Marcus Lemonis and Precise Graphix
Precise Graphix is a Manaus, Pennsylvania company doing graphics and millwork for business clients. It’s owned by two brothers, Keith and Dean, who have been running it for 12 years.
Sales are down for 2014 to $3.5 million from $4.3 and 4.4 million the two previous years. This is due to the fact that the company’s largest customer cut back on purchases from Precise. Marcus discovered that this big customer is responsible for $2 million of the $3.5 million in sales last year.
Danger Will Robinson, danger!
Any business with a single customer responsible for more than 10% of total sales is normally considered a high risk. In this case it’s 57%. If that customer left Precise would be “toast,” as Marcus put it.
The product line is broad including banners, retail signage for buildings and vehicles, and even cabinetry and trade show exhibits.
The company has a huge factory but much of the equipment is antiquated and even obsolete. This result in a lot of shoddy product being shipped to customers. There are some serious QC issues that need to be dealt with.
Keith and Dean are 50/50 partners although Keith put up all the money to start the business. Dean is the one with the design talent. Keith is very risk averse and sounds like a bit of brake on growth. When Marcus polls a number of employees as to who the overall boss is, no one can answer him. This leads him to correctly conclude that there’s a lack of leadership in the business.
Marcus offers $270K for 33.33% of the company but with a stipulation that the entire company must first pass a challenge which will be to create a flawless product. This is something we have not seen before. Perhaps one of his other companies has been having QC issues?
As the team begins on the challenge, we’re all cheering them on but ultimately the effort was rated a failure by Marcus due to designer Dean’s inability to communicate clearly with the fabrication and installation teams.
However, Marcus decided to give them a second chance by redesigning one of his AutoMatch USA stores from season one. This time the team passed the test with flying colors.
Precise Graphics has the potential, according to Marcus, to grow to 50 million in sales. Some of this initial growth will result from Marcus utilizing the standard tycoon strategy of having other parts of his empire send business over to the new acquisition. (He hinted at Standard Burger being another client.)
In addition to the direct investment for equity, Marcus has upgraded some of the company’s most important pieces of equipment. This will speed up fabrication and reduce costly QC problems.
In this case, Marcus has asserted that he will remain the de facto CEO of Precise for as long as he wants in order to ensure a smooth transition into the Lemonis Way of Doing Things Right.
The company will also need to diversify its client base so that no one generates more than 5% of its revenue.
Let’s wish them good luck.