Starting up a cylinder exchange enterprise

David and Chandra Rich will celebrate their eighth year in business this October. Photo courtesy of Panhandle Propane

How do a custom homebuilder and a realtor/bartender become owner-operators of a propane cylinder exchange business? David Rich, a co-owner of Panhandle Propane in Defuniak Springs, Fla., explains.

“One night I came home from work, fired up the grill and threw some steaks on,” Rich says. “I went inside to sit down for a couple minutes, but when I went back out I realized the gas ran out. That was $80 worth of steaks.”

As upset as Rich was, his mind wandered to possible business concepts that could provide solutions. What if a company could deliver a 20-pound grill cylinder to his house? Better yet, what if Rich was the one to establish a company that provided such a service?

“After a day or so, I got on the phone and called a [retail propane] company,” he says.

Rich started his business small, rounding up 10 cylinders and exchanging them locally for customers who wanted deliveries. Rich quickly discovered local restaurants rely on propane cylinders in the winter for outdoor heating, and he made inroads with those types of customers.

“I asked if it would be easier if a person brought them cylinders,” says Rich, whose business is headquartered between Pensacola and Tallahassee. “They all said ‘absolutely’ because restaurants would go to any exchange cabinet and send a doorman or two guys in their personal vehicles to get them.”

Eight years since its first days in business, Panhandle Propane is a 100,000-gallon-per-year enterprise. Rich transitioned away from his homebuilding career years ago, and his wife, Chandra, is equally invested in the business following her days as a realtor and bartender.

“How we ended up in the propane industry shocked us both,” Chandra says. “We literally were doing everything for awhile. I went to school for graphic design, and I handle our photography, invoices, fliers, T-shirts. David paints and builds the tanks, does the routing.”

The couple recently hired an office manager to handle phone calls for deliveries. They also have a regular driver.

“We’ve put about $1.2 million into the business,” David says. “We literally started this with under $5,000. We bought our property specifically for the propane company.”

The property now features a 30,000-gallon propane tank, which David and Chandra invested in three years ago. Ninety-five percent of their business is made up of 20-pound cylinder exchanges. Panhandle also delivers 30-, 40-, 100- and 200-pound cylinders, plus forklift cylinders.

“We have our boardwalk and our harbor,” David says. “There are rows of food trucks there. When I start deliveries, I start at 3 in the morning. My other driver starts at 5 in the morning.”

Rental properties are another key target for Panhandle.

“We go to rental companies that rent out weekly and exchange all the propane on the houses that are for rent,” Chandra says. “We increase our summer sales by going to them directly.

“We are so thankful for our clients and community,” she adds.

More on Panhandle Propane

FOUNDED: 2009
OWNERS: Chandra and David Rich
HEADQUARTERS: Defuniak Springs, Fla.
PROPANE SALES: 100,000 annual gallons
EMPLOYEES: 4
CUSTOMERS: 3,000