John Corcoran: 11:53
Under the topic of restaurants in Southern California and celebrities. Since you mentioned it, I worked at another restaurant in the San Fernando Valley, which we talked about earlier, Rosie’s Barbecue Ribs. And the highlight of that experience was when Axl Rose came in one evening. And I mean, it was early 90s like that was like the epitome for me. That was so exciting.
He asked me, he asked me some questions. I don’t even remember what it was, but I was so excited. So you had that experience. Now you end up actually working for a number of years in the corporate world and you get your MBA. At what point did you decide to go into the family business and you actually buy into the family owning business?
Michael Richman: 12:28
It’s a great story. So I was working as a commercial banker, and I wanted to do that because I wanted to see how other businesses financed and what it looked like and what that whole model looked like. It allowed me to see a lot of different numbers and panels, and I decided, okay, I’m going to go out and buy a business. And I thought I was going to buy a business that was actually adjacent to my family’s business. And so I was looking in the sign industry.
Neon signs, LED signs, that type of thing. And I thought, okay, I’m going to buy this sign company and I’m going to be able to refer clients to the awning business. The awning business is going to be able to refer clients back to me. And I was in escrow, literally driving with the check to the company to pay. And the guy calls me on the phone and says, I decided I didn’t want to retire and you can’t buy my company. And so I said, okay. So I was back to the drawing board and.
John Corcoran: 13:22
Done a lot of due diligence.
Michael Richman: 13:23
A ton of due diligence. But deals fall apart. Stuff happens. And so I went to my dad and I said, well, what do you think I should do here? And he said, well, why, why are you not joining this business?
And I said, well, you have, you know, partners. I don’t want to work for them. And he said, well, why don’t you make them an offer and see if you’re, if you could buy them out. And so that’s what I did. I bought half of the company. We were 50, 50 partners.
John Corcoran: 13:49
And how did that go, being partners with your dad.
Michael Richman: 13:52
You know, I think being 50, 50 partners was key to it. And I, you know, when I’m coaching people, it’s something that I recommend because there was none of this. Well, I’m 51, you’re 49, so I’m going to override you. So we were able to make decisions together hiring, firing, financing, purchasing new equipment, all of these decisions, we made them together because we were 50, 50 owners. Now, of course, there were certain things that I knew better than him and that he knew better than me.
You know, he knew a lot about equipment, for instance, and trucks. And I knew a lot about the internet and websites and SEO. And so we were able to balance each other out in that way, which I think made it a great partnership.
John Corcoran: 14:34
And you are kind of a classic case of, I don’t know, your dad’s education or training but he had this practical experience, had run the business for a lot of years. And then you go and you get an advanced degree, you’ve got an MBA, you come in. Sometimes that creates a lot of tension, though, right? The next generation comes in and your book smarts, kid. You don’t know what you’re doing.
Michael Richman: 14:53
You know, what’s funny is I got that from my employees. There were some employees there. Those long term employees that remembered me as a four year old running around. Right. And so it’s hard now all of a sudden, I have to tell these employees, you can do this. You can’t do this. Here’s a new policy.
John Corcoran: 15:08
I changed your diaper, kid.
Michael Richman: 15:09
Exactly.
John Corcoran: 15:10
Yeah.
Michael Richman: 15:10
And so that was a really big challenge. And one of the things that I felt that I had to do was prove myself. So I really wanted to land a big account and bring it into the company to show everybody that I wasn’t just being given leads. And so I would read the Business Journal every week looking for what are the trends, what are new companies coming in to, to California or expanding nationwide, that type of thing. And I saw that Family Dollar was coming to California and really doing a big expansion.
And I called and I called just old fashioned, sent them letters, boots on the ground type of thing. And I finally made contact with the developer that was doing all the family dollars in California. And I believe Arizona. And I said, who’s your awning vendor? And they said, we don’t have one.
And I was able to land that as an account. And I brought in, we did every Family Dollar. I think now they were bought out by Dollar General. So I don’t even know anymore if they exist, but.
John Corcoran: 16:11
I don’t know that I’ve seen a lot around California.
Michael Richman: 16:14
Yeah, but at that time they were huge. And so we were able to do all those stores. And it was a big rollout. And it was meaningful for me, because now all of a sudden, these people that saw me as this kid or as this, as this, you know, son that was brought into the to run the business and doesn’t really know what he’s doing as a golden spoon in his mouth now, brought in a big account that we can all work on.
John Corcoran: 16:36
Did that meet its objective? In other words, did it get you the respect that you were hoping for? Yeah, yeah.
Michael Richman: 16:44
And we really expanded. The other thing that we did in our business is we really expanded into the world of poolside cabanas for hotels and resorts. Custom poolside cabanas.
John Corcoran: 16:54
And so that was a new area.
Michael Richman: 16:56
Yeah, I mean, we’ve been doing some of it, but we really took it to the next level after I joined the company. And one of the things that I did was bring in some wholesale accounts, and that really took the company to a new volume of cabanas that we were sending out every year, because I all of a sudden now had salespeople in all 50 states that were pushing my cabanas. Yeah. So, you know, whereas if I hired salespeople internally, it was going to be hard for them to get to the apartment building in Iowa and sell one cabana. But now all of a sudden, I had somebody that was selling other products that would go in there and sell our cabanas as well. So we’re shipping to Iowa and Nebraska and places that you would traditionally not think of as poolside Cabana.
John Corcoran: 17:38
Yeah. Now over the last 20, 30 years, especially in Southern California, but also nationwide, the manufacturing world has changed a lot. And real estate in Southern California is not that inexpensive. So did you get pressure? Experienced pressure to outsource our manufacturing? Do we move our manufacturing to somewhere else? How did you handle that or did you continue manufacturing in Southern California?
Michael Richman: 18:04
We manufactured everything in Southern California. And I’ll tell you, you know, one of the nice things about our product was that it couldn’t be offshored. So everything we did was custom. So I mentioned Panda Express, though you with your naked eye would tell me, oh, every Panda Express looks the same. And to a certain extent that’s true, but an awning on a Panda Express might be six foot five inches in one town, and in another town it might be six foot four and a half, and that half of an inch might not seem like a lot to everybody, but it is very important to make sure that it fits.
John Corcoran: 18:42
So especially if rain comes pouring down through that gap.
Michael Richman: 18:45
So offshore, something like that is impossible.
John Corcoran: 18:49
Yeah, yeah.
Michael Richman: 18:50
And so that’s how we started our, you know, really growing to the next level is we said we can take care of this anywhere. And the manufacturing can’t be offshored. Yeah. It just can’t be. It’s not feasible.
John Corcoran: 19:04
Of course that’s the pro. The con is doing everything custom, everything bespoke creates challenges of scale, challenges of, you know, trying to do something once and do it over and over again.
Michael Richman: 19:15
Yeah. The nice thing though with our business is and maybe not nice, but fabric fades. So I do a Panda Express and.
John Corcoran: 19:24
Eventually they need it replaced.
Michael Richman: 19:25
They need it replaced. Yeah. And so then we had the measurements. We had the drawings. So we could just take that drawing and go, okay, this is the Panda Express in Concord, California. Let’s just remake it.
John Corcoran: 19:36
Yeah. So less expensive. The next time for you to manufacture. Yeah.
Michael Richman: 19:39
Thousands and thousands of files with different restaurants and different retailers showing what we built.
John Corcoran: 19:45
It’s almost like a subscription business? Yeah, exactly. You wouldn’t think, but it almost is. Yeah. Did you and you had either a company that you acquired in San Francisco?
Michael Richman: 19:56
Yeah, we acquired an awning company in San Francisco that we acquired that had been doing awnings for a long time, and we did some pretty famous locations. So the ferry terminal, I think I mentioned to you.
John Corcoran: 20:07
Yeah. Yeah, the ferry building. That’s cool.
Michael Richman: 20:08
Downtown Macy’s. And what else did we Burlington Coat Factory downtown. So a lot of pretty well known Levi’s storefront. A lot of pretty well known locations.
John Corcoran: 20:20
Oh, that’s really cool. And what was that experience like? Was that something that you drove? Was that how it was?
Michael Richman: 20:29
Yeah, we.
John Corcoran: 20:30
Always.
Michael Richman: 20:30
We thought it would be great to have coverage up in the Bay area because we were doing a lot of stuff all over the country, but especially in California, obviously, being a California based company. And so it allowed us to have crews that were up in San Francisco that we’re measuring the jobs, and we were able to then make them and get them up there. And so it just allowed us to cover the state in a bigger way. We did a lot of stuff in Central California, too, so it was a situation where we could send a truck to Central California? Can we send a truck from LA? Do we send the truck from San Francisco? Which is better? And it really gave us some great coverage.
John Corcoran: 21:08
Now what? You know, most people that eventually get into EOS implementation have some story behind, you know, they realize in running the business that they were running ragged, they were exhausted, or they were fighting with family members and they realized people were sitting in the wrong seats on the bus, so to speak. Is there any story behind why? What drew you to EO? What drew you to EOS?
Michael Richman: 21:31
Yeah, so I’ll tell the story of me being drawn to EO. And then that’s how I got into EOS. But my best friend worked for me and she was a sales person for us, and we were driving. I could tell you we were on the five freeway and driving up to Glendale. And she said to me, Michael, you’re living in a vacuum.
She said, every day you’re eating lunch with your dad. You’re not talking to other business owners. You’re not getting better as a business person. And your business isn’t growing the way it should be. And I was like, okay, that’s a slap in the face.
But what, you know, what do you think I should do? And she said, you should join a peer group. And I said, okay. And I went home and I researched peer groups, and I thought this might be something, there might be something to this. So I ended up applying and joining EO.
And once I was in EO and in a forum. And for those who don’t know, forum is a peer group, a smaller peer group of about 8 to 10 different people. In the chapter, I was complaining about my business and saying, we’re not growing. We’re not going where I want to be. I wanted to scale it and sell it.
And somebody handed me the book traction, and they said to me, read this. And I said, I’ve read every business book under the sun. I’ve had consultants. I’ve had all these people come in. I don’t want another consultant who has a book.
And they said, just read it. It’s simple. It’s different from anything you’ve seen before. So I read it and I saw the simplicity in it and I started implementing it in the company. And you’re able to see changes.
And one of the tools that I like to talk about, where we saw change immediately, was with our scorecard. We weren’t measuring anything. We had no KPIs, nothing like that. And all of a sudden, implementing EOS, we had KPIs and we had a sewer who worked for us for 20 years. And their main KPI, their measurable, whatever term you want to use for it was how many rejects they were getting out of the sewing department.
And we figured, okay, our goal is to have 98% good, 2% bad. Well, all of a sudden all the sewers had 98, 99, 100%. We had one sewer who was at 60%, Percent, and she’d work for us at the business for 20 years. So we thought, what is going on? So the sewing manager and the production manager call her in and they say, hey, we’re now measuring this stuff and we see that you’re at a, at a level that’s below what we need.
And she said, look, I’ve wanted to retire for five years. I know that I can’t keep up with it. I just didn’t know how to tell you. And so it’s just what it does. EOS is it turns the light on, and it allows you to see things in a different way that you wouldn’t have seen otherwise.
John Corcoran: 24:19
Did you realize anything about the role that you sat in on the bus or in the company or your father?
Michael Richman: 24:25
Yeah. I mean, I realized that I was definitely an integrator and I wasn’t the visionary. I wasn’t the person coming up with the big ideas and that type of thing. And so I think it allowed me to keep a better pulse on the business. I also think about figuring out which people should be in which seats.
You know, I had a project manager that I joke around with, but it’s true. He couldn’t manage his way out of a paper bag, but he was a great designer, and so we were able to move him into the design realm and give him a design position, rather than giving him this position of project manager. And it changed everything for our company because now we are getting these amazing designs, and we weren’t having a project manager who was falling down on his responsibilities.
John Corcoran: 25:09
What point did you decide that you wanted to actually go pursue this work and help others with it?
Michael Richman: 25:14
I think after I sold the company, I didn’t know what I wanted to do. I had a one year earnout and I said, you know, do I want to work full time? Do I want to work part time? Do I want to go work for someone else? What’s the next step for me?
And I decided that I loved EO, and I loved some of the roles that I took in EO, such as coaching and EO group, and serving as forum moderator. And when I would coach EOA groups, I found myself. And for those that don’t know, EOA is part of the EO organization for companies that are under $1 million and I would find myself sharing EOS tools. Hey, here’s an accountability chart and I would start coaching on those things. And I realized that’s because those are the things that work.
Those are the tools that actually will change people’s businesses. And so I started coaching on those and I said, wait a second, if I’m coaching on those in EOA, why not make this a business? And so that’s what I ended up doing, was making it a business.
John Corcoran: 26:18
And we kind of glanced over this. But you end up selling the family business. Was that challenging to do? We talked at the beginning of this interview about that. Your family has been entrepreneurs for so long, and, you know, to finally sell this family business, not pass it on to the next generation. You know, that must have been challenging to come to that realization.
Michael Richman: 26:37
Well, I think it’s because my daughters want to play shortstop for the Yankees.
John Corcoran: 26:42
Well, maybe they’ll make it. Yeah. This is the generation.
Michael Richman: 26:46
Yeah, exactly. But in all seriousness, well, first I want to say I met the people who bought my business through EO. So again, EO means a lot to me. Without EO, I would definitely be in a different place. But it was.
There’s some parts that are very emotional about selling a business. This is your baby. This is what you raise. And it’s really hard to do the one year earnout because now somebody else is kind of taking your baby and they’re doing their own thing with it. And you may agree with the things that they’re doing, and you may not agree with the things that they’re doing, but it’s at the end of the day, their decision to make.
And it’s really hard to sit there and say, this is their decision to make. It’s not your decision to make anymore, and they’re going to run the company the way that they do. But my father wanted to retire, which he’s happily retired from and travel . I thought it was time for me to do something different.
John Corcoran: 27:42
Yeah, yeah. I want to ask you about how you’ve stepped into this role of leadership. You’re going to be president of the Los Angeles chapter 200 plus entrepreneurs, successful entrepreneurs. That’s not an easy role to step into. Talk to me a little bit about the decision to do that.
Michael Richman: 28:01
Yeah, I mean, as I said, this organization means everything to me. And I think that the theme of my year is your own experience. And why is it the theme of my year? Because I owned my experience. I put myself out there and I feel like if people put themselves out there, this organization is going to return even more to them.
But you have to put yourself out there. You have to go meet people. And that’s what I did. And I want to translate that to everybody in this chapter and to new members that own your experience. It’s a carry your own bag organization.
But if you go out there and you carry your own bag and you own your experience, the returns are going to be infinite. Without EO, I would have never been introduced to traction. I would have never been introduced to the people who bought my business. I would have never met friends and colleagues and people that I’m going to know for the rest of my life. It just wouldn’t have happened. And I want to translate that throughout our chapter.
John Corcoran: 28:53
Yeah, yeah, I can see all the passion in that. This has been great, Michael. I’d love to share where people can go to connect with you, learn more about you know, what you do, and learn about your EOS implementation.
Michael Richman: 29:07
Sure, the best way to get in touch with me is via my website. It’s my name, Michael Richman. michaelrichman.me. So, again michaelrichman.me.
John Corcoran: 29:24
Excellent. Michael. Thanks so much.
Michael Richman: 29:25
No problem. Thank you.
Outro: 29:29
Thanks for listening to the Smart Business Revolution Podcast. We’ll see you again next time and be sure to click subscribe to get future episodes.