With wind-chill temperatures often hovering at 0 degrees, and snow and ice making even the smallest step precarious, construction workers in the Northeast must brace for that nip of November to come knocking. And it does, with no forgiveness.

That little meteorological fact of life in New England did not get lost on Craig Cole when he started planning the second branch of New Hampshire Tool Outlet, which opened in Pembroke, N.H., late last fall.

"I started to think what would be easy on our men, as well as nice for our customers," says Cole, founder and president of the company.

A drive-through warehouse was the ticket. When half of the company's monthly volume goes out to jobsites on its four trucks, it was something to consider.

"We can have customers drive in, we load them up, and no one is out in these freezing temperatures. We had to face facts: we're not in San Diego; we're in New Hampshire," he says.

Cole remembers those favorable climates of southern California, where he entered the industry 23 years ago as a sales rep for Ingersoll Rand Co. After having his territory cut numerous times, he and a life-long friend from New York, who has since left the business, decided to pool their money and head for the Northeast. New Hampshire Tool Outlet was born in Salem, N.H., and has grown to employ a full-time staff of 12.

"In the early '80s, tool specialty stores were just getting up and running," says Cole.

With industrial and automotive business already under its belt, the company quickly learned that the contract side—nailing guns and fasteners—was a big opportunity.

"We took input from our customers and followed their lead," he says. "You have to remember, at this point there were no Home Depots."

Now, Cole says, the company's Salem location literally sits 10 feet from the big box chain. That can be a two-edged sword.

The good news, is contractors going in to The Home Depot have to drive right by the company's sign, a giant upright screwdriver.

"Some come in and beg, 'Please tell me you have this so I don't have to go in there,'" he says.

The bad news is, the distributor's margins are destroyed.

According to Cole, industrial distributors have to specialize because of the margin pressures from competitors. Therein lies the success of the company, which carved its niche in pneumatic nailers and fasteners, and also carries compressors, power tools and hand tools.

"The competition has grown so much; manufacturers don't have as much regard for territories and saturation points. They used to be strict about who they were going to open up, but they've gotten a lot more liberal," he says.

Finding that niche, especially in the land of big box stores, gives a distributor an edge, and an opportunity to work closely with a manufacturer to buy correctly and then to sell correctly.

"You have to walk before you can run," Cole explains.

The niche has been successful, and Cole admits the company has had a good run, posting double-digit increases seven out of the last eight years.

"There is a lot of opportunity in residential wood construction, with assisted living homes and population growth," Cole says.

Second homes in the lakes region, including Lake Winnipesaukee, Ossipee, and Laconia, N.H., are on the rise.

"We wanted to be right in the middle of this growth," says Cole, who initially resisted expansion, until he was literally up against the wall. "In our 6,000-square-foot place in Salem, it actually took us three days to move a pallet rack. We had to move this to fit that, and to fit that, we had to move this."

The company now boasts a 16,000-square-foot, three-building expansion in Pembroke. The facility includes 10,000 square feet of display and floor space, and 2,000 square feet of office space.

Because of its space limits, the Salem branch required nails to be stored in the back of the warehouse and product to be hung from the ceiling. In planning its new showroom, Cole says it was critical to get a sampling of all products up front so that its customer base of 75 percent professional contractors and 25 percent do-it-yourselfers could get a feel for it.

While the new space has brought growth to his payroll, Cole still enjoys running a small operation.

"The employees and I have to do everything from the manual to the menial," he explains. "With larger distributors, they look for a purchasing agent, or a receivables guy, but here, we look for that unique person who wants to jump into everything.

"That run-and-gun, expand-expand mentality, with all the pressure, is not for everyone. And the small operation is not for everyone either," he adds.

Cole has help from his wife, Nancy, who operates as the firm's treasurer, and one of his three sons, Brad, who recently returned from military service in Iraq and does "whatever we need him to do."

Dan Paul and Bernie Burdett, branch general managers, four sales reps, two full-time repairmen in Salem, and two part-time employees round out the staff. The repair operation, which will eventually move to the new branch, represents 10 percent to 15 percent of the company's monthly sales.

The distributorship timed its expansion to coincide with a move to new hardware. It is in the process of converting its software to a Windows-based system through Prophet 21 Commerce Center.

"We will be selling online once the dust settles, and I'm confident the investment will pay for itself in a short period of time," Cole adds.

Another investment that, according to Cole, has paid off handsomely, is membership in Sphere 1, a cooperative of independent tool and fastener distributors.

"I just can't say enough good things about them," he says. "Any time you can get a rebate, that is something you need to consider."

Rebates are important with power tools, he adds, because the margins are crushed by widespread distribution, in the big boxes, and the Internet. The co-op offers the distributor an opportunity to work with preferred suppliers to try out a new line, something it may not have considered or known how to pursue.

New Hampshire Tool has been a member of Sphere 1 since 2002, and participates in the group's Air Fastening Committee. Last year, it was recognized for highest volume of purchases with preferred suppliers, as well as outstanding sales growth achievement, says Carol Shackelford, CEO of Sphere 1.

"All in all, they are one of the best members/owners and key participants in our group," she says.

The Specialty Tools and Fasteners Distributor Assn.'s compensation and performance reports are another great resource to the distributor, adds Cole, a 16-year member and current board member of STAFDA.

"Being up here in the back 40, it's key that I know where I stand with other distributors, in terms of inventory turnovers and compensation. The reports give me that much-needed data," he adds.

Right now, fuel costs and overhead are a concern for Cole. Four vans deliver key service to customers at jobsites.

"Oil and gas keep going up, and keeping that all profitable is a juggling act," Cole admits.

The company has also shopped health care year to year, and has adjusted its employees' co-pays.

"A long time ago, I realized I am not going to be a multizillionaire," Cole laughs, "but I am most proud of the fact that I can help support other families, and make a difference to them."

New Hampshire Tool has also made a difference to its customers, says Phil Lambert, president and owner of Pelcon Construction in Bow, N.H.

"I need to be up on my records, with all the OSHA safety regs," Lambert says. "Craig's staff can go to their files, pull out 50 sheets, and give me all the up-to-date I need. You don't get that in some of these big stores."

Lambert recalls a time when his trailer was broken into, and all his tools were missing.

"I needed new tools on the jobsite immediately," he says. "New Hampshire Tool quickly packed up a truck to keep my men rolling."