Precise Graphics began as a small company serving a modest amount of clients out of their headquarters in Pennsylvania. The design group would provide different types of design services and products. The company exists to fulfill several purposes. For one thing, they can help you make designs using the software. These designs can be for different types of things such as furniture, building layouts, concepts, etc. The company can then assist you in bringing the design to life with its manufacturing branch.
Things had gone fairly well with the company for over a decade. They weren’t bringing in big profits by any means, but they were able to keep the company afloat well enough. Unfortunately, considering the fact that they had so few clients when one of their major clients dropped out, it shook up the company. They needed outside assistance or they feared for the worst. This is where Marcus comes in.
Precise Graphix on The Profit
The Profit Season 3 Episode 7
The brothers who run the company are Keith and Dean and they have been at the helm since the company’s inception. Each brother holds 50% ownership of the company. Marcus meets with them at the beginning of the episode and they describe to him the kind of work their company has been doing, primarily designing retail spaces. Initially, Marcus is informed of the money the company brought in the previous year, $3.5 million. He is impressed by the figure.
The brothers bring Marcus around for a tour of their huge facility and he likes what he sees. There is a lot of potential for this business, which is a theme that presents itself repeatedly in this episode. If that is the more positive theme of the show, the more negative one is the constant disagreements between the brothers. There are plenty of things they don’t see eye to eye on. Marcus brings up going to trade shows, for example, and they are split on the idea.
In this early phase of the episode, there are a few notable issues uncovered. The first of which is that there appears to be some apprehension from Dean to grow the company, and it’s practical. He worries that since they occasionally make errors with their designs if they load up on a lot of new projects things might get messy and more mistakes will be made. Along the tour, Marcus finds that one of the reasons for mistakes might be the equipment they’re using. It is in need of an upgrade. There are plenty of very outdated modes of operation being utilized. At one point, one of the employees shows Marcus that the company is still using floppy disks. He knows at that point there will be a lot of work to do.
The other primary issue Marcus notes is an issue which he frequently encounters with businesses owned by multiple people. Especially when people are family or friends before business partners. There is no clear leader between the two brothers, and it is hard to tell who is responsible for what. These leadership issues are creating issues for the company and limiting their potential. It’s not all bad news, Marcus is impressed with the employees. He likes the kind of people Keith and Dean have chosen to work with.
It is at this point that Marcus takes a look at the money that the company is working with. What he finds is that the company is working at a deficit of around $180k. Marcus lays down the law and explains to them that this needs to be dealt with quickly, and it’s going to require a big investment in new equipment. What he finds with the brothers is that they have a lot of trouble being decisive. This is an important note that Marcus comes back to when he reveals his criteria for his deal.
Marcus sits down with the two brothers in the middle of the warehouse facility. He is ready to make his pitch, and he begins by asking Keith and Dean what they think the business is worth. The response he gets, about $2.5 million, is far from the truth. Marcus had crunched the numbers and come up with $270k. The brothers are shocked, but after some time to digest the figure they don’t put up a fight with Marcus, they know he’s probably right.
At this point, Marcus asks the brothers a hypothetical. If someone came in and offered them $250k to take the company off their hands, would they do it? They respond that they would not do it. Marcus is pleased with the answer, it’s what he wanted to hear. He tells them that, even though he could probably offer less money or seek more equity, he is going to give them $270k for 30% of the company. It is contingent on one major factor: Marcus will be in full control of all decision-making. He cites their lack of decisiveness and the fact that neither wants to hold other people accountable. The brothers, after some consideration, accept the deal from Marcus.
Marcus gets down to business, he makes Dean the head of the creative department and Keith the head of finances. Marcus gives the two brothers an assignment. 3 weeks to redesign one of his stores. If they fail, the deal is over. The end result of their efforts is good, but there are some design issues that displease Marcus. He gives Dean one more chance to redesign an auto business. On this assignment, he passes with flying colors. Marcus is overjoyed at the progress the brothers have made already. He sees the business as having the potential to be worth up to $50 million, maybe more.
Life After The Profit
If you look them up now, you’ll see an extremely professional website which showcases all of the expanded services and goods offered by the company. The company has grown and is now known as Precise Design Group rather than Precise Graphix since they offer so much more now. The company continues to grow and is far more in line with what the brothers and Marcus had envisioned.
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