Special Orders Might Upset Us

I’m old enough to remember the Burger King marketing slogan: “Hold the pickles, hold the lettuce, special orders don’t upset us”. In other words, we’ll deliver the product (food) to fit your unique needs. Obviously, a special order may require more work. The person behind the counter has to assemble the burger by hand, rather than take a pre-made sandwich out of the warmer. More time means more salary expense for staff. If your business is willing to take special orders, there need to be controls in place to ensure that the transaction is profitable.

First Consideration: Does the special order require more expense (use of cash)? If so, how quickly is the cash recovered? Will the owner have enough cash flow to operate after subtracting cash for special orders?

Think of a business that sells luxury items: A bridal shop, jeweler, high-end car dealership. Assume a Lexus car dealer has dollars invested in green, black and gray cars that sit on the car lot. These cars are sold, paid for by customers and new cars are purchased as inventory. A customer orders a yellow Lexus, which the dealer must order from the manufacturer (Side note: Someone wanting a yellow Lexus does not deserve to drive a Lexus). The dealer should insist on a large deposit from the customer. Why? If 20 customers all ordered cars that were not in inventory (not on the car lot), the dealer would have to tie up additional cash to order the cars from the manufacturer. If additional cash is tied up in inventory, the dealer may not have sufficient cash to run his operation. Essentially, the owner is asking the customer to finance a large portion of this additional inventory.

Lesson: Most business owners like to accommodate customers who place special orders. However, a special order should not be filled if it negatively affects normal business

Seen on a bumper sticker: What if the Hokey Pokey really is what it's all about?