Unusually, McDaniel Business Supply, Frankenmuth, Michigan, has never been owned by anyone called McDaniel.
“I didn’t want to name the company after me,” explains founder and owner Arnie Schwartz. “But I think people can relate better to a local company that carries a person’s name. McDaniel is my mother’s maiden name. I thought it sounded good and would honor my mother at the same time.” And this is not the only way in which bucking the trend has helped McDaniel succeed over the years.
Getting started
Schwartz established his company 40 years after purchasing his first independent dealership, which specialized in retail paper, packaging and school supplies. But even then, he could sense change brewing.
“Back in 1982, kids went to their small neighborhood drugstore or local office product store to buy their school supplies,” he recalls. “But then the large national drugstores started buying out the small sole proprietors, creating chains. We started to lose business, so that’s when we got into office products.”
Years later, Schwartz merged his company with another and stayed on in the sales department. But things didn’t work out as he’d hoped and he was soon eager to become an owner again. So, in 2010, he established McDaniel, which focuses on office, janitorial and industrial packaging products. “Our niche market is small and medium-sized independent businesses within 25 miles of us,” says Schwartz. “We drop ship occasionally, but this radius allows us to deliver to our customers next-day and in person.”
Yet not all McDaniel’s local business is small: “One of our biggest customers is the Bavarian Inn, a 360-room, family-owned motor lodge with a restaurant that serves more than 1 million meals a year. It also has 40-something small gift shops. We sell them everything from coffee cups and other food service items to toilet paper and can liners.”
The company’s local approach isn’t a coincidence. “When I went to open McDaniel, I got involved in the local chamber of commerce,” recalls Schwartz. “I joined the Rotary Club. I got involved in the community and I got a lot of local business.”
Schwartz believes these connections have enabled McDaniel to compete against the big guns. “Amazon has hurt every type of business—including mine to some degree,” he explains, giving an example. “But my business is relationship based and if you have good relationships, you can compete against Amazon. If customers find one or two items on Amazon that are 5 or 10 percent cheaper, I’ll match that and take a loss because they buy so many other things from me. But most of the time, they don’t check. It’s why my business and marketing will never be 100 percent internet based. I want a website that makes ordering easy for customers, but you can’t build relationships through the internet alone.”
Keeping up with the times
Schwartz highlights what he sees as the key reason for McDaniel’s success: “I am not a very good businessman, although I have always been able to get a company to be profitable. However, my main attribute is that I can spot trends and am a survivor. When Office Depot and Staples came to town, they put a lot of independent dealers out of business because they didn’t want or know how to change. I can see what direction things are going in and pivot quickly.”
This has included expanding beyond office products, something he advises other dealers should embrace: “No one has ever said, ‘No, I don’t use toilet paper.’ The things they use they will buy from someone. Why shouldn’t it be you?”
Headquarters: Frankenmuth, Michigan
Top management: Arnie Schwartz, owner; Ethan Crichton, general manager
Annual sales: $500,000
Main wholesaler: Essendant
Online business: Less than 10%