Hulinek's Lighting Service: small business report

Hulinek's Lighting Service supplies businesses, builders and homeowners with:

• Light bulbs
• Light fixtures
• Central vacuum systems
• Ventilation fans

Hulinek's Lighting Service was started by John Hulinek in 1983 and is located in Charlotte, Michigan about 20 miles southwest of Lansing, Michigan.

History

The last time John Hulinek worked as an employee was the Friday in 1980 when his boss handed him a paycheck and informed him that the company was reorganizing and did not need his services on Monday.  Perhaps you remember 1980, the prime interest rate was over 17%, crude oil was $107 a barrel (adjusted for inflation) and Americans were being held hostage in Iran.

Mr Hulinek had a young family.  He took on many free-lance gigs to pay the bills.  One of those free-lance gigs involved representing a building/maintenance supplier in the small communities southwest of Lansing, Michigan.  This work had definite logistical benefits. Mr Hulinek's home is in Charlotte, Michigan right in the middle of the sales region.

Mr Hulinek was a whiz at getting orders but the firm he represented was not fast in fulfilling them.  Orders were taking more than thirty days to execute.  That is a major problem when you are getting paid on a commission basis.  It also makes repeat sales tough....why order more when the first order has not been delivered?

Mr Hulinek sat down with his dad and they had a long, serious talk.  John was sure that he had the organizational skills, the drive and the knowledge to run circles around the guy who could not deliver the orders.  His dad arranged a meeting with an electrical contractor in the Lansing area.  The contractor said, "I am taking a chance that the apple did not fall too far from the tree.  Just remember, if you screw up it reflects poorly on your dad."

Mr Hulinek decided to concentrate on lighting products.  All of the big, local suppliers considered lighting products to be a sideline, an annoyance.  They had very high mark-ups and  lackadaisical service.

The electrical contractor, in a huge leap of trust, allowed Mr Hulinek to buy lights and electrical supplies from the contractor's major suppliers and put it on the builder's account.  That was in 1983.

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In three years he was selling enough light bulbs and miscellaneous electrical supplies to match his previous wages.

One thing leads to another

Mr Hulinek's core business was selling light bulbs to businesses.  One day, a business owner asked John to supply the light bulbs and fixtures for the business owner's new house.  The business owner was too busy with her business to focus on the construction project.  She said, "John.  I trust you.  I know you will take care of me."

The construction crew was a bit apprehensive.  They did not know this "Hulinek" guy.  They had seen lots of screwy stuff over the years.  They had seen countless fly-by-night suppliers come and go.  They knew that there are a lot of things you can screw up when there are over 200 light fixtures to install.

They were stunned when the lights were delivered to the job after the paint and trim was done.  Each box sported a sticker designating which room it was to be installed in, the location in the room and the switch it was to be wired to.  There was also a master list with a graphic.

Mr Hulinek did it out of self defense.  Delivering the lights to the jobsite ensured that they were handled gently. Overkilling on identification ensured they were installed once...in the correct location.  The more the lights get handled the more likely they are to be damaged.  One-and-done made Mr Hulinek money.  The construction crew did not care about Mr Hulinek's reasons.  They were delighted that they did not have to play any guessing games.  Tearing stuff out and redoing it cost them money, too.   He became their default supplier of lights for future construction.

Soon he was supplying fans and venting.  Then he was selling central vacs.

Get big or get out???

This chestnut is wrong.

Mr Hulinek experimented with expanding his business three times.  Each experiment cost many thousands of dollars.

It is Mr Hulinek's opinion, based on data, that adding the first employee requires that revenue must grow to 2.5X base.....to break even.  Additional costs come from regulatory compliance, accounting, insurance.  Administration tasks sponge up the business owner's time.  The net increase in "worker" is 0.5 while the minimum business volume must increase by 1.5.

There are many, many businesses that can comfortably accommodate a single proprietor but will founder with the additional ballast of a single employee.

What is new in lighting?

John Hulinek lives and breaths lighting.  He will gladly help you select the best fixture, the best bulb/tube/LED for your needs.  These are a few of the topics he talked about in our wide ranging conversation:

SAD

It is pretty well know that people who are afflicted with Seasonal Affective Disorder (SAD) can be helped by increasing exposure to blue light.

Mr Hulinek told me it is a little bit more complicated than that.

Edited from the work of Dariusz Kowalczyk.

Our bodies are tuned into to a circadian rhythm based on a spectrum that is red-shifted early in the morning and late in the evening and blue-shifted through the "productive" parts of the day.  Those red-shift hours correspond to lights tuned to 3500K lights and the blue-shift hours correspond to 5000K-6500K-8000K.

The red-shift lights generate melatonin, calms us down and prepares us for a restful night's sleep.  The blue-shift lights beef up the serotonin levels and make us brave, confident and energetic.

The upshot is that somebody who works at home might want 6500K in their office space and more red-shifted lights in their family space to "not harsh the mellow".

Headaches

Another consideration is the interaction between lights and headaches.  There is medical evidence that flashes of light can trigger headaches.  This may be due to the "startle", fight-or-flight reflexes that are triggered and muscles tense up in anticipation of the need for rapid acceleration.

Some lights have 60 Hz flutter or striations.  The video posted above shows a fluorescent light driven by an inexpensive. "commodity" ballast....the only kind that Big Box stores sell.  Those one-hundred-twenty flashes a second trigger debilitating headaches and muscle tension in some people. As a male, it humbles me to know that women are much more vulnerable to striation effect because their minds simply work more quickly....or that is what Mrs ERJ's tells me.

The solution is to install "antistriation" ballasts.  Antistriation ballasts convert the line power to a high capacitance, low-pass filtered, DC power source.  They smooth out the flutter.  By default, Mr Hulinek will sell you antistriation ballasts because you, as the business owner, might not notice the difference but half of your potential patients and customers will notice.

If the topic of interactions between lighting and human health interest you, you can follow up by visiting the Human Centric Lighting website.

Displays

Point light sources (halogen spots) are nearly ideal for sales.   They make diamonds sparkle, make translucent objects glow and add depth and texture to nearly everything else.

Unfortunately, Federal laws made it increasingly difficult to get those kinds of bulbs.

Picture from HERE

Merchants and landlords responded by replacing burnt out bulbs with compact fluorescent bulbs with dismal results.  Colors were muddy. Detail was blurred.  Sparkle was lost.  Cheap goods looked just as good as the premium products and it was much harder to sell the customer the high-end products when they could not see any difference in the show room.

LED technology is coming to the rescue.  Call John Hulinek (517-543-5658) if you want a crash course on how to re-bulb your sales space to LEDs to bring back that WOW! experience for your customers.  John has experience in selling furniture, automotive accessories and many other things.  He understands retail.

Central Vacs

This picture from Mr Hulinek's Central Vac website

At first glance, central vacuums seem to be an odd thing to combine with lighting supplies.

As explained earlier, Mr Hulinek got into bathroom fans because they are often co-wired with bathroom lights.  His supplier of bathroom fans also sold central vacuum systems and it was easy to also offer that particular brand to his builders.

Once Mr Hulinek was selling a significant number of central vac systems, one of Mr Hulinek's other suppliers took it upon himself to educate Mr Hulinek on the ecosystem of central vacs.

The key to selling central vacuum systems is to not compete with portable vacuums, to offer what portable vacuums cannot.  This has become more difficult as portable vacuums with a retail price of $125 now incorporate features that used to be found on commercial vacuums that sold for ten times that prices.

Mr Hulinek's wholesaler told him that he needed to sell central vacuum systems that exhausted directly outside.  What is the advantage of any vacuum, from an allergy standpoint, if you must still fight with bags and reservoirs?  Traditional vacuums do not eliminate allergy hazards.  They concentrate it and move it to a bag or canister that the owner must touch and breath when changing them.  Venting the exhaust directly to outside eliminates all of the secondary dust handling.

Mr Hulinek's wholesaler also told him that central vacuums can be "green".  A typical portable vacuum has a life expectancy of a bit more than three years.  It is a case of cramming ten pounds of fertilizer into a five pound bag, it can be done but don't expect the bag to last very long. A high quality central vacuum system will run without a hiccup for forty years.  So the choice is thirteen portable vacuums or one central vac system.

Finally, central vacuums are inherently quieter than portable units.  Portable units sound like a turbo jet powering up for take-off for two reasons:  Power density and high speed, spinning impellers.  Central vacuums use larger, slower turning impellers, the power unit is much more massive than a portable unit.  And the power unit is usually located in  a utility space.

If you are going to sell central vacuum systems you should be selling the brands that capitalize on the strengths of central vacs:  Mr Hulinek changed brands after that conversation.

John Hulinek's advice to new businesses

 

Read

You don't have to figure all of this business stuff on your own.  Many people have gone before you.

Some of John's personal favorites are the Bible, Norman Vincent Peale, Tony Alessandra, Dale Carnegie, and Jim Rohn.  We live in a very blessed time.  You don't even need to read to reap the benefit of the collective store of human (and divine) wisdom.  You can learn much on Youtube for the effort of typing in a few, well chosen key words.

Be brave

In retrospect, Mr Hulinek was successful because he was brave.  He had no choice.

One of Mr Hulinek's clients is a Rabbi (Jewish).  Mr Hulinek asked him if he thought Jews were consistently successful at business because of the wisdom found in the Hebrew Testaments: Proverbs, Sirach, Wisdom and Psalms.

The rabbi's eyes sparkled with humor.  "Are you crazy?  Jews succeeded at business because nobody would hire us.  We had no other choice."

But it is more than that.  Every business person will face periods when things do not go well.  God gives us time so we do not need to solve every problem at once.  Be brave.  Keep going.

God let's us paint ourselves into corners because most of us are too timid to be successful otherwise.

Listen to your customers

Mr Hulinek's business evolved as he listened to his customer's needs.  He tested those markets to see if they were a businesses he could profitably serve.

Be frugal

According to Kelly Blue Book, a seven year old minivan with 100,000 miles on it costs about $3500, or 10% of the cost of a new van. In Mr Hulinek's experience, a vehicle can easily go 200,000 miles if treated gently and well maintained.  Other than ego, what is the advantage of buying new? 

Don't be afraid to be the "right size"

Eaton County, Michigan is not a big market.  There is a "knee" in the curve.  Life is good in the knee.

Know how to price

You will be given much information regarding pricing by your suppliers.  Listen to them.  They want you to be successful.

Make sure you understand the difference between mark-up and margin.

A one hundred percent mark-up may seem exorbitant, but realize that some products are thinly traded and you will end up "eating" some of that inventory.

Mr Hulinek delivers.  The easiest way to allocate that cost of delivery is to carry it in the mark-up.

Finally, some markets expect "discounts" and you cannot give anything away if you are already priced to the bone.

Tolerance of rejection is the price of entry

Nobody ever embraces rejection.  The best one can hope for is a certain numbness.  This ties in with the Be Brave.

Success is a numbers game.  Mr Hulinek made thirty cold calls a day, five days a week. Every week.  He had contact with every business within his region at least once every month.  Some of those businesses placed their first order three years after his first contact.  That was thirty-six contacts and, thirty-five rejections after he started.

From his customer's standpoint:  They had seen many flash-in-the-pans.  They heard many promises.  And they never saw most of them again.

John called them.  John visited them.  John was always respectful.  John suggested certain kinds of spotlights that would display their products in the best possible way.  Month-after-month-after-month.  Even when he did not make sales, they were part of his territory.  They were his people.  He kept calling.

A guy who displays loyalty and steadfastness, even when they are not being paid, gains a certain stature. How can you doubt that he will be there for you when you have a problem?  He is there for you now.

Eventually, they would place an order.  His job then became to deliver service that exceeded anything they were used to.

Link to previous small business report
Link to next small business report

Mergener's Printing and Office Supply

Yes, the pink sign says "22LR Sale"

This week’s Local Small Business essay is about Mergener’s Printing and Office Supply: Phone number (517-975-4550)

The selection criteria were much the same as last weeks.  I was looking for a local business with longevity and I wanted a business with enough “eye candy” to support the essay while I get the hang of business reporting.

Mergener’s Printing and Office Supply

Mergener's can print on a variety of substrates, many of which have good resistance to weathering.

This substrate is extruded plastic board.  The ink is fused to the board so it is wind, wear and waterproof.  This is ideal for permanent signs in high traffic areas.

Yup, they have office supplies.

Mergener’s is an interesting blend of businesses.  They provide a service (graphic design), manufacture a product (printed materials) and sell retail (office supplies and sundries).

Cash Flow and Pocket Stop

Mergener’s reminds me of the ideal Amish farm.  The ideal Amish farm typically has a milking operation which provides steady income year round.  Then, the farmer looks at his resources and his markets and produces a bewildering array of agricultural goods with the intention of producing a second, variable stream of checks every week of the year.  His variable stream might start with maple syrup, Easter chicks, cut daffodils and tulips, asparagus, rhubarb, green onions, strawberries, sugar snap peas, raspberries, green beans, pickling cucumbers, sweet corn…Christmas trees, mistletoe, fudge, fruitcakes, and smoked meats.

The key is to exploit every square inch and every moment of time.  It is also critical to keep the maximum number of dollars on the farm.  Cash-flow is of limited value if there is no pocket-stop.  An ancillary benefit of this approach is that it keeps kids busy and (mostly) out of trouble.

Gene Logsdon once asked an Amish farmer why he did not buy more farm land.  The Amish farmer owed 28 acres which is about 1% of what a conventional farm needs to be economically competitive.  The farmer looked over his domain and said something to the effect of, “I might be able to farm more than 28 acres, but I could not farm it well.”  It is telling that this farmer had been able to raise a large, healthy family on that 28 acres and he did not go into debt doing it.

The customers for skateboarding supplies is not big but they are very enthusiastic and tend to spend money as soon as it hits their pockets.

The owner uses these products and thinks the world of them.

Spinning product so the customer can see multiple aspects of it was pioneered by Lex Wexner.  It optimizes sales per unit of merchandise and  is still considered good merchandizing.

A key to staying in business during times of price instability (i.e., inflation) is to charge enough to ensure that you will be able to afford to restock your shelves.

Mergener’s is similar to that Amish farmer.  Mergener’s is not a small business.  The owner calls it a “micro-enterprise”.  The retail shop is about 12 feet across and 24 feet deep.  The owner not only sells office supplies, he sells skateboards, wheels, friction tape.  He sells Herbalife nutritional supplements.  He sells ammunition.

The printing side of the business is like the farmer’s dairy cows.  It produces steady cash-flow.  The majority of his clients are other businesses who come to him for their various forms and other printed material needs.

The retail side of the business is the variable side of the business.  He is always arranging and rearranging his offerings.  Square footage allocated to each class of products varies by dynamic demand.  For example, the nutritional supplements are selling well during these dreary days of winter and the skateboard supplies…well, not so much.  He is going to flip his retail space around to capitalize on that.

---Editorial Aside: The perils of a small, single person business---

Mergener’s office supplies retail business supports the printing business in a few unexpected ways.  It was originally put in as a convenience for his customers and to productively use some floor space that was too narrow for printing equipment but too wide to use solely as an aisle.  Perhaps the thinking was that walk-in traffic might generate some printing business as well.

A mini-pinball machine.  It is all mechanical.  It cannot be justified by any "hard" business basis but it is fun and generates showroom traffic.

A trickle of retail customers also gives the single proprietor a reason to get up and physically move around, to get a little bit of intellectual stimulation.  Working alone can make a person feel very isolated.  The prospect that customers might walk in at random times is enough to create a sense of connection.  The key is to not have the retail business become a burden that detracts from the meat-and-potatoes end of the business.

---End aside---

Merchandizing

At one point our conversation wandered into the details of merchandizing.  The owner was able to tell me on a rack-by-rack basis which ones moved a lot of merchandise and which ones seemed to be invisible to customers.

His observations were initially counter-intuitive.  Material in flat-racks sold briskly while merchandise in four-sided “spinning” racks did not move.  Upon reflection, it is probably due to the nature of his merchandise.  The customers fall into an efficient search mode by ignoring everything more than a few inches outside a given focal plane.  Customers end up seeing right past the spinny racks.

There are not many people in retail who can articulate that micro level of detail.

Overhead

Eaton Rapids has seen many new businesses come and go.  The ones with longevity survived because they developed strategies to keep their fixed costs low.  Business with high fixed cost may thrive during good times but fail during economic downturns.  They bleed money while their revenues dry up.

One of Mergener’s strategies includes low rent.  He has a very frugal footprint in square-footage.   Also, being an older building, he does not have to pay top dollar per square foot.  Older retail space might be the kiss-of-death for consumer products but his space is very close to many of his business customers. 

Another strategy is lean inventory.  A common failing of new business owners is to fall in love with some item of inventory and to over buy because they are absolutely sure everybody in town will want to buy one.  One happy side effect of frequently rearranging the footprint is that one does not fall in love with the inventory.

A fixed cost reduction strategy from the printing side of the business was to form strategic alliances with other printers.  Mergener’s quotes jobs that they cannot do in-house and then farms them out.  They have two reasons for doing this.  Mergener’s does not end up sitting on a bunch of seldom used, rapidly depreciating equipment.  The other reason is that they know the technical side of the printing trade better than their customers.  They can spec and source the job far more quickly than the customer, freeing up the business customer to do what that customer does best….providing service to their clients.

---Editorial Aside: Integrity and Trustworthiness---

I asked for some examples his work to photograph.   He politely refused. All photos shown here are of materials that are in the public domain or his customers encouraged him to distribute...materials like business cards.

Mergener's prints business cards.  This one looks very classy with white font on a black background.

Others opt for a more colorful palate to project a different image.  These cards have very good definition and the crisp detail that my cheap camera does not capture.

He explained that printed materials contains intellectual property which belongs to his clients.  He prints brochures, menus, fliers for upcoming sales promotions, business forms.  Imagine how betrayed a business would feel if a competitor learned about an upcoming promotional event and underpriced every special by ten cents?  Or, consider the effect on sales if customers learned that prices were going to drop by 25% within a week.

---End Aside---

Saying “No” to Business

This interview was conducted very shortly after the terrorist attacks at Charlie Hebdo, a French magazine.  So the topic of self-censorship came up.

One of the advantages of a private business is that the owner has more latitude to pursue or refuse business.  I ask the owner how he handled requests to print “edgy” or potentially inflammatory bumper stickers and other materials.

The owner told me that he has “not-bid” business in the past.  He also told me that he is a dedicated, practicing Christian and the last time he looked in the Bible it said something like, “…and treat your neighbor as your self.”  He uses that as his touch-stone.  In his mind, he replaces target of the bumper sticker with Christ or Christianity.  Then he consults his gut reaction to decide whether to “bid” the job or “not-bid”.

Link to previous small business report.
Link to next small business report.