Legendary entrepreneurs like Howard Hughes and Donald Trump both inherited businesses from their fathers. But since many companies fail when transferred to the second generation, those that thrive, not just survive, are in many ways unique. Eric Richard leads Richard’s Paint Manufacturing Company, Inc., which his father started in 1954 with an initial investment of less than $500. It is still a family business, as his brother Edward is COO and his sister Deborah is a VP heading HR and office management. Today, the company is housed in a 100,000 square foot facility in Rockledge, which includes administrative offices, laboratories, warehousing and manufacturing, where they make more than 2 million gallons of paint a year and generate sales exceeding $20 million.
SCB: When I contacted you about this interview for our entrepreneurs’ issue, you immediately pointed to your father who founded the company. What were the important lessons you learned from him?
ER: Dad didn’t have formal business training; he learned from the ‘School of Hard Knocks,’ observation and intuition. The most important lesson I learned from him, after hard work and perseverance, was fiscal conservatism. If he made profits, he reinvested those profits back into the company, which is how we grew. Today, we are completely debt free, other than what we pay for our raw materials, which we usually pay off in ten days to get the extra discounts. That position has really helped us as we weather this economy. Also, he established the focus that still defines us as a company, which is servicing independent dealers and paint stores.
SCB: How has the recession impacted you?
ER: It hit us pretty hard beginning in 2007. At that time we had around 140 employees and had to reduce our workforce to 85. However, we realized there was a lot of fat, which we trimmed off and we were able to retain the best and most productive in our workforce, which has really helped us as we have moved forward, improving productivity and profitability. For the last 14 months things have picked up, so we are on an upswing.
SCB: Describe the transition of your takeover.
ER: A gentleman in 2004 who was VP and General Manager passed away suddenly. At that time, my father asked me to take the lead. Initially, I had concerns. I am younger than my brother, so I wasn’t sure if he and my sister would accept my leadership. I told them, ‘I’m not going to do this unless you agree, even if Dad asked me to do it.’ Collectively the three of us got together and agreed someone has to take the reins and run with it and that I should do it.
SCB: Was there a mutual recognition that you each had different skill sets and you were the logical choice?
ER: I have always been in the sales and marketing side of the company. My brother handles everything behind the front office, all the manufacturing, shipping and purchasing; he is in charge of operations. My brother, my sister and I have all been in the business for decades, but my focus on marketing made the transition to guiding our company’s growth a natural fit. We discussed the scope of the responsibilities and how decisions would be made, but then I went back to my Dad. I told him, ‘If I am going to do this you have to let me do it my way. As long as we are making profits you have to let me run it.’ He agreed to that and has stuck to his word.
SCB: Kudos to him.
ER: Also, Dave, our CFO, has been with us for 25 years and is brilliant with numbers; he made the transition easy because you can’t do it without good numbers. Frankly, our success is based on the incredible people supporting me. You can have all kind of vision, but it is the people that turn it into a reality.
SCB: Where did you want to take the company when you took the helm?
ER: In some ways we stuck too closely to the model we had developed over the years and became almost adverse to new ideas; honestly we were somewhat stagnant. We wanted to maintain the core focus, which was the independent dealers, but we saw a huge opportunity in toll manufacturing, (which some call private label manufacturing). This is where we produce the paint, package it and send it under our client’s brand. In this capacity we also do a lot of specialty and ceramic coatings that the larger companies are not geared to handle. Sometimes these are small batches, as little as 100 gallons. But the profit margin on them is far greater than larger orders that are based on a price/quantity margin. It is this new market that has kept us going through this economy.
We also joined a buying group called All-Pro, which is made up of 400-500 owners representing some 1,100 paint stores. All-Pro is like a co-op of owners that enables them to buy as a group. We were a member of that group as a buyer, primarily sundries for our stores. It took us eight years to become a paint supplier to the group. Now, that network has given our products even more of a nationwide market. We are gaining at least three new retailers a week – often it is with one of our specialty items. But once we get in the door with one product or specialty coating it starts to grow.
SCB: What about other markets?
ER: Initially we began to look at the Caribbean as the most logical arena of expansion. To do that I looked for a bilingual marketing representative and found what I thought was the perfect fit in a man whose family had owned then sold a painting and supply business in South Florida. When I approached him, he was already working for another supplier, but recommended that I talk to his brother, who had the same background and skill sets. The fit was perfect and now they both work for us and the market continues to grow. Our exporting trade has vast potential and we are now exporting to South America, the Pacific and the Middle East.
SCB: What are some of the more strategic changes you have made operationally that have helped your growth?
ER: We brought a Marketing Manager in-house; she was doing all of our design work as an independent agent, but wanted insurance. So we created a position for her, built a design and print room and now we are able to produce all of our labels and many of our sales tools right here. What is more, if a client is interested in us producing a private label product, once we have a PDF of their logo, we can design and give them an example of what their finished, shelf-ready product will look like in a day. It has been a tremendous addition to our marketing arsenal.
Basically everything we do is in-house, on demand. We have literally thousands of products. Once we get our foot in the door with one, we can then expand their product line or our production share.
SCB: Where do you see Richard’s Paint going in the next five years?
ER: Massive growth; all we need is a little help from the economy. The connections we have with the All-Pro network have almost limitless potential. The bigger manufactures have purchased some of the retailers so they have to offer their products exclusively, but many of the owners don’t like the arrangement. In addition, with our ability to make small batches of specialty colors with a quick turnaround, the big guys can’t or won’t take these projects. When a customer wants a product he doesn’t want to go through seven layers of management to find out if and when he can get that product. Our flexibility and responsiveness is what sets us apart.
SCB: How do you maintain the customer service rapport as you move into ‘massive growth’?
ER: That goes back to core values and everyone being on the same page in terms of who we are and the market that we want to capture. We will grow around our ability to deliver large quantities, but I can see a separate division that concentrates exclusively on the smaller, specialty batches. In this market, if you are gaining market share, you are taking it from someone else. Now, the management of the All-Pro group is pushing us to expand; the opportunity is phenomenal.
SCB: Everyone is talking about expanding the manufacturing job base in Brevard County. Do you have any estimates on number of employees you might have in five years?
ER: If anyone could have predicted this economy in 2005, we would be rich today. We would have sold everything at the peak and be buying cheap today. Unfortunately that crystal ball isn’t there; we are doing what we know and endeavoring to do it better and we will see where that will take us.