The Story of Jeffrey Heininger of Heininger Holdings

Feb 15, 2024

American Dream Achieved

IBA, as an approximately fifty-year old business brokerage firm serving the entrepreneurial community of the Pacific Northwest, has been uniquely positioned since before the American Bicentennial celebration of 1976 to witness and hear the stories of thousands of people who have lived the American dream through entrepreneurship creating beloved businesses by employees, customers, and communities while finding personal fulfillment and financial prosperity through execution of their ideas, hard work, perseverance, and ability.  In an effort to share these stories heard throughout the years by our team of business brokers, who are commonly regarded as the “best listeners” in the M&A industry, IBA has retained highly regarded writer, Nesha Ruther, to tell their stories.  It is our goal to share one story a month. It is our hope that you will find the stories as inspirational and motivational as they are to us and the buyers who bought the businesses in IBA facilitated transactions in Washington, Oregon, and Alaska.

The Story of Jeffrey Heininger of Heininger Holdings

By Nesha Ruther

Jeffrey Heininger first started his company, Heininger Holdings, in 1998 with a friend and business partner. “He was good at finance, I was good at sales and marketing, and we both wanted to do business a little bit differently,” he says.

The original concept for Heininger Holdings was a line of aftermarket products for automobiles. Aftermarket refers to the market of spare car parts and accessories, such that you might find at an AutoZone or Pep Boys.

“At the time people were selling SUVs like crazy,” Jeffrey says. “We created a line of bike carriers to fit on the back of an SUV. They fit in the receiver hitch, and the goal at the time was to roll that into the automobile accessory business.”

Jeffrey had previously worked for an injection molding company that made cassette cleaners. “When you put a cassette into the radio in the dash of the car, the cassette could get dirty, smoke, smog, dust, dirt, humidity, all of it wreaks havoc on the inside of the cassette player,” he explains. “This company I worked for came up with a cleaning invention and sold millions and millions of them. Eventually, they branched into a spinoff with a bicycle company that was developing racks.”

Jeff’s familiarity with bike racks and having worked for a company that had long made products specifically to be used in cars gave him the confidence needed to sell to both mass merchandisers and automobile aftermarket retailers. “We were operating both in the car aftermarket, but because we were selling something that related to bicycles, we were also going after the bicycle aftermarket or the bicycle dealer who was selling racks to his customers,” Jeffrey says.

The brilliance of Heininger Holdings’ business model is that it was designed to sell a variety of unique products that existed within multiple industries, all connected under the umbrella of car accessories. “The idea was that we would grow into a variety of car and truck accessories. Our mission statement was to “enhance road travel,” so we would sell something that could help with pets, like a partition to keep the pooch in the back of the suburban and we could sell something that could help with holding your phone in place,” Jeffrey says.

From bike racks to pet products to phone holders, Heininger Holdings was perfectly positioned to sell to retailers in the pet, technology, and automotive industries, and Jeffrey had no intention of stopping there. “We began selling to the sporting goods business as well and that eventually branched out into selling to bigger retailers across the country like Walmart, REI, and Costco,” he says.

Reaching such heights took some time, however, and entrepreneurship is nothing if not an exercise in patience. “We were reaching out to folks at Walmart and Sam’s Club with our products and getting a fairly positive reception, but like any new business you’re a crackpot until you hit the jackpot, and we were definitely in the crackpot stage,” Jeffrey laughs. “My partner got tired of not being able to eat every night since we could barely afford to, so he left and got another job, and I bought him out. It was okay though, we’re still friends today and he became a very successful businessman”

As is the unfortunate reality for those who leave the party too early, something monumental was about to occur that would not only alter the course of Heininger Holdings, but business on a global scale, and Jeffrey would be on the ground floor of it.

Jeffrey began selling to retailers through “drop shipping.” Drop shipping allows retailers to fulfill customer orders without keeping the product on hand. By working with businesses like Heininger Holdings, large companies can send their orders to the drop shipper, who fulfills it themselves. “Big stores wouldn’t have to do anything, they could order a product via their computer, and overnight it would alert our system so we could send out the product,” Jeffrey says.

While drop shipping is an extremely common retail practice today, in the early 2000s it was incredibly new. It makes sense then, that Heininger Holdings began this model by selling to another forward-thinking company that wasn’t afraid to be ahead of the curve, Amazon.

“In the early days Amazon only sold books, and then somebody had the wild idea to say, let’s sell everything. Drop shipping emerged alongside them,” Jeffrey explains. “Amazon used drop shipping as a way of improving logistics, they took one major factor out of the distribution chain by shipping directly to the consumer on behalf of the retailer. It was a fantastic idea, we began doing it occasionally for companies that were in a fix and didn’t have the product on hand, they would ask us ‘Can you ship it for us?’” and we realized we were really good at it.”

For a company to successfully drop ship, its supply chain infrastructure needs to be a well-oiled machine. “The key was that no matter what, come rain or snow, we were getting products out and it had to happen that day. We did everything we possibly could to make our warehouses as efficient as possible,” Jeffrey says. “That meant making sure the fast-moving items go out first when preparing orders, it meant working with the right shipping companies to make sure the product made it to the consumer’s door, it meant tracking our inventory. It was a lot of work, but it was also a new and unique offering we could give to retailers.”

Part of what makes drop shipping unique as a business strategy is that it provides both goods and services. The shipping of the products themselves is the service, which Heininger Holdings had mastered and would only continue to improve, but for the service aspect to be successful, Jeffrey needed to provide retailers with items customers wanted.

This is another core element of the company’s success, unique and viable items that improve quality of life during road travel. “We acquired a product for our brand called HitchMate®, it’s a step that hangs on the tire of your car. This step unfolds and it gives a short guy like me a chance to reach the top of the roof so I can put my skis up there or my bike, whatever it may be. We released this tire step 20 years ago and it still sells very, very well today,” Jeffrey says proudly.

Another standout product was the CellCup®, a small cup you insert into the cup holder of your car to hold your phone. “It was a little polyurethane foam product that allowed your phone to be stored right next to you, so it allowed you to talk on the phone while driving without the distraction of holding your phone,” Jeffrey says. While such products are common today with stricter laws on phone usage in the car, the CellCup predated the legislation and provided drivers with a safer “hands-free” alternative.

“Everything we sold alleviated a situation in one way or another,” Jeffrey said, “We always looked for products that could enhance your life by responding to a need. Thus, the TireStep for instance. How do I get my short body up there to put skis on top of the car? The TireStep is a simple solution, and it greatly helps in that situation.”

Critical to the company’s success was maintaining a revolving door of new products. “The lifecycle of every product varies,” he says. “But most follow a bell curve. It goes up, it peaks, and then it comes down, and sales slow. Some have a sharper curve on the upward angle, and some have a sharper curve on the downward side, but at the end of the day, most things don’t sell consistently forever. That’s where the newness of the merchandise was very helpful for what we were doing.”

In order to constantly introduce new products, much of Jeffrey’s job involved scouting and acquiring merchandise. “There’s an art to the purchasing side of the business that I had a good feel for, and I wanted my employees to be focused on sending & shipping orders, so I worked primarily on the front line of purchasing,” he says. “I went to a lot of trade shows: pet shows, car shows, bicycle shows. I was always looking for things that were coming up,” he says. “Our MO would be to find whoever had the smallest booth, the kind of folks who don’t have a lot of money but have a neat idea.”

In terms of selecting products that would be successful, Jeffrey looked toward the future. “I was always thinking about what kind of products would be needed tomorrow. While everybody else is working for today, I was trying to make sure we were prepared for tomorrow.” For innovative individuals who had a great idea, but lacked the funds to make it a reality, Heininger Holdings was a dream come true. The company would manufacture, package, and sell the product, and the inventor would receive a check every quarter with an amount depending on how well it sold.

In the instances where a similar product already existed on the market, Heininger Holdings would vary their version slightly, so it had a unique spin distinct to their brand or added additional value to the consumer that the original lacked. “With the TireStep, we would include a storage bag. They’re high-quality bags that can hold the step, so you can also slide it under the seat of the vehicle, and it doesn’t roll around or slide back and forth,” Jeffrey says. “We were always thinking about additional needs our customers might have and how to solve them in a different way than our competitors.”

Additionally, Heininger Holdings maintained an astute eye for design, and they understood the importance of pleasing packaging. While less astute businessmen might think of packaging as frivolous, Jeffrey understood that the way a product looks when it arrives at the customer’s door, even before they open it, is critical to their impression. “We made sure our packaging was pretty and neat and came with a protective sleeve. We put out questionnaires asking about the packaging and found out it was something that resonated with customers. People would say, ‘It’s so much better than getting a brown cardboard box.’”

The ingenuity of Heininger Holdings products ensured that some had an exceptionally long lifecycle. “The bike racks were the annual leader in gross dollar business, but the most popular item day in, day out, any month of the year was the Twistep®,” he says. “Another happy surprise was outdoor patio umbrellas. Like the Pet business, we knew nothing about the outdoor product industry, but we bought a company that sold them, brought on the founder and he taught us everything we needed to know.” Both of these products came as a result of a business strategy that was open to alteration and opportunity.

By 2006, Heininger Holdings had finally taken off, they were no longer in the crackpot stage, and firmly in the jackpot. Then, like for so many small businesses across the country, the banking crisis of 2008 occurred. “Gas prices went up, the consumer was distracted to say the least, and sales slowed down,” Jeffrey recalls. “We probably lost a third of our business through 2009. At that point, I knew we needed to try something new.”

While the road travel industry was fairly resilient despite the hike in gas prices, outdoor activities and sporting goods dropped sharply as people no longer had the extra funds to spend on leisure activities. However, there was one industry that remained active despite the bleak state of the economy. After all, what people refuse to spend on themselves, they will gladly spend on the creatures they love most. “We got into the pet accessory business related to road travel, and that was a surprisingly resilient side of retail,” Jeffrey says.

One particularly popular product for dogs (as noted) was Twistep. “It was part of our Portable PET division, and it provides a step on the back of most SUV’s. It slides into the receiver hitch and twists out, so the dog has a step up. It’s also halfway down when the dog is coming out of the vehicle so it’s much better on the dog’s shoulders,” Jeffrey says. “There are a lot of dogs who have healthier bone structure at an older age because their owners have provided a Twistep on their vehicles.”

Another change that allowed Heininger Holdings to make it through the financial crisis of 08’ was a complete transition to online drop shipping. While they had been partially selling to retailers in that way since 2003, the financial crisis made a total shift to online critical to the company’s sustainability. “We began to introduce ourselves to retailers like Target, Bed Bath & Beyond, Wayfair, and Overstock exclusively as a drop shipper,” Jeffrey says. “The products became secondary; the primary appeal of our business was the efficiency we provided. We would go to a retailer, and it was the very first part of our pitch.”

“It was a heck of an opportunity for us and allowed us to grow our business on this system we had put in place. We were a small company, but we were doing big things. We were able to grow through these major retailers because we were reliable, had good prices, great products, and they received quality service from us. Those relationships carried on.”

Like many entrepreneurs, Jeffrey found the greatest challenge of running his business to not be in the business aspect per se, but rather leadership. At their largest, Heininger Holdings had twelve employees, all of whom had to complete their jobs to perfection for their drop shipping apparatus to be successful. “So much of leadership is making sure you have the right employee in the right position, you need to know your employees well enough to know what is going to make sense for them. Your employees also have to trust that you have their best interest in mind, so we strove to cultivate that relationship because we couldn’t have done it without them,” he says.

After two decades of business and officially in his seventies, Jeffrey decided it was time for him to retire. The first business broker he went to wasn’t a great fit, and after a long layover, Jeffrey was introduced to Gregory Kovsky and IBA.

After speaking with Gregory, Jeffrey was paired with IBA broker Vishal Punj. “Vishal did a wonderful job of grooming us to be able to sell the business. He brought several people to the table and eventually, we latched on to the guys who purchased it. They seemed very capable of continuing to grow the business and that was my goal in selling, was to find someone who could take it to the next level.”

Since selling the business a year ago, Jeffrey has been helping facilitate the transition to the new owners and easing into retirement with his wife Jayne. He has especially enjoyed getting to spend much of his time in Southern California, caring for his 97-year-old father and seeing his son who lives in LA.  In addition to spending more time with their daughter in the Seattle Area.

For Jeffrey, the American Dream has always been about one’s ability to find success as an individual and not to be afraid to do something new or unique. “I’ve always been an independent thinker and doer,” he says. “My father was the same way; our son just broke away from a big wealth management firm to start his own company. To me, the American Dream is finding happiness and success, and to achieve that in your own way without jeopardizing your home life.”

From selling products that spanned multiple industries to implementing the new art of drop-shipping, Heininger Holdings found success through their ingenuity and individuality, and if that isn’t the American Dream, we don’t know what is.

Nesha Ruther

Nesha Ruther is a writer and editor from Takoma Park, Maryland. She received her BA in English Creative Writing from the University of Wisconsin Madison, where she received a full tuition scholarship through the First Wave program based on academic and creative merits. She was a 2016 Young Arts winner in spoken word, a 2016 winner of the DC Commission of the Arts Larry Neal Writing Award, a 2017 winner of the Mochila Review Writing Award, which was judged by Nikki Giovanni, a 2020 winner of the University of Wisconsin’s Eudora Welty Fiction Thesis Award, and a 2022 Tin House Winter Workshop Participant. She has been commissioned to write and perform for the National Education Association, and has had work published in NarrativeNortheast, Angles Literary Magazine, Beltway Quarterly and more. She currently lives in Cincinnati Ohio and is the Lead Manuscript Developer at Holon Publishing and Collective Press.