Marcus Invests In Vision Quest and Develops a Growth Strategy for it.
Vision Quest is a Long Island-based designer and manufacturer of lighting products and systems for national accounts. The founder and creative genius behind the company is Larry Lieberman who launched the business in 1996. His background in theatrical lighting gives him an edge over competitors. Over the past few years the company has seen a decline in sales and a downsizing of its staff in an attempt to minimize losses.
Let’s do a quick review of the situation using Marcus’s 3Ps.
Larry is one of those people you take an instant liking too. He’s open, friendly, and enthusiastic. However, due to the declining sales and losses he’s also stressed out. The company appears to have good employees although some key positions are now vacant due to the downsizing. This loss of key people has hurt the company even more.
The products are very impressive. Not only are they designed by someone who is a wizard at lighting but they are also visually striking.
This is where the big problems lie. Larry, who is basically a creative type should be left alone to design lighting systems for big corporate accounts while others manage the company. However, due to its weak financial position he is forced to wear many hats and spend much of his valuable time floating around the shop floor to wherever he can offer a helping hand.
You cannot cut your way to a profit. – Marcus Lemonis
Larry has just been digging a deeper hole for himself and the company over the last few years. Once his sales started declining he tried to cut operating costs by letting go of key personal. This strategy has only served to worsen the company’s performance. He has also dipped into his kid’s college fund and maxed out his credit cards.
Marcus offers to invest $375K for 50% of the company. At first this sounds greedy. Then Marcus explains that he knows he will have to invest a lot more so the 50% is actually fair. This prediction turns out to be correct as Marcus has to cut some big checks later on to upgrade some of the company’s machinery. A relieved Larry says, “Okay man, lets do it.”
To grow Vision Quest Marcus did a number of things quickly.
- He cut additional checks in order to upgrade some key pieces of equipment to “this century.” What the company had been using was outdated, slow, and labor intensive.
- He introduced Larry to Gotham Lighting a large distributor which could bring it a lot of business in New York City.
- He gave the lighting contract for the new Sweet Pete’s in New York to Larry.
- He provided the money to hire a badly needed production manager.
One thing that was different about this episode is that Marcus explained how he does a cost/benefit analysis when looking at making a sizable investment in a new asset.
Vision Quest is a typical example of what small businesses are like. They are typically started by a technician and not a manager. Larry is a wizard at designing and building sophisticated lighting systems but a loss at management. This eventually results in the company either plateauing or going into reverse and declining.
Finally, it was nice to see Pete from Sweet Pete’s meet Larry. I think that was a first for the show. It’s wonderful to see nice guys succeeding.
Here’s the website. Remember that they don’t do retail sales.