This column is the fifth of seven installments based on Jean Bye’s 2022 Hoyt Memorial Lecture delivered at CastExpo in Columbus, Ohio.

One of the best sales tactics is learning how to say “no.” That sounds counterintuitive, but the word “no” has the power to make your foundry more desirable and successful.

Establishing boundaries is an important skill to have in business and in life. Saying no is hard. It is uncomfortable, and our brains are hardwired with a negativity bias which makes us sensitive to negative input. That bias gives us a desire to avoid difficult interactions. Yet saying no makes you manage your business relationships better and helps you refine your offerings. It also protects your limited time and resources and applies them to the areas you have defined as best for your business.
Customers given a no may push harder in the hopes of eventually getting a yes. When you give in, you are letting them know that their behavior is ok, and they will continue to push on other issues. Setting boundaries early will make things easier. It is much harder to set boundaries after you have let a customer move the goal posts. Once your customer knows those are your boundaries they will eventually stop pushing. But don’t flinch or apologize, or the pushing will continue. You know best what your company is capable of being successful at. Your work should be on your terms, which means getting comfortable with being uncomfortable. Have the confidence to say no.

At Dotson, we used the ability to say no to stop doing something countless times, and instead focused on what we could do best. 

In the 1980s we stopped producing steel, aluminum, and large castings. Around 2000, we stopped pouring gray iron. Each time we stopped something, we gained focus and our margins went up. The more specialized we became, the higher our margins and the higher our quality. The more we tried to be everything to everyone, the more average we became at anything. Often, I would say to our customers: “We could do what you are asking, but we would lose the results you love getting from us.”
A Harvard Business Review article that has stuck in my mind for years was around Wahl Clippers and their value streams. Wahl Clippers created essentially two separate businesses—one for their commercial clippers and one for retail. They had separate engineers, package designers, everything. They didn’t try to have central staffing handle both styles even though both were clippers. But for the commercial clippers the customer could care less about the packaging or the color or many other traits. Commercial customers wanted the perfect swivel. The cord was critical, and they were willing to pay for it. The retail customers wanted something that stacked well at the store, could sit on an end cap, and was low priced. If they had blended, they would have had designers and engineers who were average at all and great at none. It showed the power of focus on being the best at something very specific.

Dotson’s short lead time is another example of needing to maintain focus and say no to the customer. Unbelievably when we had our pre-Covid, one-week lead time, we still had customers who wanted better. And it was tempting to want to say yes. But in saying yes, we would create disruption to the perfect delivery goals, so we needed to be able to say no. 

Saying No to the Company

Another example of where I think it important to say no is around capital projects. Capital projects are always fun, and people rush to do them. However, the approval is often based on a wide variety of assumptions resulting in an expected payback—a payback not always met. In the early 1980s, Dotson felt the impact of just how quickly things can go bad. Coming out of that, I had the strong opinion that I did not ever want to have to live through that again. So, Dotson developed the practice of exclusively paying cash for capital projects.

Conventional MBAs would say to use your cash flow and debt to accelerate growth and that certainly can happen. However, take the person who paid cash for their car and loses their job compared to the one who took out a loan. The one who took out the loan could lose their car when they can’t make payments and once losing their car might be at a disadvantage in a job search. It snowballs. The other has no payments to make and is in a better position. They have more flexibility to handle whatever comes their way. By making payments to yourself while driving a paid for car, the person can accumulate the cash to pay cash for the next car. One-time deferred gratification. At Dotson we did the same. We pay cash for our projects. We just did a $6.5 million employee center addition and we paid cash.

Accumulating and sitting on cash has the additional advantage that it allows you to do projects “counter cyclical” meaning that you are financially able to do them when times are slow and you have the people resources available, but you may not feel ready to take on debt.

Another example of when that financial focus can pay off is around employee layoffs. I don’t know about every state, but in Minnesota if you have people on employment, you pretty much end up paying back the entire amount of their unemployment. When things slow down most people lay off because they need to preserve cash flow. Yet when it gets busy, they will be paying all that money out to cover the unemployment of those employees who sat at home. Because Dotson runs with a cash surplus, we have had the luxury of not needing to lay employees off during slow periods. That keeps their loyalty—and lets you do lots of projects during slow periods. We also have paid employees to do community volunteer work during slow periods, which really helps the corporate image with employees, their families, and the community. And yet if you look over a 5-year period, it really did not cost us much at all over repaying unemployment.

An additional advantage to building a disciplined cash reserve is the ability to pay vendors at terms. Again, conventional MBAs would say to “use” your cash as efficiently as possible. They are essentially saying to pay as slowly as you can get away with and use your vendor’s cash. We all know how we feel about that when our customers do that to us. If you maintain the practice of always paying vendors at terms you build loyalty and become a top tier customer—something that is critical during periods of disruption to the supply chain. But to do that you must have had the discipline to keep cash reserves to enjoy those decisions as an option.

TAKEAWAY #5 – The ability to stay focused on what you do best and having the focus to build cash reserves gives you more options, allows you to weather challenges, and reduces work stress.