115-ryan-kugler

John DeBevoise:

Greetings everyone, and welcome to another serving of Bizness Soup Podcast Radio. If it’s in business it’s Bizness Soup. Your host is the incomparable John DeBevoise. Today, John talks with Ryan Kugler, entrepreneur extraordinaire, who runs three highly successful businesses. Today we will focus on one of them, Plan B, one of the nation’s largest secondary wholesalers. What is a secondary wholesaler? Ryan purchases unwanted, out of date product, or from companies going out of business and resells it to companies like Ross, Dollar Store, Marshalls, Big Lots, Dollar Tree, and individual Amazon sellers. It’s a fascinating look at how inventory gets recycled and put back on the shelves. So come hungry because Bizsoup has a lot to offer on this episode. 

John DeBevoise: 

Ryan, welcome to this serving of Bizness Soup. 

Ryan Kugler: 

Awesome, thank you so much. Thanks for having me. 

John DeBevoise: 

It is a pleasure to have yet another entrepreneur on this show. And as we were talking about back in my day, when we use dictionaries, you opened up to the page where it said entrepreneur, if you knew how to spell it, and there would be my picture. But now that we have Wikipedia, my picture’s been replaced with you. You are the entrepreneur on the West Coast, or the Left Coast, whatever you want to call it. So welcome to this show. And I want to talk about one of your many projects and that’s called Plan B Distribution. You have come up with a plan B, a little bit different than what most people would think about as a plan B, it’s a distribution company. Tell us about what Plan B is and how did you come about with that idea? 

Ryan Kugler: 

Plan B, we are in the liquidation business. We also consider ourself a secondary wholesaler, which really means that when someone does not do well with their product, it does not sell well, any product that they make, a physical product that’s sold online or in stores, they will call us and say, “Hey, can you help me move it? Can you buy it for me? We want to get rid of it.” Because to them it is a closeout, it’s run its course, they are officially done with it. [inaudible 00:02:01] every manufacturer, even retailers have product. You walk into a story and you see something, you come back three months later, the shelf has changed, there’s new products. Where did the old products go? If that didn’t sell to you, the friendly consumer, they go to a company like me and we move it! 

John DeBevoise: 

Well, you’re not the only one in this space, There are a few other companies like Big Box Outfits, then there’s Ross, and all of those. So is everybody in competition for this material, or do you have to establish relationships with these companies where you come get it, or they ship it to you and then you resell it? 

Ryan Kugler: 

Very good question. So yes, retailers is my biggest competitor, are Ross, are Big Lots, are Dollar General, or Dollar Tree. They do by closeouts, they’re also my customers, but we basically will buy it from the manufacturer, we bought from the names I’ve said, and we’ve bought from other retailers. So I’m one of many people that does this. 

Ryan Kugler: 

I think it’s really based on relationships. I’ve been doing this for many, many years and people know me, and they know I’m quick, and a quick offer. Best of all is my communication, I know how to reply quickly to an email, which I suggest everyone does in the world. And so people like that so they’re going to… If someone says, “Hey Ryan, I have this.” And I reply back, “Yeah, I want it. I’ll pay you this and I’ll pick it up.” “Great. This guy’s on it. Let’s do some business with him.” 

John DeBevoise: 

All right. So recently we’ve seen a lot of these brick and mortars falling off the cliff. We have Linens and Things, we have Pier 1, RadioShack, I didn’t even know RadioShack was still around. So they have all of this inventory and they’re going out of business, the brick and mortars. Does everybody in the plan B industry go after them and make bids for this inventory? How does that work? 

Ryan Kugler: 

Yes, retailers unfortunately took a very big hit this last year. They’ve been declining over time due to the internet, and Amazon, and everyone growing, which has been great for other entrepreneurs who make a product and sell it online. But with retailers going out of business, they have many choices. There’s many different verticals in the liquidation closeout business, one of them is to do a GOB sale, it’s called going out of business sale, where they put a big yellow banner on their stores, “It’s going out of business, 50% off!” Most retailers go that route first, then whatever’s left in the stores, because they have to be out of that physical location by a certain time, they will then sell to a company like us and we’ll clean it up and take it away from them. 

John DeBevoise: 

So when they sell it to you, are you saying that you’re going in and you’re giving them a cash offer, you buy that inventory, and then you turn it around. So they’re not waiting for their money, they’re expecting you to say, “All right, I want this.” And you offer them that. 

Ryan Kugler: 

Yes, cash is king. So with us and other competitors like myself, when you pay cash for inventory and you just give it to them or wire them, you’re not giving them green cash by the way, but when you wire them or a cashier’s check… 

John DeBevoise: 

Green cash is so difficult to deal with these days. You walk in, they look at you like a criminal. 

Ryan Kugler: 

Yes. I’ve had someone walk in and try to give me green cash, and there’s certainly legalities that you need to follow with handing over green cash [crosstalk 00:04:51]- 

John DeBevoise: 

That’s right. 

Ryan Kugler: 

… forms. 

John DeBevoise: 

They say, “We’ve got this.” You pay them that, you wire them the money, and then what happens? 

Ryan Kugler: 

Then we pick it up. So we send in trucks. We move 100s, if not 1,000 trucks a year picking up inventory all across the country, we even do some international business, and we bring it to our warehouse, which is in Chicago because it’s central United States, it’s an easy ship point. 

Ryan Kugler: 

Shipping right now is insane. Over this last year, shipping costs, carbon footprint, gas, et cetera, so we try to find the most local place, Chicago, or we will rent a warehouse, bring it in, check it into inventory and resell it. And we could be buying it from a Dollar Tree and selling it to a 99 Cent Only, their competitor. Across the street too. 

John DeBevoise: 

What a plan. That wasn’t plan a, but here’s plan B, and that’s called Plan B Distribution. It’s just one of your companies here. So if I’m a small business owner, which I am, and my listenership are small business owners, and they’re listening to this going, “Hey, Ryan’s got a plan here. How would I, as a small business, be able to capitalize on this opportunity of all this excess inventory that came from all of these big companies, all wrapped and ready to ship, how would I get in on that as a small business owner online or otherwise?” 

Ryan Kugler: 

Good question. So there’s two ways to liquidation and closeouts. First there’s the buying and the selling. So if you’re a small business owner and you manufactured a product and sold it online or are selling it online and you’re done with it, my first suggestion is, do not call a company like me because we’re going to offer you a very low price unless you really want to get rid of it. 

Ryan Kugler: 

But we always tell people, try to sell it to your customers first. So go to your customers, just like the retailers do. RadioShack, they gave it to their customers at a reduced price. Always try to do that first, you’re going to make more money. It’s a little more time consuming, one piece here, one piece there, where I buy it in bulk 10,000, 100,000, a million units at a time. So that’s what I would suggest. 

Ryan Kugler: 

On the flip side, if you’re looking to buy liquidation and closeouts, there’s actually companies in each city, local companies where you can walk into a warehouse and buy a skid or a pallet, same thing, or a truckload of different inventory that you can go and you just Google the name, big company is called liquidation.com. Why am I referring to them and not me? Because if you’re a small business owner, you might want to just start with a smaller amount. Where with us, we have minimums where we’re going to sell you 2,500, 5,000, 10,000 at a time, which we’d love to sell you, and if that’s the case, look us up, Plan B Distribution. 

John DeBevoise: 

Well, I think in most cases of a small business owner, that might take up a little excess space in my storefront. 

Ryan Kugler: 

Yes. And then they might call us and try to sell it back to us, we got that! 

John DeBevoise: 

All right. So you get these massive amounts, whether it be as… I gave the example of Linen and Things and Pier 1, and I would imagine that there’s quite a scrambling for inventory of plan B companies that are going for that. And as you said, cash is king. So if I’m buying something, how would I know that it came in or through Plan B Distribution? 

Ryan Kugler: 

You actually wouldn’t know. We don’t put a label or anything on it. So it’s kind of hard to tell. 

John DeBevoise: 

So if it comes into the warehouse on a skid and probably it sounds like it goes out on the same skid. 

Ryan Kugler: 

Yes. 

John DeBevoise: 

Okay. 

Ryan Kugler: 

That’s true. 

John DeBevoise: 

You gave the example of you go through one of the big box stores down at the mall there, and you say, “Oh, that looks nice.” And then you come back next month, “It’s gone.” How would I look up that inventory if I said, “I saw that maybe I should have bought that earlier. How would I know where it went, and how would I look for a particular item if it got wholesaled out to a plan B distribution company?” 

Ryan Kugler: 

Very good question, actually. So the first answer is you wouldn’t actually find it because Plan B, for us, we don’t publicize that we bought a deal on Crayola crayons. The way that people find out is our customers are usually retailers, brick and mortar, end users they’re called. And they will email us, call us directly and say, “Hey, I want to see closeouts you have, put my name on a list. And this is what I want to see, I want to see Crayola crayons.” 

Ryan Kugler: 

So then what we do is then, yes, they’ll get an email from us once a week, once a month, every other day, whatever, that says, “Hey, we have Crayola crayons.” Or, “Hey, we have Fisher-Price toys.” Or, “Hey, we have this.” That’s usually how. The second way is if they’re specifically looking for a certain item, best just to Google it, and somebody, an Amazon seller who might’ve bought a pallet, or a skid of it, will go list it online somewhere on a link through Amazon, or eBay, or Shopify, or whatever website is the most used these days. 

John DeBevoise: 

So if I was to see this item on eBay, there might be some other people, E-bay or Amazon, that have the same product so it really comes down to price selection. What am I willing to sell it for versus the other person? And the one with the best price, or service, or best ad gets the hit. 

Ryan Kugler: 

True, you’re completely correct, but I want to put this little forewarning out to your listeners. If you’re looking to get into the liquidation business of buying and selling products, which is a good business, and you find it on eBay or one of these other sites or Amazon, Amazon is probably better because it’s going to be brand new, or it’s going to give more detail as to if it’s slightly used, but I’m telling you this because you want to check quality. So price, you pay less, you get less. Major factor in my life. So if you see something for $10, you see the same item for $5, something is wrong with the $5 item. Maybe it’s scratched, [inaudible 00:10:01], the edges are frayed, maybe it’s missing a crayon. Something is wrong. 

John DeBevoise: 

You didn’t just suddenly start up Plan B at what it’s at, you’re an entrepreneur, you’ve got other businesses as well. When did you have that moment where you’re going, “You know what? I can do this, and maybe I can do it better.” How did you come about with this idea of Plan B Distribution? 

Ryan Kugler: 

It’s a good, quick story. When I got out of school, I got into the family business and my father owned a business that sold video tapes, VHS video tapes to video stores, Blockbuster Video. 

John DeBevoise: 

Oh, yes. 

Ryan Kugler: 

So, we were doing that, but in very small quantity, five here, 10 there, three there. And I thought bigger because I was an entrepreneur and got out of school and said, “Why are we peddling one and two videos, let’s peddle 10,000, 20,000, 30,000.” So I started calling the movie studios and other companies and buying their inventory and reselling it to Best Buy and Circuit City at the time, and so forth. So that’s how I kind of got into it. 

Ryan Kugler: 

But as media, meaning VHS, DVDs have slowly gone away, I had to pivot and change where I was going and said, “If I can buy 10,000 DVDs, why can’t I buy 10,000 extension cords?” So now I changed the name of the company, it used to be called DBA, which stood for Distribution Video and Audio, which are two words that don’t really exist in today’s time, because you don’t really buy video, which means VHS, and audio, which really means an audio cassette, for those listeners out there that know those words. So basically a widget is a widget, I pivoted from buying media to everything else. 

John DeBevoise: 

After you realized, “Oh, I can buy 10,000 extension cords.” And that worked, “Wow, there’s a market.” What was the next thing you went after? 

Ryan Kugler: 

Well, we pretty much buy anything and everything now, and we’re offered anything and everything. The oddest things we’ve ever been offered in our liquidation close out business is pigs ears, spoiled milk, and human hair. But we have not those three items. 

John DeBevoise: 

But there is a market for them. 

Ryan Kugler: 

There is market actually. Spoiled milk is bought for farms because I think they feed pigs and other cattle and stuff, but we don’t have that market, or that niche, so if somebody wants to go after it, somebody who’s listening, go for it. Pigs ears, I didn’t even research, and human hair I didn’t research. 

John DeBevoise: 

Well, coming from the agricultural industry, I’m very familiar with both of those products. 

Ryan Kugler: 

There’s a business for you! 

John DeBevoise: 

There we go. Spoiled milk and pigs ears. Can’t put them together, but I know where they go. 

Ryan Kugler: 

There you go. 

John DeBevoise: 

So Ryan, you started off small, and you grew and you grew, how long did it… What happened in your first year? You transitioned from the DVD and video and such, and I do know those terms, and I’m still waiting for my eight track collection to have a value. 

Ryan Kugler: 

It does a little bit actually. They’re worth about a buck a unit. 

John DeBevoise: 

Yes. Well, I paid a little bit more for Neil Diamond and Barry Manilow back in the day. So when you started it, you had a certain volume. How long did it take you to break that million dollar mark? Was it year one, year two, when? 

Ryan Kugler: 

I would say, well, with the previous company I was with, the family business, DVA, I think we were doing two to three million when I started, and I don’t want to toot my own horn or boost it, but by the time… Our highest point that we got to was 25 million. But then of course the media industry started to decline. So then when I started Plan B and I jumped ship and started my own company, no family connection, no nothing, all on my own, we, say, within the first year we went to a million and we’ve just completed 20 million. And we’re seven years old. 

John DeBevoise: 

You were in the family business, you were part of that wheel, and you finally said, “You know what, folks, I’m going to put my own wheel out there.” How easy was it to leave the family business? Oftentimes they look at you as a mutineer, you’re walking the plank and jumping off the ship. It’s not an easy thing for some people. How easy was it for you to say, “Hey Mom, hey Dad, hey family, I’m on my own. See you later. Bye.” 

Ryan Kugler: 

I think it had its pluses and minuses like anything. If anyone’s working for any company out there, they’re working for the man, as they say, and then they leave and go start their own company, there’s pluses and minuses. I mean, the minuses, you don’t have a comradery, you don’t have a team as someone else to bounce ideas off of right away. The plus is you might make a little bit more money and you can make a decision and no one’s going to counter it. So it was good and it’s bad, and I miss it, but I love it. So it’s 50/50. 

John DeBevoise: 

When you started your business, going into the entity, I’ve said for decades now that I’ve never met an attorney who wasn’t willing to separate you from your success. You have a company, at what point did you incorporate and how did you do it? Was it a C Corp, S Corp, an LLC? Certainly you’re not doing by DBA. 

Ryan Kugler: 

Good question. You know your stuff. When I left, we immediately chatted with a lawyer and basically went under the same premise as the family business I was with before, so we did an S Corp. And sure, it took a little time to get all the licenses that you need from the local city and government, and to set up the corporation, and to build a website. But I did it all in the background as I was doing sales, technically. So I was still wheeling and dealing it on the phone, and had some other people doing it for me, and just kind of did it all, and appreciative that I have a team of five, we’re a little smaller now, but we all do fun stuff. And plus we have other companies too, and I have a layered company where the five employees work the other companies as well so it makes it more interesting so there’s never a dull moment. 

John DeBevoise: 

I have often said, and I can see the example here, you don’t have to reinvent the wheel. And as my audience always knows, I talk about putting spokes in the wheel. You were already in a similar business, and I’ve said for decades that look at technology and how it can improve the business that you’re already in. There’s your spoke, where do you put it? And you found this niche where, instead of just the video sales, there’s the opportunity to go into other products, other goods and services that have a physical presence that you put your hands on. So you didn’t reinvent it, you just put your spokes in a wheel, and moved on down the road and took your business. And the opportunities are there. What was the biggest challenge that you had in starting this new business of yours? 

Ryan Kugler: 

Good question. And yeah. So basically I basically applied what I know and what I’ve learned from finishing school to now, and said, “Listen, I know how to do this. Let’s keep doing it.” I did start other businesses to challenge myself to see, can I do other stuff? And we can chat about that another time. But going back to what was the toughest thing to do starting the new company? I think it was doing it more alone, should I say. Like we touched upon before, leaving the family, and I didn’t have the comradery of someone else there, a brother, a father, another brother. When you leave a team, you have to start a new team, and you have to find new people. And I think that was the biggest thing. 

Ryan Kugler: 

But I do remember when I first started and the office is empty, and I’m trying to get the fax machine to work, and I got to put the ink in the machine, and it doesn’t work, and I’m trying to answer the phone. I just remember that day where I’m like, “Wow, this is interesting. I don’t have someone just to say, “Put the ink in the machine. Order new ink. Can you get the phones?” I was a one man band for a few months to probably six, seven months. 

John DeBevoise: 

And at the end of the day, you’re the one out there sweeping and using the dust pan as well. 

Ryan Kugler: 

Yes, I do appreciate that with my father, my family who raised me. I call it, pick up a shovel and start digging a ditch. So I learned how to do this, I know how to work, and I know how to make it happen. I don’t have the attitude of, “Let’s just see how the day goes.” No, I need to make it happen, and I’m responsible for any positive or negative aspects. 

John DeBevoise: 

So when you became your own self-employed entrepreneur, you found that you suddenly had five hats on and you were working a lot more hours than what you were the day before. 

Ryan Kugler: 

Yes, but I do pride myself that I know how to just get things done, that’s my slogan in life, just get it done. So if an email comes in, I don’t put it off, I hit reply immediately, and I answer it, and I go to the next one. Because when you put stuff off, technically it’s double work because you’re putting it off and then you got to go read it again later. 

John DeBevoise: 

Good point. 

Ryan Kugler: 

So I have found that having the 10 hats or 10 jobs I do, I can get it all done and still be home by dinner and play with my kids. 

John DeBevoise: 

Well, it is a juggling of priorities and things. And then the family comes home and says, “When are you going to stop working?” Because your mind’s always turning as, “How do I make this work better?” And, “I got to put this hat on.” And then, “Oh yeah, here you go, kids.” 

Ryan Kugler: 

[inaudible 00:18:23] at 3:00 in the morning, when you wake up in the middle of the night, and go, “What about this?” My mind is always thinking about work, and when I leave work at 4:00, because I start at 5:00 to 6:00 AM, I do leave work, I’m actually done until the next day. 

John DeBevoise: 

When you got into business, not everybody knows everything, and I have found that the three biggest challenges in business, the business killers, have been regulation, legislation, and litigation. Of those three, what do you consider to be the biggest impact or biggest threat to your industry and your business? 

Ryan Kugler: 

Very good question. So I would say that regulation and legislation is not because we go by the first sale doctrine, which is a legal law that the government put in place many years ago. We actually have plaque hanging up that says, if you buy something, you can sell it at whatever price you want. We’ve had people come and try to sue us, not a lot, that said, “Hey, why are you selling this for a penny?” Because the first sale doctrine, we can buy it and lose our shorts and sell it for whatever we want. So we don’t have that problem. 

Ryan Kugler: 

Regulation, yes. If we buy an inventory of food, it needs to be sent in refrigerated trucks, and USDA certified and all that fun stuff so we apply those laws. But I would say the biggest challenge is technology. I’m going to be honest with you. The changing technology. Every week when Windows updates and you got to figure out how to send an email from this way or how to do that, that is our biggest challenge, and I find that the younger millennials are our greatest asset and they know how to keep up with technology compared to maybe some older people like myself. 

John DeBevoise: 

I can appreciate that. I’ve spend so much time trying to learn myself, and I say, “The heck with this, I’m going to go kidnap a ten-year-old and pay him with Skittles.” 

Ryan Kugler: 

I agree. My daughter, who’s 11, knew how to do this video and make it go in reverse and back and forth. And I’m like, “How do you know this? I can’t even do this.” “Dad, it’s on your phone.” 

John DeBevoise: 

Yeah. Everything’s on the phone these days. 

Ryan Kugler: 

Yeah. [inaudible 00:20:13]. 

John DeBevoise: 

And so many apps I haven’t even opened, but that’s for another subject. Ryan, [inaudible 00:20:18] invaluable in the content and the entrepreneurship that you’ve demonstrated where you have taken a wheel, you put your own spoke in it, now you’re rolling down the road and you’re doing tens of millions of dollars in the wholesale and distribution industry, taking inventory that others have been unsuccessful in marketing, and then you turn around and because you can, at your price break, you can sell it for less, you recapitalize those that you bought it from, they get to use that money and create new product lines, whatever that may be, and the food chain keeps working, that wheel keeps turning. 

John DeBevoise: 

Now, you don’t have to reinvent the wheel, folks, just put a spoke in it. And Ryan here has done so. Ryan Kugler, it has been a joy to talk to an entrepreneur and somebody who sees that, and you’ve got other businesses I’m going to invite you back to talk about. We’ve been talking about Plan B, but there’s also your events company called A5, and I welcome you to come back and talk about each of those on different serving of Bizness Soup. Ryan Kugler, thank you for being on this serving of Bizness Soup. 

Ryan Kugler: 

Thank you very much.