One of Jim Koskey’s business philosophies sounds more like dating advice than a way of turning a failing company into a multimillion dollar business.
“Dance with the one that brought you to the dance,” advises Koskey, who is the co-founder and president of K&H Pet Products.
In other words, stay with one industry, even if you change companies. Then learn everything about what works and what doesn’t within that business sector.
This year marks Koskey’s 30th year in the pet industry. During those years he co-founded a Colorado Springs-based pet super store, saved a failing pet products company and received seven patents for pet products he designed and developed that have made K&H millions in revenue. Koskey expects to receive his eighth, and perhaps ninth, patents early next year.
K&H, which labels itself as the largest dedicated producer of heated pet products in the country, is hidden in an office building at the far south end of Aviation Way, just south of the Springs airport. The company’s orange, two-letter logo on the glass front door gives no indication of the 60,000-square-foot warehouse and assembly area inside. K&H makes about 350 products for the domestic pet and small ranch industry. Those products include heated and non-heated pet beds and water bowls, car seats, SUV liners, heated hoses and birdbaths and stock tank deicers.
Some of the products can save animals’ lives. Holly Colella, a local large-animal veterinarian, said providing horses and cattle with warm drinking water in winter is essential to preventing abdominal problems.
“If they don’t have warm fresh water available to them,” she said, “they won’t drink enough and they will colic.”
Colic is the term used for pain in the gastrointestinal area; horse colic can be caused by an impaction of food in the intestines that often occurs from a lack of water, Colella said. The impaction can be minor or so severe that it causes death.
“Colic is the number one killer of horses,” Colella said, “and providing warm fresh water is the first way to prevent it.”
One of K&H’s more popular products is an outside pet hut that provides a warm shelter for cats and dogs. Colella said giving domestic pets warm sleeping areas in winter, even when indoors, helps prevent illness.
“Being cold obviously decreases their immune system and makes them more prone to being sick,” she said.
K&H products are sold online and also at Petco and some Big R stores.
Jennifer Tillett, assistant manager for the Big R on Fontaine Boulevard in Fountain, said K&H’s livestock tank deicers are hard to keep on store shelves during winter.
“We sell those like they are going out of style usually this time of year,” she said.
K&H born out of previous company
Koskey started K&H at the end of 1997 with his partner Wes Howard when they purchased Pet Heating Products in Loveland. The company made heated pet water bowls and mats. Koskey knew the company from his previous days as a pet product buyer. His experience told him the company was ripe for a takeover because it was horribly understaffed and underfunded” and heading quickly toward failure.
“They had a great product and poor execution,” Koskey said. “The orders you placed in August for September, you were lucky to get at all.”
While Koskey and Howard had the capital to purchase and invest in Pet Heating Products, the company’s past problems created other hurdles for Koskey when trying to sell the products.
So the first thing Koskey and Howard did was change the company’s name to K&H Pet Products.
At trade shows, Koskey found about 25 percent of the company’s past customers were afraid to reorder products because of Pet Heating’s past reputation. Still, he was able to grow the company by about 75 percent its first year, he said. The growth came from new clients, including people he had met previously when running pet supply stores in Houston and Colorado. Which, Koskey said is a perfect example of another of his business philosophies.
“Never burn your bridges,” he said. “People end up in different places, and you never know when you will meet them again.”
Koskey was raised in Antigo, Wis. Pets have been a part of his life since he was a boy. He has owned parrots and a ball python and grew up with two black Labrador retrievers and a Russian blue cat named Pandora. His parents owned a Mautz Paints franchise, but Koskey had no interest in finding the right hues for contractors and homeowners. So in June of 1982, after spending a year in Keni, Alaska, Koskey threw his right leg over his 1978 Suzuki GS 1000 motorcycle and rode to San Francisco. He was 19.
“I was convinced San Francisco had white sand beaches and lots of bikinis,” he said.
When he learned the truth, Koskey gave himself three months to find a job or return home. So he took a retail sales job with Pet Center in San Bruno, Calif., in 1982 Less than a year later, Koskey was overseeing five stores for the company. He was 21.
He soon transformed his position into what was known as a “turn-around guy.” The term refers to a person who takes poor performing stores and finds ways to increase revenues. Koskey’s penchant for rejuvenating sales earned him his next two jobs. The first was in 1988 with Pet Foods Plus in Houston. The second came when Howard called to entice Koskey away from that company. Howard was looking to start a chain of pet super stores in Colorado and he wanted Koskey to head the company.
“He dangled the carrot and offered me equity” Koskey said, “and so I moved here in January 1993.”
Koskey and Howard opened their first Pets USA store in the Unitah Gardens Shopping Center on May 1, 1993. The two men opened four stores within the next three years in the Springs area and Denver. The 15,000 square-foot stores sold mostly pet supplies and some small animals, such as hamsters, but not dogs or cats. Koskey and Howard sold their stores to Petco in October 1996 for an undisclosed amount. Contractual agreements kept Koskey with Petco for the next year.
“We sold the chain because this was when companies were severely overpaying for acquisitions,” Koskey said.
Sale helps company grow
Nearly 10 years after they started K&H, Koskey and Howard sold it to Chicago-based Benford Capital Partners , a private investment firm, in March 2007 for an undisclosed amount.
Howard retired after the sale. Koskey stayed on as an equity partner, president, product inventor and trade-show salesman. He spends at least a third of each year living and working in China where most of the covers for K&H’s pet beds are sewn and then sent to the U.S. for shipping and assembly.
Ed Benford, founder and partner of Benford Capital Partners, said he learned of K&H through a local business broker. The company scans more than 100 companies each year for potential acquisitions. Benford said his company bought K&H for three reasons: its unique business niche, its growth potential and Koskey’s leadership skills.
“Jim is a terrific entrepreneur,” Benford said. “He is very hard working, has great ideas on how to grow K&H and is a really motivated guy with a strong work ethic. I was really impressed by him.”
K&H has nearly 30 employees. Koskey’s patents have helped build K&H from $1 million in revenue in its first year “to in excess of $10 million in revenues today,” Koskey said. But the company’s growth would not have been possible, he said, without the sale to Benford. Koskey said he brings about 25 new products to market each year. Each product costs about $25,000 to get on store shelves, he said. Without Benford’s capital resources, those products would never be developed.
“The new partnership allowed me to expand in areas in the pet industry that we were unwilling to do as a two-person partnership,” he said.
Koskey’s 30-year “dance” in the pet industry has taught him to recognize poor product designs before putting capital into them. He cautions would-be inventors and business owners to make sure there is a market for their products before sinking their life savings into their dream. Koskey and company representatives attend nearly a dozen trade shows each year to promote K&H products. Every year he sees people with new product ideas for which there is no market. The proof, he said, is that each year he also doesn’t see most of the people who tried to sell their products the year before.
“I have seen people ride their own ideas into the poor house,” he said.
Contact Ned Hunter: 636-0275.