Opening a plumbing supply house from scratch
What you don’t hear too much of these days are folks starting supply houses from scratch.
Acquisitions in our industry are alive and well.
Look no further than the Down the Pipe and PVF Beat sections of this issue where you’ll find news on five acquisitions, including two of particular note in the industrial PVF space with Hajoca acquiring All-Tex Pipe & Supply and Mid-States Supply’s acquisition by private equity interests.
What you don’t hear too much of these days are folks starting supply houses from scratch. John Burgin has bucked that trend. Last year, Burgin, an alum of Winsupply, opened BK Plumbing Supply in Louisville, Ky.
The 52-year-old Burgin spent about a half-century with Winsupply, including 19 years as president of its Louisville location. After selling his interest in the company, Burgin purchased a local rep agency and later sold that right around the time of the economic downturn in the late 2000s. “My heart is in the wholesale side of the business and always has been,” he says. “A couple years ago I thought to myself, ‘Let’s open up a new one — an independent.’”
And that’s exactly what Burgin did. He partnered with longtime friend Larry Klein of the Willis Klein Group, which features three decorative plumbing showrooms in the Louisville area. “Larry’s stuff is all high-end,” Burgin says. “It was a good fit for both of us. He was already in business and it helped when we started talking to vendors.”
Burgin said the biggest challenge in the entire startup process was securing vendors. “There is a lot of competition in our market,” he explains. “There had not been a successful plumbing supplier new to this market since the 1970s. When word started to get out, it sent a shockwave. The nice part is in my 25 years with Win I learned all the fundamentals of wholesaling and had a good relationship with the reps and factory people.”
Burgin says hard work and persistence on the vendor front has paid off and BK Plumbing Supply now has many key manufacturer brands among its inventory. “We worked hard at it for about eight months,” he says. “A lot of the manufacturers were gracious. We are not quite at a year-and-a-half into this and we have just about everything we want. We feel we have a lot to offer. It was just a matter of people stepping up who wanted to work with you.”
BK Plumbing Supply is a member of the Equity Plumbing buying group. Burgin says membership in the co-op has been a big contributor to the distributor’s early success. “On my first phone call to Ted Havel (Equity executive), he said, ‘You are doing what?’” Burgin recalls with a laugh. “Equity has been good for us.”
On top of the Equity relationship, Burgin formed a small consortium of sorts of noncompeting private distributors in surrounding states. “Being on a deserted island is fun when you’re on vacation,” he says. “However, in business sometimes you would like to have someone to talk to and bounce ideas off. With this consortium we communicate with each other and maybe do a buy here and there. There is value to belonging to a brotherhood.”
Burgin reports the month of March was the most robust in terms of sales in the company’s brief history. “Every month we grow and gain strength,” he says. “Would I love this to happen faster? Sure. Right now we are being cautious. We would love to have a couple locations. We’ve already had one company reach out and ask if we would like to buy them. I wish it was a year from now.”
Burgin feels there is room in the industry for startups like BK Plumbing Supply. “The value of a small guy like us is we are so nimble. We can react quickly,” he says. “A contractor walks into our place and the first office door he sees is mine. He can walk right in and talk to me and we can make a decision.
“I would love to see the resurgence of private distributors again. Our industry has seen consolidation for quite a while. Maybe it’s time to go back in the other direction. It can be done.”
Burgin has plenty of advice for someone looking to set up a new shop. “Don’t burn bridges,” he says. “You never know when you might want to cross them again. You also need proper financing, a good business plan and good vision. You have to look for opportunities.”
And Burgin has done just that.
“I love this industry,” he says. “My name is John and I sell toilets. Is that coincidence or destiny?”
This article was originally titled “Starting from scratch” in the May 2016 print edition of Supply House Times.