Started Mid-Career, Grew to $38m in 3 Years

I didn't want to buy a rental equipment business. So think of like cranes and you know, bulldozers and you know, there's a lot of equipment dealers that fall into that category. So I wanted pure distribution in the hydraulic pneumatic fluid connector, instrumentation, seal space. And so that was a subset of the, of the 29,000.

And so actually your thesis was, was dialed all the way down to wanting to be selling rubber hoses?

And what does value add mean? You've said that a couple times.

Meaning, you know, different types of light manufacturing, whether it's hose assembly or assembly of sorts. You know, we have a systems team that, that designs, builds and tests hydraulic systems for customers.

And so, you know, I would, I would label it as somewhat light manufacturing, but you know, it was, it's not someone coming to us saying, I want, you know, six of these and, and our job 100% of the time is to deliver, you know, X number of widgets. There was an advice component that's built into the sales process. And so there's a reason, you know, they're coming back to Us that's not solely on…

And so the advisory piece or the value add piece is, is what separates you a lot from, from a price perspective. And you know, our main supplier is, is never going to be the cheapest option because of the quality. And so you know, we have to compete on, on other levels besides price. And so the value add component is, is how we do that.

And that also answers a question I had meant to ask about industrial distribution. That distribution broadly has the reputation of having pretty tight margins because I guess to your, to your very point it can be quite commoditized. It's just getting you know, widgets from point A to point B.

And so how you, how, how you enjoy better margins is through value add?

I would say yes and I'd also say from a quality perspective. So the, the suppliers that we're representing are the majority are very high quality. And so that allows us to, to build a little bit more margin into the pricing that we're charging.

And can you share what, what net margins would be in, in a business like yours or what they are in your business?

Yeah, so, so we're, we're right around 40% gross profit and then, and then EBITDA margins are, are between 10 and.