‘Silent Partnership’ Evolves into Full-Time Success
Cincinnati-area company owner Kimball Derrick discovered his affinity for cabinets somewhat by accident, helping two local cabinetmakers get started.
By Helen Kuhl
One could say that Kimball Derrick, president of K.D. & Steele Cabinetry in Blanchester, OH, has gone full circle in the cabinet business.
He began as somewhat of a silent partner in 1985, when he was owner of an industrial wood products company. He decided to enlarge a building under construction in order to rent space to two cabinetmakers who were working in a garage at the time. He found himself more interested in the cabinets than in his own business, which he eventually sold, and became involved in growing the cabinet end. When one of the two cabinetmakers decided he would be happier back in a small operation, Derrick bought him out. Today, he is two-thirds owner of the business with partner Joe Steele, and the company expects to reach $2.5 million in sales for 2000.
Derrick says that he had followed a totally disjointed career path until he founded the industrial wood products company, a business which became successful but wasn’t very satisfying to him. “But when I got to cabinetry, everything sort of jelled for me,” he says.
He enjoyed dealing with homeowners and concentrated the company’s growth on new residential construction, working with builders to provide “reasonably priced, well-made custom cabinets for the kitchen and bath.”
As he continued to pursue that market, he began working on more elaborate, customized homes in the Cincinnati area, gradually evolving into the very high-end market and also into more remodeling jobs. Today, K.D. & Steele’s business consists of kitchens ranging between $40,000 and $60,000, complemented by a few $250,000 projects involving cabinetry for the whole house. About 50 percent of the work is remodeling.
Derrick says that he appreciates remodeling work more now than he did initially because he found that there usually is a larger budget available for the kitchen in a remodeling project than in a new home. “I also like providing cabinetry into a project trying to create a seamless look, as if there were never a remodeling that took place,” he adds. “There is a particular challenge to that — transforming a whole room to look as if it were always that way.”
When Derrick became involved in the business full-time in 1989, he gave his attention to business matters while Steele focused on production and scheduling duties.
Derrick says he began by examining production costs and determining which areas were most profitable. He realized that their products were being priced too low, and as he became involved in estimating and sales, he found that he had a natural ability in those areas. He became the company’s primary salesperson and also became a Certified Kitchen Designer through the National Kitchen and Bath Assn. (“one of the hardest things I’ve ever done scholastically,” he says).
Besides handling sales and design, he also ran the business. Learning how to be a successful business manager was an ongoing challenge, especially at the beginning, he says. “With all the different training I have in my background, I don’t have a degree in business management. I would have been more profitable sooner had I been a more savvy, more experienced business manager.”
One of the things that helped him grow as a businessman was joining a roundtable group for local CEOs, sponsored by the Cincinnati Chamber of Commerce. There are about a dozen business owners in the group, all from unrelated areas but with similar concerns, and they have become an advisory board of sorts for Derrick.
Another key to the company’s success, he says, has been his dedication to attracting and keeping high-quality employees. K.D. & Steele has grown to 22 total employees. Derrick says, “I look more for individuals who are good people with integrity and ethics, ‘salt-of-the-earth’ types. The skills can be trained or developed. Along the way, I have hired some really good people.”
He also has worked hard to retain good employees by caring about their personal growth both within and outside of the company. “I work with and talk with my employees about their growth, and it has also been a policy of mine to include them in the decision-making process as much as possible, especially where it impacts their destiny,” he says.
“Employees feel some control over their destiny within our company,” Derrick adds. “We all share a mission about the quality of our product and our lives. While I feel very fortunate to have had little turnover, I also feel that it’s not by accident. It’s something I have worked on a lot.”
While Derrick was concentrating on sales and management, Steele was moving beyond production duties and gravitated towards the computer. “Thank goodness!” Derrick says. “In this day and age, I’m so glad that we have Joe’s abilities and his interest, because he has really led the way.”
Steele started with word processing and accounting software and then trained himself on CAD in order to generate drawings. Today, the company uses VersaCAD and Cabnetware.
“I have an assistant who does drafting, using Cabnetware to produce my sales drawings. Then Joe takes those drawings and mixes them with actual site measurements and specifications to produce final drawings for approval and to tell the shop what to build,” Derrick says. “He plays a really vital role in the capacity of being my translator. And having that information be accurate is so important. We have very little in the way of ‘boomerang’ cabinets that come back to us, thanks to Joe.”
As a complement to his sales duties, Derrick also handles all marketing for the company, and he says one of his most valuable tools has been having his work professionally photographed.
“I started doing that a few years ago,” he says. “Originally it was with the idea of generating a portfolio of 8-by-10 photographs that could be carried around. The photographer convinced me to enlarge some so that I could hang them on the office walls. I did that and had some matted, and one day, before I had them framed, I took a few to show a client. It had such an impact on that meeting that I began to see value in maintaining a portfolio of large photos.”
He now has photos done in a 16-inch by 20-inch size with 20-inch by 24-inch mats and carries a large number with him to client meetings. He still has 8-by-10s printed and sends them to industry and consumer magazines to encourage editors to feature his work in their publications. Both strategies have paid off.
In addition, Derrick says his most successful effort has been what he calls developing “allied professional” relationships. He counts among his allied professionals the contractors, architects and interior designers who have become K.D. & Steele’s long-term customers — people who he feels comfortable working with and who provide mutual referrals for work.
Conestoga Wood Specialties Corp. has been another important partner, Derrick adds. From its beginning, K.D. & Steele has purchased about 90 percent of its doors, drawer fronts and panels from Conestoga and has been very pleased with the quality and service, he says.
Derrick also gives credit to a local artist for doing exceptional carvings on many of the company’s projects, which supplement other carvings purchased from Raymond Enkeboll and Hafele. He also outsources turnings locally.
Another way in which the company has grown has been by branching out into what Derrick calls other “profit centers” besides custom cabinets.
One profit center is the sale of stock cabinetry. “At a certain point, I realized that we needed a stock cabinet for laundry rooms, secondary bathrooms and lower-level rec rooms,” he says. “We were needing to take the clients’ budget and proportion it to where they would get a good quality cabinet for their secondary areas and could focus their dollars in the areas that were most important to them, such as the kitchen, library, family room and sometimes the master bath.
“Even today, in multi-million-dollar homes, clients welcome the fact that we have an alternative for the secondary areas,” he adds. “Also, as we moved upward in the scale of homes we were doing, I still had builders of smaller-scale homes who I had worked with and who wanted to continue to be K.D. & Steele customers. I still wanted to serve those long-term clients.”
Derrick says that whenever he orders stock cabinetry, it is brought into the shop, unboxed and inspected before it goes to the job site. The shop makes any repairs needed and sometimes will assemble the cabinet so the installers don’t have to figure it out.
Other major profit centers for K.D. & Steele are countertops and appliances. “I saw where peripheral products to kitchens and baths were potential profit centers that we were not taking advantage of,” Derrick says. “And in many cases, I wanted to be in control of the countertops, hardware or appliances, because we had to coordinate with other suppliers of those products who weren’t good coordinators. And it was easier if we did it ourselves and took that responsibility.”
Derrick says that he sells several hundred thousand dollars’ worth of new appliances each year. “There is not much margin to work off of in those areas,” he adds, “But there also is not a lot of expense.”
Part of that profitability comes from the fact that K.D. & Steele belongs to BKBG, a buying group for kitchen and bath industry dealers, that enables him to purchase appliances and other products at a lower cost level and to receive rebates. It costs $1,000 to join the group, and each member has to agree to a certain level of business or he is billed a nominal monthly fee.
It also is mandatory to attend one of two annual conferences, which enable members to visit face-to-face with vendors and see products. Derrick says he attends them all because he has found them to be so helpful, especially for the networking opportunities. “I go to spend three days with the most successful and best dealers in the country,” he says.
Derrick also has benefitted from having displays of his cabinetry in the appliance distributor’s showroom. Likewise, he will feature appliances in a new showroom K.D. & Steele will open early next year.
The company previously had a small showroom in its Blanchester facility, but recently dismantled it to obtain additional office space. The new showroom will be in the new Design Center of Cincinnati, which is being developed by an architect client of K.D. & Steele’s. The Center also will house suppliers of windows and doors, flooring, audio-visual equipment, lighting, countertops, specialty hardware and other residential product lines. There will be an opportunity to do some joint advertising through the Center.
“I’m both extremely excited about it and totally terrified at the same time,” Derrick says. “I’ve grown accustomed to a kind of low profile, and this is definitely going to put us out there. It’s going to represent some challenges. We do not deal with much walk-in clientele here or have multiple customers at one time. I intend to hire additional designers to work within the showroom to handle that.”
Although K.D. & Steele is growing and branching out, Derrick emphasizes that he does not want to become a “cabinet factory.”
“We want to maintain a hand-made look to our work with a certain elegance and skill evident and not take on a ‘factory’ appearance, whether it is in the finish or the detail,” he says. By offering the stock cabinets, he says that he does not have to turn away customers, but can still continue to offer truly custom work — “basically an unlimited, wide-open selection, with the service of guiding the client through the selection process.”
The company’s finishes are all done in-house and are one thing that sets it apart from competitors as well as from the general marketplace, Derrick says. “Our painted finishes took us years to develop, and they are very good.”
The company also makes its own drawers, which are solid maple, dovetailed all the way. They feature a K.D. & Steele brand inside. “We are very particular about our drawers and our roll-out shelves and other interior accessories that we make,” Derrick says.
“I noticed that when we deliver cabinets to a job site before they get countertops, largely they are judged on what the cabinet looks like from the top,” he adds. “So even though we might have done a beautiful finish on the exterior, if there is a drawer that is not just right or a rough edge to a machining area, the client sees it. And for the price that we are asking them to pay for hand-made cabinetry, we need to watch those things and have a real consistent attention to detail from beginning to end.”
Derrick says that he has trained everyone in the shop to inspect carefully and reject work that is not acceptable. “When you get that kind of team agreement in the shop about who we are and what we produce and an understanding that nothing short of that quality will do, it’s very powerful,” he adds.
Such attention to detail also is beneficial for installation, Derrick says. The company does not do any of its own installation, which is customary in the area, and Derrick says the finish carpenters who install the cabinetry actually upgrade their work and pay more attention when they see good quality. “They don’t want to have their work in any way reflect poorly on cabinetry that they see is very high-quality,” he says.
In addition to the quality of the product itself, K.D. & Steele also maintains a high level of quality in its service to customers and treating them with respect, Derrick adds. “We are honest and admit when we have made a mistake and take care of it. We deal with customer service and warranty issues with a policy of ‘Do the right thing.’ It’s very simple.”
Derrick’s design ability and personal relationships with customers have been a big plus in helping the company be successful. It is there where the circle is becoming more complete for him, as he now thinks about stepping back from the forefront and developing other employees to take on greater sales and design roles.
“One current challenge that I face is that the business has really become wrapped up around Kimball Derrick. I want to guide the business and have a good reputation that brings in clients. But for me as a business owner, its value is diminished because of its single-focus with me,” he says.
“I’m seeing it as a good business move to begin to train people first as my assistants and then let them begin to go out with their own name, using my system and my experience,” he adds. “Little by little I want to let go and become more selective of what I do.”
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