Episode 77: Thriving Out of the Recession | Richard McKinnon, President of System 1 Interiors

Zeb’s Take

He is a good friend of mine. Richie and I have known each other forever. He’s a really good guy. I’ve always been impressed with him. Basically, he was responsible for his entire family after his dad passed away and the business itself. He was able to overcome all of that and build a better stronger business. I’ve been working for Richie since the beginning of 2012.

The thing I want to touch on is the recession and how it contributes to business. In Richard’s mind he thinks that was a blessing. It was a good experience because he was able to take his business and lean it up, learn to make it more efficient, and that made his business ultimately better. He learned a lot of life lessons too; business lessons; what not to do, what to do. He really carved out a niche and now that his business is doing extremely well he has a much better understanding of his business. He runs a tight ship.

On more of a grand scale, I think, a recession really provides an opportunity. When you’re in a bull market and people are doing well in the economy, people look at the system in the wrong way. I’ve been involved with a few businesses where their question is, what’s the return on investment? They look at everything as numbers, and people like Richard and myself understand it’s not just a numbers game. It’s taking that extra step. Richard was on his way home when he got a call to do a job in Malibu, and even though he didn’t want to do it, he did, and it ended up saving his business. Those are the opportunities that you can’t value on a piece of paper. What ends up happening is people end up cutting those expenditures. They think, it’s going to cost this much in gas it takes this much time, it’s not an appropriate expenditure, let’s not do that. They miss out on this huge job, three months of business. They’re looking at numbers and not people and doing right by people. People look at numbers to tell the story of a business, but they can never take the place of the people to people interactions.

I’m going to work as hard as I can to make introductions, meet as many people, expose people to my business and add as much value and to genuinely help and be of service to people. If I looked at everything from a financial perspective, a balance sheet, whether or not going to the Chamber of Commerce was worth my time, whether or not having this podcast is worth my time, I would miss out on so many opportunities that have opened up as a result of me doing these things that I feel are necessary from a business sense.

The recession trims out those people that are looking at the bottom line. Those are the businesses that tend not to do so well in recessionary times. And the businesses that do do well, especially the ones that thrive out of a recession, are the ones that make those people to people encounters and really foster and develop those relationships.

Find out more about System 1 Interiors and Richard McKinnon

Go to www.system1interiors.com to contact Richie and find out more.

Quotes

“When I took over the business, for me, there was a lot of fear of the unknown. When I don’t have someone to go to, what is it going to be like when the training wheels come off?”
“We take pride in being the best. We’ll always strive for that.”
“Dealing with customers and dealing with employees and the different personalities and making that work and making it a positive thing. That’s the biggest struggle.”
“You’ve got to go, and you’ve got to do some things whether you like them or not sometimes because they could be very big opportunities.”
“I’ve always lived by the motto of just being real.”
“Don’t worry. Because it doesn’t improve anything in your life.”
“Just being a hard worker is successful in itself.”
“You’re going to be successful if you’re the best at what you do, or striving to be the best at what you do.”

More from the Interview

How did System 1 Interiors get started?
In 1978 Richie’s father worked for a company that did acoustic ceiling spraying. He realized that if he had the right machinery and tools, he could start his own business and be able to raise and support a family. He knew he wasn’t the type to be answering to anyone, he wanted to be in charge of his own destiny. He got a loan from his father-in-law and began his business.

Richie grew up around his father’s business. He says, once he actually started working for his father he understood what it took. “It was very different: knowing what somebody does and then knowing what somebody does first-hand.” At the age of 20 he began working full-time with his dad. A few years later his dad was diagnosed with skin cancer. Richie decided he needed to get to know the business end of things as much as possible. He went with his dad to as many estimates and appointments, management things, as he could to see how things were done. When his father passed away Richie had already been mostly running the company for about a year and was able to get a lot of his questions answered.

He says, his father was the kind of person that no matter what, he would make something happen. “When I took over the business, for me, there was a lot of fear of the unknown. When I don’t have someone to go to. What is it going to be like when the training wheels come off?”

The Recession

“It was a complete blessing. It was business 101. It was a crash course. I really didn’t look at it then that way. I honestly get chills thinking about some of the things I had to go through, making decisions at such a young age. I was only 25 years old when I took over this company. We had, at the time, 7 employees. I had a lot of determination knowing that it really was sink or swim.”
Richie’s whole family was dependent on this business.

Richie says his business felt the impact of the economy on the decline before he heard about it in the news.
“I was grieving, at the time I had to put on that armor and lead this company through the troubled waters.” Having to explain to his long-time employees why there was no work while not really understanding why and trying to figure out how to fix it was difficult. In hindsight he realized that it’s nothing that they were doing wrong. It was difficult because a lot of the news wasn’t out he didn’t know how bad it was. “But the blessing about the economy dropping off for us, we’re a very very good business, we have a great reputation. I remember my father telling me before he passed, the one strength that you’re going to have and you’ll understand it one day, is that I’ve worked hard for 30 years of building this business to where it’s solid. No matter what you do, whether it’s advertising or things like that. We’ve built up a reputation… one day you’re going to see, when it gets busy again, just how much work was put into it.” He says, “Now I can understand that really what you put into your business, what you’re willing to put in, you will get it. So when you plant your seeds and you’re doing that hard work. A lot of times you don’t see the benefit, it comes later. A lot of times you can look back and say you know what, everything we did up to this point brought us through these lean times.”

The recession taught Richard to bear down and be a lean mean machine. They got a smaller shop, ordered less materials at a time, took away a lot of the things they didn’t actually need. If it wasn’t for the economy going down he says he would not have made those changes. Today System 1 would probably be wasting a lot of money, energy and resources, and not working as smart. “When you have an economic downturn, it’s really a reality check, and a time to go through everything and figure out what you need and don’t need. And then when the economy picks up all of a sudden you’re like a marathon runner, ready to go. … We’re better for it.”

I think a lot of our success has to do with the customer feeling comfortable and knowing exactly what they’re going to get and then where the success comes in is with executing that exactly as planned and exactly as you stated and if there is a hitch fixing it ASAP and making it right. That is the essence of what we try to do.

“My number one thing that I’ve learned is that clarity is key. Clarity is before you start anything with a customer you’re being crystal clear up front. In our business there are things that are unpreventable because of the nature of the business, explaining that to the customer ahead of time, so there’s not shock. Delivering exactly what you say you’re going to deliver. Knowing that it’s okay if somebody wants the impossible, to explain it, “That’s impossible.”

Biggest struggle
There are a lot of customers that are not capable of being pleased. Richie knows for certain they are the best company in southern California at what they do. “We’ve always known that we’re a very good company. We take pride in being the best. We’ll always strive for that.”

Dealing with customers and dealing with employees and the different personalities and making that work and making it a positive thing. That’s the biggest struggle.

Thriving out of the Recession

The last 3 years, his business has rebounded really well. The biggest asset to the company has been the internet. He says, the internet has separated the good companies from the bad companies. For the good companies, it makes them better. You don’t know who is going to put up reviews. We don’t have an on off switch where we do good work we do bad work. We only know how to do it well. If you can get a hundred reviews and 95 of them are straight A’s you’re going to get more business. At this point I’m not sure if the economy is as good as I believe it is, or if it’s a matter of since we’ve established ourselves as being a good company through our reviews that we’re just getting more work than others.

Advice

What’s the biggest piece of advice you learned from your dad?
Probably, never to give up on anything and to be there. It’s 4:30, it’s raining, there’s traffic and I get a call from a general contractor. He wants me to come to Malibu right now because a painting contractor didn’t show up. I really didn’t’ want to go; it’s going to take me an extra 3 hours to get home. But, I just had that advice, that you’ve got to go, and you’ve got to do some things whether you like them or not sometimes because they could be very big opportunities. It ended up being a job that probably saved our business back in 2008. I had no idea what it was, it ended up being a huge house for a Hollywood movie producer. It kept us busy for 2 or 3 months.

Be yourself. You don’t have to go and sell the jobs. You don’t have to put on a salesman pitch or face. Just go in there, be yourself and you’ll do fine. I’ve had to understand that I’m perfectly capable of doing this without having to try so hard on the sales pitch thing. Go in, be yourself and people will see though the fakes and phonies. I’ve always lived by the motto of just being real.

His advice to me was always just to be myself and to know that I’m perfectly capable of doing it.

What’s one piece of advice you would give to someone who found themselves running a business, like you did?
Don’t worry. Because it doesn’t improve anything in your life.
Don’t let the doubt and the worry […] freeze you from having a clear brain and execute what you need to do. You start looking at the bills you have coming in and the amount of work you have and it will freeze you up. One great thing about business is that you can bounce back and it doesn’t take very long to bounce back. Knowing that not only can you bounce back, but you will, and it doesn’t take long.
If you keep going, and you work hard, and you’re never gonna give up, and you keep going at it. Not only is it a probability that you’ll bounce back but you can even turn it into something more amazing than what you had before.

I’m constantly trying to figure out how to perfect the business. Constantly trying to think of creating new businesses.
I don’t like the thinking that everybody just needs a slice of the pie. Create your own pie. I’m constantly thinking about what else can I do. I feel I’m successful because I have a business mind and I have a mind to create.

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