Transcripts For CNBC The Profit 20160220

And if you dont get the quality right, this business wont be here for you. Miami is my hometown, and its also home to over a million cubanamericans. Since the castro revolution, cuban families have come here to build their homes and their businesses. They bring their culture while embracing something that is distinctly american the American Dream. Grafton furniture is a shining example. Started in 1964 by esteban grafton, the Custom Manufacturing Company Makes everything from sofas, chairs, to tables. Steve this ones 154 by 96. Lemonis his son steve now runs the business and designs most of the furniture and is 50 50 partners with his wife, mary. Their son, also steve, is there to learn the business and keep it going for another generation. But when the economy turned in 2009, so did the companys fortunes. Steve the market was soft. Finances were really bad. Lemonis when business slowed, the company and the family began piling up debt to keep the doors open. Today, with limited funds, they work in an outdated facility thats strangling production. Thirdgeneration businesses have a high fail rate, and without some dramatic changes, the future of this business is in serious doubt. Hopefully, i can get a deal done and have lots of reasons to come back to miami, including making some money. My First Impression of grafton furniture is that i like what i see. I like the look and feel of the place. How you doing . Steve marcus. Lemonis how are you . Steve im great. Lemonis are you steven . Steve im steve grafton. Lemonis i was just trying out some of your furniture. Steve nice. Lemonis who do you primarily make your furniture for . Steve interior designers. Lemonis and so a customer cannot come here and buy this stuff . Steve this is stuff that ive had from years ago, and i just put this showroom together over the last six to nine months. And what i need is to merchandise this with current inventory that we sell today. Lemonis so this is essentially a showroom that has furniture that you cant buy. Theyre a custom manufacturer, so this warehouse is not a showroom. Its just a bunch of unclaimed furniture. How long have you been in this building . Steve since 1964. 50 years. My dad, my dad. Lemonis oh, your dad. Okay. Steve hes here, actually. Lemonis i would love to meet him. Steve i would love for you to meet him. Go ahead. Papa esteban hey lemonis how you doing, sir . Esteban so far, so good. Lemonis your name . Esteban esteban grafton. Lemonis nice to meet you, sir. Esteban nice to meet you. Lemonis wow. Esteban well, ive been here since 1953, and im an american. Lemonis youre an american. Im american. Were both americans. Esteban [ laughs ] lemonis and so youre the true american success story. Steve they call him maestro around here. Lemonis yeah . Maestro . You come to work every day . Esteban most of the time. Lemonis you in your 60s . Esteban im 82. Lemonis 82. Steve and this is steven. Steven hey lemonis how are you . Im marcus. Steven nice to meet you, marcus. Lemonis youre a steven, also . Steven yeah. Its a terrible story, really. Steve im steve, hes steven, hes esteban. Lemonis okay, so three generations right here. Steve right here. Lemonis the thing that i love the most about grafton furniture is the fact that its a threegenerational business. That tells me that theres a lot of love and a lot of passion here. What worries me is that generational businesses often struggle. We know that secondgenerational businesses fail at about a 60 rate, and we know that its even worse for thirdgenerational businesses that fail at almost 90 . How is it working for your dad . Steven its great and stressful. Lemonis grafton has a crew of 28 employees. They do everything from design, build, paint, and upholster. Today, steve owns 50 , and his wife, mary. Mary hi. Lemonis how are you . Im marcus. Mary nice to meet you. Lemonis . Owns the other half. Their key employee is louis, the general manager. Louis, how are you . Nice to meet you. Im marcus. He understands the process better than anyone. Louis what you need to do is do it multiple times, cause you can see the difference, how this is smoother and this is still rough. Lemonis so why doesnt that machine do it all in one . Louis cause its not, like, one of the best planers. Lemonis do they make one that would do it all in one shot . Louis yes. Steve some of the machinery here are 50 years old. Lemonis look, its obvious to me now that the company isnt the only thing thats three generations old. And if this equipment doesnt work and its not up to date with the right technology, well, youre wasting a lot of time. What does it cost to get a brandnew one that does it the right way . Louis a really good one, about, say, 3,000. Lemonis if it costs 3,000 to get a new one, how much time extra did he have to take to do it three times . Multiply it times the number of furniture that we make in a year. How long does it take me to get my money back . Steve this is the house in the hamptons, and here are the sales orders here. Lemonis what kind of margin will you have on this . Decent margin . Steve i think so. Lemonis you think so . Steve yes, because you dont know until you make it. Lemonis you dont know what your margins are on them. You kind of go into production with just a guess. Steve correct an educated guess. Lemonis the key to manufacturing is understanding that time and materials are the two big components that go into determining profitability. But if steve doesnt know how much time it takes to make something, maybe thats one of the reasons that theyre not as profitable as they should be. Louis this is what we call a master list. Lemonis master list. Louis this is everything that we have inhouse. Lemonis but why are all the wips zero . Steve cause they havent they dont put the wips into here. Lemonis why wouldnt you update this . This is nothing now. Why wouldnt i know the status of the job . Steve no, this is our bible. Lemonis well, you need to go to a different church. In any manufacturing business, the most important document is the workinprocess report. It tells you where jobs are in their life cycle. So if you had 10 jobs happening at one time, you would know if a job was 7 done, 87 done, or 100 done. At grafton, i dont have anything filled out. Theyre all zeroes, so i dont know what the hells happening. It could be me, but tell me what you see when you look down the barrel. Do you see a swell . Steve a swell right here. Lemonis do you see a swell on one side . If this came to my house, id send it back. George how are you doing, sir . Lemonis im marcus. George george castellanos. Lemonis what is your job here . George i do delivery and installation and then payroll. Lemonis you do payroll, too . George yeah. Lemonis which is very common, that the same person that does payroll does deliveries and installation, right . [ chuckling ] its very common. Steve he doesnt do payroll. Steven yeah, he does. Lemonis you say no, he says yes, he says yes. You said he doesnt help with payroll . Steve no, he helps her. He prints out all the time sheets. Lemonis yeah . Steve and he goes to them. What job were you working on . Which really should his job. Lemonis have you assigned him that job . Steve no. Lemonis so then why do you say it should be his job . Steve because thats one thing that he should be doing to help this lemonis but how is he supposed to know that . Steve i tell Chris Lemonis is he supposed to read your mind . Steven yeah. Here, yeah. Lemonis grafton handles all aspects of their production under one roof. Theres no logic to their work flow. Its totally inefficient. The facility feels really hot, and its messy. Thats not a good thing for the people that do the work. And its also not good for the furniture. Dust and heat thats not something you want around fine furniture. Steve all of these products these are orders to be done. Lemonis its not very clear what the process is. Its not easy to follow. Louis it is for me, cause ive been doing it for so long. And thats why i have stevie to help me. Lemonis and so are you training him to be a foreman . Louis yeah, to get to that point. Lemonis why isnt he at that point yet . Steven im not comfortable, because im not sure that this is the actual order, because something changes, and its all these two when they talk to clients, and then it stays in their heads. Lemonis for the last 14 years, steven and louis have been running this business with a secret sort of code where they just know whats going on. The problem is nobody else does, including stevie, whos ultimately one day supposed to be taking over this business. Steven it could have been changed. It could have been this. It could have been something they talked about. And they know. Lemonis theres not a changeorder process. Steve yes, there is. Steven no official. Steve there is. Esteban sometimes it doesnt happen. Lemonis sometimes it doesnt happen. Steve right, because hes being jumped over all the time. Lemonis well, cause he doesnt have a clear role, and youre making changes, and youre not bringing him into the loop. Would his role exist if he wasnt your son . Steve yes. Assistant production manager. Lemonis if hes out, is he in charge . Steve hes in charge if hes out. Lemonis Everybody Knows that . Steve i would hope so. Lemonis louis, is that true . Louis it will be steven to a point, but theyre gonna go to steve. Lemonis and so its the worst position you can put him in is when you give somebody a title, but you dont actually give them the stick. Whos in charge of quality here . Steven i would be more in charge of quality. Lemonis cause i think what happens is when you know that you need to collect the money, you start cutting corners to get it done faster. Steven i dont want to do that, and i think if were not gonna get a check cause were late, you know, i understand the business. You got to get the money. But i know what a good product looks like. Lemonis well, at the end of the day, heres how you should think about this. This is your grandfather was here. Now your father is here. Steven yeah. Lemonis and if you dont get the quality right, this business wont be here for you. Steven exactly. Thats my lemonis its got your name on it. Steven exactly. Lemonis total revenue last year 2,448,000. Gross profit at 1 million. So less than 50 . Steve yeah. Lemonis you said the margins were amazing. Amazing at under 50 . Is that considered amazing . Steve no. Lemonis the Industry Standard on customfurniture margins is around 70 . Grafton furniture is operating at about 50 . We have a lot of work to do to figure out where the 20 is leaking out. Lemonis the total liabilities that should be on my mind are 369,000 in thirdparty debt. 600,000 on the mortgage for the building, and 50,000 in a liability to the other shareholder of the property. Steve correct. Lemonis which happens to be your buddy. And so its about 1 million. Steve correct. Lemonis its a summary of all of it. That would clean up every piece of that. Steve every single year. Lemonis okay. So, when i look at the showroom buildout of 100,000, how did you fund that cash . Steve yeah. Lemonis ooh. Thats a lot of cash. Steve i dont have credit. You know, we lost a condo in the keys. Weve got cars repossessed. Lemonis what happened that caused cars to get repossessed . Mary the recession, everything. Lemonis the recession crushed you guys. Lemonis not only does grafton have a Million Dollars in debt, but its with three or four different lenders. The problem is, when they have a downturn, theyre not just in trouble with one bank. Theyre in trouble with lots of different lenders. In a downturn in the economy, this is one of the first affected. This business is good when its good, but its scary when its bad. And so a business like this should have no debt, cause you cant handle the recession. Steve correct. Lemonis today, grafton operating only with Custom Furniture is a very dangerous proposition. Youre dealing with highend clients and highend real estate. When the economy slows down, that could be the first thing to go. This Company Needs to be diversified not only in its offering, but in its price points. I think about this business in three distinct categories quick ship, mass market, fast production, turn it over, and go. Semicustom, where theres a couple of styles, and you can pick your wood finish and your fabrics, and then custom. Mary thats what we are. Lemonis youre not any of the first two. Mary i just feel like were custom and highend, and i kind of want to stay there. Lemonis all right, im gonna take some time to just kind of look at this. Steve okay. Lemonis ill see you in a little bit. Okay. Thank you. Steve thanks, marcus. Lemonis today, im meeting the graftons at one of my favorite restaurants in miami, joes stone crab. I have a lot of good memories here, and hopefully, after today, ill have one more. Do you feel like your business is run right today . Esteban no. [ laughs ] lemonis your dad said no pretty quick, didnt he . Steve well, no. Theres always room for improvement. Lemonis you know, generational businesses sometimes dont succeed. Second generation has a failure rate of 60 or 70 . Third generation has a failure rate of 90 . Mary wow. Lemonis and so its always very dangerous for me to think about investing in a, a cyclical business, which is the furniture business. Steve correct. Lemonis . And, b, a multigenerational business that doesnt have the smoothest of transition plans today. I get the sense based on a few things yesterday you feel like youre the only one with good ideas. Steve you have to convince me of what your asking or doing or saying. And if i think its totally wrong, ill tell you my opinion. Lemonis what happens if steven gives you his opinion . Do you process that, or do you dismiss it early . Steve no, i process it. I do dismiss it often. Lemonis are you confused sometimes, when you come in, what your role is . Steven yeah. Yeah. Lemonis so, when i think about your financials, it does look like a labyrinth of debt and mortgages and bank revolvers and steve right. Lemonis theres 1 million in debt, not enough working capital to sustain any sort of downturn. Fixing up the machinery in the buildings thats 1. 3 million. Steve correct. Lemonis so, the product to me and i showed you yesterday, when i look at the detail of a chair and i notice the fold. Esteban yeah, yeah, yeah, yeah, yeah. Lemonis . I am crazy about the details. Steve okay. Lemonis and im adamant that theres clarity for steven. And so my offer is very simple. Im willing to put up 1. 5 million. Thats a lot of money, right . Steven absolutely. Lemonis and so for the 1. 5 million, i would want 45 of the business. Full financial control, and i want to be able to have 100 say on his path without any question from you. Im bushed ive been on my feel alyea me too. Excuse me. Coming through ride the gel wave of comfort with dr. Scholls massaging gel insoles. Theyre proven to give you comfort. Which helps you feel more energized. All day long. I want what he has. People love me for saving them over half a grand when they switch to progressive. So im dabbling in new ventures. It was boardgame night with the dalai lama. Great guy. Terrible player. Go paperless dont stress, girl i got the discounts that you need its a balancing act, but i got to give the people what they want more box. Any words for the critics . What can i say . Critties gonna neg. [ applause ] the what . [ laughs ] this bale of hay almost derailed the ranch. When a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business. Faced with horses that needed feeding the owners were forced to place an emergency order of hay. Thankfully, mary miller banks with chase for business. And with a complete view of her finances, she could control her cash flow, and keep the ranch running. Chase for business. So you can own it. At sleep trains cpresident s day sale, save up to 300 on beautyrest and posturepedic, get three years interestfree financing on tempurpedic, plus sameday delivery. Hurry sleep trains president s day sale ends sunday. Lemonis and so for the 1. 5 million, i would want 45 of the business and 100 say on his path without any question from you. And so if i say this is his job and he doesnt like it, too bad for him. And im a lot harder than you are. Mary thats what he needs. Lemonis i want to pay off the mortgage. I want to ensure that the facility is acceptable and make sure that theres plenty in the bank so that you guys feel like you can take care of your family and your bills so that you dont ever have to feel like 2009 and 10 again. Mary i think im gonna cry. [ chuckles ] lemonis does that help, mary . Mary yeah, absolutely. When banks turn you down and when people turn their heads on you, to know that somebody with your knowledge and experience believes in us and my son youre taking him under your wing. Im ecstatic. Lemonis we have a deal . Steve we have a deal. Mary im supposed to do a round of applause now . Lemonis thank you. Steven thank you. Steve im looking forward to you helping us. Mary i feel like im in a dream. I dont even know that any of this is real. Esteban we have what he needs. Lemonis you all right . You got pit stains cause youre so nervous . Steven yeah. A little warm in here. Lemonis its not that warm in here. I think you were just. Your pants. Steven yeah. [ laughter ] lemonis ibuenos dias all ibuenos dias lemonis see . You thought i was gonna break out good morning, didnt you . [ laughter ] yesterday, i made a deal to invest 1. 5 million into this company. The reason that im investing in this business is not only because of all of you, but because it was important for me to come back to miami. My family owned a chevy dealership in miami for 40 years. I learned a lot from my time there. I learned how difficult it is for family to work together, how difficult it is to pass a business on to generations. And so im hoping to be able to share those mistakes so that we dont make those same mistakes. Today, we make Custom Furniture, but thats not enough. We want to create a furniture line that has a brand behind it. We want to see if we can prove that generational businesses can last forever. And so to plan for the future, we want to take steven, and we want to teach him so that he can lead us into the future. I dont want to be average, and i dont want to be small. We want to be the best. We already know we have the best people. Esteban yeah, yeah, yeah, yeah [ applause ] lemonis where are you from . Honduras. Where are you from . Woman nicaragua. Lemonis nicaragua. Man dominican republic. Lemonis dominican republic. Man ecuador. Lemonis ecuador. [ laughs ] esteban cuba lemonis the most beautiful part of america is that they give us a chance, including me im from lebanon to come to this country to make a living, to provide for our families. Esteban, 50 years ago, you came to this country, and you said you wanted to become something. Esteban yes. Lemonis i would say that if you look around, youve become something. Esteban this is what i wanted to do. So, i have my dream. [ applause ] lemonis you have a lot of work to do. Everybody excited . Woman yes whoo lemonis lets go to work. Graftons primary business is the customfurniture business a great foundation. And they sell mostly to designers. But i think the real opportunity here is to find a way to sell directly to customers. I told you that i wanted to figure out a way to build a line. Steve mmhmm. Lemonis and so what id like to do is id like to start with creating a quickship product designed solely by you. Steve okay. Lemonis my goal in driving graftons revenue is to create a quickship line. These are readytobuy lines with multiple designs, and theyre offered up with a few wood choices and a few fabric selections. And unlike Custom Furniture, these pieces can be in your home within 10 to 14 days. Id like to start with four accent chairs, because that accent chair is easily marketed. It can have cool looks to it. Theyre easy to make. They have a great price point. My goal is 1 million with the quickship line, and im gonna do that by creating four chairs to start the program. Each one of those chairs is gonna have to do 250,000 a year at a 50 margin. On 1 million of revenue with a 50 cost, thats 500,000 in gross profit. I want you to design all four chairs with a different look in mind. I want to see a california look, i want to see a midwest look, i want to see a southwest look, and an east coast look. Now, theres one more twist to it you have to be able to retail it for under 500 and make a 50 margin. Steve thats doable. Lemonis although the margins are a little lower at 50 , the volume is where you make it up, because youre gonna premake furniture and have it in inventory. That allows you to make 10 or 20 at a time instead of 1. I think the real question is, can steve adapt and change . I want to look at them later, but have some fun sketching some stuff. Steve all right, cool. Thanks, marcus. Lemonis steven so going forward, we want to be able to understand better how we represent our quality. Steven yeah, no. Back when i started doing deliveries and i would see unhappy clients and see mistakes maybe they wouldnt notice, but i would notice. Lemonis so, is this an example of something that would get delivered . Steve mmhmm. Lemonis what would this chair retail for brandnew . Steve brandnew, thats a 1,700 chair. Mary oh. What do you see thats interesting about that cushion . Steve this shouldnt be seamed here. Lemonis why is the seam there . Steven it was seamed cause sometimes we make things work. Lemonis so this customer that paid 1,700 just happened to get hey, sorry. We wanted to make it work, so were gonna give you a half literally a halfassed cushion that covers half your ass. Steve right. This is not our best foot forward. Lemonis its in your showroom. Why is it in here . Find a piece that you think is good. Steve this one, we reupholstered recently. Lemonis how much would this chair retail for . Steve 1,000 or even a little bit more. Lemonis and what is it worth with this nick . Steve nothing. Lemonis what else do you want to show me . cause im really excited to buy furniture here. Find something in this 100,000 showroom. To cook healthy meals. Yet up to 90 fall short in getting key nutrients from food alone. Lets do more. Add one a day mens 50 . Complete with key nutrients we may need. Plus it helps support healthy Blood Pressure with vitamin d and magnesium. They say that in life, we shouldnt sweat the small stuff. But when youre building a mercedesbenz, there really is no small stuff. Every decision. Every component. Is an integral part of what makes the 2016 cclass one of our most sophisticated cars ever. Because when youre setting a new benchmark for refinement, it is the small stuff. That makes the biggest impression. The 2016 cclass. Lease the c300 for 399 a month at your local mercedesbenz dealer. I. Just me. Me andrd my four daughters. Ah, theres a lot of dancing and pageants that go on in our kitchens and living rooms and things like that. Ive had to learn to accept certain things like the fact that my toe nails and finger nails are going to be painted constantly. But its really awesome to watch them at their own things. Theyre great kids. All of them. Whatever home means to you, well help you find it. Zillow. [bassist] two late nights in blew an amp. But good nights. Sure,musics why we do this,but its still our business. We spend days booking gigs, then weve gotta put in the miles to get there. But its not without its perks. Like seeing our album sales go through the roof enough to finally start paying megs little brother i mean,our new tour managerwith real,actual money. We run on quickbooks. Thats how we own it. Defiance is in our bones. Citracal pearls. Delicious berries and cream. Soft, chewable, calcium plus vitamin d. Only from citracal. cause im really excited dto buy furniture here. Steve this one might pass muster. Lemonis oh, you have one that may pass muster . Thats good. That arm is on straight. This arm is on crooked. Steve right. Lemonis youre rushing it. Steven, is there anything in this showroom that you would deliver to a customer . Steven no, theres nothing in here that i would give 100 . Lemonis what about that chair right there . Steven it has the nicks on the paint. Lemonis how about this one . Steven the upholstery is all right, but the finish could be better. Theres scratches. Its not good. Lemonis who is really pushing the furniture out before its ready . Steve its a good customer, and they call, and they say, can you have it in less time . Steven hell say yes, but then we have to do a rush. It messes up production. Lemonis does that frustrate you . Steven everyone gets frustrated, because theyre expected to do perfect in less than, you know, perfect amount of time. Lemonis the problem with the furniture and the quality isnt the people that are making it. Its the process that theyre given to make it or the lack of process. Going forward, effective today, steven is 100 in charge of the quality. Steve okay. Lemonis and im gonna get him yellow stickers, like a little dot. And if it doesnt have the dot, it doesnt go out. And so if something goes out of here and its a mistake or a customer complains, its coming back on you. Steve the pressures from the client, the pressure is gonna be from louis, the pressure is gonna be from me, and hes gonna be under a lot of pressure. Lemonis you are now the yellowdot man. How much stuff in here is just not needed, dust all over it, not efficient . The other major problem at grafton well, its production. There is no flow. Fabric and upholstery is everywhere, and equipment is very outdated. The space too confining. We have a finite amount of space, and we want to make more money. What we need to do is figure out how were gonna lay this whole thing out. Ive got a great way to expand the Production Capacity without acquiring more land or more buildings. You have this space that makes no money, and so were gonna clear it all out. Steve theyre gonna take my showroom away from me. Mary i told you. When you were doing it, i told you. Lemonis were gonna improve the process by putting the flow in place, improving the number of mistakes that are made, and making sure that when it goes out, it goes out right. But if we want our product to be the best, we have to upgrade our equipment. We bought over 50,000 of new equipment. Steven a sander. Thats a dust collector. So its two planers. Lemonis come on. Including a new sander, a new wood planer, two new table saws, and a dustcollection system. Efficiency is labor. Labor is money. Money is margin. Thats whats gonna take this companys margins from 50 to 70 . Steve what happened with that silverleaf mirror . Steven the paint came off. Steve well, what happened . They told me it was more like handling on the delivery. Steven we did it too fast. No. The glue of the leaf needs time to sit, and were just not taking that time. Steve well, this is the second time that mirror comes back. Steven and it will come back again if we give them another quick date. We need to spend time on it. We cant give them quickturnaround days, because these things will just keep happening. Lemonis are you frustrated a little . Steven yeah. Yeah. They were just rushing a piece out that they had made a promise to, and i was telling them i dont care what you promised. It cant go. And we sent it. It came back. I was very frustrated. At times, im still like, come on, guys. Come on. Were still doing the oldfashioned way. And i feel like sometimes, they may think im just complaining to complain, cause i dont always have the answer. I could only sometimes see the problem. And i need some support or you know . Lemonis well, lets go talk to them. Steve continues to promise unrealistic delivery dates, and its affecting the business. So, we were just having this discussion about some issues that are bubbling up. And from what im understanding from him, youre not changing. Steve i think its getting better. Its not going to get perfect right away. We have improved. Lemonis do you agree that thats happening . Steven no. Or if youre young or old. Are if you run everyday, no matter who you are a heart attack can happen without warning. If youve had a heart attack, a bayer aspirin regimen can help pvent another one. Be sure to talk to your doctor before you begin an aspirin regimen. Bayer aspirin. This just got interesting. Why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in Blood Pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card stop taking cialis and get medical help right away. Lemonis youre not changing. Steve i am starting to change. Yes, i am. Its not gonna happen overnight. I think we have improved. Lemonis lets come back to the kind of overarching issue. The fact that he wants more time is because hes a perfectionist. Hes got so much passion and so much energy and so much love for his familys business. Steve youre right. Lemonis the biggest goal that i had was creating a succession plan, and having him feel like he doesnt have your support, its not gonna help. Steve youre right. I promise ill try. Lemonis weve started work on the warehouse. So, this is the new floor plan . Man this is the very newest as of this morning. Lemonis my goal isnt just to improve productivity, but to make it a better, more comfortable place to work in. The lunch room is it built . Steve yeah. Lemonis im building a new break room so all the employees can eat together. This was a good investment right here. Steve this is awesome. What it does for the morale is way worth it. Lemonis i spent 75,000 putting airconditioning, because it didnt have it before. So as the humidity goes up and down, the furniture doesnt steve right. Very important. Lemonis and i spent 110,000 building out a Design Center so that designers and customers can come in and pick from woods, fabrics, stain, and design exactly what theyre looking for. Ive already spent over 500,000, and im not even close to being done, but improving efficiency, quality, and margins, as well as Production Capacity is worth it. Steve this is the prototype, and its getting ready to go into paint for tomorrow. Lemonis steves been working on the quickship furniture line, and hes ready to show me the first of four chairs, the great lakes chair. Steve this is what i didnt like about it. The arm is too low. Lemonis yeah. It feels like im struggling. Steve struggling to get down. Lemonis it also doesnt have the same pitch. It feels flat. It needs a little bit. The problem is is that this isnt this. What looks different to you . Steve were rounding off the back here, and then i added this detail here. Lemonis why . Steve because i felt it gave it a little bit more of a relief. You dont like that . Lemonis i would have liked this, cause this is what i thought you were making. Its not exactly the way i want it. There are certain things, like the rounded edges, the cutins, and the height of the arms that have to change. I worry that if we agree on a whole line of furniture, and you show me images, and im like, that looks amazing. And then i show up, and the furnitures in, im like, this looks different. The numberone message that i want steve to understand is once we lock and load this design, i dont want him going back into the warehouse in the middle of the process and changing it. It costs us time and money, and we end up having to redo it again. Are you increasing the gap or increasing this . Guillermo increasing this. Lemonis this seems offcenter to me now. Guillermo know how to change the pitch of this. Lemonis when you do these drawings and you back up all this information, where does it sit on your laptop . Steve in the computer. Lemonis what if you lose a computer . Steve were done. Lemonis i want to put a system in here, like they have this at t backup and go system, where basically everything you do the drawings, the accounting records, the payroll, the customer files everything basically sits in the cloud. You can access it remotely, and its secure, and so you dont have to worry about it. So can we print this on a blueprint . Guillermo absolutely. Lemonis okay. And then well take it out in the shop and start the process. Now that im comfortable with the revisions of the great lakes chair, im gonna send it into production. I want to see some stuff get cut. Well start the process by creating a template chair. The wood will get planed, then measured and cut to size. So we build a whole template for the whole chair. Steve correct. Lemonis okay. One time. Steve yes. Lemonis next, the parts and pieces will be assembled. Once i give my final stamp of approval, this will be the master template for all great lakes chairs. Then the process will be completed for the other three chairs, and well have a full line and be ready to sell them. Target price point . Steve 495. Lemonis cost . Steve 250. Steve well, i dont see yellow stickers. I see them on this, but i dont see them on these pieces. Steven when its done, it has a sticker. This doesnt have a sticker. Is it done . Steve no, its not done. Steven okay, so let me do my thing, man. Lemonis steve has been making a lot of progress by putting new process in place and designing new products. But some of those old, bad habits they continue to come back. How are you . Steven im good. How you doing . Lemonis whats going on . Steve i was just making sure he had, you know, his eye on the ball and everything that needs to go out is checked. Lemonis i think he knows that, though, right . Steven yeah. Lemonis are you now the yellowdot guy, as well . Steve no, no, no, no. Lemonis okay. [ laughing ] look how stressed he looks. You all right . Steven yeah. Lemonis okay. Im sorry. Steven no, its all right. Lemonis okay. Steve im sorry, too. Lemonis steve tells me that hes trying to adapt and change, but honestly, im not seeing it. If he cant get out of the way and let stevie do his thing, theres gonna be terrible consequences for all of us. I think you got to remember to stick to your thing. Steve right. Lemonis and youre bumping into other people. Hes your son, too. Steve oh, i know. I know. Lemonis and if we say were gonna give him authority, we say were gonna let him do his job. No . Steve yeah. Lemonis i mean, was it that way when you were growing up . Was it the same . Is your dad here . Steve yeah. My dads over there. Lemonis lets go talk to him about it, cause im trying to understand where your habit comes from. How you doing, my man . Esteban im in my office. Lemonis youre in your office . Esteban yes. [ laughs ] lemonis you know, im watching how him and stevie interact, and it seems like steven is always. On stevie. Esteban yes. Lemonis were you the same way with him . Esteban no. When he was that age, i stepped aside, and i let him to learn the business. Lemonis and what about stevie . Esteban well, i dont think he still has grown to his potential. Lemonis hes a young man. Esteban hes a young man. Thats why hes got to let steven learn to take charge for the next generation. Lemonis and in the business you built. Esteban uhhuh. Lemonis remember that steven is learning from both of you. Steve right. Lemonis different lessons from you, different lessons from you. Thats the beauty of this business is that theres three generations here. The importance to me is that everybody can be on the same page going forward. You just got a fresh start. Steve yes. Esteban thats progress. Lemonis its progress. Esteban yeah. Its progress. Steve stevie . Steven huh . Steve i know that theres a lot of pressure, and i know that ive been hard on you and ive been, you know, always riding you, and i want you to know that i am proud of you. Steven no, no, i know. I know. Its cool. Steve you beat me here every morning. Youre hustling from one department, you know . So i want you to know that. Steven yeah, yeah. Im glad youre. Here. Try phillips fiber good gummies plus energy support. Its a new fiber supplement that helps support regularity and includes b vitamins to help convert food to energy. Mmmmm, these are good nice work, phillips the tasty side of fiber, from phillips. This bale of hay almost derailed the ranch. When a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business. Faced with horses that needed feeding the owners were forced to place an emergency order of hay. Thankfully, mary miller banks with chase for business. And with a complete view of her finances, she could control her cash flow, and keep the ranch running. Chase for business. So you can own it. Chase for business. After a dvt blood clot. Mind when i got out of the hospital what about my family . My lil buddy . And what if this happened again . I was given warfarin in the hospital but i wondered if this was the right treatment for me. Then my doctor told me about eliquis. Eliquis treats dvt and pe blood clots and reduces the risk of them happening again. Not only does eliquis treat dvt and pe blood clots, but eliquis also had significantly less major bleeding than the standard treatment. Knowing eliquis had both. Turned around my thinking. Dont stop eliquis unless your doctor tells you to. Eliquis can cause serious and in rare cases fatal bleeding. Dont take eliquis if you have an artificial heart valve or abnormal bleeding. If you had a spinal injection while on eliquis call your doctor right away if you have tingling, numbness, or muscle weakness. While taking eliquis, you may bruise more easily. And it may take longer than usual for bleeding to stop. Seek immediate medical care for sudden signs of bleeding, like unusual bruising. Eliquis may increase your bleeding risk if you take certain medicines. Tell your doctor about all planned medical or dental procedures. Eliquis treats dvt pe blood clots. Plus had less major bleeding. Both made switching to eliquis right for me. Ask your doctor if its right for you. Lemonis hey, buddy. How are you . Its been three weeks since we started overhauling the warehouse, and im excited to see what it looks like. Were getting a little cleaned up out here. Steve oh, my god, yeah. Lemonis show me whats going on inside. Steve oh, gosh. Let me show you. Lemonis the old showroom. Steve yeah. Lemonis the warehouse came out exactly like i wanted to. Steve we got eduardos setup back here. Lemonis you like your new space. Eduardo oh, yeah. Absolutely. Lemonis its good . In three weeks, it went from a disorganized maze with brokendown machinery to a very clean operation. Oh, my god, this is totally different. Steve totally. Lemonis how much lighter does the place feel . Steve oh, my god. No, the place . The shoulders. Lemonis this total renovation cost me about 700,000. I spent 150,000 putting on a new roof that will last us for 15 years. I spent 75,000 putting airconditioning. I built out the employee lunch room. And i spent 110,000 building out a Design Center. The buildout will allow us to entirely change the process, and new heavy machinery to cut and shape are now all in one room, and finetuning, like sanding, is in another, which is right next to the paint and stain room. The warehouse is gonna run like clockwork. And all of our designs will be backed up in the cloud. Grafton had leakage of 20 of their profit margin because of inefficiencies. With the new equipment, that will eliminate mistakes and doovers, and that will save 10 . The new, efficient work flow will cut down on manpower hours, and that will save another 10 . Put those savings against 1 million of revenue, and weve just added 200,000 in gross profit. This is really about creating efficiency. Its about having a starting point and having the product go through the system one time the right way. Today, im just outside of chicago at the directbuy headquarters. Directbuy is a consumer retailbuying group, and its the largest Retail Network in the country. In furniture alone, they sell over 200 million of product a year. Steve marcus. Lemonis my man. Steve were on. Lemonis how are you . Steve and steven are gonna pitch the first phase of our quickship line. If we get this deal, its a true game changer. We go in there today, sell. This is a national retailer, and so this gives us a chance to do business all over the country. Steve right. Lemonis are you guys ready . Steve im ready. Lemonis all right. Defiance is in our bones. Citracal pearls. Delicious berries and cream. Soft, chewable, calcium plus vitamin d. Only from citracal. cell phone rings where are you . Well the squirrels are back in the attic. Mom . Your dad wont call an exterminator. Can i call you back, mom . He says its personal this time. If youre a mom, you call at the worst time. Its what you do. If you want to save fifteen percent or more on car insurance, you switch to geico. Its what you do. Where are you . Its very loud there. Are you taking a zumba class . Latches onto youry finger so hard, its like shes saying i love you. Thats why aveenos oat formula is designed for your babys sensitive skin. Aveeno®. Naturally beautiful babies. Announcer ifis the staying awake part. Y [train horn blares] sleep train has your ticket to a better nights sleep. With a 100 night low price guarantee, sleep trains love your mattress money back guarantee, same day delivery, plus helpful advice from the sleep experts, its no wonder more than a Million People fall asleep each night on a sleep train mattress sleep train [train horn] your ticket to a better nights sleep lemonis thand so this gives us a chance to do business all over the country. Are you guys ready . Steve im ready. Lemonis all right. Steven hi. Jim hi there. Steven how are you doing . Steven. Jim hey, steven. Jim okeefe. Nice to meet you. Steve steve. Lemonis you guys, thanks for allowing us to come in and talk to you today. Getting this meeting was a great opportunity for us. While were very niche today, the goal is really to change the way we manufacture, and so i want to see if theres a way to do some business. Steve great. Thank you, marcus. I have designed four chairs, one for every region of the country. Ill start with the one that we shipped you. This is our great lakes chair. Man whats the retail on that . Steve 495. Man okay. Lemonis i had him make these four chairs with four very specific regional feels. The line that this will all be branded under will be the American Dream. Man are you guys gonna carry inventory, or what type of lead times would you expect . Steve this is our quickship program, so we are going to stock and be able to ship in a 24hour period. Lemonis can we look at the chairs . Have you seen them . Lets look at them. Man okay. Steven its a clean, modern look, available with a cushion or with just the wood. Man mmhmm. Lemonis theres a story behind the manufacturer. It really, i think, resonates with people. Man oh, its a wonderful story to be promoted. Were constantly getting requests from our members, saying what products are americanmade. If we can have the American Dream story behind it, that really takes it over the top. Lemonis look, the feedback on the furnitures fantastic, but a deal isnt done until we have a handshake. Man love your story, and you got a great product. I think its a Wonderful Partnership for the future. Steve awesome. Man we have a conference in a couple of weeks where almost every clubs gonna be there. If you could be there, its in dallas. If you could be there, displaying your product, it would be a great opportunity. Lemonis this is a big deal. Steve absolutely. Lemonis oftentimes, youre begging to go to companies conferences. But when theyre inviting you, its kind of a big deal. Guys, thank you very much. Appreciate it. Were gonna give you greatquality service and do a great job for you. Man great. Thank you. Its a pleasure. Lemonis the four chairs of our American Dream line are going to directbuys conference. This is the start of something really big for grafton. Were also in the final stages of looking for space for a new showroom in the miami design district. But the improvement im most excited about has nothing to do with the product or prices. It has to do with pride. This, to me, is your business, your town, your family, because it started with you, and its gonna go long after you. So go ahead and turn around and take a look. Steven oh, my god. Oh, my god. Lemonis theres your Design Center. Steve [ laughs ] look at that. Mary oh, wow. Look at that eagle. Oh, my god man oh, look at these three guys. Steve [ laughs ] mary oh steven they gave you a little more hair, huh . Mary wow. Steve papa. Esteban yes . Steve . Congratulations. Lemonis i really feel like the moment in front of the mural was kind of a culmination of years and years of joy and frustration and sadness and fear. And in that moment, i think the grafton family realized that they were finally heading in the right direction. When i first came to miami, i told the employees that there was no way that i was going to invest in a business in my hometown and not have it be the best, so i focused on improving the people, the process, and the product. But when it came to the people, we forced the change. I required that steve understand the relationship with his son from a business standpoint and that if this business was gonna succeed for generations to come, he was gonna have to let him fly. And hes doing a really good job. Lemonis tohow you doing, buddy . A progress report. Welcome to the general store. Norton how you doing . Good to see you. Lemonis in the past 2 1 2 years, ive taken you into 41 businesses and made a deal with 26 of them. Ive spent nearly 40 million. Man thank you for saving us. Lemonis its money that kept them from closing. Jess you dont know if youre gonna have a job in another couple weeks. Lemonis its money that helped them grow. What do you think of when you see that symbol . Ashley dollar signs coming in plus, money. [ laughter ] lemonis but at the end of an episode, thats when the real hard work begins. All shulers lemonis lets go to work. Tonight, im back at a Southern California wine bar, amazing grapes. I gave the place a massive facelift. Looks great. Man unbelievable