around culture, it could be around performance, it could be around how we do one-on-ones. And she spent a good bit of time replacing those people. She took her time. She hired around cultural values, and it’s not like a wholesale change, but the changes she has made are just visible. The culture is as good as it’s been in a long, long, long time. And yeah, I mean, we’re still figuring it out, but she’s just done a really nice job. Probably because she went to Princeton.

Jay Goltz:
Wow. I don’t have anybody working for me who graduated from Princeton. I’m really envious. How’d you do that?

William Vanderbloemen:
That’s the funny thing: Search expert, how’d you find the great COO? Do you know this company, Lush Cosmetics?

Jay Goltz:
Sure.

William Vanderbloemen:
So she ran that for North America. Ran the whole thing for North America, left there several years ago, started her own company, developed a sports bra. It had a particular appeal that wasn’t on the market. Built that up until it was time to either build manufacturing plants or sell. She sold it, and she was sitting around saying, “Gosh, I wish I could use my education and my business sense to help build something for the church.” And she lived about a mile from our office, and she found us on LinkedIn. [Laughter]

Loren Feldman:
She found you.

William Vanderbloemen:
On LinkedIn, yeah.

Jay Goltz:
Okay. Well, it makes sense. She wants to do something for the church. So you have a little advantage with that.

William Vanderbloemen:
Yeah. But I mean, Chicago Business School, Princeton undergrad, runs a $500 million company. She lives a mile from me, and I can’t find her? So much for me being the expert. She found us.

Loren Feldman:
Jay, what kind of year are you off to?

Jay Goltz:
There’s no question that the market’s a little soft. If I was to go back over the years and chart the stock market to sales, there’s clearly a relationship. It’s a little soft. I’m suffering the end of the pandemic problem, which is, my guys were out there buying all kinds of cool, interesting things for my home store. And it was all tied up and couldn’t get over here, and then whoosh, it’s all coming in now. And I’ve just got a tremendous amount of inventory, and it’s gonna take me the rest of the year to get it back under control.

Loren Feldman:
Did you say it’s still coming in?

Jay Goltz:
Oh, yeah. I mean, it’s just, you couldn’t get stuff.

Loren Feldman:
The supply chains have been cleaned up for a while now, haven’t they?

Jay Goltz:
To a degree. But you know, my buyers literally go around the world looking for cool and interesting products, and they’ve gotta fill a container. And as you know, the containers, they were tied up. And I’m not saying it’s happening today, but just a few months ago, the stuff started coming in. And I just have a tremendous amount of inventory. And I’ve got a ton of money tied up in it. And it’s gonna take me the rest of the year to work down.

But to make anyone feel better who’s got a cash crunch, even after 45 years, it still is a problem. And I’m gonna work through it as I always have. But still, I can tell you, it just weighs on you subconsciously. It just weighs on you. And I’m not afraid of bank debt. I’ve had bank debt for many years, but using up big lines, it just wears on you a little bit.

Loren Feldman:
Lines of credit?

Jay Goltz:
Yeah, and it’s like, we’re fine. We’re paying our bills on time. It’s very easy to get inventory out of control when you’re buying the way we buy. It’s kind of like cutting Samson’s hair. I don’t want to mess with telling the buyer, “Stop buying stuff.” Because that’s the business we’re in. We’re into buying cool and interesting stuff. So I’m not going to put the hold on it. But I do have to work through the glut. And I would also tell you that the pandemic definitely wore on people, and you can still see small signs of it here and there. It’s been a difficult few years on everybody.

Loren Feldman:
With the inventory, Jay, what’s the bigger issue? Is it finding places to store stuff? Or is it the money that it’s tying up?

Jay Goltz:
Well, I’m lucky in that my kid does development, and he buys buildings. And then he either eventually bulldozes them and puts up the new thing, or he converts it. So my son has a couple of empty buildings that I was able to stick stuff in. But without that, I would have definitely had a problem with storage.

It’s both. It’s: Where do you put the stuff? And Jayson Home has gotten to be a pretty big business. It’s very easy to have a lot of money tied up in inventory. So it’s not like I’m in the ice cream business where you just order your gallons of ice cream, and you have X amount in the back. I’ve just got a lot of interesting, cool stuff that they bought on a bunch of trips, and it comes in, and it takes a while to cycle through it.

Loren Feldman:
Is there something, looking back, that you could have done differently? Or was this just the inevitable?

Jay Goltz:
You know, that’s an interesting question. Um, no. I mean, I have my son here now who comes in and says, “You know, the inventory is high and blah, blah, blah, blah, blah.” And I said, “Yeah, I’m well aware of it.” And I sat down, and I said, “Here’s what our cost of goods sold is. Here’s how much volume we should do this year.” And I showed him, “If 30 percent of what we sell comes out of inventory, it’s going to right itself.”

But going through this, I realize my son’s been here for a year and a half. I’ve been doing this for 45 years. It’s going to take some time before he gets his sea legs, because it’s not like this is the first time I’ve been through something like this. And from the outside observer, you think you can turn some dial and fix it, and it’s just not that simple. Like I said, the last thing I would do is go to my buyers and say, “Okay everyone, stop buying for the next few months.” It doesn’t work like that. I mean, there are shows, there are places they go yearly. They need to go there and buy the stuff.

And certainly, as the year goes on, there’s gonna be less of that happening, but we’re gonna have to use it up. But no, in hindsight, I don’t know what I could have or should have done. I tell them, “Be careful what you’re buying.” I mean, they’re already careful about what they’re buying. So really, you know, it just is what it is.

It gets down to something that Ami [Kassar] said to me a few years ago: Companies should have a credit line that’s probably 10 percent of your sales. And that’s good advice for everyone. If you are running a healthy business, that’s some good advice. Luckily, I had changed banks and got a bigger credit line. And I’m glad I got it now.

Loren Feldman:
Are you debating whether you should have a big blowout inventory sale?

Jay Goltz:
I do that once a year in November. It’s extremely demanding. We have it at the warehouse. Literally, I think 1,200 people showed up last year. There was literally a line before we opened that goes out and around the building. It’s like a big deal. And I just don’t see doing two of them. Plus, my buyer swears to me that the stuff that we have in inventory is not stuff that we gotta sell at the warehouse sale at a big discount. It’s new stuff. So it comes down to one just has to play the course. I’ve just gotta get through the end of the year. It’s just a lot of stuff to be sitting on. It’s not food. It’s not perishable, but it’s just a lot of stuff to be sitting on. But it goes under the category of: It is what it is.

Loren Feldman:
Is there a pricing issue related to it?

Jay Goltz:
I don’t think so. I would say, to add to that, the framing business got soft in the late part of the year. I believe most people in the industry felt it. Like, the hangover’s over with the pandemic. People were buying stuff and fixing up their houses. And I do believe things started slowing down at the end of last year. And now, I believe, there are a lot of people going on vacation now. I mean, I know it just anecdotally, and I just know it from watching the customer count. There are a lot of people that hadn’t been on vacation for a year or two, and they’re on vacation. So when you’re on vacation—

Loren Feldman:
Instead of framing pictures?

Jay Goltz:
Yeah, exactly. And you can see it. So that didn’t help either. So if there’s a business lesson from this—which I already knew, and I’ve known for years—it’s really good to have credit lines that are open and available that you can use if you need it, because sometimes you might need it. So I have, and we’re fine because of that, but it doesn’t mean that I’m happy about it.

And I read the book about Ray Kroc from McDonald’s years ago, and I’m so envious of this. He claimed that he had the ability, when he went to sleep, to take an eraser on a blackboard and just erase the blackboard clear. So he went to sleep with a completely clear brain. And I envy that, because I wish I could. Because I think about it when I’m sleeping.

I mean, the old expression, “What keeps you up at night?” It doesn’t keep me up. But, definitely, I feel it. There’s no question that it’s always there. And I mean, it’s not making me nuts—or maybe I am nuts, but it’s not the reason I’m nuts. It’s a little pressure that I’m absolutely dedicated to making sure I’m gonna get out of this and make sure that I don’t get in the situation again. That’s the plan.

Loren Feldman:
You talked a little bit about the mental aspects, the hangover from the pandemic. Do you think you’re feeling that yourself?

Jay Goltz:
No. I mean, I’m kind of a soldier. I just keep going on. And I’m extremely, extremely thankful and appreciative of the fact I have lovely, wonderful people who work for me, and we’re in really good shape with that. Because at the end of the day, in my mind, that’s what it’s all about. If you’ve got good, solid people with you, you can withstand anything, and I do. It has been a long few years. But I don’t think I’d say I’m worn out from it. I can definitely see, though, that it’s taken a toll on frontline workers who are working with customers all day long.

I just noticed yesterday, I think for the first time, that my framing salespeople just started taking their masks off now. Which is odd, because there’s a couple of them that have only worked here for a year or two. And like, I’ve barely seen them without their masks on. So it’s kind of weird to have an employee where their mask is off, and it’s like, “Oh, that’s what they look like.” It’s kind of an odd thing.

I’ll tell you where it has worn on me. I haven’t had many meetings in the last two or three years. And that’s not great. I mean, I used to have a production meeting every Friday. I used to go to talk to the salespeople every whatever. And I’ve gotten away from that because of the pandemic, and I need to get back to that. Avoiding meetings does catch up at some point, so I am trying to get everything back to quote-unquote normal. But it’s been a long three years.

Loren Feldman:
William, how does that look from your perspective? Do you see a hangover as well, in terms of people’s attitudes?

William Vanderbloemen:
I think everything Jay just described, we felt as well. But sooner and shorter. For us, I’m sure there are still voodoo dolls of William from when it was, “No, we’re going to come back to the office in person for real.” But that’s subsided now. And you know, we don’t carry inventory. So we don’t have the same challenge that Jay might have of having to buy it and then not being able to sell it. We’re a totally cash-based operation. We even do our accounting on a cash basis and not accrual. So we’re really old-school. But we keep a line of credit that’s roughly equivalent to 10 percent of annual sales. So that was our guess. Now, I know, it’s what we’re supposed to do, because I listen to the podcast.

Jay Goltz:
Well, that’s what Ami said.

Loren Feldman:
You’re talking about Ami Kassar, who writes for 21 Hats.

Jay Goltz:
Right.

William Vanderbloemen:
So I don’t know, we’re just people. So we don’t have a supply chain, we don’t have warehouses, we don’t have a lot of the things that a lot of business owners have to have. So we’re a far simpler structure, and that might mean that the hangover came to us quicker and shorter.

Loren Feldman:
I guess you do have content inventory, right? Your business relies on producing a lot of that.

William Vanderbloemen:
Yeah, that’s right. A lot of our content, though, during the pandemic, was pandemic-specific. “How do I set up online church? How do I get PPP money? How do I get an employee retention tax credit?” And that all sort of has proven to be a perishable good, if that makes sense.

Loren Feldman:
So that means you had to replenish your inventory?

William Vanderbloemen:
Yeah, we sure did. But that’s okay. And a lot of the things we write, we write evergreen on purpose. So you know, we have 3,500 resources for free on our website that are evergreen.

Loren Feldman:
Have you enlisted the help of ChatGPT to help with that content production?

William Vanderbloemen:
No, I have played around with it a little bit.

Loren Feldman:
Thoughts?

William Vanderbloemen:
Well, the book I have coming out in November is like, “How do you make yourself irreplaceable? What are the things that the very best candidates I’ve ever interviewed have in common?” It’s really pretty cool. Because we’ve done 30,000 face-to-face interviews with top candidates. We’ve identified who are the best, and what they have in common. And a piece of that is: How do I keep AI from replacing me? A piece of it is, there are five generations in the workforce for the first time ever. So how do I stand out in the crowd?

And so playing around with that, I put my book title in ChatGPT and said, “Can you think of a better book title for How to Not Get Replaced by AI?” And it actually came up with some better titles. So I’ve not done it for content for us. I do think, Loren, that if I had started my business with the model I started it with today, it wouldn’t work. Because the content I wrote 15 years ago probably ChatGPT could do.

Loren Feldman:
Interesting. What’s the difference? Just a higher level of sophistication and knowledge?

William Vanderbloemen:
Yeah. Now the things we write are more nuanced. And we have some measure of, for the moment, website brand equity. People have been coming to us forever. So they keep coming to us. But if I were trying to get off the ground right now, anybody could have done what we did. Just use ChatGPT.

Jay Goltz:
You know, I’ll tell you a good thing that happened that was just kind of a surprise. We had a little coffee and donut thing. And I was talking to some new people who were here. And one of them interviewed at a much bigger company, four or five times. They got offered a job, and they took the job here instead. And the other person said, “Oh, yeah, I was also offered a job.” And I feel good that our corporate culture is such that there are people who want to work here who don’t want to work at the big soulless corporation and want to feel like they’re making a difference. And they’re working with people instead of for them. And I felt great about that. I was surprised. So I feel like I’m doing something right.

William Vanderbloemen:
I want to work for you.

Jay Goltz:
There are some openings. Send me your resume, and we’ll do a video chat.

Loren Feldman:
Have either of you adjusted your prices in the past year or so? William? Have you done anything?

William Vanderbloemen:
We’ve raised our minimum fee.

Jay Goltz:
I’ve absolutely raised prices, because I gave everyone pretty decent raises last year. And I mean, it’s got to come from somewhere. And I just heard this morning of a business owner being interviewed. He owns a restaurant, and he was talking about how he hates to raise prices. And it’s like, get over it. I mean, just get over it. Because you have to charge what you have to charge sometimes. And believe me, I’m just as paranoid about it as anybody. But there’s a sure way of putting yourself out of business: Keep trying to absorb all these increases. My real estate taxes went up 20 percent.

Loren Feldman:
Did you raise prices at both the framing store and the home store?

Jay Goltz:
Yeah. I’ll tell you the good news is the shipping container price. The shipping charge was like double last year. It’s back down to where it was. Capitalism works. Competition works. The prices, that whole thing is over. The prices are back down right where they were before the whole thing. So at least we’re not getting killed on international freight charges.

Loren Feldman:
When you raised prices last year, did they take? Did you get any pushback?

Jay Goltz:
You know what, when you’re in retail, anyone who thinks they can tell? Like, you can’t tell. I mean, I’ve seen it talking to frame shop openers over the years. I can tell you what happens. You finally convince them that working and not making money is not a good thing, and they finally get the confidence. You need to charge more.

And then they go back, and they raise their prices. And then one customer comes in. Mrs. Jones says, “Oh my god, that’s too much money.” And they freak out. What they don’t understand is she would have said that at the old price, too. So I just don’t think that a 5, 6, 7, 8, 9, 10 percent raise is, all of a sudden, everyone’s going to run out of your store and think, “Oh, my God!” It just doesn’t work that way.

Loren Feldman:
But you did tell us that your sales are a little soft.

Jay Goltz:
Yeah, sure.

Loren Feldman:
Are you concerned that might be the result of the price increases?

Jay Goltz:
Absolutely not. No, here’s why. This is simple math: If you raise your prices, let’s say 8 percent, you’d have to lose 8 percent of your business for your sales to go down. I just don’t think that you’re gonna lose 8 percent of your business. So no, I can tell you, that is not at all what I’m thinking when business is soft. That never crosses my mind. But I certainly can identify and appreciate that people are worried about raising their prices. But you’ve got to charge what you’ve got to charge, at the end of the day.

Loren Feldman:
You know, William, I’m not sure I’ve ever asked you. How do you charge? Is there an hourly fee involved? How does it work?

William Vanderbloemen:
Well, the vast majority of our search work—we have a few ancillary side services, but search is our primary economic engine—the vast majority of those searches are a retainer that’s derived as a percentage of the first-year salary. So I guess you could say we raised our prices, because everybody’s salaries went up.

Loren Feldman:
Interesting. So you get to raise prices without raising prices, in a way.

William Vanderbloemen:
I guess that’s right, yeah.

Jay Goltz:
Do you have any competition to speak of?

William Vanderbloemen:
You know, in our little world, there are a few… What do they say, “Imitation is the highest form of flattery”? There are a few people who have tried to start things similar to ours. In the search world, anyone can start a search. There’s no barrier for entry. You just hang a shingle, “I do search.” And it’s, frankly, not real hard to get the first few searches, because you can say, “You don’t have to pay me unless I find somebody”—kind of like plaintiff attorneys here and there.

We’re not that way. We’re a retainer, and you pay us regardless of the outcome of the search. There’s nobody who competes with us on that. That requires a lot of sales skill, but it also just requires reputation, and body of work to look back at, and references. And so it takes a long time for somebody to build that. It doesn’t mean there won’t be one.

Jay Goltz:
So wait, if you charge the percentage, what is the retainer? How does that work? What is the retainer?

William Vanderbloemen:
The full fee.

Jay Goltz:
They pay you upfront for the whole search?

William Vanderbloemen:
They agree to a schedule of payments that are enforced irrespective of the search.

Jay Goltz:
Wow.

Loren Feldman:
So you divide it over an expected period of time for how long it will take?

William Vanderbloemen:
Yeah, exactly. And with 3,000 repetitions under our belt, I can tell you, “This kind of search? It should take this long.” And so we’ll bill it six payments over six months, or whatever.

Jay Goltz:
So 3,000 times you’ve done this. I want to know how many of them where you finally said, “This isn’t working. I can’t deal with this church. I can’t deal with the board. I can’t deal with this”—out of 3,000, did you have some failures?

William Vanderbloemen:
Oh, yeah, totally. Totally. No, we’ve not given back money. We don’t do that. I mean, we’ve done things like, “We’ll credit you for a future search. We’ll do a search again, for free.” But sure, there have been failures. Absolutely.

Loren Feldman:
Failures where you had to fire a client?

William Vanderbloemen:
Yeah. You know, when you’re hungry and you need business no matter what, you’ll say yes to anybody. Now we screen people. We tell people, “Well, I just don’t think we’re going to be a good solution for you.”

Jay Goltz:
Okay, so that’s the missing link. Because without that, I was gonna say, “Wow, how could it be that nobody finally said, ‘You know what? Here’s your money back. Please lose my phone number.’” And that’s because you’ve screened them upfront. You’ve gotten good at it. Okay, that makes sense.

William Vanderbloemen:
We’re getting better at it. I would say, in the beginning, I would say yes to, “Hey, William, what if we pay you everything except the last two payments, and we’ll pay those when you find somebody?” And I’ve just found, I’m not very good at working with those people. They’re probably lovely, wonderful people. But we don’t match up well. And if the first question a lead that I’m talking to asks is about price, or, “How cheap can we get this done?” I know in my gut, this is probably not going to be a match. If that’s what’s driving you, then I’m not the right person to talk to.

Loren Feldman:
We’ve been through a lot of turmoil in the labor market the last few years. Have your expectations for how long it takes to do a search held up through all of that turmoil?

William Vanderbloemen:
It certainly changed. Within the search world or staffing world, there’s such a wide—I mean, you can go find an administrative assistant and hire them temporarily and then move them to permanent and, like, high volume searches. That’s not what we do. We do the equivalent of a C suite. So it’s a very, very different thing.

And usually, if we’re running a search, it’s for a pretty cool opportunity. So people won’t just get flighty on us. In the lower level, or even the middle management roles, my friends who do those searches are like, “Man, I’ll have a candidate ready to present to a client, and they’ll call me that morning and say, ‘Sorry, I took another job.’” It’s just very volatile, very fickle. And we see some of that with some of the searches we do where we probably have to speed the process up. Because there’s a risk of candidates going elsewhere.

Loren Feldman:
Do you think leverage has returned to the employers in your world?

William Vanderbloemen:
It’s moving back. It’s moving back, but it’s not there yet at all. It’s still an employee’s market.

Loren Feldman:
Do you think that’s also true of the labor market at large?

William Vanderbloemen:
Yes.

Loren Feldman:
Jay, do you see any difference?

Jay Goltz:
It’s still tight out there. And I’ve seen different explanations, and I believe it’s a combination of: There’s no question the Baby Boomers retiring is affecting things. There’s no question that immigration restrictions are making a difference. There’s no question there’s plenty of people who are staying home with their kids because childcare has gotten so expensive. They finally figured out, “You know what? For what I make and pay taxes, I’m better off taking care of my own kid and living off the spouse’s salary.” I think that’s had an effect on things. I think there are less people in the labor market. With that being said, we still get a response, but it’s definitely less than it used to be.

William Vanderbloemen:
Well, I think the article that I’ve gotten more feedback on that I’ve written for Forbes in the last year is on what to do if you’re regretting your resignation.

Jay Goltz:
Wow.

William Vanderbloemen:
Yeah. And the number one tip I have is: Offer to come back to your previous employer at the same pay you left, and offer to come into the office.

Jay Goltz:
You know, I’ve had two people who’ve left. One of them went to a big company. He needed to pay off his school loans. We wished him well. They paid him a lot more money than we were paying him. He’s back. And I’m quite proud. And I’m paying him more than he wanted when he left, but like he’s back. I feel great about that. I was happy to have him back.

Another guy left at the beginning of when things started falling apart three years ago. He’s back. I don’t think there’s a problem bringing people back if it ended fine. And I don’t have that many people leave. But in this case, he’s happy, I’m happy, everybody’s happy.

Loren Feldman:
All right, my thanks to William Vanderbloemen and to Jay Goltz—and of course to our sponsor, the Great Game of Business, which helps businesses use an open-book management system to help build healthier companies. You can learn more at Greatgame.com. Thank you both.