When you operate a company, there isn’t a GPS or map to clearly identify the road to success. Sometimes there are major roadblocks to overcome before you head in the right direction. However, it’s easier to get from point A to point B when someone is willing to help you avoid the pitfalls that come with the territory of owning a business.
Mark Gracy, President of Bully Tools, is a successful entrepreneur. He shares timely insights about the rewards and challenges of manufacturing in these times of economic uncertainty, Twenty-eight years ago, “outsourcing was the name of the game.” Mark chose to take a different road because he believed in one product and a dream.
How has the company consistently achieved double-digit growth?
Overall Bully Tools experienced a 21 percent sales increase in 2020 and a 45 percent sales increase in 2021. Sales have never been a problem. Frankly, our only growth restraint has been production capacity and cash flow. Since much of that was fixed in 2021, I allowed the company to grow more quickly. I am a salesperson at heart, and sales drive the manufacturing process.
I believe it’s a competitive advantage to have the sales department in charge. They have the final say on what products we develop, what they look like, and the final designs. I continually keep abreast of trends and research how our products are perceived. I believe Bully Tools has the ear of consumers. We simply make products that the customers like!
Was the business impacted by supply chain issues or shortages of materials?
Because we are 100% domestically sourced and have good relationships with our suppliers, we grew at what I believe to be an incredible amount of 45 percent with minimal problems. Naturally, we had incredible price increases for raw materials and some labor shortages, but that coincided with new efficiency from capital improvements, employee training, and manufacturing software that we started implementing in 2020.
Is there a competitive advantage to manufacturing products 100 percent in America?
The simple answer is, “Yes.” But contrary to popular belief, I don’t think it’s as great a draw as many believe. We estimate that approximately 10-15 percent of our business comes from a loyal base that demands or is enticed by the made-in-the-USA philosophy. Manufacturing and sourcing materials domestically is a plus.
On a personal level, when we started the company almost 28 years ago, “outsourcing” was the name of the game. That wasn’t a business plan I could wrap my personal beliefs around. All in all, I thought it was a huge mistake for companies of all sizes and our economy. I truly felt those decisions would come back to bite. There was a strategic value and some challenges to sticking to the domestic plan. But I knew our company would not have to worry about factors out of our control like dock strikes or waiting for a slow boat from China to deliver inferior parts. Having the company and the quality control under our own roof in the USA made perfect sense.
Knowing that the quality of our products was well in hand, we found the pricing issue just didn’t exist for us. When it comes to online sales, the new generation of homeowners and the more informed and now tech-savvy, seasoned homeowners place more importance on customer reviews and “star” ratings to make their decisions. The question on price is lower on their priority list. On the direct retail level, the same result of increased sales and a happy customer base can be reached by implementing certain point-of-purchase practices, informed customer service, and simple merchandising methods for contractor-grade tools.
The company completed a 60,000-square-foot expansion of the manufacturing facility. What is the impact of this $6.7 million investment?
Adding a new facility to our campus in December of 2021 has provided us with the necessary room to upgrade and add new equipment and streamline operations. Most importantly, it gave us ample space to hire more employees. The benefits were realized very quickly. In early December of 2021, we had a five-week lead time for order fulfillment. By March of this year, we were shipping within days of receiving a purchase order. That rate continues today, and our sales YTD are up close to 30 percent.
What are some of the most significant challenges manufacturers face today?
Our biggest concern is one that we all face – inflation. The steel commodity provides a snapshot of what we have been facing when it comes to all materials we need for manufacturing. In a twenty-four-month period, our steel raw material cost has increased by 130 percent. It’s a test for sure, but we’ll get it done.
Another concern is the possibility of penalties for being a large energy user, which is always a go-to in political circles. Being penalized for carbon emissions would make us less competitive with our Chinese counterparts. They can produce without being subject to the same laws. United States manufacturers are making products cleaner than ever. The same products will be manufactured outside of the United States with little to no regulatory compliance and the loss of jobs domestically.
Labor shortages became less of a problem as our equipment and tracking technology investments allowed us to become more efficient while increasing production. Being more productive enabled us to raise wages, and as of January, we were fully staffed.
What advice would you give to entrepreneurs who plan to start a company?
I’ve been involved with many entrepreneurial organizations over the years, and I’ve seen so many individuals, who are more educated than myself, that have great business models for various products or services, but they still failed at some point. The common denominator, in my view, is that they would/could not recognize their weaknesses.
When you have a weakness, maybe several, surround yourself with individuals who excel in the areas you do not but do so without blindly delegating. Entrepreneurs must push themselves to excel in areas that may not be their cup of tea. By doing so, their skill sets improve. In due time they will be able to discuss and answer questions about all aspects of their company and see how each department is unique yet intricately involved. More often, I’ve witnessed that many do not entirely understand their balance sheet and cash flow statements and do not religiously evaluate how their company is fairing. It’s a common downfall. Face the numbers and faults, keep abreast of your industry or the changes that may affect your services, and keep an open ear and mind.
You must be able to have an educated conversation and see through any excuses and or BS that is proffered to you by your team members. In particular, you must know the sales process, manufacturing process, financials and cash flow, tax implications of decisions, and keeping ahead of a constantly changing market. I don’t mean you need to be an expert in any of these, but you must have a basic understanding to make educated decisions.
Why are research and development important?
Some people say you must, “Keep up with the Joneses.” I’ve always believed that you must stay one step ahead. A large part of our early growth was to have products that the consumer could immediately see at a glance that our products were better. You wouldn’t think it could be done with rakes, shovels, and hoes, but our initial success and market penetration were based on what a consumer expects. My kids and employees are surely tired of hearing me say, “perception is reality.”It is crucial that when you develop and properly market and merchandise a product, consumers perceive it as being better than the competition at first sight – or they will never get the chance to find out that it actually is.
Do you have suggestions that may improve inventory management or profit margins?
Boy, do I! Bully Tools continually tries to educate store owners on how to increase their profits and turns while lowering their inventory and GIMROI. We do it in a smaller footprint that allows room for other products they normally wouldn’t have carried. A link in our ad provides valuable information in detail that, regardless of the benefit of offering Bully Tools in their product mix, can be applied to other categories throughout their retail establishment.
Many of our readers operate family-owned businesses. Are there other family members who hold positions in the company?
Yes, ten years ago, my wife, Carol, although actively involved from the beginning, took on a more hands-on position with the company. She initially handled trade show coordination and eventually managed all aspects of human resources. After our oldest child Katelyn graduated from college, she pioneered our E-Commerce sales and social media activities. She left the company to take on a more demanding job as a mom. Our middle child, Adam, has worn many hats over the years and now heads up brick-and-mortar sales. He’s been on medical leave for a while but will return to the trade show scene soon! Our youngest, Sean, was a highly sought candidate after graduating #1 in his college class. He worked for other firms for five years before we could steal him away three years ago. He now manages all E-Commerce on both the sales and technical side, continually works on brand building, and keeps our website working seamlessly.
What is your vision for Bully Tools in the next five years?
I expect to be opening additional factories farther west and south, strategically placed to serve all our customers better. These facilities will enable Bully Tools to continue to supply our customers if unforeseen issues may curtail production in a particular facility. We also plan on dramatically increasing our marketing campaign and hope to be a household name in the near future. Who knows, maybe when people see me on the street, they’ll say, “Look, isn’t that the ‘My Shovel’ guy?”