Family run business: Flexibility, family drive O-ring success

LENEXA, Kan.—Family owned businesses are successful because they are quick and versatile with decision makers involved in all parts of the operation and on the front lines.

O-ring Sales & Service Inc. is a prime example.

“When sales managers are in the trenches with sales people, the right decisions get made faster,” said Andrew Johnson, sales manager for the Lenexa-based distributor of seals. “When the family is deeply involved in every aspect of the business, we can be much more efficient in our changes and how we adapt our company to increase our market share.”

However, the company's flexibility is becoming more and more unique in a consolidating marketplace, he said. “For the better part of a decade, mergers and acquisitions have been commonplace ... making a family owned seal distributor a dying breed.”

Still, the company continues to follow the charted path it began in 1982, when Doug Johnson, Andrew's father, founded the business. It serves a balanced mix of industries, including fluid power, agriculture, transportation (principally truck and rail), fluid handling, water, food and beverage, and laboratory.

However, major technology changes are taking place at O-ring Sales & Service to keep it ahead of its competitors. One thing is certain, Andrew Johnson said: “Gone are the days when a distributor is merely a middleman who buys and sells parts.”

In addition to Doug, president of the firm, and Andrew, other family members that make up the operation's management team include Judy Johnson, wife of Doug and vice president; Jay Barrow, Doug's son-in-law, purchasing manager; and Adam O'Hara, another son-in-law, controller.

No non-family members hold executive or ownership positions at the seal distributor.

“The core of our business is supporting original equipment manufacturers' needs for specialized and standard seals by offering our unique mix of services, including engineering, testing supply chain management and ultimately sourcing of their sealing product group,” Andrew Johnson said.

Remaining successful for 34 years has been challenging at times, Doug Johnson added, but “God has blessed us, and we have been determined to do our best to give the customers what they ask for, the quality products they need and excellent service.”

O-ring Sales & Service has overcome many obstacles in the past by being committed to the future, working hard and getting up each morning determined to be successful, he said. “Much like a marriage, you have to want to succeed at all costs.”

Among the stumbling blocks that it and other family owned businesses usually face are financing, succession planning and family disagreements. The first step in minimizing those problems is to make lots of money, Andrew Johnson said.

He said when the economic outlook is bright, a family that owns a business is generally at peace. “When the economy takes a scary turn, you have to deal with a lot of stress inside the family unit.”

Emotions usually run high at that point, especially when making important decisions, he admitted, because financial stability of the entire family is at stake. It takes strong leadership with a plan of action and family ties “hopefully rooted in love and a love of a more divine plan. A family with a strong Christian faith helps unify us and gives us confidence in the future.”

In order to remain ahead of competitors, sometimes businesses need to make changes or even reinvent itself, which Andrew Johnson said can be difficult because it is often an uphill battle getting all family members to go along with the plan because “no one likes change. As a leader, you have to be passionate, competitive and hungry for success to reinvent your organization.”

He said it takes a commitment to a bigger vision for a company, one that others might not see at first.

In recent years, Doug Johnson has turned the company's day-to-day business decisions over to the next generation, and he has let those managers heavily influence the firm's future plans and investments, according to Andrew Johnson.

He said if the younger generation of managers want to continue to build the business and put it on the proper path for the future, “they must be given and take an active role in company decisions,” especially when it comes to looking for new revenue streams, developing new competitive advantages and planning around future technology.

Today's technology is extremely important to the second generation at O-ring Sales & Service. “Even though the first generation (Doug) doesn't understand all of today's technology, he has embraced it and championed the second generation's efforts to develop custom tech solutions for our family company,” Andrew Johnson noted.

It is now as much a technology company as it is an industrial distributor, he said. “We write computer code and develop custom software and hardware solutions for our company. We started by developing custom inside office processes and reporting, allowing us to operate the entire company in a paperless environment.”

After that, the firm automated several shipping processes, including integrating its UPS WorldShip system with its distribution software. The company then created software to automate custom shipping documents, and finally it invented a database capable counting scale that is intertwined with its distribution software. That has allowed it to boost sales without expanding its infrastructure, keeping overhead low.

“We just recently filed a patent on a new wireless vendor machine inventory system we invented in-house,” Andrew Johnson said.

While it only employs 19, because of its new technology it was able to ship about $7.2 million in seals during 2015 comprised of 25,000 individual pick ticket line items with only three warehouse employees, a receiving clerk and two shippers.

Equally important, a succession plan is in place at O-ring Sales & Service, ultimately passing the company from its founders, Doug and Judy Johnson, on to the next generation: Andrew and Suzanne Johnson, Adam and Amy O'Hara, Jay and Jessica, and Evan and Julie Clark. Andrew, Adam and Jay currently work full time for the company.

Doug Johnson admits “there has never been any effort to keep the business out of the home or the home out of the business. In a small business, it all bleeds together. When the family is all together in a home setting, the business is usually one of the chief topics ... and we enjoy it.”

The same holds true at the office, he said, where “we have a bouncy house for the kids and battery powered cars in the warehouse.” At the end of each month, the company makes an effort to bring the entire family unit together for dinner, “where we all share a meal and discuss current business topics,” he said.

Looking ahead, Andrew Johnson said, O-ring Sales & Service will continue to carry on its legacy of hard work and a desire to see its customers succeed. However, the company will look a bit different.

First off, as it adapts to a changing market, the company likely will feature more engineering and value-added services. It will “specialize with unique service offerings, differentiators such as our test facility, a unique supply chain and our patent pending vendor managed inventory system,” he said.

Secondly, he said, the company must redefine its channels to market, which continues to consolidate because of mergers and acquisitions. Consolidation has created a more corporate sales environment “with layers of management to wade through as we seek out the decision makers,” he said.

Consolidation also has the firm's management wondering who its competitors are. “The increasingly concentrated corporate customer base has led many of our major product suppliers to focus on a more direct-to-market sales strategy,” the executive said. “This has left us in a rather awkward position at times. Frankly, we are now competing with our suppliers for many of the same opportunities.”

Lastly, Johnson said, technology is changing the distribution game in a big way, “and we have focused many of our resources adapting.” With a heavily automated, paperless operation, O-ring Sales & Service already operates differently than it did in the past.

“This makes us leaner, more accurate and ultimately more competitive,” he said. The key to all the changes the company has made “is we have kept them in the family,” which he believes must be the champion of change.