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New to the game: Steve Bennett bets on Pilot Lumber’s potential

There are a number of reasons people get into the LBM industry by way of heading up their own lumberyard. For some, it’s the pride in carrying on a family tradition. For others, it’s knowing they play a key role in building homes for their community. For Steve Bennett of Pilot Lumber in Bellevue, Kentucky, it comes down to this: It was an opportunity to bet on himself running and owning a company, and investing in a company he believed in.

While many lumberyard owners may have taken on the family’s business or have come over from the construction side to head up a supplier, Steve purchased Pilot Lumber because first and foremost he wanted to own his own business. He chose a lumberyard when the opportunity arose through his investment in Northern Kentucky real estate in an industry he believes will always be important.

Pilot Lumber

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A graduate of Notre Dame, Steve worked as a management consultant while earning an MBA from Michigan, which exposed him to entrepreneurship through acquisition. After gaining experience that brought him to China and back, Steve sought opportunities such as software start-ups, health care companies, and real estate investments, before selecting Pilot Lumber after moving to the Cincinnati area to be near his wife’s family.

Steve had learned that the two-location lumber and building materials supply firm was for sale through connections he had made with bankers and business brokers. From an initial meeting in June 2020 to an agreement worked out four months later, the purchase process was stretched out due to the COVID-19 pandemic, but finally closed in the spring of 2021.

Once the company was purchased, Steve talked to others in the industry who own or have owned lumberyards. He still frequently visits with the folks at PC Home Centers which serves Indiana and Kentucky, as well as other dealers in the Cincinnati area.

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“I’ve talked with other independents who may be seen as competitors, but we’d rather lose to each other,” he jokes.

Strong start

You could say Steve Bennett is new to the business, but he’s certainly not new to business. While his official ownership of Pilot Lumber is just a year old, his work as a management consultant has prepared him to identify a profitable opportunity in a market poised for growth in homebuilding.

“It’s only been about a year, but it has been a wild year,” Steve says.

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Steve credits the lumberyards’ previous owner for setting him up for success after the purchase. “The former owner ran a well-run business. The operations were there, it was profitable, and growing steadily,” he says. “As-is, it was a well-run, profitable company, and I give credit to the employees who have been with Pilot for a long time and have stuck with me.”

While new to the industry, Steve has enough business operations and management experience to continue Pilot Lumber’s success and make adjustments as he’s able. “One of the things I did was ensure that the former owner would stick around for a year. He has helped me with understanding the business, the customers, and how to profitably run this business,” Steve says.

In an area where housing growth is projected to continue, Steve says he’ll grow with the business. As a management consultant he worked in a number of different industries where he gained knowledge and experience that can be applied to Pilot Lumber.

“I fully realize that it was a completely brand-new business for me, but it also allows me to take a chance on myself,” Steve says.

Growth opportunities

Founded in 1919 as a coal and supply company, Pilot Lumber now has two locations—the original in Bellevue, Kentucky, and a second location about 30 minutes away in Alexandria, Kentucky. Bellevue’s location features a 10,000 square-foot retail space and an acre of lumber storage. In Alexandria, the company holds a 5,000 square-foot retail store on a 5-acre yard where they store decking, lumber, and sheet goods. Most home packages are shipped from the Alexandria location as well.

Around 70 – 80% of the company’s materials are shipped to Kentucky, and the proximity to the greater Cincinnati tri-state area means there is plenty of room to grow by also stretching services into the Cincinnati area and into Indiana.

Pilot Lumber primarily serves pro contractors, which make up 60% of revenue in the Bellevue location and between 70-80% in Alexandria. While Bellevue is a larger market closer to Cincinnati, there are growth opportunities to be realized in Alexandria as well, Steve says. “Bellevue gets about five times as many walk-ins as Alexandria so we’re switching up the Alexandria store.” Steve and his team are working to reduce the number of SKUs carried, and clear about half of the store’s square footage to serve as a design center.

“We’re in the process now, so it’s a construction zone,” he says. “We’re getting rid of SKUs that don’t sell and are focusing more on what contractors are searching for. While we’re limiting SKUs, we’re focusing on being an inch wide and a mile deep” rather than carrying items not used in their market.

Connecting with the community allows Steve and his team to seek out the feedback needed to make sure each location is carrying the right items. “We’re doing a lot of outreach and making sure everyone knows who and where we are,” Steve says.

The company is also hosting more events for local contractors, such as lunch-and-learns, that are bringing people into the store.

Solid service

About 20 employees, including three dedicated outside salespeople, serve the communities through the two stores. Together, the company generated around $5 million in revenue last year, while seeing steady increases since 2015. As the only independent lumberyard in Campbell County, Kentucky, Pilot Lumber is able to out-service big box stores, Steve says. The company also specializes in decking and railing, a product category that has has grown 20% year-over-year for the past three years and elevated Pilot Lumber’s status in the market. “That department is our competitive advantage from both a knowledge and stocking standpoint,” Steve says. “If someone is building or repairing a deck, we can out-service any of the big boxes by keeping material in stock, offering premium grade lumber, and working with customers to create their dream deck with them.”

Though lumber price volatility is a top challenge, Steve says that missed opportunities have mostly presented themselves in the form of lead times. For example, since Pilot doesn’t manufacture trusses, they are forced to rely on other manufacturers that can be backlogged. As a result, he admits, the company has lost several large bids.

Keeping up with price increases can also be a battle at times, Steve says. Those increases include fuel costs, which presents challenges at a company that does half its business via delivery.

“We have to weigh the pros and cons of that. We try to be more efficient with our deliveries, and we’re contemplating that since our best customers get free delivery, do we charge small fees for other small deliveries, or bunch deliveries together?”

Regardless of where fuel prices land any given month, Steve explains that constant communication with customers can alleviate most any issue. “We don’t want to give anyone surprises,” he says.

In years to come

Now that he has more than a year of ownership under his belt, Steve says a dedicated focus on what each of his stores does independently will propel the company’s growth.

“The first-year goal for me was to learn the business. I’ve learned to run it, and I’ve learned a lot about the business. I have a lot more to learn still, but the changes I’m looking at now focus specifically on how the two stores are similar but different.”

The Alexandria location is becoming a true contractor lumberyard, Steve says, while Bellevue is getting a refresh to the outside of the building, including updating the home and garden department, while inside inventory is getting refreshed for the market.

“The goal is to sustainably grow. I wouldn’t say just aggressive growth, but sustainable aggressive growth,” Steve says.

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