Business Spotlight: Five Star perseveres through ups and downs

The story of Five Star Construction Supply is more than drywall. It's not just about construction cycles. Neither is Five Star's history in business merely a recitation of revenues and expenses.

Rather, Five Star's story is about the future. Its owners and managers concentrate on the future. They learn from the past, but they don't dwell on it.

Five Star's history illustrates the ups and downs many small-business owners face. It rode the crest of a wave of new construction, hit bottom after being the target of embezzlement, then climbed back up and maintained a healthy level of business, keeping things at an even keel through a major drywall supply shortage.

Greg Lewis, president, and Roi Storey, general manager and business partner, don't have an official business philosophy. However, it's clear that they believe it isn't what happens to you in business, it's what you do about what happens that ultimately determines your success.

When the company first opened in 1990, it rented a building near the intersection of Scenic and Battlefield. The location was convenient to construction projects on Springfield's south side and provided easy access to builders in Branson. Construction was booming in the area, and the company's five investors one of whom was Lewis thought the future looked promising.

As with most new businesses, Five Star started out small. The company had four employees and used two delivery trucks and one boom truck, which lifts large pieces of drywall, to transport supplies to customers.

The company grew, and in 1993, Five Star moved from the building it was renting to a new location on West Vista, just north of Kansas Expressway and Battlefield Road. By 1994, the company had 24 employees, six delivery trucks and three boom trucks. Sales that year exceeded $7 million, according to Lewis. Construction was booming in Branson and Springfield. Times were good.

In 1995, a new bookkeeper was hired to help keep track of customers' accounts and monitor $300,000 worth of average daily inventory. Toward the end of that year, Lewis discovered the bookkeeper had embezzled close to $500,000.

Before long, drywall manufacturers that sold supplies to Five Star began calling for payment. Nonessential business expenses, such as advertising, were cut. Employees didn't get raises or bonuses that year. Some workers were let go, and others left to take jobs elsewhere. Lewis said he dreaded answering the phone some days.

"The first three months were tough, both financially and emotionally," Lewis said. "It's still hard for me to believe that one person could not only affect the business but so many people's lives. I was honest with the employees about what happened. I was honest with our suppliers, too, who were accommodating up to a point. We also told our customers, who began paying earlier because we couldn't wait 60 to 90 days for them to pay."

Since then, Five Star's CPA firm began handling more of company's bookkeeping. Bookkeeping and financial responsibilities were divided so that no one person could exert too much control over the company's finances.

"As time went on, I began to be amazed by the number of people good people, smart people, business owners who told me the same thing had happened to them," Lewis said. "If you start out with only four or five employees, chances are one of them handles most of the bookkeeping and accounting work. Most small businesses don't have the resources to divide the bookkeeping and accounting functions the way they should be. Then the company grows, and you keep doing things the way you always have, and something like what happened to us takes place."

Rather than dwell on the loss, Lewis and the company's employees began focusing on the future. Lewis knew times would be tough, but he was convinced they could get through them.

Five Star was the only Dryvit distributor in southern Missouri. According to Lewis, about 47 percent of the stucco market uses Dryvit's finishing system, and as the only name-brand provider in the area, the product provided Five Star a consistent base of customers. In fact, Dryvit sales in southern Missouri have tripled since Five Star became the company's authorized distributor, according to Lewis.

Lewis also heard about a new drywall cooperative called Amarok, and he joined the organization. The move proved to be a wise one. Amarok, whose headquarters is in Phoenix, Ariz., is one of the fastest growing co-ops in the United States.

Joining the co-op allowed Lewis to qualify for discounts and rebates from suppliers because purchasing was done in the aggregate. Getting better prices allowed Five Star to compete with national and regional chains that sell drywall supplies in the Springfield area.

Belonging to a co-op also helped Five Star get supplies during a major drywall shortage in 1999, which lasted until August of last year and nearly doubled drywall prices.

Through the co-op, Lewis was able to locate and purchase drywall he might not otherwise be able to obtain. Still, balancing out the needs and demands of the 300 customers in his customer base was quite a task.

Despite the challenge, by the end of fiscal year 1999, Lewis saw sales hit $5 million, the second highest sales year in the company's history. The company is considering larger quarters and more product lines, and plans to hire two new salespeople.

Five Star Construction

Year founded: 1990

Owner: Five Star Construction Supply Co. Inc.

Address and phone number: 2035 W. Vista, Springfield 65807; 883-7494