Niche Player
Specilization meets higher ROI
By David Wolff
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Todd Fisher runs K & K Supply, a sales an rental operation in St. Louis, with his brother and business partner Scott. |
Sometimes, in order to get bigger, a business has to become smaller.
K & K Supply is a sales and rental operation serving the St. Louis, Mo. metropolitan area. A few years ago, the owners felt like they hit a wall. The avenues for growth seemed to close.
Business partners and brothers, Todd and Scott Fisher, decided the days of being “everything to everybody” had to end. They focused on niche markets like concrete finishing and tree maintenance, and vowed never to send a customer to a competitor for supplies to complete the job. The results of this decision say it all.
“We have grown by 25 percent the last two years,” Todd says. “Rental has grown about 20 percent each year, and sales 25 to 30 percent.”
K & K revenue is split 75/25 in favor of sales. From a rental perspective, sales is a value-added service.
“The issue we had is that we never had enough supplies to keep our clients from going somewhere else,” he says. “Customers come to us to rent a jackhammer to break out a porch, steps or garage floor. Once they are done with that job, mesh has to go in, but they have to go somewhere else to get steel. Now, they can get everything from us.”
Last year, K & K bought 10 acres of adjacent property that used to be an automotive manufacturing plant.
“Space was always a stumbling block to our growth,” Fisher says. “We had no place to put 100 tons of rebar. We invested a lot, but we needed to have sales growth. We also acquired a building for more storage.”
Niche markets
Land acquisition was important, but in niche markets so are product and project knowledge. Concrete grinders, for example, have many functions. On some jobs they are used for finish work, while on others the task is demolition. K & K personnel not only have to learn how to use equipment, but also how to complete a variety of jobs.
“We have to be able to show our customers how to complete their jobs on time and on budget,” account executive Mike Harrell says. “Some of our customers couldn’t bid on certain jobs if we didn’t have the equipment or project expertise. It’s one thing to say we have equipment available to rent, but quite another to demonstrate how to use it in a variety of applications. We are in niche markets because we have more knowledge and offer hands on training to customers. Our model is to rent specialty equipment and sell consumables versus trying to put 25 scissor lifts on one job. We sell our expertise, rather than try to be the cheapest commodity provider on any given day.”
Listening to customers has changed the makeup of the rental equipment fleet. K & K invested in a fleet of $25,000 ride-on tile strippers for commercial flooring and demolition contractors, limb chippers ranging from 6- to 19-inch capacity, and a fleet of stump grinders from 13 to 114 hp for arborists and landscape contractors.
“We are experts, but we’re also diverse,” Harrell says. “We’re not just a concrete supply house. We do a lot of business with landscape, demolition and flooring contractors and municipalities. We are a dealer for Bandit Industries. Their line of limb chippers and stump grinders opened up a whole new clientele for us. These same customers now purchase chain saws, rope, tree climbing gear and safety items. We’re spread out; the depth of our customer base is wide.”
People are key
The Fisher’s plan to involve the company deeply in niche markets depended on making sure the right people were in the right positions.
“Rental stores can’t be around a long time and show the kind of growth we’ve had with two or three individuals,” Fisher says. “We have a team of 30 people working together. Our sales force has a vested interest in what we’re doing. We retain people really well, and that is one of our strengths. To be successful, we have to have a trained staff and qualified people dealing with the public. Product knowledge is key. So many people come to us who don’t know how to operate the equipment, or it’s so specialized. Someone might look at a piece of equipment and not even know what it does. A knowledgeable rental sales team is critical.”
For the most part, K & K’s growth comes from current customers. They have been driving the rental operation into new products and markets.
“We’re on a first name basis with our customers,” Fisher says. “They like doing business with us, and we want to do more with them. We hold our barometer pretty high. We treat other people like we want to be treated. We have loyal relationships with our vendors, and our customers have loyal relationships with us.”
Third generation
K & K Supply was started by Todd and Scott’s grandfather, Kermit Fisher. He was a retired postal worker who bought a couple of transport trailers to rent. Their father, Kirk, worked at General Motors and later joined his dad in the business. This was in the mid-1960s, when the rental industry was in its infancy. The original name of the company was Travel Trailer and Travel Rental. When Kermit passed away, Kirk built a warehouse to get into selling consumables. The name was changed to K & K Supply to reflect the partnership of father and son.
Todd came to work for the company in 1992 when he finished college. Six years later the company relocated to the west from its original location near downtown St. Louis. The operation moved into the current facility in Fenton in October 1998. K & K continued to grow when the economy sputtered in 2008 because of its low debt position.
“It was an easy time to take on debt because there was no end to what could be done in the industry,” Fisher says. “The sky was the limit, but it destroyed the housing market. However, we weren’t highly involved in the home building market. We were focused more on the commercial concrete contractor. It was a testament to my father that he knew there would be a hiccup in the economy, although he didn’t know it would be as severe as it was. We didn’t take on a lot of debt. It may not have been an awesome move, but it made life really comfortable when everything else in the industry was so crazy.”
K & K anticipates another 20 to 25 percent growth in rental this year.
“We’ll be making capital investments and grow the size of the fleet,” Fisher says. “We’re grateful for the opportunities given to us by our family. Scott and I could not have achieved what we have without the foundation they built for us. On the other hand, we rolled up our sleeves and got to work and made the business what it is today.”
Recently, the brothers bought a traffic control business.
“It was as an opportunity to get one of our biggest competitors out of the market,” Fisher says. “We had a lot of clients building highways, and we knew we could serve them better by being more diverse.”
The long-term future of the company includes another location, planned for some time in the next five years.
“That will enable us to go after different clients,” Fisher says. “We may have saturated our market from a sales standpoint. Another location would mean a better source of rental revenue, which would be more profitable. Most of our sales come from large contractors. The people we primarily rent to are smaller contractors. We can get a lot of sales from one location, but not a lot of rentals. Another location will help pull in walk-in traffic from a different clientele. It will make it easier for people to get to us.”
Originally published in the March/April 2014 issue of Pro Contractor Rentals. Copyright 2014 Direct Business Media.
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