Supplied for success

If a family wants to keep its business flourishing for four generations, complacency isn’t an option. Just ask the McCoy family, whose San Marcos, Texas-based supply company sells building products to contractors, tradespeople, other businesses and consumers.

McCoy’s Building Supply, which now operates 85 stores in Texas, New Mexico and Oklahoma, faced an existential threat when big-box retailers entered the market. The family had to throw out much of their old playbook as they fought to win back customers. Just as they were gaining ground, some family members said they wanted to sell the business, leaving the company’s future in doubt.

The McCoys persevered, buying out their extended family and embracing a new approach to customer service. Those efforts paid off. Today, McCoy’s Building Supply has grown to revenues over $1 billion under the leadership of its first woman CEO.

McCoy’s Building Supply started out in 1927 as the McCoy Roofing Company. Its founder, Frank McCoy, was living in Houston and working as a day laborer when a roofer hired him to work on a crew. After gaining some experience with roofing, he decided to move across the causeway to Galveston and go into business for himself.

Frank’s son, Emmett, grew up in the business and then went off to attend trade school in New York. When World War II broke out, Emmett came back to Texas and worked in a shipyard, but he was eager to enlist. Emmett served in the Army in the Pacific, and Frank, who had been a seaman in his youth, joined the Merchant Marines. While the two men were away, the company stayed open with help from another family.

A new business model

Following the war, the company underwent a transformation. “The business started changing in large part because the economy was changing. Household formation exploded,” says Meagan McCoy Jones, president and CEO of McCoy’s Building Supply and a member of the fourth generation.

Before, it hadn’t been socially acceptable for prosperous consumers to make most repairs without hired help. “What I’ve gathered in the history is if you were having to fix something on your home yourself, that was a sign that you couldn’t afford to do it otherwise,” Meagan says.

Now the do-it-yourself movement took off, and people were actually proud of the work they did on their houses. Emmett saw an opportunity and pushed for the company to sell more building materials directly to consumers.

Frank wasn’t interested. He’d gotten divorced and left Texas, walking away from the day-to-day operations. “By that point, Frank had moved to California, was getting a dividend check from the company, and was satisfied with that. He didn’t really want to risk his capital to grow,” Meagan explains.

So Emmett set up a parallel company called McCoy Supply Company and soon opened a second store in Texas City. He put up his home as collateral. “I don’t think he put any money down on that loan. I think it was a handshake with a banker he knew in Galveston,” Meagan says. “He opened that second location as his own business, and he would eventually buy out both his mother and his father from the business. He leveraged it all to keep expanding.”

The building supply company operated on a cash-and-carry system and differentiated itself through competitive prices. “Our product line was not super broad, but he was buying direct from suppliers rather than through a wholesaler and was selling as close to wholesale prices as he possibly could, to provide the best value to customers,” says Meagan’s father, board chairman Brian McCoy.

Emmett also bought the company’s first forklift, which signaled a departure from the previous way of doing things. “Up until the time that forklift was bought, any load of roofing products or other building products that came in had to be unloaded by hand, trucked into the warehouse with hand trucks. And then, when it was sold or bought for a roofing job, it’s loaded all again on hand trucks and such and rolled out and loaded by hand onto a truck,” Brian says.

As the years went on, Emmett continued expanding the company, opening a handful of stores on the Gulf Coast.

Growth and tragedy

Emmett had four children: Brenda, Mike, Brian and Dennis. Brian and his brothers tagged along with their father to the shop building and helped out on Saturdays. When they reached high school age, they took on more responsibilities and got paid. Mike, the eldest, was genuinely enthusiastic about the work. Brian and Dennis were assigned office janitorial duties, which they didn’t exactly enjoy, but they looked up to Mike and wanted to follow in his footsteps.

After high school, Brenda and Mike went to Texas Tech in Lubbock. By the time Brian and Dennis joined them, Emmett had opened a new store in Lubbock — all the way across the state. The family joke is that he opened that location just so his sons could hold onto their part-time jobs while they were at college. “He was going to make sure that we kept our interest in the business,” Brian says.

Brian graduated in 1975 and started working for his father full-time as an assistant manager at the store in Brazoria, a small town. Within a year, he was store manager at one of the two Austin locations. Emmett told him he wouldn’t be there for long; he would need to come back to headquarters and assume the role of merchandise manager, then a relatively new concept in retail.

While Brian worked in purchasing and finance, his brothers took on the responsibilities of regional managers. They divided up the locations into “Mike” stores and “Dennis” stores.

The company was enjoying spectacular growth. It hit $100 million in sales just before the end of 1981. In 1983, the McCoys built 10 new stores. But the family’s good fortune didn’t continue unabated. In 1985, Dennis was killed in a plane accident while traveling to a store in Brownwood. The pilot of the small company airplane died along with Dennis, who left behind a wife and two young daughters.

Mike and Brian had to regroup. “Eventually Brian and Mike both would be traveling, having different responsibilities for inside the office and also in the field,” Meagan says.

Through the upheaval, they largely stuck with Emmett’s winning formula, operating hardware stores and lumberyards. “We were serving a niche, if you will, and that niche allowed us to grow,” Brian says.

A challenge from the big-box stores

The late 1980s and the 1990s brought a major disruption: Home Depot and Lowe’s, which hadn’t been a serious threat when they opened in big cities, were now entering the smaller communities where McCoy’s was established.

“They would open a store in a market where we were, and in the first year we lost about 30% of our revenue. In the second year, we lost another 20%,” Meagan recounts. “It was catastrophic.”

The old retail model wasn’t working, but the company struggled to recognize the problem. “We didn’t change quite quickly enough,” Meagan says. Out of 110 stores, 29 eventually were closed.

Emmett retired in 1997 at age 74. Privately, Brian was relieved. “I had tremendous respect for him, and he was a tremendous businessman,” he says. “At the same time, I just remember thinking he probably stayed too long.” The business had to make major changes, and for that, it needed to move on to the next generation of leadership.

‘Flipping light switches’

Mike and Brian had to figure out a new plan. They started doing things differently, through a lot of trial and error. “It’s almost like over the course of 12 months, one light switch had to go off, and we had to start flipping a bunch of switches to see which lights came on,” Meagan says.

One area they wanted to address was staff development. “Our management needed to grow and to be more professional leaders and managers,” Brian says. The McCoys sent people to some of the popular training programs at the time, but the lessons didn’t seem to stick.

So they turned to Brian’s friend David Ferguson, a pastor and counselor who was dabbling in development work with tech companies in Austin. He created the Business as Unusual leadership program, which McCoy’s Building Supply has used ever since.

“I felt like my job was to keep the best of all the culture that my dad had created, which was super high integrity and super focused on the work,” Brian says. “But we needed a stronger culture of serving.”

Business as Unusual teaches employees how to serve peers and customers by focusing on relational needs. For example, a consumer working on a DIY project might need support and encouragement. On the other hand, a builder wants to feel that their time and expertise are respected.

Part of the training involves completing surveys to identify strengths and weaknesses. Mike was the “change agent,” Brian says. Brian’s results showed that he needed to be more accepting of change. He also scored particularly high on the dominance characteristic.

Brian is mild-mannered and cordial, so it’s hard to imagine him dominating his staff. “I’ve always been raised to be polite, and I feel like I don’t raise my voice at people and all those things,” he concedes. But when he asked his team about it, he learned that he was “sneakily dominant.” He was very patient in conversations, but he would keep talking in circles with someone until they agreed with him. Confronted with this feedback, he realized that he’d have to become more open to others’ points of view — especially now that the company was shaking up its business model.

The McCoys tried many things within a short span of time. “It was very chaotic,” Meagan says. They started extending credit to professional customers, only to learn that issuing and servicing credit was more complex than they’d bargained for. And because they were a new credit issuer, they attracted applicants who didn’t have the strongest financial track records. In the first year, they wrote off about $1 million in bad credit.

Many companies in this scenario would simply sell their credit portfolio or delegate servicing to a third party. They might at least buy software. In contrast, McCoy’s Building Supply developed its own in-house system for credit and collections, with a goal of maintaining consistent quality of service.

The company’s unwillingness to outsource has led to innovation, Meagan says. “If by outsourcing or buying an off-the-shelf system or software we could make our competition better, we’re not going to do that.”

They went into manufacturing and opened two facilities to make doors. They got good at delivery, which became an important part of their business. Today, McCoy’s Building Supply delivers 55% of sales on its own fleet.

They also tried to move into installation but found they were competing with their customers who offered that service. And they opened lawn and garden centers, which they still speak about ruefully. “That was a disaster,” Brian says.

A plan to run stores only for professional customers was also a flop. They closed two stores to the public, but the idea alienated everyone. “To a consumer customer, we looked like a professional big lumber yard. And to a professional customer, we look like a hardware store,” says Meagan’s brother Reid McCoy, vice chairman of the board.

They reopened the stores to the public, but they had already burned their bridges. “I worked in one of those stores years after it had been reopened, and we still had customers coming in not sure if they could shop,” Meagan says.

But they ultimately built stronger relationships with customers through dedication and one-on-one outreach. Brian started traveling three days a week with the store manager and the outside sales team, visiting builders’ offices and job sites. “It was a big game of block-and-tackle,” Meagan says.

Defying expectations

While all this was going on, Brian was introducing his children to the business. Meagan loved it from the start, while Reid didn’t take to it right away — in defiance of some people’s expectations for the two siblings.

“I got all these messages of, ‘Hey, you’re going to run this one day,’ and I didn’t want to do that. And Meagan gets these messages of, ‘Oh, you’re so cute,’” Reid recalls.

Reid was drawn to the family’s ranch property. During the summer he’d work at the store for most of the week, then work at the ranch on his day off. He studied engineering in college, then went into the Navy, leaving the family business behind for a time.

Meagan began accompanying her father to work the summer she was 10 and helped out on the switchboard. The switchboard was the place to be in the 1990s, as most business was conducted over the phone.

Within a few years, she moved on to the advertising department and worked on ads to be printed in the Sunday papers. There was concern that people would hesitate to criticize her ad layouts because she was a McCoy. They came up with a creative solution: Meagan would be known as Meagan Jones. “They made her a name plate for her desk and everything,” Reid says. (Meagan grew up and married Richard Jones, so the name plate turned out to be accurate after all.)

Meagan was eager to learn everything about the business, and she continued working at McCoy’s Building Supply every summer — with the exception of two summers in college. At that point she got her nose pierced, which was against the dress code. Brian gently reminded her of the policy. “He was like, ‘Look, you have to take your nose ring out if you want to work for the company or you should work somewhere else,’” Meagan says. She kept the nose ring and worked for another employer. In the end, the company dress code was changed.

A crossroads

In 2000, Mike told Brian he wanted to sell the business. He had already spoken to Brenda and her husband, and they agreed.

Brian was caught off guard. He believed McCoy’s had a dedicated team and an opportunity to bolster its brand, and he struggled to see his brother’s point of view. They were civil with each other, but when neither brother could persuade the other, both sides had to enlist attorneys to draft a workable solution. “That’s such a strange place to be,” Brian says.

In 2001, Brian’s branch of the McCoys gave up much of their interest in the family’s real estate and got the operating company in exchange. Going forward, they would lease facilities from their extended family.

Meagan, who was thinking about attending law school, did some work for the attorney who represented them in the deal. “I did not want to go to law school after that summer,” she says wryly, although she appreciated the chance to learn about real estate transactions.

Instead of studying law, Meagan earned a master’s degree in communication studies from the University of Texas at Austin, then returned to McCoy’s to work full-time. She gained experience on the sales floor, in the yard, and in each department at headquarters. Following a stint as assistant store manager, she returned to headquarters to continue moving up through the leadership ranks.

Meagan was a junior member of the executive team when the 2009 financial crisis hit. Suddenly, she was confronted with questions of how to lead the company in a down market. She recalls with admiration how Brian weathered the storm. “It’s really a credit to Dad’s style, because he’s always been really transparent and open,” she says.

There was no way around it; McCoy’s would have to lay off some staff. Everyone in management took pay cuts, and Brian took a 100% cut.

Growth soon returned, though, and by 2010, things were looking up. Brian restored the management salaries to their previous levels and even reimbursed everyone for the difference.

While Meagan had jumped right into the McCoy’s leadership track, Reid took a more circuitous path back to the family business. After serving in the Navy, he studied international affairs in graduate school and joined the Foreign Service.

Although Reid loved his career, he and his wife decided to move back to Texas in 2015, partly so that he could lead the family ranch business. Reid was also motivated to come back so he could support Meagan as she prepared to take the helm at McCoy’s Building Supply. “I knew it could be quite lonely, and so I didn’t want Meagan to be alone in shouldering that responsibility,” he says.

Reid was pleasantly surprised with the progress Brian and Meagan had made in improving customer satisfaction during the years he’d been away. Back when he was helping out as a high school student, he’d been dismayed by the numbers of customers who weren’t happy with McCoy’s service. Now, he was delighted to see many more satisfied customers.

And he appreciated the opportunity to continue working with some of the same people he and Meagan had met at McCoy’s in the ‘90s. “It made being in the business all the more enjoyable and special,” Reid says.

A symbol of innovation

The McCoys planned to roll out ecommerce capabilities over six months, but the COVID-19 pandemic forced them to move up that timeline. In just six weeks, the stores were ready to meet the surge in demand for home improvement products. McCoy’s recently upgraded its technology again; it’s testing robots to validate store inventory.

Today, the first forklift Emmett McCoy bought in the ‘50s has been restored and stands in the lobby of McCoy’s headquarters. For Brian, it’s a reminder of his father’s commitment to serving a unique market and trying new things. He knows that McCoy’s needs to maintain that spirit of innovation in a dynamic world: “Markets change. Products change. Economies change,” he says.

Brian had long felt that he and the other executives needed to work to replace themselves, so he was thrilled when Meagan was appointed president and CEO in 2022. He’s gratified that his children have followed in his footsteps and that their own young children might one day lead the business.

At the same time, he stresses to Meagan and Reid that they shouldn’t feel compelled to carry on the company at all costs. If perpetuating the family’s legacy is always top of mind, it’s impossible to be objective or to take risks. “If you are now the fourth generation and feel like you’re so deeply burdened that you have to keep this thing going, I don’t think you can be free enough to make the right decisions that would allow it to keep going more naturally,” he explains.

As for Meagan, her dream is that McCoy’s will continue to be a great place to work, where employees can make a difference and feel respected. She also wants the company to learn from the big disruptions of the past. Shocks to the business are hard to predict and adapt to, but fortunately, they don’t come along often. “What’s more common is: businesses and customers evolve, and so how do we change incrementally over time to be relevant? That’s what we hope to do.”