When Don Smith moved his family from Spokane, Wash., to Denver to start up a hose distributorship, he traveled south with a truck full of stuff. Most would think that the truck was filled to the brim with household goods, but Smith laughs at that notion.

"About one third of the truck was our furniture and stuff," he says. "The other two thirds were filled with inventory!"

As president of Central States Hose, an industrial hose distributor in Denver, Smith looks back on his move with affection.

"For a young guy like that, I was about 30 years old at the time, I thought moving everything to Denver would be a great opportunity," he says. "I came down and checked it out in November of 1975, went back to Spokane, and told my wife that I thought we should make the move."

Smith was given the opportunity to buy a third of the new distributorship by the company he'd been working for in Washington, which had set up the location. It was one of many opportunities that Smith would capitalize on throughout his career as a distributor.

In 1988, Smith was approached to buy out the last two-thirds of the distributorship, and he was pleased to accept.

As for the move, Smith left Spokane on Dec. 26, 1975, and had set up shop and was ready for business in Denver on Jan. 1, 1976.

Central States Hose has always been a hose and fitting distributorship. But as the years have gone by, the company's inventory has grown to include tools and other things.

"[Selling other products] has turned out really well for us," says Smith. "At first, I bought a lot of stuff at a bankruptcy sale and put it in the showroom to see how it would go. Within 30 days, it was all gone."

The quick turnaround motivated Smith to investigate more products. Today, the distributorship is aligned with about four suppliers that Smith considers "really good," and promotes those tools and products, as well as construction supplies.

"Our first line is still hose and fittings, but we get a tremendous amount of people who come in here just to buy tools," he says. "A lot of those people came in to buy hose initially, but once they saw what selection we had, came back on a regular basis to buy tools."

Smith concedes that Central States has been fortunate in its business dealings, but again equates that with taking advantage of opportunities when they arise. When Smith has the chance to buy a large amount of hose or accessories on special or close-out, he jumps on it.

"A lot of our suppliers call us because they know that we'll take it all, instead of just a pallet or something," explains Smith. "We know we might be buying a year's supply, but when I have that chance, I look at it and ask myself how long it will take me to get my money out of it. Generally, it's something I can get my cost out of in 30 days. And if I can do that, the rest is profit."

Smith's philosophy on inventory management may be different from other distributors, simply because he doesn't worry about how long that inventory will be in his warehouse.

"A lot of companies will buy maybe 90 days worth of inventory, and that's stretching it for several others," he adds. "For us, we might buy enough to last 12 or even 24 months. But we know where our money is, and what our price margins are. And each time there is a price increase, this value goes up, too. Over two years, there are two price increases right there. So we know that our margin just went up 7 percent or 8 percent, or even 12 percent."

The newest customer resource that Central States has opened is an Internet outlet. Customers from all over the United States and as far away as Bangkok, Thailand have placed orders. An order recently went out to Great Britain. One of the distributorship's best recent customers was in India, a company that bought $60,000 of hose per year, for three years.

"All they asked was that we ship it out as soon as possible," says Smith. "Invoices were e-mailed to them, and the money was wired into our account, and the next day, the merchandise went out."

Customers e-mail the distributorship with an inquiry, and a quote is sent right back. If the price is good, the deal is done. If not, says Smith, it's not. "We don't get them all, but we get a fair percentage of them," he says.

Smith says straightforwardly that he was against the Internet idea from the start, but his son, Erik, who works with him, talked him into it—after a year. Smith now is quicker to listen to Erik's ideas.

"He had to talk until he was blue," says Smith. "I told him I couldn't afford it, and he said that we would gain it back 10 times over. I'm glad I listened to him about this. Now, when he suggests something to me, I listen."

Smith says that at 60, he's set in his ways, and that it took some time to realize that the younger generation has a lot of good ideas. Smith estimates that Central States does about $750,000 a year from the Internet. They're now working on an online shopping network with credit card input.

Central States is located in a 17,000-square-foot building just outside of downtown Denver, off Interstate 70. Home for 18 years, the building is significantly larger than the first building of 6,000 square feet. It's a bustling location, with customers driving in and out all day.

"We've been through a lot of hard times," says Smith, "as has anyone who's survived very long in business. And we've had a few years where our growth has stalled, but we have managed to continue to grow over the years."

Open from 7 a.m. until 6:00 p.m. Monday through Friday, and limited hours on Saturday, Central States Hose boasts an inventory that Smith calls, "the best inventory between here and Seattle.

"We've got a lot of dealers that don't have something and they call us," he says. "I don't mind selling to the competition, as long as I get the profit that we need."

If a customer arrives at 6 p.m. and needs to be taken care of, employees stay until the order is filled, says Smith. Key customers also have at least three phone numbers for emergency after-hours needs.

"We feel like we don't just give our customers excellent service, because there are a lot of places they can go buy hose," says Smith. "But we give them the best service of anyone in town: from our open hours to our delivery. We bend over backwards for them, and are sure they know that they are getting an excellent product at a fair price."

Nick Zettler is a man who wears many hats at Barone, Inc., an equipment manufacturer located in Arvada, Colo. "We're a small company, so we all need to do our part," he says.

When it comes to Central States, Zettler praises the distributor for its own flexibility.

"We've dealt with them since about 1995, and I've been here since 1996," says Zettler. "They've had the best pricing on the steel fittings and hose that we need, and they do a good job for us."

Zettler's faith in Central States will continue into the future. "For us, once we've found something or someone that works for us, we stick with it. And there's certainly no reason to change. We'll carry on with them the way we always have," he explains.

Central States' largest customer base, about 70 percent, is construction. Petrochemical interests, such as refineries and the like, count for about 20 percent, and the rest is made up of pharmaceutical and agricultural customers.

"We used to do a lot of wholesale, and it was about 60 percent to 70 percent of our business, but now we're doing about 75 percent retail and only 25 percent wholesale," says Smith. "I like it better as it is now."

As for business in the area, Smith concedes that 2001 and the following year were hard on a lot of businesses, including Central States Hose, but if a company is positioned well, he says, it can weather anything.

"On a scale of one to 10, I would say right now, we're at six," Smith admits. "We still have room for major improvement, but I feel like, compared to a lot of areas, we're doing well."

Darren Scott is national and OEM accounts manager at DuraVent, an industrial ducting hose and accessories supplier located in Plymouth, Ind.

"We've worked with Central States for many years, more than 15, at least," says Scott. "They have a good group of people over there, and do really well in the marketplace.

"They have a fantastic Web site program that we like to work closely with them on, as well as other projects that we've cooperated on."

Scott says that Central States was among the supplier's top 25 distributors in North America. As a result of that and their continued partnership, Scott believes that the relationship between Central States and DuraVent will continue to grow with their own expansions and developments.

As for the future of Central States Hose, Smith says that he is considering additions to the building, as well as perhaps a branch, but he is hardly anxious to jump out of the business.

"A lot of people decide to sell their businesses, and a year later, they wish they hadn't," he says.

With both Erik, who works in the Denver office, and Smith's other son, Austin, who lives in California and works the Internet site, involved in the company, Smith doesn't worry too much about where Central States will go once he's done working.

"They're interested, so we'll hold on to the business and keep it in the family," says Smith. "I'll work another 10 years, provided my health stays good. I'm sure there will be a time when it's best for me to take more time off and let the kids run it."

Smith explains his longevity in the business by citing the trust his customers have in their treatment at Central States Hose.

"As long as we've been here, our customers have trusted us," says Smith. "A lot of times, they'll call us with an order and not even ask the price. They know we'll take good care of them.

We've got one customer, located about a block away, that we've sold to for 28 years. They call or come in with an order before I know what the manufacturer's quote may be, because they know we'll treat them right.

"That's where we feel like we shine, because when a customer walks in, he's here for one reason: to get waited on and get back to the job site. By gaining your customers' trust like that, you had to have done something right."

Don Smith, president and owner, in front of his Denver-based distributorship.