John Suarez | CVM Solutions
April 18, 2018
How many times have you ended a conversation with a small or diverse business and been astounded at their unique path to success and at the stories they’ve collect along the way?
At CVM Solutions, it occurs almost every week.
Through speaking with hundreds, if not thousands, of diverse suppliers over the years, one thing is for sure: that astonishment still hasn’t been lost.
In this edition of ‘Diverse Supplier Spotlight’, we interviewed Bob Kelly Sr., of KellyREST Brand Products, a Native American- and Small Disadvantaged-owned business. In this interview-style article, we’re going to share with you Bob’s amazing stories in his own words, along with how he became a supplier for some of the largest corporations in America.
I was born and raised in the St. Paul, Minnesota area and attended public schools as well as graduated from the Minnesota State University system.
Dad was an engineer so I hung around him a lot watching him design and build various types of equipment for Whirlpool, Litton Industries, and other companies looking for various applications.
My Mom taught special and adult education for the St. Paul School system.
In the very same building, while my mom was teaching classes at night, I was taking industrial design and drafting. I would take her to and from work so I decided to make good use of those hours I was waiting around.
My earliest entrepreneurial influence was my mother’s sister Alma who owned a full-service gas station and towing business on the Turtle Mountain Indian Reservation in North Dakota.
Looking back she may have been one of the first female native entrepreneur’s in 1961 on Indian land in our country. I used to spend summers on the reservation with my grandparents and hang out with my cousins at their family gas station.
I was amazed at how well liked and respected my aunt was in town, she remembered everyone’s name. She took the time to share her words of wisdom as a business owner.
I knew from that point, in some way, I would be self-employed when I grew up…
While attending college I started a small residential painting business that helped pay for my college expenses.
I kept the projects small — one or two-person jobs in which my wife or a friend could help. I would use this learned skill on and off for several years.
I will never forget this one job I had:
I was repairing a small plaster hole in this church parsonage stair well. I tapped the hole very carefully with my hammer and the whole wall fell down. I mean, three hundred square feet of plaster gave way exposing the wood lath all the way from the floor to the ceiling.
The pastor was gone at the time, but his young pre-teen son was there. While he casually walked by my dust covered face and climbed over the debris to get upstairs, he calmly said, “You’re kind of screwed, aren’t you?”
Anyway, my father ended coming over and helped me apply chicken wire and re-plaster the walls. The pastor was kind enough to cover my expenses.
In the early eighties, I had been working for a local contractor as a project manager and estimator while researching possible business ventures at night.
This was about the time when desktop computers were just starting to make their way into the everyday business world.
I decided in 1983, with the financial help from my mother, to start Kelly Computer Supply Company in the basement of our town home.
At first, I started selling computer supplies through mail order catalogs and magazines such as Byte, ComputerUser and other national magazines.
My wife and I had just had our first child so while home with the baby she answered the phone, fax or replied to mail orders while I painted houses. Later in the day, I would make sales calls on local businesses.
For several years, I sold computer supplies and accessories, buying from wholesalers or factory direct in the Twin Cities.
We had finally out grown the basement of our townhouse and got an office to work out of in St. Paul, Minnesota.
I had heard of the Minnesota Minority Supplier Development Council from my uncle, who was the Regional Director of Tribal Economic Development for the Dept. of Interior, in North Dakota.
He suggested I get involved in the council and after attending my first meeting I decided to join the organization in about 1989. I was amazed at how many corporate members attended their monthly meetings.
Looking back, being a certified Minority Owned Supplier allowed me the opportunity to meet with purchasing representatives from some of the largest corporations in the Midwest.
We quickly started selling to many of these companies and establishing personal relationships that in some cases still exist today.
It was at one of these meetings that life changed.
I had met a purchasing representative from the Minneapolis Star and Tribune who asked if I could make him a custom wrist rest for the oversize keyboards used in the newspaper industry.
After a few prototypes, our product was accepted by the various stakeholders at the Star and Tribune. We ended up making over a thousand custom wrist rests within a few months.
The following year, I met a Supplier Diversity Manager from United Airlines at the Chicago Minority Business Opportunity Fair. She informed me that United Airlines was looking for a unique wrist rest for the airline reservation team nationwide and wanted to know if we were interested in looking at the project.
We ended up making over four thousand custom wrist rests for their entire reservation group. We kept quite a few seamstresses around the St. Paul area busy for several months; even my mother was helping in production to meet scheduled delivery dates.
Eventually, I was asked to design and make a custom copy holder, keyboard tray and footrests for other local NMSDC council members.
It was about 1992, when I launched KellyREST Brands and began making our own line of computer and furniture accessories.
We still sold other computer supplies, so our KellyREST Brand product line fit right in with our core product offering.
Life was about to change again in 1997 when we met merchandising representatives at the Chicago Business Opportunity Fair from Staples, BT Office Supplies and Boise Cascade Office Products, later to become OfficeMax-Office Depot.
All three of these companies were very interested in expanding their “tier two” product offering and giving Minority and Women Business Enterprises (MWBE) the opportunity to sell their products to a national audience.
The KellyREST Brand was now included in the catalog offerings of the nation’s largest office supply dealers.
A few years later OfficeMax introduced us to their global sourcing team to help find off-shore suppliers to improve our cost structure and expand the KellyREST Brand product offering.
We now have four factories in Asia helping to supply us with parts and components needed for finished products. This has allowed us to compete on price with larger competitors.
Over the years, we have overcome obstacles as many MWBE suppliers do, but I think access to working capital can be an issue for a growing company, especially during the global financial crisis in 2008-2010.
Our business was growing so we needed working capital and banks were not lending. Fortunately, through our contacts at the North Central Minority Supplier Development Council, we were able to secure financing through our local Community Reinvestment Fund and MEDA (Metropolitan Economic Development Association) who help minority entrepreneurs succeed.
We still work with both organizations today.
We have always written business plans; we set goals, budgets and adjust to trends as they change throughout the year.
We utilize technology to keep the cost of business low and stay in touch with our customers who provide a wealth of knowledge. I am always asking people for product ideas or suggestions.
I try to introduce a couple new products each year.
For any MWBE supplier or vendor I would strongly encourage certification.
This allows you access to prospective decision makers with the largest corporate and government organizations in the United States. Also, networking with other MWBE suppliers is very valuable.
I find that I share common experiences with many of my MWBE suppliers and enjoy helping out with suggestions, referrals, or just listening.
I also notice that many MWBE suppliers get discouraged when they are unable to do business with a large company right away.
I got involved with our local NCMSDC as a board member nearly fifteen years ago and found helping other MBE firms was very enjoyable. I would have never met the key decision makers without my certification and involvement in our local council activities.
A unique advantage we have is being an enrolled tribal member at a federally recognized tribe.
This allows us the opportunity to participate in “Buy Indian” preference programs with various tribal organizations. This has allowed us to partner with many small Native American-owned office supply companies around the country.
Not every large corporation is a potential partner or customer — do not expect to get lucky.
It takes years of hard work. Keep networking, attend council meetings, volunteer locally and set a goal to touch twenty new people a week and stay in touch.
The supplier diversity contacts today are very overworked, and many may not even know your decision maker. So, you need to be politely persistent.
In our case, it makes good business sense to partner with a Staples, Office Depot or Grainger who already have existing relationships with the procurement decision makers.
For us, being a valued partner for our resellers has helped us gain exposure to the largest corporations in the United States.
Tier two relationships are the most cost effective for both the customer and supplier. With the new SBA guidelines allowing prime contractors to count tier two spending as part of their small business purchasing goals, I expect this trend to grow.
Looking back on the past thirty years I would have tried to hire better talent at key positions earlier in our business cycle.
If instincts come with experience I often wonder how our business would have looked had I stretched the budget and hired an expert in accounting or marketing sooner.
How would our business look internally or externally?
Another thing I didn’t realize is the time commitment it takes to own and operate a family business.
You tend to make sacrifices other people can’t relate to, like short vacations or working on holidays.
Whoever said the business owner has the freedom to do as they please never owned a business.
I believe that we will start to see a big uptick in prime contractors demanding that subcontractors track diverse spending within their own supplier diversity programs.
This is because the SBA is now allowing tier two spend to count towards overall federal contract small business spending goals. It’s sort of a no brainer when one analyzes the cost savings and positive outcome it will have with the MWBE suppliers, as well as with our economy in general.
With the current technology available today and third-party insights, such as CVM Solutions helping major corporations with reporting MWBE tier one and tier two spend, it is pretty simple to grow a tier two program.
Right now, you are seeing many state procurement contracting officers that actually require targeted supplier diversity goals and hold a prime contractor accountable to achieving these goals.
If I were a supplier diversity practitioner, I would be asking my prime contractors right now for my tier two quarterly or annual spend numbers. I would ask for a plan to increase my spending goals.
I think you will see suppliers like Staples, Office Depot or Grainger utilize their tier two programs as a means of providing value-added services for their large corporate and government customers. The reporting they do is amazing.
The difficult part for a MWBE supplier is finding a willing partner to include your company as a tier two partner. It is always best to join your local procurement council to get certified and attend the meetings and tradeshows.
I never imagined I would be in business for over thirty years and that two of my four children would work for our family business. Nor did I imagine the joy I would get seeing KellyREST Brands being used by customers in airports, hospitals, hotels, schools, tribal organizations and corporate offices around the country. It gives me a sense of pride difficult to put into words.
Small businesses can have a huge impact in their own local communities by hiring local high school or college kids in the summer or after school.
Over the years, I have seen hundreds of these young people grow up and find careers of their own and eventually have families.
Having these young people stop by after many years and say hello just melts my heart.
Read the full interview with CVM Solutions here.