Nearly every CEO will say they want their employees to have an “ownership” mentality – to perform their role like they had a stake in the company’s future and profitability. Unfortunately, many businesses don’t provide their employees with actual ownership opportunities. Winsupply – a distributor that supports contractors in plumbing, HVAC, electrical, industrial, fire, PVF, waterworks and irrigation supplies – is a different story.
Winsupply’s mission is to have an ownership team under every roof. The company owns a majority equity stake in more than 640 distribution businesses; they want entrepreneurs to succeed under its local ownership model.
Monte Salsman, president of the Winsupply Acquisitions Group, joined us on a recent episode of the Wholesale Change show to talk about the company’s unique business model and how Winsupply fosters a thriving entrepreneurial culture.
Distribution Strategy Group: You’ve mentioned that Winsupply’s business model is unlike anything you’ve ever seen. Can you give us a description of what that business model is and how it contrasts with others?
Monte Salsman: Sure. Winsupply is first and foremost about providing the opportunity for ownership to hard-working people with entrepreneurial courage. That’s the essence of it. What makes us distinct is ownership under every single roof.
If you look at the history of Winsupply, it started differently than most other wholesaler businesses. In 1956, a group of amazing people came together and asked a question. This question was not, “How do we start a great distribution company?” but rather, “How can we build a business around helping capable, hard-working entrepreneurs succeed?”
Most distribution businesses start with someone who leaves their company to start their own business. Winsupply’s founders, on the other hand, wanted to build an opportunity for people who had entrepreneurial courage but didn’t have the capital or exposure to help them succeed. I think that’s what’s so different about Winsupply’s business model. It was purpose-driven right from the beginning. The purpose wasn’t to sell more stuff, although we do have to sell things. But it’s different when you start a business with a question that’s purpose-driven instead of money-driven.
DSG: Can you give us an overview of Winsupply today?
Salsman: To start, we don’t define ourselves as a wholesale distributor first. We love wholesale distribution, but our primary purpose is to help create and grow entrepreneurs. To do that, we go through the vehicle of wholesale distribution.
Over the years, we’ve grown to multiple billions in revenue across roughly 650 locations. We are in several verticals, including plumbing, electrical, HVACR, pipes, tubing, water heaters, wires, cable and others. Traditional strategy is driven by where you want to grow – you track demographics and industry trends. While all of that matters, our business model thrives when we find an individual who says, “I want to be an owner.”
So, we don’t really have specific targets about which segments to grow. Our purpose is to find hard-working, capable entrepreneurs who have the courage to take ownership. So, we’re pretty agnostic about where, when and which industry we operate in, so long as we find people with the right values and desires.
DSG: Under the “Our Purpose” portion of your website, the first sentence reads, “Winsupply has embraced a philosophy based on helping capable, hard-working people achieve their dreams.” Will you tell us about your and Winsupply’s philosophy of leadership?
Salsman: I’d love to. For myself, I would call it less my philosophy and more my learned experiences of what does and doesn’t work. I’ve gotten kicked in the teeth a lot, but I’ve tried to remain curious and ask people for help.
We all have a choice in what we do with our lives. One of the reasons I joined Winsupply is that it aligned with my experiences, beliefs and values. This is an organization striving to create opportunity. We discuss creating millionaires and financial independence for hundreds and thousands of people. When I go and recruit young people, I often say, “This is the opportunity.”
DSG: What steps should people take to realize this opportunity and be successful?
Salsman: A while back, I was getting ready for a speech and asked myself, “Can I give somebody the specific exercises and daily disciplines to achieve financial freedom and enjoy this entrepreneurial dream we talk about?” When preparing my speech, I took the time to put all the things I’ve learned over the years into a system.
To me, the first aspect of success is the idea of demanding the best of yourself. And it certainly is demanding. You can go all the way back to stoic philosophers and find this concept that asks, “How much longer are you going to wait before you begin to demand the best of yourself?” To me, that’s at the heart of entrepreneurial success. There’s not some switch you can turn on and off; you have to pursue it daily.
Another thing to keep in mind is what time of day you work best. For me, it’s 6 to 7 in the morning. That’s when I have my best energy, and my thoughts are the clearest. I think one of the things that is really important if we’re going to go on this personal journey and get better is to ask ourselves not only the question, “Am I going to demand the best of myself?” but also, “Am I going to use my best energy and time intentionally?”
I started with these two ideas, then dove a little deeper into what I consider ownership categories. These categories are expertise, relationships, communication and what I call GPWYW. GPWYW stands for “Getting Paid What You’re Worth.”
My view of capitalism and commerce is that there needs to be a fair, balanced exchange of money for services and products. GPWYW doesn’t necessarily mean raising your prices; it’s getting paid what you’re worth. Distributors do so much; they house thousands of products, buy trucks and insurance plans, train people, etc. Distributors will crawl through fire for their customers. You have a right to get paid what you’re worth – that’s not gouging people. If you’re getting paid less than you’re worth, it’s kind of like being bullied and stolen from. The converse is true, too.
So, that’s my system for success: ownership, expertise, communication and earning the right to be paid what you’re worth.
DSG: When you acquire new companies, do you encourage or require them to use a standard operating system? How do you ensure the companies under your umbrella are operating well?
Salsman: Ultimately, the answer is yes, but it begins way up the line. When I talk to someone about an acquisition, the first thing I want to find out is whether or not we have the same beliefs and values.
The most frequent first question I get asked by sellers is, “What is my business worth?” That’s a relevant question, of course, but what would happen if you started the conversation with a different first question, like, “How can I serve people by selling my business?” or “What kind of legacy can I create for people as I sell my business?” When you have the same beliefs and values, anything is possible.
What Winsupply has been building since 1956 is a system that supports the pursuit of the entrepreneurial journey in everything; its procedures, operating system, structure, language and ideas. Our endpoint is to have an ownership team under every roof. What’s flexible is how we get there and how long it takes. That depends entirely on the characteristics of the business that we acquire.
DSG: What does wealth creation look like after acquisition?
Salsman: We offer salary and profit-sharing. I’ve worked at several companies in the past, and I’ve never seen a profit-sharing structure as generous as the Winsupply model. In addition to that is the actual ownership model in each entity. There’s a significant percentage of equity and ownership shares that local teams can acquire, and that equity grows over time. We pay out dividends as a way to repay earnings. Those dividends get distributed back amongst the people who are owners. So almost everybody has a salary plus profit-sharing.
Another thing that sets Winsupply apart is that we are a C-corporation and all of the companies under us are, as well. Frankly, we’re proud of the fact that they are corporations and not branches. Each local company has a president, and it is up to them to determine how they want to use the equity available.
Shared ownership is empowering. When we think about our own experience as customers, most of us want to buy from a business that a very active owners. Whether it’s a restaurant, a bike shop or a tailor, when an owner is involved with their customers, it’s so much better. For me, it’s the richest way of spending my money. In contrast to a traditional branch, Winsupply puts owners directly in contact with the customers who are buying from each location.
DSG: Do you think this model could be applied to other industries?
Salsman: I’ve thought a lot about that. I can’t tell you that I have a definitive answer, but one thing I’ve learned is what is at the heart of what makes Winsupply work, and I believe it’s applicable anywhere. When you have a group of people who believe in and want to accomplish the same thing, you will probably make considerable progress towards it.
I think this model is relevant where there is a significant local relationship component. So, for instance, if you look through the lens of the customer and why they make buying choices, if they prefer to buy locally and have the opportunity to do so, I think there is some version of this model that could work in other industries.
DSG: What are some things that surprise new owner-partners after an acquisition?
Salsman: It probably surprises them that they still feel like they run their own business. There are more controls and processes in place than before, but owner-partners can still feel like they are in control.
Another thing people are surprised by is that the earnings opportunity is still there for them. It’s getting tougher and tougher to be your own vendor. Consolidation is happening, and ecommerce is creating a massive expense to businesses, not just in terms of money but in the time spent learning about it. That’s a huge investment of time. At Winsupply, we’re solving those problems for people, and I think they appreciate that.
DSG: My experience with acquisitions is that integrating culture is the hardest part, and integrating IT systems is the second hardest. What’s your experience in terms of integration challenges?
Salsman: Well, if our cultures don’t match, then we won’t do the deal. If there’s no entrepreneurial courage or a drive to have ownership, then we’re the wrong choice. If there’s no culture fit, it won’t work for either side. Everybody’s going to end up miserable.
From an IT-integration perspective, I think there are two things to consider: attitude and work. If you do what you’ve always done, you won’t end up with the same results; you’ll wind up with less. We’re in a competitive capitalistic model. People are changing all around us. If we stick to what we’ve always done, those people will consume what we used to have.
Don’t be a person that resists change. You’ve got to learn new keystrokes and different screens – it’s nothing other than work and repetition. When you’ve got people with the right attitude, you can get them through that learning curve.