Building a Sustainable Family Business

Home-Ace-coverGary Johnson knows all about building a business from the ground-up. From where he started, there was nowhere else to go but up.

In the 1980s Johnson oversaw a $100 million territory as a senior sales manager with Belknap Hardware in Louisville, Ky., with about 100 sales representatives and a customer service department reporting to him. “I was the youngest person to ever hold that position in the company, but it wasn’t what I wanted to be doing,” he recalls.

So in 1986, with Belknap Hardware starting a fast slide that would end with the company’s demise that year, Johnson packed up and moved his wife Paula and two young sons to Columbus, Ga., taking a low-paying, middle-manager position.

Johnson did have another plan—he wanted to buy the small hardware store across the street. “Looking back now, I guess I was young and foolish and didn’t really know what I was doing,” he says with a laugh.

He invested $200 in the beginning, with a promise to pay more each month over time. “I put $200 in the cash drawer and said ‘That’s my financing.’ It was one out the door, one on the shelf and one coming in the back,” he says.

Belknap was selling products at discounts up to 60 percent, so Johnson ordered $40,000 of inventory to put in the tiny, 1,500-square-foot store. “I didn’t have the money to pay for it. I talked to the head of commercial lending for the bank and got a loan for $16,000 without a local address. I left with a check,” he recalls.

“Not sure if it was smart or foolish, but I went without a salary for the first five years and kept investing back in inventory,” he adds. “Luckily my wife was able to get a job as a school teacher.”

After three years of long hours and slow progress, Johnson knocked out a wall to expand Home Ace Hardware to 2,900 square feet and kept growing the inventory. In 1991 he was able to buy the property across the street, which enabled him to have an 8,000-square-foot sales floor. The store has been expanded three times since then and now features 17,000 square feet of indoor and outdoor selling space and $1 million in inventory.

“The secret to our success is outstanding customer service from our long-time employees and diversification into niches like outdoor power equipment,” says Johnson. “Also, you need to know how to change quickly by listening to customers and giving them what they want and need.”

His 37-year-old son, Seth, joined the business full time in 2004, and he has been instrumental in growing the outdoor power equipment business. “He’s increased our volume by two-thirds since he joined the business and it’s because of his people skills. Customers just love him,” says his proud father.

“We sell 1,000 units of STIHL a year and sell zero-turn mowers up to $12,000. People are only going to buy a big-ticket mower from someone who gives them sound advice. We have the advice and the service after the sale, and we only do warranty work on mowers we sell,” Johnson points out.

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