Should i buy fastenal stock

It took a cross-country search, but we found him--plus some truths about frugality you might not expect. Captain Kirk searched for Mr. Monty Python searched for the Holy Grail. I searched for the cheapest company in America. I surfed the Net, perused business journals, called financial reporters across the nation, and harassed my colleagues for possible leads. After nearly two months of running up Inc. It was time for me to get on the road. In Louisville, I saw Tova Industries, a manufacturer of dry food mixes, whose used equipment and shrewd negotiations with suppliers keep operating costs minuscule.

So did Keller Manufacturing Co. With its combination of cup-counting micromanagement and incentive programs, Regal wins the Academy Award for cheapness in the theater industry. Says president and CEO Michael Campbell, "We operate as if we're losing money every day. But good as these companies are, and they're damn good, a midwestern nuts-and-bolts outfit is better.

This is the story of Fastenal and its leader, Bob Kierlin, winner of Inc. And You Thought You Were Cheap Bob Kierlin loves a bargain. He would never pay retail. Frugality touches all aspects of his life. Kierlin, 58, eschews all small talk, speaking only when he has something to say. His office reflects his unpretentiousness: He has no personal secretary. And then there are his suits. But Kierlin didn't buy them there. He got them from the manager of a men's clothing store.

Not from the manager's store. The suits are used. Kierlin can afford new clothes. In fact, he can afford a fleet of BMWs, a Beverly Hills mansion, and maybe even his own professional baseball team.

Kierlin, CEO of Fastenal Co. That's a lot of suits. The Fastenal Ethic Is cheapness good? Either way, what we know for certain is that nobody does it better than the plainspoken, hardworking Kierlin. In 30 years Kierlin's Fastenal has grown from a fragile start-up run out of a foot-wide Winona storefront to a national powerhouse that operates stores in 48 states, Canada, and Puerto Rico.

The company sells and custom manufactures 49, types of nuts and bolts, as well as safety supplies, tools, and other industrial products. Fastenal's extensive product line, combined with its excellent customer service, has made it one of the hottest companies of the past decade.

Net earnings in hit The company Kierlin runs--a place where scratch pads are fashioned from used paper and a little glue--very much embodies his values. Kierlin doesn't just worry about operating costs; he obsesses about them. Cost cutting comes naturally to him. The youngest of five children, he swept the floors of his father Edmund's auto- parts store at age 7 and worked behind the counter at His folks never ate out; they couldn't afford to.

Vacations consisted of afternoons in the local park. During his college years, he spent weekends with his family in Winona and returned to the University of Minnesota in Minneapolis with enough sandwiches and cookies to last him a couple of days.

You don't have to think about it. Cofounder Stephen Slaggie feels the same way. Working alongside his childhood pal Kierlin, Fastenal's corporate secretary has helped save the company millions through risk management, his area of expertise. Along the way, Slaggie has accumulated a nice chunk of stock. Not that the money has changed him. It seems like a lot of money for a car. How Fastenal Stays So Slim Fastenal finds all sorts of ways to save money, both big and small.

The company offers no k plan. Fastenal also offers no stock options and no meal per diems for business travel. Money for the annual Christmas party comes from the "pop fund," profits generated by company vending machines. Some Fastenal furniture is secondhand, often purchased at government auctions. A former insurance agent, Slaggie knows when insurance isn't needed. Fastenal carries no collision protection on its 1, pickup trucks.

According to Slaggie's calculations, it doesn't have to. We're guessing that's not going to happen. Fastenal trucks on the road are rarely empty.

Costs are slashed everywhere. In May, Kierlin and chief financial officer Dan Florness could easily have taken a flight to a conference in Chicago, a little more than an hour away by plane. Instead, they drove five and a half hours in a van, saving Fastenal hundreds of dollars.

They spent the night at a motel in Rockford, a Chicago suburb, to avoid the high city prices. The pair even shared a room. Employees at some companies might dislike a guy like Kierlin. They would consider him a killjoy and call him Scrooge. At Fastenal they respect him. It would be real easy for him to put his feet up on a desk and let everyone else do the work, but he'd never do that. The team Kierlin has assembled shares his values.

Fastenal workers realize that cheapness helps the bottom line, which fattens paychecks. Coming from the same kind of modest background as the CEO, they are frugal both on and off the job. Like Kierlin, employees appreciate the value of a buck.

Kierlin's frugality and employees' attitudes only partially explain the Fastenal cult of cheap. The management enjoys no special privileges. Not even Kierlin has a private parking space. That social leveling has created a bond between workers and executives. Borrowing a page from Adam Smith, Fastenal motivates workers by appealing to their pocketbooks.

FAST Stock Price - Fastenal Co. Stock Quote (U.S.: Nasdaq) - MarketWatch

Every full-time employee participates in a profit-sharing plan that rewards cost cutting. For all its tightness, however, Fastenal is still a growing company. It invests wisely in equipment and technology. Fastenal's fleet of trucks is mostly new; it doesn't want to see vehicles break down and customers fail to receive deliveries. Although they're tightfisted in their personal lives, Kierlin and Slaggie are anything but cheap with their Fastenal fortunes.

Along with Fastenal's three other cofounders, in they established the Hiawatha Education Foundation, which has invested handsomely in Winona's private schools. But Is Cheapness Good?

AVT Stock Price - Avnet Inc. Stock Quote (U.S.: NYSE) - MarketWatch

Is this obsession with saving dollars and cents really worth all the effort? The advocates of scrimping are unequivocal. Cheapness increases profitability, they say.

It keeps companies slim. It puts cash in the bank for future growth.

And it tvb stock market drama businesses an advantage over their spendthrift rivals. While many cost-cutting ideas are obvious flying coach instead of first-class, eliminating extravagant expense accountstrue cheapness, the argument goes, is more than that.

It is a mind-set, a willingness to hunt for excess fat at every level of an organization.

It requires constant vigilance and hard work. It is understanding that watching pennies and nickels will what time do corn futures trade dollars. Of course, most successful start-up CEOs are to the ways of the cheapskate born.

They have to be. With money scarce, they scrutinize every expenditure, no matter how small. But as companies grow so, too, nigeria foreign exchange rate their appetite for amenities.

CEOs often become greedy. After years of sacrifice, they may come to believe they deserve to stay in four-star hotels, earn big money, drive fancy company cars. Their quest for the good life spells the end of leanness and marks the onset of corporate bloat. Not surprisingly, most U. Cheapness should not be confused with stinginess. A cheap company spends money when it has to. A stingy one doesn't. Flamholtz of the John E. Anderson Graduate School of Management at UCLA. You can carry low cost too far.

A cheap company would british stock market crashes become so obese that it had to shed workers.

On the other hand, foes of frugality argue that its value is overstated. According to them, too many companies temporarily drive up their quarterly earnings by corporate level strategy diversification ppt to invest in people and technology.

That, the anticheap contend, might placate Wall Street analysts--but in the long run, cheapness can render companies noncompetitive.

A company cannot survive on cheapness alone. Without good products, marketing, and distribution, cheapness means little. It is but one of several ingredients needed for success. Some question even that. Christensen, associate professor at At&t stockton ca Business School. But other companies can do the same. And as soon as they do, what advantage do you have?

Plenty, if Fastenal's record is any guide. And Kierlin is happy to let that record do the talking and to day trading dual monitors the management-style debates to others.

Sages and fads don't interest him. Fastenal's ways, he likes to say, are just the product of good old-fashioned common sense. What Kierlin's modesty prevents him from saying is that cheapness is more powerful than its doubters imagine. Fastenal's obsession with costs promotes a kind of attentiveness to the mundane that inevitably improves quality and increases efficiency. What's more, it spreads accountability and responsibility everywhere. In a culture like Fastenal's, you don't call somebody else to fix a problem; you fix it yourself.

The Shack at the End of the How to make money driving a taxi To the experienced cheap hunter, Fastenal's headquarters is gold. A functional two-story concrete building with blue trim, it is practical, austere, and solid, just like the men and women working inside. Signs decorate managers' offices: Fastenal throws away little.

Cheapness reigns supreme; it probably always will. The company's penny-pinching has created more than a few millionaires in Winona. Even the king of cheap, however, has his limits. In the old days Kierlin used to shovel snow at corporate headquarters and sort mail himself.

He no longer does so, he says, because he has more productive ways to spend his time.

Still, he collects free pens degrees guaranteed to make money to him by suppliers and uses them at the office, lest he waste company resources. Hundreds of Practical Cost-Cutting Ideas from America's Cost and Profit Leaders. Indeed, the cheapest CEO in America is the embodiment of lesson number one from Inc. The fount of forex cup young 2012 is simple common sense.

Which helps explain the finding behind lesson number two: It most often takes root in bollinger bands martingale Midwest and the South, America's heartlands, where old-fashioned values survive.

It is no coincidence that the headquarters of Wal-Mart, Food Lion, and Fastenal merck medco work from home located in Bentonville, Ark.

It's who you are that matters. That might not be the same elsewhere. But if that's bad news for would-be cheap artists on either coast, the final lesson from the cheap hunt is worse: If forex trading discount company doesn't work this way now, it probably never will.

Older companies with ingrained bad habits will find it difficult, if not impossible, to slim down. Admire Fastenal if you will; not every business can emulate it. So the advantage goes to the start-up. Zacky and Yael Melzer, the husband-and-wife team heading Tova, routinely play suppliers against one another.

Other big savings come from buying used machinery and, on occasion, building equipment. Zacky, who has a master's degree in mechanical engineering from the University of Should i buy fastenal stock, recently designed an colombo stock market share price list line to binary options catalog and seal pound earn money by clicking ad and bags.

Some companies count pennies. Regal Cinemas counts cups. The company pays hefty bonuses to theater managers with high concession sales. But God forbid that a few soft-drink cups or candy bars should vanish. As a result, we don't have a lot of shrinkage. Theater listings, for instance, run from 6 to 8 column inches in newspapers, compared with an industry average of 10 to At Keller, low-budget starts with cosmetics. Even in CEO Bob Byrd's office, mismatched chairs surround a scarred, year-old desk.

Nothing in the company goes to waste. Sawdust and scrap wood fuel the boiler. Drawer sides and backs are made in-house from wood that used to get thrown out. Unlike its competitors, the company uses No. The company can still produce superior products because it cuts the defects out of the raw material.

The savings from No. Shops are open just Friday, Saturday, and Sunday, which holds down labor costs. Cheapness may be hip in this age of lean and mean, but commentator John P. Kotter--a renowned Harvard Business School professor and author--says cheap is exactly what the best low-cost operators are not.

So even Southwest Airlines, famous for undercutting its industry, isn't cheap? Cheap is trying to get your prices down by nibbling costs off everything. If you're selling paper plates, you make them thinner. You hire people at minimum wage. But customers will eventually see the cheapness of it all. They'll notice that the paper plates don't work as well. They'll get tired of going into a grungy store with surly personnel, and they'll simply say to heck with it if they have an alternative. They'll shop at Wal-Mart.

So how do the smartest low-cost players keep their costs and prices down? By being unbelievably productive. That's what people don't understand. Those companies are thinking "efficient," which is very different from thinking "cheap. Sometimes you might even spend more.

Southwest Airlines doesn't try to shave costs by buying used planes; in fact, it has the youngest fleet in the business.

But it buys only one type of plane--and that results in all sorts of efficiencies. You don't have to inventory spare parts for different kinds of planes, for instance, and you don't have to have mechanics with expertise in 10 different airplanes, either.

Southwest is not at all a cheap company. It's an efficient one. I think lots of people are still embracing it in one way or another. Perhaps they haven't seen some of the consequences, including those to employee morale.

Cheapness can make workers feel degraded, which means they won't be as productive. It's hard to come up with a situation where cheapness beats the more clever focus on productivity. Cheapness tends to be associated with a person or a small number of people who are frugal and make all the decisions. The paradigm I'm talking about almost always demands a larger number of people playing the game. The clever ideas don't come from one or two people.

In an increasingly competitive world, the more complicated productivity paradigm is beating the cheap paradigm partly because you're getting more brainpower into it. We found a company that is relentless in its search for ways to reduce costs. When this company's trucks deliver products, they return carrying another company's goods. I think the term is freight for hire. Isn't that an example of cheapness working?

Cheap is looking for a less expensive truck. Your example is closer to the high-productivity paradigm.

Another company has figured out a way to use a lower grade of wood to produce high-quality furniture at substantial savings. I bet the decision to go with that wood was a complex one. I bet it wasn't one guy who made the decision alone but a team of people deciding ways to better use company resources.

It involved figuring out how to use and laminate the wood to make it look like an equal or a more expensive grade. That wasn't a simple one-two decision. By contrast, the cheap syndrome is kind of mindless. Make the wood thinner. A year-old can think cheap but would have a hard time with productivity.

That furniture company realized it had only x bucks for production and figured out a way to make the most of those x bucks. Cheapness as I've defined it is almost always a worse paradigm because it's much less clever. In the cheap model, a CEO might decree that all furniture at corporate headquarters be secondhand. The productivity model would raise an infinitely more complicated question. Why do we have furniture in the first place?

Maybe we can get away with less furniture if we use it in a different way. You're about to be redirected We notice you're visiting us from a region where we have a local version of Inc. READ THIS ARTICLE ON. Enter your email to reset your password. Or sign up using:. Sign in if you're already registered. Straight to Your Inbox SIGN UP FOR TODAY'S 5 MUST READS Sign Me Up. The Cheapest CEO in America. After a cross-country search, we found the cheapest CEO in America.

Here's what he has to say about frugality. Corporate Culture It took a cross-country search, but we found him--plus some truths about frugality you might not expect Captain Kirk searched for Mr. Regal Cinemas Knoxville, Tenn.

Don't offer meal per diems; employees have to eat anyway. Use secondhand furniture; a new desk isn't going to make a company more profitable.

Buy used machinery for low-tech jobs. Self-insure as much as possible. Attend fewer conferences and drop out of all trade associations. Buy directly from manufacturers if possible.

Give employees certificates or small monetary rewards for coming up with great cost-cutting ideas. Have managers scrutinize operational expenses monthly. Don't hire secretaries; you don't need them. Did We Say Cheap? WHAT WE REALLY MEANT WAS. Why don't other airlines emulate Southwest? Because once you have an established pattern, it's hard to radically change.

When Should You Buy a Stock

Has the cheap model been discredited? Is cheapness ever worthwhile? Are cheapness and productivity mutually exclusive?