Today, I want to discuss my first and greatest failure and how it was the best-worst thing that could have happened to me professionally. Not to brag, but in general, I have always had a fairly high success rate. I typically land the job, excel in it and if I set my mind out to accomplish something, I usually hit my mark.
Well, Pino Napoli changed that. My husband always had a desire to own his own business and as his partner and wife, I have supported that decision. Prior to our marriage, we agreed to live as though we had only one income and save the rest for our business endeavors. For ten years, we visited businesses for sale across the country and considered franchises or real estate ventures along the way. After a promising opportunity fell through, the broker reached out to us with another opportunity. Two business for sale by a single owner. The sale price so far beyond our budget that my initial response was, absolutely not. Fast forward through due diligence, attorneys, accountants, and trips, we closed on our new businesses and relocated for a second time to Florida.
In mid-December 2016, we officially became the owners of Pino Tile & Napoli Granite and Marble. The night of the closing, an argument broke out between a manager and employee at the Christmas party. Just sharing to give you a little taste of the ride. I managed Human Resources and Business Development, with my husband handling Operations and Finances. We were officially business partners. I will perhaps write about that experience in another post. I will say that running a business with your spouse when you have ideological differences makes for a wild ride.
The Unification Process
Pino Tile + Napoli Granite and Marble = Pino Napoli Tile & Granite
We decided to rename the company to “Pino Napoli Tile & Granite” along with the separate Construction business which ran separately and placed both under our holding company. We had two retail locations, one in Pompano Beach and one in Delray Beach, FL with an onsite slab yard and fabrication shop. Thirty employees (Retail Sales, Admin/Accounting, Purchasing, Driver, Forklift Operator, Fabricators, Cutters) plus Subcontractors (Installers) and management staff.
When we arrived on the scene, the previous owners had moved both companies’ sales teams to the same physical location, but all business operations, software, systems, processes were all separate.
There was a homegrown CRM for the Countertop group, nothing for the Tile team, scheduling was paper based and there was not a unified email system. I was able to solve this problem with Microsoft Office 365. The employees now all had official “pinonapoli.com” email addresses. I also used Bookings to replace the homegrown CRM and used Yammer to encourage collaboration between the two locations. I incorporated the photos of the employees going about their workday and showroom pics as I was designing our new website. Here’s my interview with the Boca Raton Observer discussing the early days and the unification process.
To combine our cultures, I began by establishing Guiding Principles and Company Wide Core Competencies for the combined company in both English and Portuguese (for our non-english speaking employees). At this time, I also developed Job Descriptions and Management competencies. We held an all company meeting to review and confirm alignment. Everyone received an electronic copy which they signed electronically for storage in their personnel file to confirm they agreed with the values of the company.
I then moved to developing the processes for the unified company. I wrote an official Employee Handbook and hired an Employment Attorney to review to ensure it was compliant with all regulations and laws. Each employee received an electronic copy and signed consent to follow the policies, with a copy in their file. All of this paid off when we soon discovered just how much people like to sue others in South Florida.
Next, an extensive review and redesign of our Sales processes. Along with our Sales Managers, I developed a Sales Training program and manual and facilitated workshops with our teams to review the new program and processes and get their feedback and thoughts. At this time, I also instituted quarterly sales meetings for the combined sales teams to review the previous quarters’ results, reward the high performers, and review the next quarter’s objectives. I also began to cross train the teams so a tile salesperson could sell countertops and vice versa. And anyone in the company could earn commission if they made a sale.
I also made all paper-based forms electronic, which was done by manually recreating as electronic forms in MS 365 to reduce the admin burden of the sales team which was a major pain point for everyone on the team.
HR Infrastructure / Process Development
The previous owners outsourced all HR functions, so I brought it all back in house. I selected a Payroll vendor (Paychex – I could not get budget approval for ADP from my husband). I have never enjoyed Benefits Administration, so I hired a Benefits broker who provided a self-service HRIS/Benefits Portal for a nominal fee which I adored and was just what we needed. It also provided with a tool to manage employee performance and development and provided a platform I could use to execute HR processes.
Having a solid HR infrastructure in place with well defined processes protected us many times against false accusations so even though in the end this work didn’t save our company, we were shielded and protected from a lot.
For instance, within the first week after closing, we had our first employee injury in the Fabrication shop. Although we handled everything as sensitively and compliantly (Worker’s Comp) as we could, the employee still sued us. It happens. I learned a lot during this process and have no regrets. This unfortunately would not be our first experience with employee injury or death which I may one day discuss in a separate post.
Now let’s get to what did not work.
Enabled a Shadow Culture to Thrive
The previous owners offered to provide an overview of the employees to us. The things we should know and look out for. My husband and I opted to take a “Blank Slate” approach and get to know the employees ourselves. I still agree with our decision to do this. There is often a lot of baggage that comes with history. Also, a poor performing employee may see this acquisition as a fresh start, and I am all for forgiveness, growth, and development.
I knew the acquisition was causing distress, fear, and uncertainty for some employees if not all in some measure. We also wanted (and needed) to retain everyone. The competition for talent was high. We were warned to do everything to prevent poachers and knew this time in particular made us even more vulnerable.
We wanted to give the employees a chance to get to know us and for us to get to know them. I met with some informally (in office chat/stop ins) and others more formally (lunch/dinner). My husband is more extroverted, so he would spend much of his day on our sales floor in Pompano learning the ropes and getting to know the team. My neurotype and personality could not really tolerate that environment for long stretches, so our partnership worked great in this area.
Unfortunately, a lot of bad was uncovered during those initial discussions. Really, bad things where I needed to consult our employment attorney on how to best address them. I began investigating and looking into some of the grievances and we made process changes. Only looking back can I see how wrong I was in doing this. We moved too quickly and without even realizing it, gave an impression of rewarding bad behavior to other employees. For instance, if multiple employees reported a similar grievance against a peer or manager, we took it seriously. The previous owner had a do the work and leave me alone approach, so I decidedly took a polar opposite approach and had an open door, talk to me about anything at any time approach. There is absolutely nothing wrong with this, but we both should have been more guarded and wary of some of what we were hearing from the employees.
What we did not realize at the time was there was a shadow culture lurking.
The mistake was believing without question some of these horror stories and then and acting too quickly without all of information necessary to make the best decision. Shadow cultures are hard to root out and they take time to dismantle.
Fear driven Strategy
I am not exactly sure where to begin with this one because it is difficult for me to admit that our actions reflected this, but my husband and I both have acknowledged to each other that our collective fear of failure caused us to delay some actions that needed to be taken and take others too hastily. Because we were often in survival mode, we did not address discord and inner conflict as swiftly as we would have if fear were not driving our decision making. Or we intervened too quickly, which then impacted morale negatively and put us at risk of losing people we could not afford to lose.
The Final and Fatal Blow
We Didn’t Scale Properly aka “We grew too big for our britches”
When you speak about owning a business in the past tense, the next question you get 100% of the time is, “what happened”?
So, remember when I mentioned earlier that we implemented a new Sales training program? Well, it was remarkably successful. At the time of closing, our total monthly sales averaged around 500K – 600K. A 700K month was rare and only occurred during the busy season. Well, in July 2018 we hit our first $1M month, and our business never recovered from it.
Due to the nature of the work, business, and location, we were in a non-stop Recruiting and training cycle as we were constantly needing to replacing Sales employees and Fabricators. I am not sure if I went a week without interviewing someone during our final miserable year.
The sales continue to come in, but operationally we were failing. The employees could not keep up with the volume of work and costly mistakes started to happen. By this time, we were taking on hotels as far south as Key West, we were doing jobs in Palm Beach and everywhere in between. If you recall, we dealt in luxury products for large Commercial jobs and “Real Housewives types,” and the materials must be purchased before the job begins. If the builder does not get paid, we do not. This began happening increasingly, and cash flow dried up and we just could no longer sustain the business. We were unable to find new buyers or take on new partners and painfully decided to close the doors.
We kept on a small contingent of employees and finished what we could.
We shed a lot of tears, lost a lot of material stuff, and maybe even a few years off our life, but I can say now a few years down the road that this experience changed us for the better and even through the loss and pain and ongoing issues we’re still dealing with, I am grateful for this failure. I am changed.