When Staples bought Corporate Express (CE), Greg McLeod—who was then president of CE’s Minnesota division—knew it was time to make a change. He wanted to find a position closer to where he lived to make it easier to raise a family. So he joined Innovative Office Solutions as a partner.
During his four-year tenure with Innovative, Greg won contracts from heavy hitters such as the state of Minnesota and the University of Minnesota, helping grow the company from $8 million to $45 million. However, Greg realized if he wanted to go independent, he would soon need to make his move. So in 2013, aged 49, he started 1st Source Business Supplies.
Risk tolerance and flexibility
In the last 10 years, in addition to office products, 1st Source has branched out into janitorial/facility maintenance, food service, furniture and, most recently, maintenance, repair and operations (MRO) supplies.
“One of the secrets to our success has been a willingness to take risks,” says Greg. “We are willing to try something new and make mistakes. We are willing to pay the dumb tax. We would not still be in business if we didn’t have this mindset.”
Greg explains that for anyone attempting this approach, perseverance is crucial: “When we try something new, we stick with it long enough for it to incubate. We are willing to fail—and some things we’ve tried have. But other things worked incredibly well when we gave them time.”
Greg also believes 1st Source’s size and flexibility give it an advantage in the marketplace: “We can compete with the big companies on service and price because we don’t have the overhead of 15,000 employees in 30 locations they do. We can outmaneuver many of our competitors because we can respond quickly. Big companies can take weeks to get back to customers, if they do at all. We get back to them right away, which helps us form relationships. It’s taken some time, but these relationships are starting to pan out for us.”
Who you know matters
These relationships helped 1st Source survive the supply chain shortages during the COVID-19 pandemic.
“When no one could get nitrile gloves, we had the relationships needed to get them,” recalls Greg. “We talked to a guy we knew, who talked to a lady, who knew another guy and so forth; and we found a manufacturer that had them.”
Greg goes on to suggest that these relationships should be built at all levels. “No matter how good a wholesaler is, you can’t rely on them to have everything,” he cautions. “Wholesalers, resellers, other independent dealers, manufacturers—our sourcing is a patchwork of all the above.”
Facing down the challenges
And COVID-19 is just one of the challenges that 1st Source has had to contend with in recent years. “In 2019, our account was hacked using ransomware by the Russian Mafia,” says Greg. “It almost brought us to our knees. We held on by the thinnest of margins. It was a miracle we survived. Then there was the pandemic. Traditional sales dropped 90 percent. We’d be gone, but our ability to pivot got us through. A third challenge was building the supply chain for the new MRO category. We had no idea how to find the products, who to buy from, what to buy. I know many people, but sometimes no one has the answers and you have to figure them out on your own. There were a lot of lonely moments when I questioned if it was the right thing to be doing. You have to have moxie to get through.”
Looking ahead
Looking another 10 years down the line, Greg predicts a bright future for 1st Source: “I see us doing $30 million plus in sales, continuing to build new product categories and still being an independent family business. I didn’t start this company to sell it.”
Headquarters: Minneapolis, Minnesota
Top management: Greg McLeod, CEO; Delorce Smith, mid-south branch manager
Number of employees: 10
Annual sales: $5 million
Main wholesaler: S.P. Richards
Online sales: 60%