New South Construction Supply celebrated 40 years in business on Jan. 1. The company was founded as New South Supply by Wayne Gotto and Wayne Glenn in Columbia, South Carolina. The two had been salespeople for Specialties, Inc. in Columbia and had the itch to go in business for themselves. There were only two problems: there was a major recession going on, and they didn’t have much money. They were able to borrow from a customer to get started and over the next couple of years they would deliver whatever they sold, and, on the weekends, they would do the books and send out invoices. They worked seven days a week for the first few years until they could get the company on solid footing.
During the next 20 years they expanded from one location to five and things were good…until Wayne Glenn and his wife both developed cancers. They decided they wanted to sell out and devote their time to getting well. Wayne Gotto did not want to run the business alone, so they put the business up for sale.
At the same time, I was looking for another business to buy after the sale of Enterprise Computer Systems where I had been CEO for 12 years. The Capital Corporation in Greenville, South Carolina had the listing to sell New South Supply. I had contacted them looking for a business to buy. After one meeting with Wayne Gotto, I knew I was onto something. I liked the fact that the business was focused on only three product categories: concrete accessories, masonry accessories, and waterproofing. Also, there were only about 500 SKUs. I have always felt that there are riches in niches, and I liked the niche that they were in as there were no national competitors to snuff me out, just a few regional competitors.
In about three months I was completing due diligence on the last of their five branches when the 9/11 terrorist attack hit the World Trade Center in New York. That was gut check time. Would our economy crater? Would there be more attacks? Would I be able to finance the purchase as banks would now be skittish? All these questions ran through my head and many more. I persisted and was able to line up the financing to get the deal done. On Nov. 1, 2001 I closed on the purchase.
Just three months after the closing, on Feb. 5, 2002 we opened our sixth location, in Myrtle Beach, South Carolina. I am proud that we made a profit our very first month. It wasn’t much, but it was a profit. Since then, we have expanded to nine locations in the Carolinas and Georgia. We have added rebar fabrication and the rental and sales of tilt up concrete construction products to our product offerings. We diversified from just light commercial construction to residential, industrial, road and bridge, and restoration and repair. We replaced the generic computer system we inherited with industry specific software and since then we have added mobile ordering, GPS tracking, data visualization reports, cost to serve analysis software, and pricing algorithms. Also, in 2008 we rebranded as New South Construction Supply to reflect more accurately what we supplied.
What lessons have I learned in my 40+ year career? The main ones are below:
- It’s all about people. I don’t care how good your facility, inventory levels, and trucks are, if I have better people than you, I will beat you every time.
- Stay up to date with technology. Computers and software don’t join unions, they don’t ask for raises, and they don’t miss work due to being out too late. We are doing 5X the revenue from when I bought the company with 25% of the back office staff. That is all due to automation.
- Stay in your lane. When you try to be all things to all people you end up meaning nothing to no one. Find a niche and own it.
- Practice open-book management. For all of my career I have shared financials with my associates. I know that most of my competition thinks this is crazy; however, I have found that when your associates understand your financials, they understand the tough decisions that have to be made during hard times. Just make sure you share the wealth during good times.
- Build your bench. It’s never the wrong time to hire the right person. We are always doing college recruiting and looking for talent anywhere we can find it.
- Know your industry. Read trade journals, go to industry conferences, listen to podcasts, and be active in trade groups. You will get much, much more back than what you put into it.
The last 20 years have been a lot of work but also a lot of fun. I have decided to not sell the business but to create an Employee Stock Ownership Plan (ESOP) so that the legacy built over the last 40 years will carry on when I retire. We have a very loyal group of associates and I know that if I sold the company most of them will lose their jobs. I am not doing an ESOP exit for purely altruistic reasons, as it is good for me and my family, as well as all our associates. I view it as a classic win/win proposition. I just hope I will be around to see what the next 20 years brings.
Jim Sobeck is CEO of New South Construction Supply and New South Real Estate Partners. Jim is the author of The Real Business 101: Lessons from the Trenches, a collection of business tips he learned (mostly the hard way) in his more than 40-year business career.