CNBC’s THE PROFIT has Marcus Lemonis interested in a custom upholstery manufacturing business, Grafton Furniture in Miami. All furniture is made in the U.S. by veteran craftsmen.
It’s a family owned business begun more than 50 years ago, now run by the son of the man who established it. UPDATE with SPOILERS posted below.
Steve and Mary Grafton are equal partners in the business and their son Stevie has joined them.
Did you ever wonder exactly what the business owners in trouble hope for when they seek advice from Marcus? Here’s a bit of what the Graftons had to say:
“Our people, process and product could use some improvement.” Nice touch there Steve, knowing that Lemonis’ 3 Ps strategy is the basis for all his turnarounds.
Steve also wants Marcus’ assistance in upgrading their machinery to help their turnaround time and increase their ability to serve customers.
“I felt like our company has gotten a little stifled and our ability to expand,” needs some tweaking says Mary.
Here’s what Marcus found when he walked in. The severe recession slowed business to a crawl and the mounting debt has yet to be managed. That only makes Steve and Mary’s concerns about expansion more difficult to achieve or even dream of.
A cash infusion is needed and needed badly.
Besides what the Graftons want, Lemonis sees the tension and fighting between father and son. The two Steves rub each other the wrong way. Young Stevie hates being micromanaged and Steve the elder believes that without his hovering, things won’t be done the right way.
This is not an unfamiliar situation on THE PROFIT and Marcus has managed troubled waters before. He’s a pro at sizing things up and being blunt about what it will take.
Let’s hope he has more success than last week’s episode at Fuel Foods, also in Florida.
There, the owner refused to do things Marcus’ way, particularly when it came to excessive marketing expenditures when key employees’ salaries were being cut. Add that to the owner’s inability to get approval for Marcus’ investment from all shareholders in the business and you had a disaster.
Marcus loved the three-generation family business story, particularly in Miami, the place he grew up and worked in his own family’s auto dealership. Esteban Grafton, more than 80 years old emigrated from Cuba and lived his own American dream. He still came to the shop on most days, and saw the tension between his son and grandson.
When Marcus asked if Esteban had the same issue with Steve his son, family patriarch said no. He taught his son then allowed him to learn how to run the company his own way. That’s what Marcus wanted for Stevie.
Once he decided to invest $1.5 million, he put young Stevie in charge of quality control, allowing him to hold all orders until he was satisfied. The company had begun to ship and produce less than stellar quality items, rushing orders to get the cash infusion.
Lemonis went to work using his investment. He significantly reduced the family’s debt which had reached $1 million, and did a build out of the manufacturing facility, added a cooling system and updated the old equipment.
Then he did the unthinkable, he insisted that they design and build a ready-to-ship line of goods that would be sold retail. Custom furniture is too reliant on the wild swings of the economy and it’s how they got debt-ridden in the first place.
When he got the two Steves an appointment with Direct Buy, they pitched the first line of products for retail sale at the right price point and closed a deal.
To put a period on the end of the sentence, Marcus named the new line of goods, “American Dream”, to emphasize the immigrant family story and the made in the USA label. Direct Buy loved it, claiming it had customers who inquired about USA made goods.
The guy does good work, right?
CNBC airs THE PROFIT Tuesday nights at 10 p.m. ET/PT. Image/video credit: CNBC, used with permission.