The Barrier to Entry

One of the biggest differences when starting a tool company is the barrier to entry.

Many businesses — like lawn care, pressure washing, house cleaning, painting, handyman work, or woodworking — have an extremely low barrier to entry. You can often start with just a few hundred dollars, some basic tools (or even borrowed ones), and your own time and labor. You’re essentially trading your physical effort for money. These types of businesses are relatively easy to launch, which is why so many people do it.

The challenge with low-barrier businesses is the competition. Almost anyone can jump in quickly, which often leads to heavy saturation and a race to the bottom on price.

Starting a tool company is a much higher barrier business.

Without enough capital to buy proper inventory from manufacturers and wholesalers, it’s genuinely difficult to make a sustainable profit — especially with unpredictable tariffs and fluctuating prices. Someone who bought their stock of Milwaukee, DeWalt, or Makita tools a couple of years ago has a significant advantage over a new business buying at today’s higher costs.

My Personal Experience

When I first started, the cost of doing business caught me off guard. I didn’t know what I didn’t know. On my very first sale I lost money because I didn’t fully account for shipping. On the second sale, credit card processing fees got me. Those small details add up fast.

I was okay with it though. I intentionally sold those early orders at cost, and even took a small loss, because I was more focused on testing and refining my processes than making a profit right away.

One thing I’ve learned quickly is that selling to individuals, friends, family, and very small businesses is extremely difficult to make money on. They have more time than money, so they research and itemize every single item to get the absolute best deal. You basically have to time the market perfectly, and even then you’re competing directly with big box stores — something that’s nearly impossible as a startup.

That’s why I believe the smartest strategy as a startup is to focus on commercial contractors and government agencies first. These bigger customers are where you can actually make real profit. They care more about reliability, quality, and the strength of the relationship than penny-pinching every tool. If you can solve their problems on the job site and help keep their crews productive, you become far more valuable than someone just offering the cheapest price.

Places like Grainger stay successful by being problem solvers, not the cheapest option. That’s the model I’m following. My business is built around commercial contractors and government agencies because their focus is on big-picture outcomes — completing major projects on time and building critical infrastructure. They’re not bargaining over every single item the way an individual customer might.

As you grow and gain more capital, you can always expand into retail or a showroom model later. But trying to start with heavy inventory and retail space right away usually requires far more money than most new businesses have.

Even with the higher barrier, there are real advantages to this industry. It’s not seasonal. After 20 years in the Army doing manual labor, this business is much more mental than physical, which suits me well at this stage of life. And once established, the revenue potential is significantly higher and more consistent, allowing you to build something truly scalable.

My Advice for Anyone Starting a Tool Business

Spend time networking at chambers of commerce, industrial trade shows, local meet and greets, and industry events. That’s where the real customers are.

In the beginning, keep your pricing simple while you nail down your systems and processes. You’ll figure out fast that just because one supplier has the best price on Milwaukee doesn’t mean they’ll have the best price on DeWalt or Makita.

You generally have two basic paths: buy popular items in bulk now to lock in better pricing, or source on demand when a customer requests something specific. My recommendation is a smart blend of both. Stock the fast-moving items so you have them ready with decent margins, and source the rest. This reduces risk while you grow.

Treat inventory purchases like buying a house. Don’t obsess over trying to perfectly time the market. Ask yourself: Does this price make sense today? Can I sell it at a profit? If yes, move forward.

Starting a tool company is not easy. It’s not a “get rich quick” business. You have to bootstrap, learn as you go, and be willing to lose a little money early while you figure things out. But it is worth it.

Keep your head down, push through the unknown, and don’t give up when times get hard. The bigger and better life — both for you and for the people who will work with you — is on the other side of those tough early days.

If there is anything I can do to help you or your company, please reach out.