When siblings Dean and Deb DeGraaf bought DeGraaf Interiors from their father Daryll DeGraaf in 2007 for $1 million, they said it was a leap of faith.
“My sister and I took on $1 million dollars worth of debt, and that was a huge number to me at that time,” said Dean DeGraaf, co-owner of DeGraaf Interiors in Jenison, Michigan.
But their faith, a solid employee strategy, and several gutsy moves grew DeGraaf Interiors to a top 50 specialty retailer in the United Sates, which reported $32 million in revenue in 2022, and is celebrating 30 years in business this year. Watch the Video
Daryll DeGraaf started DeGraaf Interiors (DGI) in 1993 after working in the floor covering business for 15 years. DGI began operation in a retail space shared with another flooring store in Jenison, Michigan. DGI concentrated on the retail and builder markets while the other business concentrated on the commercial and multifamily markets.
In March 1995, Daryll hired DGI’s first employee on a part-time basis, and later that year, the companies moved operations into a new building nearby. In 2003, DGI broke ties with the other flooring store and relocated its showroom operations to its current location in Hudsonville, Michigan. Within the same month, DGI purchased the assets of Kemp Floor Covering in Grand Rapids, Michigan, in turn, hiring all of Kemp’s employees for their valuable flooring experience. DGI outgrew the old Kemp store and relocated to a brand-new facility down the road in Grand Rapids, Michigan.
Deb DeGraaf and Dean DeGraaf said they never anticipated joining their dad’s business, but as DGI grew, Darryll DeGraaf asked Deb to start doing paperwork for him. Dean DeGraaf later joined to manage the warehouse and measuring.
“Dean and I were both on completely different paths,” said Deb, who was going to school for occupational therapy while Dean was in high school and worked for a friend of his dad as a painter. After high school, Dean owned his own painting company and began building spec homes.
“I liked working with my dad,” Deb DeGraaf said. “God clearly didn't want us in some other divisions or fields—we just fit right in.”
In 2007, Daryll DeGraaf retired, selling the business to his children for the full appraised amount of $1 million.
“Our dad, when he retired, it's not like he was sitting on his rocking chair at his house,” Deb DeGraaf said. “He got on a sailboat and sailed the Caribbean for two years. He loved what he did, but he needed to pull the rip cord.”
With their dad making the most of his retirement, Deb and Dean faced management of the business on their own. Early challenges included a few builder deals that didn’t go as planned.
“It just taught us at a young age, we're here to work, and the only way that we're going to get through this is by grinding and also being extremely efficient and lean with our capital,” Dean DeGraaf said. “When you do a $20,000 house job, you can only get screwed by $20,000. When you do a $2 million contract, it’s a whole different experience.”
But after those first few years, DGI increased volume every year thereafter.
The Path to Growth
Dean and Deb said they divided their responsibilities based on their talents: Dean runs the commercial division and Deb runs the residential division.
“Anything that I’m not good at or really isn’t in my quiver, she’s got fully locked in, and anything that she doesn’t have in her quiver, there’s a 2,000% trust factor, ” Dean DeGraaf said.
“Our joke is he makes the money and I spend it,” Deb DeGraaf said.
Over the last 10 years, Dean said the company revenue is divided in thirds: one-third commercial, one-third residential and one-third builder. The commercial business kept humming during the pandemic, and then DGI benefitted from the residential remodeling boom. “Of course, 2021 from a retail perspective was absolutely bonkers,” Dean DeGraaf said.
As the company became more profitable, Dean invested capital in buildings and properties to work development deals.
“I deal with a ton of developers and have made a significant amount of relationships within West Michigan, and I partnered up with people on anything from hotels to industrial buildings to strip malls to houses,” Dean DeGraaf said. “I love the sale of a $2 million contract and putting together something big and amazing and beautiful and building something awesome. But I also really love—let's call it the art of the deal—when it comes to buying a piece of property and putting tenants in there. It's not dealing with Mrs. Smith on her bathroom countertop.”
Deb, on the other hand, is all about Mrs. Smith and her home remodel, overseeing the residential side of the business, which includes DGI’s retail locations: an 8,000-square-foot showroom in Hudsonville, Michigan, and a 6,000-square-foot retail location in Cascade, which was added in 2010.
Dean and Deb DeGraaf said they did not initially see eye-to-eye on the addition of the Cascade showroom.
“I was totally against it,” Dean DeGraaf said. “I just felt like it was too soon. The rent was too high—the volume that needed to be done based on the rent—I just said, if you're going to do it, just know this one's on you and you better park yourself there and you better make it work—but she did. She stayed there for a year and just crushed it.”
At the time, Cascade had just two independent flooring stores along with Lowe’s and Home Depot. Deb said she saw the potential of the market and pushed to make the investment.
“It was just in 2009 and 2010 when she was pushing on this, we didn't have any extra money to do it,” Dean DeGraaf said. “We just didn't know where the market was going to go—but it was, without any question, a phenomenal call.”
Dean and Deb DeGraaf say joining the National Floorcovering Alliance (NFA) was another milestone for growth. The elite group of carpet and flooring dealers are selected from an industry consensus of the largest in North America. Only one-tenth of one percent of all flooring dealers meet the criteria required for consideration for membership in the organization.
“People for years where saying that we’d be a great fit for NFA because there's nobody in Michigan,” Deb DeGraaf said. “That was a huge step for our company."
The Power of Leadership
In their early days of ownership, Deb and Dean had to respond to every situation, but over the years, they built a pyramid of leadership that empowers and encourages employees to manage and make decisions. This structure set the company on a trajectory for growth.
“I love leadership,” Deb DeGraaf said. “That's why forming that leadership team and taking that to its fruition and empowering those people was so rewarding for me.”
Development of the leadership team began with an employee DiSC assessment, which is a behavior-assessment tool that aims to help people understand their leadership styles and improve workplace teamwork by measuring dominance, influence, steadiness and compliance. Development continues with ongoing leadership training, team-building events and employee reviews.
“When you surround yourself with intelligent people and you're working on all these different things, you absorb their knowledge, they absorb your knowledge, and it just keeps you moving towards a successful, joyful, wise life,” Dean said.
Employees and managers are also encouraged to celebrate wins and be transparent with mistakes.
“If a sales salesperson made a mistake and I see how that mistake was made, we will send an email out to the seven other commercial estimators telling them that you and I just got cooked on this,” Dean said. “This way, we don’t get cooked on it by four more estimators. I want everybody to learn his lesson or her lesson, not individually.”
The education is also being passed down to the third generation as Deb DeGraaf’s daughter, Kailyn DeGraaf, learns more about the business. “When I was a younger, people asked me what I wanted to be, and I said I wanted to be like my mom,” Kailyn DeGraaf said.
Kailyn DeGraaf began working in the store as soon as she was old enough and recently completed her bachelor's degree in business management. Deb DeGraaf said Kailyn is starting in sales and learn from there.
Preparing for More Growth
The last nine months have been a transition period for the company’s headquarters, tripling the size of its corporate and warehouse space to include meeting space, a training room, multiple offices for the growing commercial team, more than 20,000 sq. ft. of warehouse space, and $100,000 of pallet racks to accommodate more inventory.
Dean and Deb said they wanted every employee with an office to have a window and also considered who needs more privacy and quiet and who needs access to collaborative workspaces. “We just keep telling the team, just be patient,” Dean DeGraaf said. “I want it to look modern and sleek.”
“We're working on interruptions: now, when you walk up and can see through the window and see that I’m in a meeting with four people, they don’t disturb me,” Deb DeGraaf added.
There is more to come for the showrooms, too. The team aims to improve the customer experience, simplify merchandising, and streamline the purchase experience for the consumer, such as adding more directional signage to the showrooms.
The team said it takes nothing for granted. “We didn’t do all of this, this guy did,” said Dean DeGraaf, pointing to the sky.
“I give credit to our team being the best there is in West Michigan every single day,” Deb DeGraaf said. “God has blessed us beyond measure with the people that he's brought into our lives, who we've hired, and so, like Dean said, the credit is there first, but our people are phenomenal.”