Latest / Scaling Up with Fexingo: How Small Businesses Become Mid-Market Companies / How a Niche Door Maker Scaled Past 20 Million by Fixing Its Distributor Network
Transcript
- Lucas: So today we're looking at a niche commercial door manufacturer, family-owned, based in Ohio, that was stuck at eight million in revenue for four years. They made high-end architectural doors — the kind you see in hospitals and university buildings — and the product was great. The problem was entirely in how they sold it. Luna: I think I know where this is going. Was it the classic too many small distributors problem? Lucas: Exactly. They had about a hundred and fifty independent reps and small dealers scattered across the country, each covering a patchy territory, and nobody had any real incentive to push their brand over a competitor's. So they'd hit eight million, and every attempt to grow just bounced off that ceiling. Luna: So what was the breaking point? Did they try a new marketing push or a price cut first? Lucas: They did, actually. They tried rebranding, they tried trade show blitzes, they even tried a small price increase to reposition themselves as premium. Nothing moved the needle. And then the founder, a guy named Dan, did a deep dive into his sales data and found something uncomfortable. Eighteen of his distributors were responsible for eighty percent of his revenue. The other hundred and thirty-two were basically coasting. Luna: Ouch. So the Pareto principle, but worse. What did he do with that? Lucas: He decided to do the opposite of what most founders would do. He cut the bottom forty percent of his distributor list over eighteen months. Not all at once, but methodically. He mapped every territory, figured out where he had real coverage and where he had gaps, and then he made a list of who had to go. Luna: That sounds brutal. How did he handle the relationships without burning bridges? Because some of those guys had been with him for a decade. Lucas: That's the part I found really smart. He didn't just fire them over email. He flew to see each one personally, explained that he was restructuring the channel to focus on partners who could invest in real technical training, and he offered them a path to stay if they met new performance criteria. Some of them actually stepped up. About a third of the ones he planned to cut met the bar and stayed. Luna: So it was more of a filter than a purge. But what was the criteria? How do you decide who's actually good? Lucas: He boiled it down to three things. First, did they have at least one certified salesperson who could spec a commercial door assembly correctly? Second, did they carry a minimum stock level of the most common door sizes? And third, did they actively quote his product on at least half of their commercial projects? If they couldn't meet those, they were out. Luna: That's a really concrete bar. But cutting distributors usually means short-term revenue drop. How did they survive the dip? Lucas: They did see a dip, about a twelve percent drop in the first six months. Dan had budgeted for that. And then he did something that made up for it — he hired two direct sales engineers, one for the Midwest and one for the Southeast, to work alongside his top distributors on the biggest projects. These weren't order takers. They were technical consultants who could spec the entire door assembly, including the hardware, the frame, the fire rating. Luna: So they went from passive distribution to active co-selling. I bet that changed the conversation with architects and general contractors. Lucas: Exactly. In the old model, a rep would hand over a brochure and hope for the best. The new sales engineer could sit down with the architect, walk through the fire code, show how the door would handle high-traffic abuse, and specify the exact product. That moved them from a commodity to a specification. And that's where the pricing power comes back. Luna: And that's the thing — if the door is specified into the blueprints, it's almost impossible to substitute it later without a formal change order. That's huge. Lucas: Right. And they paired that with a new tiered partnership program. They created two tiers. A 'Select Partner' had to commit to a minimum annual volume, send two people to a week-long training at the factory, and share project pipeline data monthly. In return, they got a higher margin — ten basis points more — and first crack at regional leads. Luna: Ten basis points is interesting. So they bought loyalty with a small margin bump, but the real carrot was the pipeline sharing. That's smart. Lucas: Yeah, because the pipeline data became the real tool. Dan could now see what projects were coming up six to nine months out, and he could allocate his sales engineers where they'd do the most good. Instead of hoping a distributor would remember his product, he was proactively involved in the bid process. Luna: So what was the actual revenue result? I'm guessing they didn't just get back to eight million. Lucas: By the end of year two, they were at fourteen million. And by the end of year three, just this last fiscal year, they crossed twenty million. Average deal size grew from about forty thousand to fifty-four thousand, because the sales engineers were targeting larger institutional projects — a new hospital wing, a university lab building. Luna: That's a two and a half times increase in revenue in three years. And they did it by shrinking their channel, which is so counterintuitive. Lucas: It is. But the deeper lesson is about focus. A smaller network of committed, capable partners outperforms a sprawling network of disengaged ones every time. And that's a hard thing for a founder who's used to saying yes to every opportunity. Luna: I want to dig into the emotional side of that. Because cutting distributors isn't just a business decision — it's personal. Some of these people were friends. How did Dan deal with that? Lucas: He told me that was the hardest part of his career. He had a couple of distributors who'd been with him since the beginning, and they were the ones who'd never invested in training or inventory. He had to sit them down and say, 'I love you, but you're not helping me grow.' He gave them a year to improve, and when they didn't, he had to let them go. Luna: That takes real guts. And I bet there were moments where he wondered if he'd made a huge mistake, especially when the revenue dipped. Lucas: Oh, absolutely. He said there were sleepless nights in that first year. But he kept reminding himself that the old model had been flat for four years — it wasn't going to magically start working. And he kept his eye on the metrics that mattered: active quotes, spec wins, and project pipeline coverage. Luna: And those metrics are a good reminder for any small business owner. Sometimes you need to look at leading indicators, not just trailing revenue. Lucas: Right. And that's actually something that resonates with me about the show in general. These conversations we have with founders, they're full of these honest, hard-won lessons. And the reason we can keep having them ad-free is because listeners who find them valuable chip in a few bucks. If you've gotten something out of these episodes, you can support the show at buy me a coffee dot com slash fexingo. It's a small gesture that keeps us independent. Luna: Yeah, and it really does make a difference. Every bit helps us keep bringing you these real stories. Lucas: So back to the door maker. They're now at twenty million, and they're looking at the next phase. Dan's thinking about whether to expand the sales engineering team or maybe open a second plant. But the thing I want to leave you with is how he's thinking about the next ceiling. He knows the same pattern could repeat — if he doesn't keep investing in the right partners, he'll stall again. Luna: So it's not a one-time fix. It's an ongoing discipline. That's a good reminder for all of us. Lucas: Exactly. Scaling isn't a single breakthrough. It's a series of deliberate choices about who you work with and how you work with them. And sometimes the bravest choice is to say no to a customer or a partner that's holding you back. Luna: I think that's a perfect place to wrap up. Thanks for joining us on this episode of Scaling Up with Fexingo.