Lance Beatty, Vice President of Maintenance Builders Supply, talks about his family business in the niche building supply industry.
Please excuse any typos in this hasty transcript.
Matt Register: Hey, welcome back to the show, Texas Business Radio. Texasbusinessradio.com is the website. 844-814-8144 is our 24 hour call in line. That means get your calls in now. Get ’em in later. Get ’em in the middle of the night. I don’t know that I really care. We’re gonna get the experts in here to get those questions answered. We also monitor #TBR on Twitter or you could go to the website, texasbusinessradio.com, and get your question in that way.
We are talking about growing your business today on the show, and there’s a lot of ways to do it. One of the ways to do it, probably the hardest way to do it, is to just go out and greenfield a new location, a new line of business, and start from zero, and just build it. We have a perfect example of somebody who has done that and done that successfully.
I’m your host, Matt Register. Jay Curry’s sitting over there in the co-host chair. What do you think, man?
Jay Curry: Yeah, I love this. You’re right. It’s gotta be the hardest way of doing it, but when you find someone that’s done it, there’s a lot of best practices to learn and there’s a lot of good information. This is gonna be a good segment.
Matt Register: Yeah, no doubt about that. MBS, Maintenance Builders Supply, is a building supply company that supplies building products to apartment complexes and things being built. Lance Beatty is the vice president, here in the studio with us. Lance, welcome to the show, sir.
Lance Beatty: Thanks for having me.
Matt Register: So, MBS, what do you do? Who do you do it to?
Lance Beatty: Okay, Maintenance Builders Supply is a 25 year old company and we supply products to production apartment builders. We sell pre-hung doors, trim, hardware specialties, things like that.
Matt Register: So, production apartment builders, these are guys who kinda develop a plan and kinda stick to a plan. They’re building the same thing over and over again. You guys can start to kind of put a package together, where you know exactly how much and what kind of materials are gonna be required in that, correct?
Lance Beatty: That’s correct. As soon as they have a pair of blueprints that they can send out to trades to do estimates, that’s where we start. So, it could be anywhere from a few months before we start or a year or so, just depending on their phase or what part of the planning phase they’re in.
Matt Register: We were talking during the break and one of the things that it’s a little bit counterintuitive … I assumed that you would be limited to the state of Texas or limited to a reasonable means of transportation of all this material to a building site, and that’s certainly not the case. How far and wide do you guys spread your supplies here?
Lance Beatty: Currently, we’re working in about six states, I believe, but historically, we’ve worked all over the country. There are some things that keep us from going to certain markets, geographically available labor and things like that, but the multi-family business, it is cyclical in markets. Right now, Houston’s a little bit slow. We’re a little bit overbuilt, but there’s other areas in Texas that are doing well and other areas outside the state, so we kind of follow the business trends as much as we can.
Matt Register: Well, not only are you in the supply business, in the distribution business, but also, from what I understand in the labor business, you install a lot of these products, and you recently got into the door manufacturing business, and that’s what I want to talk about because I think that transition from a distribution company to all of a sudden a manufacturing company is something that a lot of people don’t get right.
Lance Beatty: Sure.
Jay Curry: It’s tough.
Lance Beatty: Sure. So, yes, for 19 of the 25 years, we were what you would refer to as a box and drop. Even though we may have repackaged some things that came into our facility with the correct quantities, and even though we may have installed it, it’s pull it off the shelf and send it back out, to where when we got into the door business, which really simply, it’s pre-hanging doors, where we talk all the different components for a door, we do the proper prep that we need inside, and we use our machines to pre-hang them and send them out as a pre-hung unit, very similar to what you’d find on the shelf at a Home Depot.
Matt Register: But you didn’t go and buy an existing company that did this, right? You started from zero and built it from the ground up?
Lance Beatty: That’s correct, and for a few different reasons, we wanted small, controlled growth anyways so that we didn’t go out there and try to hang the moon immediately, but we chose to reach out to some individuals that have been in the industry for a very long time and have them come onboard and coach us along and help us paint the path of where we wanted to be.
Matt Register: Well, and that’s one of the things that is always challenging. A manufacturing company does not look at all like a distribution company.
Lance Beatty: No, there’s always gonna be some concepts that are gonna be the same, but all in all, very different operations.
Matt Register: Most of the time, and we see it almost daily in our investment bank, an engineering company trying to become a manufacturing company, a manufacturing company trying to become a distribution company. They aren’t the same thing. The skillsets are very different. So, you guys ended up hiring, ended up buying the skillsets that you guys did not have internally as a distribution company, correct?
Lance Beatty: That’s correct. We made a few key hires that allowed us to grow from there, and to build our infrastructure where we needed, and like I said, very controlled growth.
Jay Curry: Now, Lance, I’m seeing you’re dealing with very large apartment complexes and you’re providing the labor, and it might be in, Lord knows, Montana, so this is very complicated. Do you send everything out at one time, ’cause these building projects take a long time to build? You can’t have 750 doors arrive at one day. You’ve gotta put them somewhere. How do you figure all that out?
Lance Beatty: We use the right people for logistics. We have MBS employees on the ground, on these job sites, working with the builders, folks that are on the ground, and every project’s different. Every project has different challenges, so it’s doing as much identifying of these issues upfront as you can, the more you sit and talk about a project during the negotiation phase, and that way when it comes to the day and you’re ready to pull the trigger, we’re not trying to create a plan there, and we already have one in place.
Jay Curry: So, you’re not bringing in the cheap labor from Texas. You’re getting that local, but bringing in the management and the high-level strategy people to make sure it’s installed right and managed?
Lance Beatty: Well, at the beginning phase, we pull in the higher level, general manager type positions, but right now, the folks in the field, as we refer to them as project managers, they all have been grown through MBS and have come from different positions, been with us 10, 12, 15 years.
Jay Curry: And live in Texas?
Lance Beatty: And live in Texas. So, they do travel some. It’s the nature of the beast. I travel some, too. So, it’s just one of the challenges that were dealt with, but they still manage to cover their territory and do well. Most of our work is out of town right now, so a lot of trips to Austin and San Antonio during the day, Denver, just where we need to go.
Jay Curry: You mentioned that Houston is kind of slow right now and that in other parts of Texas, it’s going well, but we had this huge hurricane. What isn’t that generating a lot of work, or is it it just hasn’t gotten there yet?
Lance Beatty: So for us, it is generating some work, but again, we do all production, so on these apartment complexes that are redoing an entire first floor, yes, we’ve been involved with those and have seen a few come our way. As far as homes, we’re just not really geared up for that we’ll call type business where folks walk into a counter, so we haven’t seen a lot from that, but my understanding is that occupancy picked up for a temporary period of time for apartments here, and so I think that things are still staying well. I don’t wanna speak too far out of turn, but it’s looking like new construction in Houston is gonna pick up here at the end of the year and beginning of next.
Matt Register: Yeah, interesting. We’re talking to Lance Beatty, vice president of MBS, Maintenance Builders Supply, about some of the growth that they’ve done in their company through building a new division. They’re really building a separate company. Talk to me briefly about integration. Integration is where things like this get made or broken, right? So, how did you echelon in some of the activities of the company to take it from a separate business to all under one roof?
Lance Beatty: Sure. So, when we started the door and millwork division, it operated very much like a separate business. It was Maintenance Builders Supply, doors and millwork, our own folks over there. The only same back office would be the back office of the folks that we share at our accounting department, but now that we’re operating just as Maintenance Builders Supply, we’re starting to integrate different things. So, it’s identifying any tasks that may be duplicated and where can better use resources or people to fill gaps that are needed to improve our service. So, we’re actually in the middle of that right now, a lot of hands on work for managers, a lot of meetings following the project and meeting our deadlines, trying to get it pushed to the next level and not let it linger.
Matt Register: No, it makes a lot of sense, and hats off to you because that’s something that a lot of people-
Jay Curry: It’s very difficult.
Matt Register: … yeah, certainly don’t get right.
Jay Curry: Yeah, it’s true.
Matt Register: It sounds like there was a lot of thought that went into this, and by all measure, a successful addition to your company, gave you some capabilities you didn’t have before.
Lance, what’s the easiest way for somebody to learn more about MBS, should they want to?
Lance Beatty: If you wanna learn more about MBS, you can go to our website, mbssupply.com, or you can reach out to us at 713-462-8213. That’s our office number. You can ask to speak with me. You can ask to speak with Troy Holt, one of our outside salesmen, or you can ask to speak with David Bennett, one of our outside salesmen.
Matt Register: All right, Lance Beatty, vice president of Maintenance Builders Supply. Mbssupply.com. We’re gonna have that linked right from texasbusinessradio.com. We do have to go take a break and pay a couple of our own bills. We’re gonna be back with a whole lot more Texas Business Radio right after this. You don’t even have time to go anywhere. We’ll be back.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.