‘It’s Going to Take $8 Million in Financing’

Guests:

Stephanie Stuckey is CEO of Stuckey’s.

Liz Picarazzi is CEO of Citibin.

Paul Downs is CEO of Paul Downs Cabinetmakers.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome to the 150th episode of the 21 Hats Podcast. We’re here today with Paul, Liz, and Stephanie. It’s great to have you all here. And it’s especially great to catch up with you, Stephanie. I know you’ve been busy. How are you? How’s it going?

Stephanie Stuckey:
I’m doing great, thank you. I have been busy. It’s nice to be back.

Loren Feldman:
Well, welcome. Tell us, I think it’s been more than a year since we’ve talked to you. How did last year go for you?

Stephanie Stuckey:
So just for background, for people who might be newer to the show and not remember the story, I am the third generation of a family business, Stuckey’s, founded by my grandfather. He sold the company in 1964. It was out of our family’s hands for decades. I had the unexpected opportunity to buy it three years ago. It was six figures in debt.

People familiar with the brand probably know us as a roadside convenience retail chain. We only have 60 locations today, and we don’t own or operate any of them. They pay us a licensing fee. So we had to rebuild the brand in a way that would make us more profitable because we don’t generate a lot of funds from those licenses. So we purchased a manufacturing facility that shells pecans and then makes pecan snack candies and pecan snacks.

So that happened two years ago. And in the past year, what we’ve done is we decided to get out of the shelling business. That was a big move for us. We’re in the process of moving and selling all the shelling equipment. And we’re doubling our capacity to make the finished product. So we’re going to make more pecan snacks and more pecan candies because the demand is growing.

So we’re getting more machinery. We’re hiring a new workforce. We consolidated all of our operations into one place. So we moved our distribution center, which had been in another town. We just moved that. We just upgraded with scanning technology and real-time inventory. We just finished integrating all three companies that we’ve purchased into one financial system. So just a lot of internal structural work to strengthen and grow our capacity. And really, I think by Q4 is our goal to start growing with sales, because we’ll now have the capacity to actually fulfill. It’s been a lot.

Loren Feldman:
That is a lot. While you were doing all of that, did your revenue for last year meet expectations?

Stephanie Stuckey:
No, I’ll be honest. I think quite often there’s this thought that you’re always on this trajectory of going upwards, and the sales were on a trajectory of going upwards, but the net was not, for several reasons. One is we’re putting in these processes, so that all takes time. So we weren’t as diligent as we should have been on our accounts receivable, for example. If we had been collecting like we should, and we had a strong process in place, we would have ended the year much stronger.

Now we’ve collected those, but it took us a while to put that process in place. We also gave three rounds of pay raises to our workforce. And that was our biggest expense last year, and it was the most important expense, because we really had to shore up our workforce. So turnover has gone down dramatically. Workforce satisfaction has gone up. We’re doing a lot of work with culture and employee engagement, and all that’s paying off, but it takes a while. It takes an investment of money and time and energy to put the structure in place so that you can start growing.

Loren Feldman:
What were the companies that you bought?

Stephanie Stuckey:
So there’s Stuckey’s, of course. And then my business partner had a snack brand called Front Porch Pecan, so we had to merge his records with our records. And then the two of us jointly bought, like six months later, the manufacturing facility in Wrens, Georgia, which includes the shelling operations and the candy operations and a fundraising business. And actually, those three entities all kept separate books, and were all organized as separate legal entities. So we’ve had to consolidate all their books.

I think too often we read about these mergers in the news, and we think it’s: Once you sign on the dotted line and you transfer the paperwork and the finances, that it’s done. But no, integrating the financials, integrating the culture, integrating the workforce, making sure you’re not duplicating roles. Or maybe you want some redundancy, and making sure people understand what each other is doing. We’ve had to completely redo our org chart. So that’s taking time. And now that we’re really close to having everything in place, I’m excited. I feel like I can start focusing more on sales, and less on logistics and supply and HR and finances.

Paul Downs:
I have a question.

Stephanie Stuckey:
Yes.

Paul Downs:
The last time you were here was pre-COVID. Right?

Stephanie Stuckey:
No, I was here during COVID.

Paul Downs:
I’m just wondering how that general disruption and travel and what have you affected the brand.

Stephanie Stuckey:
Not really, because people continue to buy snacks and candies. And we’ve been expanding the channels where you can buy our products. So we’re not just distributing to those 60-plus Stuckey’s licensed locations. We’re now in some 5,000 stores nationwide through distributor networks. Some of the larger chains would be Food Lion, Ingles, Wawa in Florida. We’re in some Big Lots, At Home. We’re about to be piloted in Pilot, and TA as well, Travel Centers of America. And we have a lot of mom-and-pop locations all over the country that sell our products: Ace Hardware and local grocery stores, and gift shops, hotels. You name it.

Loren Feldman:
You had told us about that a little bit, Stephanie. And I think one of the challenges you faced was figuring out how to price your goods, depending on where they were being sold. How has that worked out for you?

Stephanie Stuckey:
You know, I’ve learned, and it’s a process that there are different pricing models for different channels. So if you’re going through a distributor, obviously, you’re going to have to alter for distributor pricing. And if you have a broker, then the broker’s going to take their whatever, 3 to 5 percent. And the distributor is going to take their 30 percent. And then if you’re in the grocery channel, then the grocer is usually going to be 33 to 50 percent.

So there’s that whole world, and I would put Costco and Walmart and some of those in that category. And then you have to pay the slotting fees. You have to pay the upfront setup fee for the warehouse. The fees are phenomenal. And then you’ve got the specialty retail, which has a lot more flexibility on the price structure. We distribute direct to them from our distribution center. So the specialty mart in Fort Smith, Arkansas, for example, might have a higher retail price, but you’re paying for being in a nice store environment.

Paul Downs:
You went from 60 outlets to 6,000? That’s really impressive.

Stephanie Stuckey:
About five thousand. But it’s through the distributor networks, right? So they’re different types of—

Paul Downs:
Yeah, but, you’re there, right?

Stephanie Stuckey:
Yeah, and we’re online. Yeah, and fundraising, too, is a huge business for us.

Paul Downs:
Very impressive. Well done.

Stephanie Stuckey:
I was just looking at our fundraising numbers this week. Last year, we did over $3 million in sales for fundraising.

Paul Downs:
Can you tell us what your annual sales are now, as opposed to where you were?

Stephanie Stuckey:
Yes. In the past three years, we’ve gone from $2 million to over $13 million.

Paul Downs:
That’s fantastic. Congratulations!

Stephanie Stuckey:
Yeah! But we’re really held back. We could do so much more. And what’s so frustrating, is we are not proactively pitching accounts—other than our distributors will do pitches with some large retail chains to get us in a planogram, for example. But we’re not out there proactively marketing sales, because we don’t have the capacity to fulfill orders right now.

So you won’t see us on Amazon. You don’t see us on Faire.com, which is for specialty retail, because we don’t have the fulfillment capacity yet. So we’re trying to scale in a way that makes sense for us, so we don’t disappoint a lot of customers, because they place an order and five months later, we still don’t have the product ready.

Loren Feldman:
So I guess that’s what drove the decision to stop shelling and start making candy. Tell us about that decision. Are there risks in that? Do you lose some control by not doing your own shelling?

Stephanie Stuckey:
Honestly, after we started delving into it, we realized that the biggest hold back for us was that the facility we purchased had been shelling since 1935, and the community was used to us having a shelling plant there. But shelling operates from October through January. It’s seasonal. And we were having to keep this whole facility active. Like, we had all this space that we were paying for, we’re paying mortgage on, we’re paying—maybe not to keep it super chill—but we certainly had to keep it climate-controlled.

We had some staffers who we had to keep year-round because they were so valuable, and we really only used them five months out of the year. I’d go see them in the off months, and they’d just be sitting around talking and reading the paper all day. And I thought, “Why do we have you on salary?” We really employed them just a handful of months a year. Then we had to train a seasonal workforce every year. We had to ramp that up, and it was just exhausting. So now we have an exclusive contract with a pecan sheller from Georgia, Georgia Grown Pecans, and we’re actually going to save money not having to shell.

And then we can more than double our capacity to produce, but it’s going to take $8 million in financing to renovate the shelling facility to be food-grade certified. We have to get a new roof. We have to insulate. We have to air condition the whole section more, because we’re making chocolate, and we roast pecans, and it gets really hot in there. So there’s a ton of work that has to be done. And then we have to buy new equipment and hire up staff. So it’s about $8 million. I spend my days doing financial paperwork.

Loren Feldman:
How are you going to finance that?

Stephanie Stuckey:
We’re doing two different main ways. First is New Market Tax Credits. And that will bring in about $1.5 to $1.9 million, depending on how it all shakes out at the end. And that should close in two weeks.

Loren Feldman:
How does that work? I’m not familiar with it.

Stephanie Stuckey:
I was afraid you were gonna ask me that, and I have a very high-level understanding. And like any of these government-related financial programs, you almost always need to have a person whose whole role is to package it and organize it for you. And then they get a cut. So if our guy was on the phone, he could explain it better.

But basically, it’s a program to incentivize job creation in small rural communities or economically disadvantaged communities, often through manufacturing, and they really like agribusiness projects. And the federal government offers tax credits as an incentive. And there’s a mechanism by which you can sell your tax credits to third-party entities at a reduced rate. So you monetize your tax credit, and you get the tax credit proceeds right away to apply to whatever project you want. And then the entity buying the tax credit gets to use it over a period of years. So we actually get cash with no obligation on our end other than a bunch of reporting, which is why we have a guy who is going to take his cut to manage all of that process.

And then the rest of the financing is coming from a USDA Food Processing loan. And we’re working with Ameris bank in Augusta, Georgia, which is right near where our plant is, and they’ve been terrific. They do a lot of these USDA Food Processing loans. And they have the contacts, and they can pick up the phone and get the right person. And that should close in July.

Loren Feldman:
So you’ve been watching interest rates for some time, I’m guessing.

Stephanie Stuckey:
Yes, and that’s one of the reasons why we’re doing the USDA, because we purchased the plant with a SBA 7(a) loan, which is a variable rate, and those payments have been going up. We’re paying some of that down, and then we’re refi-ing with a USDA loan at better terms.

Loren Feldman:
Interesting. Stephanie, if I recall correctly, when last we spoke, you described the way you divvied up responsibilities with your partner as you being primarily focused on marketing. It sounds like you’ve gotten quite an education in manufacturing since then. Can you talk a little bit about what you’ve learned about manufacturing, and how this is going for you?

Stephanie Stuckey:
Yes, it’s really been all hands on deck. My business partner remains more focused on the operations end, but you have to understand that if you’re going to be a partner. And so I spend a lot of time just observing and watching. And I actually work shifts so I understand the process. And we have an overall plant manager, so he does a lot of that as well.

My role still tends to be more external and connecting with resources to help us get the workforce where we need to be. For example, Georgia Tech has a manufacturing program on a sliding-scale basis. And they’ll come in, and they’ll help you analyze how you can better do the layout of your plant. I’m better at big-picture thinking.

So after working a bunch of shifts, being very much in the day-to-day grunge work of running a candy plant and a snack-plant operation, I realized there were some inefficiencies in how we were laying out our equipment, and what the workflow was, and where we stored our ingredients. And so we all worked together on this, and we’re now reconfiguring the workspace. So that’s been a lot. Like, how do you have the workflow in a way that maximizes productivity? So that’s one of the things I’ve been doing.

And I’ll be perfectly honest, a lot of my time this past year has been building the connections that will help us as we start to grow. So I just joined the National Confectioners Association board of directors. That’s going to be a big commitment. I also do a ton of keynote speaking, events, so I’ve been traveling all over the country. And I get paid to do that, which has been really nice. And what I started doing was negotiating the pay: “Instead of paying me cash, I want you to buy $5,000 worth of Stuckey’s gift tents for your corporate gift program,” which gets our product in front of hundreds of corporate execs throughout the country. And usually the talks I’m giving are to associations and industries that can help advance our name.

So I just spoke at a national convenience store conference where they were CEOs of major convenience stores from all over the country. I spoke at the National Confectioners Association twice last year, which was all the players in the sweetened snack industry. I talk to food-shipper organizations, trucking associations, economic development associations. So all of that has been helping to advance the brand, and it gives me something to do until I can really start selling.

Loren Feldman:
Liz, I think I know the answer to this question. But hearing Stephanie talk about her factory setup, does it give you any thoughts about building your own facility to make your own product instead of outsourcing it?

Liz Picarazzi:
No.

Stephanie Stuckey:
It’s hard!

Liz Picarazzi:
No, I mean, honestly, I know this is not politically correct. But I really like my factory.

Loren Feldman:
In China.

Liz Picarazzi:
Yes, we have a great relationship with them. We’ve done some product development. They were really a great partner during the supply chain issues. And as you know, Loren, I spent a good three months a couple of years ago RFPing out our bins to manufacturers in the U.S. I have to emphasize, it was a huge amount of my time. And it came back that, on average, we would have to pay 67 percent more to manufacture here in the U.S. So, no, I don’t have an interest in that.

I would have if you had asked me two years ago, because I really wanted to do that. Like, as an American, I would have loved to have been able to do that. And if it was possible, I definitely would have. But we got that ruled out.

And the other thing is that we’re manufacturers, but yet we’re not. So we’re not like a Paul Downs where we’re fabricating individual custom things with very high-skilled laborers. Ours are modular. They’re ready to install. They’re prefab. So for us to have a very efficient factory that we have a great relationship with is just—I feel really comfortable with that now, having done the research.

Paul Downs:
Yes. If you’re not manufacturing now and you think, “Oh, I’ll just do that,” you’re in for a world of pain. And I think that Stephanie benefited from basically moving into operations that were already up and running. And they needed a ton of work, clearly, but somebody knew how to make the product in the building when you arrived. So trying to go from scratch? Very tough.

Stephanie Stuckey:
I would also add that we have a factory that’s located in the heart of where our main commodity is produced. So it’s a different model. Almost every product we make has pecans in it. And we happen to be in the number one state for production of pecans in the country. So it just made sense for us logistically to have the manufacturing sited right where our main commodity is being produced.

Paul Downs:
It becomes an interesting question: Do you want to locate your business near where the customers are? Or near where the people who know how to do it are? Because there are definitely clusters of skills in various industries in various places. And if you want to locate near the workforce, then the big issue becomes distribution.

And Liz, you’re about to run into this: If you have to ship all over the country, how do you do the installs? So it’s never easy to balance where you make it and where you sell it—and how you get it between the two of them, and what needs to happen when it arrives. And the best thing is to be able to just put something in a box, give it to UPS or the Post Office, and then you’re done.

Liz Picarazzi:
Well, that is what we do.

Paul Downs:
But you have big things. Don’t they need some assembly?

Liz Picarazzi:
They do. But we have assembly videos. We have really good manuals. We’ve actually never had a complaint from anybody in California, or even Hawaii—where we’ve been shipping lately—about the ability to install.

Paul Downs:
That’s great. Good for you.

Loren Feldman:
Stephanie, can you tell us more about those, I think you said, three raises that you gave to the workforce? Was that driven by turnover? Or by inability to hire more people? Or both?

Stephanie Stuckey:
Both—and also just wanting that to be part of our culture, that we treat people with respect. And it was really important to me. When we first purchased the company—I should know the starting wage—it was like $9 an hour. And we have given modest raises across the board. But then what we’ve also [done]—which I think is more important—is we’ve put in a pay scale within a certain period of time, I believe it’s 30 days, they automatically get a bump if they stay with us.

So that was really important as well, was just to keep people, letting them know that there’s a pathway to prosperity, that this is not just working on a conveyor belt or working in the roasting room all day long. You can have a chance to advance. So we’re working with a local technical school to offer skills: everything from food safety certification to forklift training. And so the more you advance in your skills, the more you have an opportunity to be a shift leader, and then you can be a manager. And so far we have been promoting from within for all of these sort of shift leads and management.

We want to delegate more of the duties that the plant manager is doing. And we’re delegating that to folks on his team to give them more responsibility, like procurement of ingredients. So we’re now looking at designating someone in charge of procurement. One person who is just a really stellar employee, we said, “You’re now in charge of food safety. Your job is food safety operations. You’re no longer working on the plant floor.” So really building a team and building a culture where this can be your career. If you come here, we want you to stay.

Loren Feldman:
At one point, you were concerned about an Amazon facility that was scheduled to open. Did that, in fact, open? And has it been an issue?

Stephanie Stuckey:
Oh, yeah. We actually have not lost a single employee to Amazon. So we’re very proud of that.

Loren Feldman:
Are your wages comparable to what they pay?

Stephanie Stuckey:
Slightly lower. But people have said, “We would rather work here because we feel like we belong to a family.” Really. And we just hired a new staff person—well, he’s management level—and we’re giving him a couple roles, but one of them is working on culture. So he’s having one-on-one conversations with every single employee. It’s confidential, it’s going to be anonymized, and asking them, “How can we build a better workforce? What do you need to have more workplace satisfaction? Are there any issues or concerns that we need to address?”

And so we just want them to know that this is a place where they can hopefully enjoy their job. And I don’t know if everyone who works for Amazon can say that. We’re in their community. Amazon is 28 miles away. So we employ a lot of people who don’t have ready transportation. So quite a few can walk, or they carpool. Wrens, Georgia is tiny. And so we draw from this community where we’re based. And they don’t have to put 50 miles a day on their used car that doesn’t drive that well. So there’s an advantage to being right where they’re located.

Loren Feldman:
How many employees do you have now?

Stephanie Stuckey:
We have 90 FTE, and when I bought the company, we had nine. 10 times in three years.

Loren Feldman:
That’s a lot of hiring.

Stephanie Stuckey:
Yeah, and we expect to add 50 in the next few years with this expansion. But a lot of the expansion is going to be equipment and machinery. So the roles that we’re looking for, we now have our machinery, our machine shop, and our repair team. That crew is five now. So we’re getting skilled jobs. These are folks who need to be able to repair high-functioning $300,000, $400,000 machinery.

Loren Feldman:
And how are things going with your partner? I believe you have a 50/50 deal. And every time that comes up, some of your colleagues on this podcast, I think, break out in hives, just at the thought of having a 50/50 partner. Has it worked out for you?

Stephanie Stuckey:
It’s worked out great. And we actually have a third partner who owns 10 percent. And my business partner and I each own 45 percent. And the new partner owns a marketing firm. His name’s Ted Wright. And he’s been just an incredible asset to be part of our team. Frankly, we needed some money to help with cash flow as we were doing our pay raises. And we said, “If we’re gonna do the pay raises, we need an influx of cash.” So we really aren’t looking for private equity or anything like that, but more a strategic investor.

And so Ted has really been a partner. He came forward with the cash. And he’s at the table, and even though he owns less than we do, we bring him in on all major decisions. But we just get along great. We had written up in the paperwork, when we had the new guy come on, that he couldn’t be the tiebreaker if RG and I had a dispute. So we didn’t want this person with 10 percent essentially having the ability to trump our decision, so to speak. So we structured it in a way that the main two entities, as far as the decision making, are me and my business partner.

Loren Feldman:
So how do you make decisions if you disagree?

Stephanie Stuckey:
We haven’t disagreed so far. We have disagreed initially, and then we work through it. And we have discussions, we listen to each other. And every single time, what we end up with is some hybrid of what we each were originally proposing.

Liz Picarazzi:
I’ve got a question, Stephanie: So if you sold the 10 percent or brought in an investor or partner at 10 percent, I imagine you needed to have a valuation done. So if you did that, how did that work out? And the reason I’m asking is I’m at that point where I would consider taking on a lower-stake partner, but I know that the valuation would need to happen first.

Stephanie Stuckey:
Well, we were fortunate that we had just purchased this other company, and we had just merged. All of this happened within a year, and so we had valuations that had already been done. And it was internal.

When we did the valuation to merge our companies, we did go to the U.S. Small Business Development Center at the University of Georgia, and they have financial experts who will do valuations for you. They gave us two different people to do valuations, so we had people representing each side. It was really well-done. So we already had all of that done. It was fairly painless for us. I will say that there are some resources out there. The Small Business Development Center is in every state, and I found that to be a great resource.

Liz Picarazzi:
Thanks. I’ll check that out.

Loren Feldman:
Liz, how’s your year gotten started? Has business been good?

Liz Picarazzi:
So I have to say, we had a softer Q1 than I anticipated. We were down 5 percent from last year. We normally get paid 100 percent upfront or the day of installation. We’ve had some where people are taking longer to pay. And then we’ve also noticed that, in buildings getting trash enclosures where there’s, let’s say, a board of directors or some sort of other decision maker, those decisions are taking a lot longer.

So in terms of sales, we’re down. Things are warming up a lot the last couple of weeks. When it gets warmer, and people spend more time outside, the trash becomes more evident. So we always have a little bit of seasonality. In the warmer months, people are spending time outside, and they’re noticing the trash in front of their homes. So we’ve had that pick up.

I have been spending a lot of time on business development and partnerships. And it really is because there are a couple of areas with our product where we have hit a limit in what our expertise is, and a lot of it has to do with hardware and locks. So I’ve been reaching out to a lot of companies that seem to want to potentially sell us some locks, but then the next level up could be doing some sort of partnership. But then even a level above that there has been some little bit of a hint that an acquisition could be in the future, if a partnership went well. So that’s really got my mind engaged—

Loren Feldman:
Meaning them acquiring you?

Liz Picarazzi:
Yes. And like I said, certainly, it’s not like that’s happening. But if I think of: What are the three levels of relationship that we could have with this lock manufacturer I’m talking to? The first one would just be: They sell us locks. The second would be: They do have a partnership where we include them in all of the PR that we’re getting about our bins in various cities. We’re working in Boston, Philly, Newark, Hoboken, and talking to about five other cities. So I’m hoping that with a partnership, they might be interested in really getting their brand out there with us for a very noble cause, which is keeping streets clean. And then a level above that would be potential acquisition.

So for this company, I did talk to a couple of the companies, their portfolio companies that were acquired, that had been independent, like mine. One of them was actually an EO connection, where I have nothing in common with this guy, other than being in EO. Oh, I guess, making lockers—that is a pretty big commonality. But I had a great conversation with him. And that got me really excited about, down the line, might this be something I would consider? And I wasn’t eager on something like that a year ago, but now I am, because we are hitting some limitations in our ability to grow. And I would much rather grow through a partnership than through more debt or taking on investors.

Loren Feldman:
You’ve talked to us about the pilot projects you’ve had in place with various municipal entities, business districts. Have any of those reached the point where the district has made a decision about whether to roll this out in greater numbers?

Liz Picarazzi:
So I think the best city to talk about is New York, where this all got started. And we’ve been doing two types of pilots with the Department of Sanitation. One is with business improvement districts. So we’re in 18 of the 76 business improvement districts in New York. The second type is the residential pilot. And that is on a whole entire block of Manhattan, 45th Street between 9th and 10th avenues.

And I actually went there this morning. I go every once in a while to kind of check things out. And we do know that they’re not planning on rolling that out. That was something that was never officially communicated, but we know that we’re not in the budget that’s going to be announced in June. So it’s a little bit disappointing.

But at the same time, we know that the business-improvement-district model works much better for us, because in most of these districts, they have full-time cleaning crews that take care of the trash and take care of the sweeping. And if there’s illegal dumping around the bins, they’re going to put that stuff away.

With residential, there isn’t that level of supervision. And so there are a lot of different constituents. There are the superintendents of buildings, there are the sanitation workers themselves, there’s the neighborhood, there are various political parties involved. And it’s really hard to get them to agree on something that would scale out that doesn’t have full buy-in. So to answer your question in a long-winded way, we are doing well in New York with the business improvement districts, but the residential plan that could have potentially rolled out city-wide, it’s not gonna happen.

Loren Feldman:
And do you think that’s primarily for budgetary reasons, or because they were disappointed in the way it turned out?

Liz Picarazzi:
So I think it’s a combination of both. I spend a lot of time with sanitation workers these days, and I can tell that if someone’s been working as a sanitation worker for 20-30 years, and they’re used to taking a trash bag from the sidewalk and hurling it into the truck, they’re not going to want to now open a door with a lock, that may not always work as well as any of us would like, to then pull the trash out and put it in. So it does slow them down. That was part of it.

I think part of it is that there are only so many things that the Department of Sanitation can do. And they have a lot of other higher-profile initiatives that probably are getting the funding. But yeah, in terms of New York, we’ve got so many utilities under the streets. So for them to do some sort of a containerization that’s underground is going to be very difficult. So some people think that there will be a renewed interest in doing the type of containerization that Citibin does, which is above ground, because it’s much more cost-effective and easier to implement than some sort of a model like they have in Amsterdam, or Paris, or Barcelona, where they have trucks that hoist up the bin from subterranean.

Loren Feldman:
But it sounds like your relationships with the business improvement districts have gone really well. You seem to have a lot more of those than I recall you mentioning the last time we talked.

Liz Picarazzi:
Yeah, so those are really good relationships, and some of them are buying more. So those that piloted them, starting with Times Square, they started with four intersections, and they’re going to have 10 soon. So they have been really happy. And obviously, if you can make it in Times Square, you can make it anywhere. So if my bins have survived the trash and the rats and the tourists of Times Square, I know that they’re going to do it anywhere. I really do. But their level of maintenance of those bins is higher than it would be on a residential block. Because on residential blocks, it’s just tenants and supers and a lot of other players.

So with business improvement districts, that’s part of what has helped us get into other cities, because they can see what we did with business improvement districts across New York. We have contact lists for all of those BIDs nationwide. And one thing I’m really excited about—it hasn’t really rolled out yet so maybe I shouldn’t be talking about it—but I will anyway.

Loren Feldman:
Yeah!

Liz Picarazzi:
I know you love that, Loren. We have always thought there’s an opportunity to do a group purchasing program with municipalities, or higher ed, or even with some of our existing clients, like property managers. And so I would really like to go to cities—New York obviously being the first—and offer the BID Association, which is 76 commercial districts in New York City, a way to buy at a discount, with a deeper discount if they buy together at the same time. So I’m kind of circulating this idea with people who are smarter than me and are more involved with the city and with BIDs to see what their input is. But the input from them has been very favorable.

Loren Feldman:
Paul, the last couple of times you’ve been on, you’ve talked about how your sales have been considerably off from your expectations. Any movement there?

Paul Downs:
Yeah, we had a good week last week. We got one very large order from a major manufacturer who is going to be using us to produce a product for one of their customers that they could not or would not put through their factories. And this is a kind of relationship, which I think has a lot of future for us, where big companies set up their production lines, and they just really can’t accommodate custom requests.

And there’s been an ecosystem of companies that could do that kind of work. But the number of companies and the number of workers who know how to do it is shrinking. And so we just landed our first relationship of that type. And we’re doing a pilot project for a company that’s moving its headquarters from Connecticut to Tennessee, because they’re a gun maker, and I guess they don’t want to be in Connecticut anymore.

And so we’re gonna be doing the boardroom for that company. And that’s a pretty good-sized order. It put us closer to where we needed to be. We’re still down about 15-20 percent, but that’s way better than 40 percent. And it seems like the pace of sales coming in is starting to pick up a little bit. So I’m in better shape than I was a couple of weeks ago.

Loren Feldman:
Can you explain the relationship you started to describe?

Paul Downs:
Imagine you’re, say, Chevrolet. And somebody’s like, “I love Chevrolets. I’m buying a fleet of Chevrolets, and for my own Chevrolet, I want one with wings.” And Chevrolet will say, “Yeah, we’re happy to sell you the whole fleet, but the one with wings? Can’t do it.” And so that’s the kind of thing where we come in and put the wings on the Chevy.

And that’s not even the best way to put it, because we’re not modifying somebody else’s product. What we’re doing is selling our services and our ability to customize through a channel that’s a relationship with a huge manufacturer. And that manufacturer wins because they’re able to outfit the entire headquarters with their standard products and keep the leadership team happy by being able to provide the very customized table for the big boardroom. Is that clear?

Loren Feldman:
I think so. So that’s why you’re hopeful that this could lead to more business in the future?

Paul Downs:
Yeah. I mean, they came in, sniffed around to make sure that we’re for real, sent a team of people who evaluate outside vendors to my shop, and spent a day looking at our operations and me explaining why just because we’re relatively small doesn’t mean we’re not capable. And I was able to show them all of our systems and talk about some of our other clients who are very impressive and show them the operation. And I guess we passed muster, and the people who came knew what they were looking at. That was a very knowledgeable crew.

So that was a nice pat on the back for us having assembled a level of skill, and also a level of, I would call it, sort of systems horsepower. When you look under the hood of my company, it’s not just me trying to juggle a bunch of Excel sheets to run these jobs. We actually have an ERP, and we can interact with the largest organizations in a way that makes sense to everybody involved. And I think that that’s a big part of getting qualified for this kind of relationship. And having gotten the first job, of course, I’m emphasizing to my people that this is incredibly important to us, because the client told us that they get 10 or 15 of these opportunities a year, and they’ve just been telling their clients, “Can’t do it.”

And so this would be a way for them to be able to say yes, and it would be feeding us very high-value projects directly with someone who we’re familiar working with. I hope it’s the start of great things, because I would like to have this kind of relationship with more than one company. And I don’t know how those companies feel about that, but there’s really no reason why we couldn’t be doing business with more people who are in the industry, running factories, and need some custom.

Loren Feldman:
The intriguing thing to me is that this sounds like the kind of client that you are hoping to attract through the big marketing campaign that you are looking forward to unleashing—clients that will lead to multiple sales, and not just one-by-one.

Paul Downs:
Yeah, it is, although it’s not necessarily what that campaign is aimed at. Because there are various different ways someone could say, “Hey, we want a crazy big table, and where are we going to get it?” So it could happen coming from the design team. It could happen coming from, in this case, a manufacturer that was putting together a huge order to outfit the entire building and just needed something for one room.

And for whatever reason, the client—I think that we were approached by someone from the gun manufacturer. And then we got involved, and then they introduced us to the big furniture manufacturer. And I actually don’t know exactly how it happened. But I’m pretty sure that that’s what happened. So our existing marketing efforts and our position at Google always turns up cool stuff now and then, but the problem is a lot of times that’s one and done. And so how do you turn these singular opportunities into ongoing relationships? And that’s just a trickier thing. So we’ll see how it all plays out. But the first thing is to make this table and do a great job on it.

Liz Picarazzi:
I think it’s brilliant. I think it’s an amazing model. And you’re also helping them look good to their client, because they’re able to offer something beyond what they normally would do.

Paul Downs:
Yeah, and one of the nice things is, they’re not pretending they’re doing it. So the client knows that we exist, and knows the name of our company, and they’ve been working directly with my people. And what we’ve found in the industry is that, often, the people in between us and the final user don’t really want to reveal that we exist.

And that’s a problem. Because then we’re just being commoditized. And also it’s much harder for us to do the kind of job we want to do if we can’t be in regular contact with the end user, because they’re the ones who understand their own problems. And if we’re trying to get some analysis of what they want through three different layers of people, who may or may not be helpful or smart, then it just doesn’t work. So the idea that we’re partnering with a big company that’s going to say, “Hey, we have these guys. We’ve vetted them. They’re good. Here you go.” That’s a huge win for us.

Loren Feldman:
Have you joined the NRA? [Laughter]

Paul Downs:
You know, it’s funny, because, no, personally, I would not do that. But I have a lot of employees who are very into guns, and a lot of my clients are very into guns. We sell a lot to the military. I don’t think that, in my business, it would be wise to put any kind of particular political spin on who I do or don’t do business with—with some exceptions.

But I’ve got to put up a wall between my own personal politics and who we accept money from, because it’s a big world. And if you only confine yourself to people who are exactly like you, then you’re not doing your employees a favor, is the main thing. If we’re limiting the growth of the company, because I’m on my high horse about this or that, then it just limits the opportunity for me to either retain and pay my people, or attract new people and grow the company.

Stephanie Stuckey:
Amen to that. You know that famous quote by Michael Jordan, who said, “Republicans buy sneakers too”? It can get political, and I have a background where I served 14 years in the Georgia legislature as a member of a political party. But you will not see political posts on any of my social media, because I represent Stuckey’s now. And I want everyone: libertarians, Independents, Republicans, Democrats. As long as they have money, they’re welcome. [Laughter]

Paul Downs:
Here’s the other thing: We’ve been dealing with all kinds of people for years. And I’ve had a million phone calls with some person who, I’m pretty sure, would disagree with me on a lot of things. But we always find a lot to agree on, too.

The makeup of the average woodworker is very different from me. And I’ve got great relationships with all kinds of people in the industry, because we’re all in it together. And I think it’s a hopeful sign that: Okay, you’ve got a huge country, a lot of people in it, a lot of different beliefs, but there is a way to get along. And one way is to just do the business and let that be the thing that draws you together. And that kind of keeps the rest of it from getting out of hand. So I think it’s really important that everybody decides to do business with everybody they can and not turn their nose up at any particular position for whatever reason. That’s a bad idea.

Loren Feldman:
Well, actually, I also think it’s a healthy thing for the country at large. I mean, maybe I’m humoring myself, but I like to think doing what we do here is a way to bring people together who disagree on a lot of things, but see some commonality in trying to build a business. And the more conversations like that that get started, the healthier it is for everybody.

Paul Downs:
I absolutely agree. I think it’s only a good thing if we can talk to each other, particularly if we can discuss things that are politically neutral. How to care for your employees, how to grow your business, how to make payroll—those things shouldn’t have a political spin on them. Because everybody’s got basically the same problem. How do I satisfy customers? How do I find more? How do I get money? And how do I spend it?

Those things, yeah, you could put a political spin on them. But most small business owners are not at a level where they can even indulge that. So I’m glad we’re all coming together, and that there’s some geographic distribution and some ideological distribution.

Loren Feldman:
Well, before we start singing, “We Are the World,” I think I’m going to conclude this podcast episode. My thanks to Paul Downs, Liz Picarazzi, and Stephanie Stuckey. And, of course, to our sponsor, the Great Game of Business, which helps businesses use an open-book management system to help build healthier companies. You can learn more at Greatgame.com. Thanks, everybody.