Ken Hendricks was just 17 when he dropped out of school in the 11th grade with a wife and baby to support. His father was a roofer meaning he got up on roofs and on his hands and knees, fixed or replaced them. It was hard, grimy work but it was a good living.
To support his little family, Ken worked for his dad and he worked for Wisconsin Power & Light driving a repair truck. When he’d see houses with worn roofs, he’d stop his truck, knock on doors and try to convince the owners to hire him. “I sold roofing and installed on weekends,” Ken said.
But as he worked these long, stressful hours, a valuable boyhood lesson came back to him. As a boy, Ken went door to door introducing himself and offering to mow their lawns. If they hired him, he’d guarantee their satisfaction and then work hard cutting lawn after lawn.
Eventually, it occurred to him he could make far more money if he went door to door and got the jobs and hired others to do them. He charged $3, paid his friends $2 to mow each lawn and he’d keep a dollar for himself. Soon he had a nice income.
Applying that valuable childhood lesson, at 22, Ken became a roofing contractor, which meant he knocked on doors and convinced people to hire him. Then he hired others to do the roofing. Soon he had so much work; it became a very good business. Little roofing jobs then led to big ones. By the age of 26, he had over 500-employees, doing roofing across America and overseas.
But there was a drawback. “I was away from my family an awful lot,” Ken said. “It wore me down.” As the business kept growing, it eventually “put the final spike on the marriage.”
In 1981, Ken was trying to think of a new business that would let him stay near his home in Beloit, Wisconsin. He asked himself what he did exceptionally well that he would enjoy doing.
“I bought roofing material better than anyone else,” he observed. “I said, ‘damn, there are very good [profit] margins in this thing,’ ” and no national competitors.
What happened next made business history. In May, 1982 with just $1200 Ken purchased 3-supply stores that were going out of business. How? “I got terms,” he said. “I went to the bank and got an asset based loan.”
This means the bank loaned him “50%” of the asset or inventory value, which he was buying at a very low price from the seller, who also gave him attractive terms, because they were anxious to get rid of the inventory and close the stores.
“I had 90-days to pay for the inventory [assets]. I didn’t have any money invested.” The bank did. Ken then aggressively sold the assets, collected the money and paid off the loan and paid off the seller. “In effect, I bought with no cash.” It wasn’t necessary to use even the $1200 he’d put up.
Now Ken owned what he called “3-supply centers” and he had a bank line to buy new and better inventory, employees he inherited, buildings in a desirable location and a list of former customers. He retrained the employees to think in terms of top notch customer service, and agreed to share the profits with them.
Ken also convinced many angry and skeptical customers to come back. Soon those 3-stores that failed for the prior owner were cash machines for Ken and his employee team.
Ken now had the winning formula. He kept buying troubled building materials firms from owners across the U.S. and he applied it. When he recently passed away at the age of 66, his firm; ABC Supply Company was by far the biggest roofing and siding material supplier to contractors in the U. S. with an incredible 1/3 of the market.
It was also one of America’s biggest distributors of windows and other exterior building products.
ABC now has 6,000 employees, 390 locations in 46 states and in Washington, DC and $3-billion in annual sales. Forbes magazine last year ranked Ken 91st among America’s 400 richest people with a net worth of more than $2.6 billion.
What astounded businesspeople is how Ken repeatedly made such outstanding acquisitions that cost him so little and yet became so successful. To Ken it came down to understanding and fixing the problems that existed under a prior owner and instilling first caliber business practices.
What was his secret to spotting and fixing the problems? “Above all when I walk into a business for sale, I sit down with the fork lift operator on a pallet of shingles. He’s in his environment.
“I say, if this is your business what would you do?” Ken said. “95% of what he tells me is right on. He knows every single thing that is wrong and how to fix ‘em. He has torn overalls and makes $9 or $10 an hour. He knows far beyond what any consultant can tell me. It’s amazing.”
If you own a business or you’re in management, this is a great lesson for you. Most owners and managers don’t listen to lower ranking employees, yet those employees know their functions far better than anyone else and have crucial information to offer for those like Ken who are willing to listen to them and act on what they hear.
If you want to become a major business success, here’s another great lesson from Ken. “I have a passion to help my customers be successful,” he said with intensity ringing in his voice. “It’s not about money. When people go into business purely to make money … [It’s] not how can I make a better product or help my fellow man.
“When I’m out and I see a customer on a roofing job, I’ll stop the car and come up on the ladder. I’ll have a six-pack of pop and ask if they buy from me. If so, I ask if they’re pleased or what else can we do to better serve you. If not, what can we do to get your business?”
So here was Ken Hendricks, a wealthy man still relating closely to his customers and wanting to serve them better than ever. For he knew what it was like to be one of them and he knew it was they and his employees who made him successful.
In concluding this article, I’d like to share with you a personal observation. Ken impressed me with his enthusiasm and with his humble nature. In the corporate headquarters, there was only one secretary in the entire place and she worked for everyone, not just him.
Ken answered his own phone, or returned calls promptly from voice mail and he located materials I requested and then addressed, stamped and sent them himself.
In addition, despite ABC being a privately held company Ken answered all my questions including financial ones with candor and with no hesitation. It’s how he also treated ABC’s employees for how could they do their jobs well if they weren’t trusted with crucial information and made to feel part of the family.