The Story of Darman Mfg. Company and Genius (10-13-2010)
This blog is a critical one for me. This is because it is a resume of sorts… or at least a part of one.
Incidentally, this blog represents strongly suggests that I have a work ethic second to none, and that I have at least some degree of genius. (Both of my parents had some degree of genius. Out of the seven children that they had, I was the most gifted in regard to math, science, and logical thinking.)
I spent the time needed to tell the story of my tenure as President of Darman Mfg. today.
I did this because my credibility is so important in regard to what I am trying to do at the moment.
I felt that perhaps my work history with Darman Mfg. might help with this (my credibility).
[Darman Manufacturing Company can be found on the Internet at http://darmanco.com/.%5D
I hope that you (the reader) gain some insight in regard to what my potential and my capabilities are when you read the story that follows.
The Story Of Darman Manufacturing Company, Inc. During My Tenure As Its 2/3rd Majority Stockholder and President
I have done a business start-up before in my life… or almost done so.
“Almost” in the above means that I did not have to start a business from scratch. I revived a business that was dying, and was dying for quite some time.
In 1983, for $100,000 I bought a dying manufacturing company with (1) an obsolete product, (2) an old plant and equipment, and (3) an almost empty bank account.
I bought this business from my father Arthur Darman.
[Arthur Darman had bought Darman Mfg. Company from his father Joseph Darman’s estate in the late 1960’s when he died. Joseph Darman, an immigrant from Malta who spoke no English, and had no money when he arrived at Ellis Island in about 1910, was its founder (after soon buying out a funding partner). Joseph Darman was a very gifted man, and was known to be a genius by many that knew him.]
My start at Darman Mfg. Company was not an auspicious one. In the twelve years prior to my taking the reins, my father had fired me three times, and I had quit three times out of anger and frustration as well. (At least we were even in this regard when I bought the company from him.)
Darman Mfg. Company was purchased from my father without a dime of my own money (as I had none). It was purchased by the company mortgaging its paid-for-building for $50,000 (an amount immediately handed to my father), and a $50,000 promissory note at no interest paid out monthly for five years. (I paid my father $833.33 for the next sixty months, and paid the mortgage as well. These were paid out of company proceeds as we went along.)
Darman Mfg. Co., Inc.’s annual sales were about $130,000 annually for the prior three fiscal years before I bought it. These annual sales were probably the lowest in its corporate history as far back as World War II.
Darman Mfg. Company, Inc. had suffered through a long slow decline in annual sales over the past fifteen years or more. This decline in sales was a result of paper towels and hot air dryers replacing the cloth roll towel cabinets that are (sometimes) still found in public restrooms.
Darman Mfg.’s primary product was cloth roll towel cabinets that were sold to the linen industry. The linen industry then hung these cabinets in commercial restrooms, and made their money on washing and changing the roll of cloth toweling.
When I told people back in the 1983 – 1994 era what Darman Mfg. Co. actually made a common response I received from many persons was “Who the heck still wants those? I did not think anyone made them any more”.
The primary reason for Darman Mfg. Co.’s flat sales three years before I purchased it was just as my father told me before he sold me the company… “Allen, every product has a life cycle. The life cycle of our primary product is over. It has been over for quite some time”.
Both my father, and a consultant with an M.B.A. degree that I hired a few years after I bought the company, told me that I did not have a chance as far as succeeding with Darman Mfg. Co. goes. Both thought such to be impossible… or extremely unlikely at best.
Few desired cloth roll towel cabinets (the toweling that they dispensed) to dry their hands on when paper towels for hand drying became prevalent, and took the commercial hand drying market by storm in the sixties and the seventies. In some states cloth roll towel cabinets were actually unfairly outlawed from the standpoint of hygiene. The market for cloth roll towel cabinets in the United States was not robust when I purchased this company, to say the very least.
In these hopeless business circumstances, and in a high tax state in which manufacturing companies were leaving in droves or dying, I succeeded “in spades”. And I succeed despite manufacturing a product many thought to be obsolete… cloth roll towel cabinets.
Less than eight years after I bought Darman Mfg. Co, from my father, it was doing about $2,000,000 in annual sales. And it continued to do so until I retired in 1994 in order to try to find the cure to manic depression.
For the past three or four years that I ran Darman Mfg. Co. as it’s President, its profits, and my salary with benefits, were both around $100,000 (each). This admittedly assumes that I count as my salary paying my ex-wife $35,000 annually as a “no-show” vice president, count a company car, count some paid for by the company gasoline credit cards.
I succeeded due to the following:
(1) I had a work ethic second to none. (Eighty hour work weeks were the norm for me for the bulk of the first five years or so of the eleven years I ran Darman Mfg. And in one particular year and a half period of these five years I often exceeded this eighty hour work week by another ten hours or so.)
(2) I maximized the value of a verbal pledge to purchase 2000 towel cabinets annually from a major domestic linen supplier in advance of a new towel cabinet design being even started on. (When this verbal pledge of future purchase was made, it represented about $120,000 in business annually, or about double our annual towel cabinet production in units at the time.)
(3) I was able to find and secure close to half a million dollars of funding for this new design via (1) a limited stock offering to people that I knew, and (2) through S.B.A. financing package. (I was heavily involved on a hands-on-basis in developing the business plan and accounting data to make this financing occur.)
(4) I successfully upgraded Darman Mfg. Company’s towel cabinet design from a product with a metal outer shell to a product with a plastic one. (I heavily participated in the design process of this new plastic shell. I worked as a team with a “pencil draftsman” that I had hired in a bar one night. “Pencil drafting” was almost a must at this time, as personal computers had not quite advanced enough to support AutoCad yet. Neither this draftsman nor I had any prior experience in plastic part design. We learned as we went along. Our design was so good a major local molder doing told us our new cabinet could win an award for its design. I admittedly did have our work reviewed by a professional plastic parts designer before expensive molds were made. However, this professional plastic parts designer made remarkably few changes to what the draftsman and I had come up with design-wise.)
(5) I greatly improved our internal accounting capability. (I was a wizard at writing Lotus 123 spreadsheets in 1987, and was completely self taught in this (by reading books). I put all the business books on spreadsheet templates of my own design in 1987. These were still in regular use by Darman Mfg. over a decade later. My work was done on a 286 computer, and was way ahead of its time. It actually embarrassed our C.P.A accounting firm to take the action of sending some of their employees to Chicago to learn how to use computers. A person in this accounting firm told me if my cash disbursements ledger template could write checks, he could sell it to some of his other accounting customers. I could have learned how to do such from the books that I had in my possession, but I did not have the time to invest in this. I was running my own business, not helping his for peanuts. Oddly, as much as I knew about Lotus 123 spreadsheets and spreadsheet design in 1987, I don’t know a whit about Excel today. After I left the business environment my learning was directed elsewhere.)
(6) I was behind the smart purchasing of raw materials. (At purchasing Darman Mfg. Company excelled for a business of our magnitude. I was using a Radio Shack computer to help with purchasing as early as 1984. I used merge letters, and the Thomas Register, to often get thirty or forty quotes from different vendors for the same part. This was done to find the best price for a part of equal quality, of course.)
(7) I was able to recognize the successful price point for our primary product. (This to