Paul Garwood’s business philosophy is simple: Think like a consumer. He’s been doing that at Island Hardware & Supply on Orcas Island, Wash., for more than a quarter century, supplying everything from lumber to toilet paper to the 100% cotton socks he buys from a woman in Georgia and sells for $2 a pair. Here's what he told us.
Rewarding Loyalty I get so sick and tired of hearing, “If you come to our company, we will give you such-and-such as a new customer.” I tell mine, “If you are an old customer, you are going to get the deal.” New customers have to get in line and earn the deal.
Account Benefits We have 2,500 charge accounts [on an island with nearly 5,500 people]. Just about everybody has a charge account unless we’re mad at them or they are mad at us. If you have an account, you can use our loaner truck, which is parked in the yard with the keys in it. All you pay is $5 for gas.
Partnering with Employees I pay my staff $12 an hour and half the profits. Most hardware employees make about $25,000 to $28,000 a year. Mine all make over fifty grand. My lowest paid is 23, with little education and three kids. He made $54,000. At Christmas we close and I pay an extra week’s pay.
Community Service Our customers root for the store to be successful. We give coats to kids. If somebody needs a wheelchair ramp, we give lumber. If somebody gets hurt, we tear up the bill.
Toilet Paper and Gas We sell 1,000 rolls of toilet paper a week. We sell so much we had to buy another truck, one that holds six pallets at a time. We buy everything full-tilt from Costco [on the mainland] and resell it. We buy batteries and sponges and break open the packs and put them in a bucket and sell by the piece. We were the first station to sell biodiesel on the West Coast, and we sell our own brand of gas called Passing Gas. We sell deli sandwiches in the morning, and we give away really good coffee, candy, popcorn, cookies, and licorice. You can get fat coming in here.
A Profitable Retirement I’ve owned Island Hardware for 27 years and have been retired for 16. By keeping my company, I’ve made way more money than I would have if I sold it.