Dare to Dream

Review Summary:
Business. Coastal Chemical & Paper Supply, Sarasota
Industry. Janitorial products, retail
Key. Company has survived the recession by being nimble and spending wisely.

The recession hurled a knockdown punch into the gut of Scott Miller's business dream: to one day see his janitorial products and services company become the industry's first commercial and retail superstore.

Miller envisions a place where a facilities manager for a hospital might buy an auto scrubber and a plastic drum pump, while a housewife picks up a squeegee and a gallon of streak free glass cleaner in the next aisle. The store itself, just like it does today, will stock more than 4,000 items, with 30,000 more available on special order. Its motto will continue to be 'everything to clean anything.'

The way it currently works in the janitorial products industry, a company either does consumer retail or it serves large-scale commercial customers. But not both.

“No one has done it successfully in our industry yet,” says Miller, president and chief executive of Sarasota-based Coastal Chemical & Paper Supply. “No one has been able to put it all together.”

The economic downturn, however, has put Miller, 50, on his heels instead of allowing him to foster his dream.

“We are supposed to be a recession proof industry,” says Miller, who thought all businesses and public entities would need a cleaning service, no matter the state of the economy. “But I guess there is nothing that is recession proof.”

In fact, annual revenues at Coastal were down 14% last year, from $8.7 million in 2008 to $7.5 million. The company, which currently has 26 employees, hit $8.5 million in annual revenues in 2007.

Some of the company's customers simply went out of business in 2009, while Miller decided to no longer work with other clients who were late or delinquent in bills — a recession-era decision that tugged at his heart.

“In the old days, I wouldn't have done that,” says Miller. “But I can't allow a customer to go a few months without paying anymore.”

A tough stance on accounts receivables isn't the only way Miller is fighting the recession.

Indeed, consider 2010 the year Miller starts to fight back and regain his dream.

Many aspects of Miller's strategy to do just that at Coastal mirror the lessons he learned during the three years he was a manager of one of the busiest Home Depots in the country. Says Miller: “You could take the same philosophies for any business.”

'Brand loyalty'
The dream revival plan at Coastal began in earnest last fall, when Miller analyzed a series of detailed feedback surveys he commissioned from vendors, customer and employees. The surveys contained some surprises.

For one, Miller learned that next-day free delivery, something he does for about 85% of his customers, really doesn't mean much to clients. “It was all about quality and service,” Miller says, not the speed of delivery.

Coastal has about 1,200 regular customers, with a heavy concentration in schools and hospitals from Citrus County south to Collier County. The company's online business has expanded that reach dramatically, to where it recently sold some supplies to a school in Alaska.

The company has about $8 million worth of inventory in its store in Sarasota, a few miles north of downtown. Coastal can also tap into thousands of other products through
its relationship with the National Independent Sanitary Supply Company, an industry buying group.

Miller says Coastal has bought more than $40 million worth of products from NISSCO since 1982, an effort that has saved its customers $4 million.

The survey, meanwhile, revealed another important nugget, one that other executives in just about any other industry could heed: Don't switch products on repeat customers, even if it's virtually the same thing under a different label. Miller says Coastal had switched on clients when it was out of a certain product and there was a close replacement.

“We found that there is some pretty strong brand loyalty,” says Miller. “The customer doesn't want to change once he finds something that works.”

Another recent step Miller has taken in response to the recession is to open a consignment side of the store. That's where Coastal sells used items like industrial vacuums, floor cleaners and auto scrubbers for up to 70% less than new. Customers have told Miller they need backup gear, but don't want to pay full price for something they might not use too often.

Before the recession hit the company and many of its clients, Miller used the spend money to make money approach with Coastal. He bought new delivery trucks in 2004, 2006 and 2007. He installed GPS systems in all the company vehicles.

Miller also overhauled Coastal's software and technology systems a few years ago. Says Miller: “I've invested a tremendous amount into this company.”
Miller has also recently invested a lot of time and effort into the business trend of the day: Going green.

At Coastal, that includes using many types of recycled paper and plastic products, both internally and for sale. It also recently created its own green line of cleaning supplies and products.

“We don't want to bang the green drum because it's the latest trend,” says Miller. “It does work.”

Exhilarating work
Miller might live for custodial products now, but he once thought he was going to have a long career in computers. That was in the early 1980s, when, fresh out of the University of Florida, he got a job in data processing with the corporate office of Eckerd Drug Stores in Largo. “I thought computers were the wave of the future,” says Miller.

But Miller soon learned his future lied in being an entrepreneur. In 1986, with a $25,000 loan from SunTrust Bank, he founded a wholesale custodial products distribution company. He traveled across Florida and sold products to other janitorial companies, including Coastal, which was initially founded in 1967.
Miller became friendly with the Coastal owners, a husband-wife team, and in 1993 the two companies merged together. The combined company had about $2.7 million in revenues that year.

In 1997, when the company had $4.4 million in revenues, the owners, Ron and Cindy Wilds, bought out Miller in an amicable deal.

Miller then started his own statewide commercial contract cleaning business. The company worked in office buildings in Jacksonville, Orlando and Tampa and, in the process, Miller learned the end-user side of the custodial products business.

In 2000, Home Depot contacted Miller. The company sought a manager-in-training for its stores in and around Chicago, including the one in Naperville, Ill., which at the time was one of the largest ones in the chain. Home Depot corporate executives even showed off that store to visitors and potential institutional investors in the company.
Miller took the job. “If you come from an entrepreneurial mindset, the challenge [at Home Depot] is exhilarating,” says Miller. “It was a very exciting time.”

Miller says his experience at Home Depot taught him a lot about merchandise packaging, how to guard against employee theft and the value of human resources. He also honed his multitasking skills there.

But in 2003, Ron and Cindy Wilds asked Miller to come back to Coastal. The couple wanted to retire soon and, more importantly, the company had been stuck in neutral in sales since Miller left it in 1997.

So Miller came back to Coastal, where annual revenues were in the $5 million range. He has since split his time on the custodial products superstore dream while also focusing on the day-to-day operations. Miller admits that leaves little time for much else.

“I've had golf clubs since 2003,” says Miller. “I've never been able to use them. I just love to work.”

Home Depot lessons

Scott Miller considers his three-year managerial stint in a suburban Chicago Home Depot store one of the most exhilarating business experiences he's ever had.
Miller has incorporated many of the lessons he learned at Home Depot into Coastal Chemical & Paper Supply, the janitorial products and services company he owns in Sarasota. Those lessons, Miller says, could be applied to nearly any other business. The lessons include:

• Respect human resources: Miller has hired a full-time HR person for Coastal, which has allowed him to focus on operations. At Home Depot, Miller learned, one of the reasons the company was so successful was because it had happy employees. “Human resources is something a lot of [entrepreneurs] don't look at,” says Miller. “But that part of the business is huge.”

• Merchandise mix matters: Miller says he was taught almost from his first day at Home Depot that a product display has to be done perfect and put in the perfect spot. The placement, he says, is sometimes more important than the price. “Packaging and presentation matter a whole lot,” says Miller. “It makes the buyer feel good.”

• Never get complacent: The corporate folks at Home Depot preached operational excellence strategies daily. For Miller, that started with making sure his employees embraced change. “Just because it worked yesterday,” says Miller, “that doesn't mean it won't work better another way the next day.”