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.

People

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.

Larry and Ann Lieberman go over financials with Marcus.

Larry and Ann Lieberman go over the financials with Marcus.

Product

The products are very impressive. Not only are they designed by someone who is a wizard at lighting but they are also visually striking.

Process

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.

Financial

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.

The Offer

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.”

Growth Strategy

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.

Continue reading.

6 Responses to The Profit: Marcus Lemonis and Vision Quest

  • Did anyone else think that Larry looks like that motion picture director James Cameron?

  • Yes, he does look like the Titanic director now that I think of it.

    Could someone explain how Marcus did those calculations for the machine investment? It was too fast for my brain.

  • Major mistake, in my humble opinion by Marcus on ROI
    Looking at the laser cutting machine at the trade show in Chicago, Marcus walks through the margins (for me, ROI) with calculation based on 350 days

    350?
    15 days off ?
    No break on weekends ?
    If so, that should be made clear, along with any overtime pay

    • Maybe 15 days of downtime for maintenance and re-calibration? This is a little detail that business owners sometimes overlook and don’t plan for when acquiring new equipment.

      • Running a sales and distribution business, I would tend to count 260 days
        There are 365 in a year, take out weekends and holidays …

    • I thought the same thing. He also did not address shift work (should it be needed). Then Marcus assumes that machine will be used for everything…not true. Only the custom orders would require the use of it.

      Also, 350 days? BS! 5 days a week times 50 weeks…(holidays and other days described later will easily eat up 14 days annually in a company that size along with general work slow downs, machine maintenance, specially laser gas machine trained operators being out of work well as others supporting machines being out of order ) will make this $355,000 machine only be used a grand total of approximately 250 days per year …..Based on a ZERO interest 36 month loan the monthly total is $9,861.11 per month.

      Larry had better have more of those two “good” months that he reportedly had during the calendar year he was speaking about.

      I’m sorry but I’ve got about a updated waterjet cutter for about $80,000. Though it would only do about 80 to 85% of the work the gas machine would do You will never recoup it at the rate they were growing up.

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