The Story of Eric & Michelle Johnson (Washington Generators)

Aug 10, 2023

American Dream Achieved

IBA, as an approximately fifty-year old business brokerage firm serving the entrepreneurial community of the Pacific Northwest, has been uniquely positioned since before the American Bicentennial celebration of 1976 to witness and hear the stories of thousands of people who have lived the American dream through entrepreneurship creating beloved businesses by employees, customers, and communities while finding personal fulfillment and financial prosperity through execution of their ideas, hard work, perseverance, and ability.  In an effort to share these stories heard throughout the years by our team of business brokers, who are commonly regarded as the “best listeners” in the M&A industry, IBA has retained highly regarded writer, Nesha Ruther, to tell their stories.  It is our goal to share one story a month. It is our hope that you will find the stories as inspirational and motivational as they are to us and the buyers who bought the businesses in IBA facilitated transactions in Washington, Oregon, and Alaska.

The Story of Eric & Michelle Johnson (Washington Generators)

By Nesha Ruther

Eric and Michelle Johnson’s company, Washington Generators, is the epitome of a family business.

Eric graduated from Ricks College, now BYU-Idaho, and was inspired to become a commercial electrician by Michelle’s uncle Ron.

“[Uncle Ron] said, ‘Hey, I’m a commercial electrician over here in Portland. Why don’t you consider being a commercial electrician in Seattle where you live?” Eric recalls. He gave the idea some thought and decided to apply for a Local 46 apprenticeship. “It is a great program,” Eric says, “It can be a little bit challenging to get in because the pay is high and there are a lot of applicants, but I was accepted.”

Eric spent five years in apprenticeship, training to become an electrician before taking his journeyman test, the electrician’s exam required by the state or local municipality to work in that area. Eric passed with flying colors but still felt there was more he wanted from his education.

“I thought I’d like to get some additional certifications, and so they had the electrical administrator’s test, which is needed if you’re going to have your own business,” Eric says. Although Eric never aspired to be an entrepreneur, he figured it would make him more competitive with potential employers. He received his certification and went on to take foreman training to become fully aware of job site leadership tactics and safety. “I didn’t know it at the time, but that [training] allowed me to receive a promotion,” Eric says. “I was recruited over to Pride Electric where they offered me a paid foreman position as a service truck driver.”

Unfortunately, no amount of education could have protected Eric from the 2008 recession. Pride Electric was hit incredibly hard, and in 2009, Eric was let go in a round of layoffs.

While Eric had been building his career as an electrician, Michelle had been working an equally rigorous job as a stay-at-home mom to three girls. Little did she know soon the couple would soon have a fourth child—Washington Generators.

“After Eric lost his job at Pride, and after a lot of prayer, we decided to go forward with opening our own business in February 2010,” Michelle says.

Like new parents, it took some time for the pair to acclimate. “At first, when we opened the business neither of us really knew what we were getting into,” Eric says.

“I don’t have a degree or any experience running a business, so that was a big learning curve,” Michelle adds.

While many people plan for years before opening a business, an unstable economy and need for income forced Eric and Michelle’s hand. “It gave us a really big push to do something we otherwise would not have done if the economy had not crashed,” Eric says.

The pair withdrew $10,000 they had set aside and purchased their first work truck. Their only electrician was Eric himself. Michelle handled all the accounting and set up the books. Over the next year, Washington Generators began to grow.

One day, Pride Electric called Eric and offered him his old job. He turned them down. “We made a decision not to do that because we had made commitments to customers and projects,” Eric says.

Coming out of the recession but still on unsteady footing, Eric and Michelle continued to grow their business. Eric had connections with local Alexeve Construction and was able to gain some sizable commercial projects through them. Michelle set up their website and featured positive reviews, which would help gain business down the road.

At the end of the first year in business, the pair had made $175,000 and hired their first employee. “I was so impressed at the end of the first year when we added up all the money we had made, and all the receipts, and it was like, ‘We did $175,000 in the first year!’ We were so excited,” Eric says.

While that number seems small to Michelle and Eric now, at the time it was incredibly meaningful. Like so many beginning business owners they used what little money was left over and reinvested this by purchasing a second used van and only the most essential equipment. It was a good start, but money was tight and had to be managed carefully.

Because the fate of the company relied so heavily on Eric and Michelle’s ability to forge professional relationships, the stakes were high for any connection either made or lost. For small business owners in that position, Eric recommends patience and perseverance:

“You just have to keep moving forward. You are going to try things and—I’m sorry, whoever you are, I’m sure that you are fantastic, but we’re all fantastic. We all want to believe that we’re better than we are. But some of the things you try, many, maybe even the majority, are not going to end up being successful. You cannot dwell on that. You just have to say, ‘What didn’t work? What can I adjust or do differently? That was a consistent pattern we had from the beginning; we found what worked and we expanded it.”

One thing that Eric and Michelle discovered and used to their benefit, was that working for general contractors provided a consistent source of revenue. Noticing this trend, they prioritized general contractors in their search for new clients. They obtained a contract to do tenant improvement work for Saltworks and were introduced not only to more general contract work but to working directly for the CEOs and CFOs of their client companies.

As their staff grew, Eric and Michelle also created systems to incentivize field techs and office staff to sign up customers for regular maintenance service. “Part of our vision was to have a stable portfolio of repeat customers providing revenue and work for the company,” Eric says. “It took a lot of contracts to reach critical mass, but we knew that it was simply a numbers game, and it quickly became clear we were winning. When you see success in any area it’s crucial to refine what works and push even harder.”

Washington Generators ensured their pricing was aligned with market standards, moved all their documents into the cloud so technicians could access them easily, and they regularly subjected their documents to feedback so they could revise and improve them. Just as importantly, they removed elements of their business when it became clear they were no longer working.

“We had to take a close look at how to connect with customers. This required no small amount of research and skill to determine where to place our efforts. Information is only as useful as the key decision makers’ ability to interpret it and create a plan of action,” Eric says.

The effort paid off, and like the $175,000 Washington Generators made in its first year of business, the contract with Saltworks provided Eric and Michelle with a pivotal moment of perspective in which they could see how much their baby had grown.

When asked what motivated them to continue to scale their business despite struggles and setbacks, Michelle’s first thought is of her children. “Supporting our family. If we hadn’t tried, it wouldn’t have felt right for our family.”

Eric and Michelle’s three daughters—Hailey, Amber, and Allison—are all now all grown up and with aspirations of their own. Haley is completing a Nursing degree, Amber recently graduated high school and is serving on a mission trip with the family’s church, and Allison is interested in pursuing cosmetology after she graduates high school.

As both entrepreneurs and parents, Michelle and Eric were often juggling multiple responsibilities. “The number of hours you work as an entrepreneur is huge,” Eric says. “You don’t clock off at the end of the day. Somebody that owns a business comes home and there’s still work that they’re doing. Balancing it is like spinning plates, one is family, and one is the business. When one slows down, I’ve got to get it spinning again, and when the other slows down, I’ve got to work on that. It’s hard.”

“I think it was most difficult when employees would leave,” Michelle adds. “Sometimes they would give notice, other times they would leave their keys in the van and text us saying, ‘I’m done. That becomes pretty overwhelming when you’re trying to balance your family with extra work. Sometimes I would get up at 4:30 in the morning to start [work], and then we’d have dinner with our family at night, and I’d go back to the office until about 10:30.”

Still, Michelle and Eric persevered, and as Washington Generators grew, so too did their motivations for continuing the business. “Later on, the obligation to new and repeat customers pushed us, the integrity of having a business and not wanting to let them down. Sometimes you get customers that will be like, ‘We had a great experience with your company, it was really wonderful, it was amazing!’ Seeing those reviews come in is encouraging and really makes you want to keep going,” Michelle says.

While those positive moments of appreciation and validation are small compared to the complaints and negativity many entrepreneurs face, they can mean the world to a small business owner.

One factor that contributed directly to Eric and Michelle’s success was their willingness to work at the forefront of cutting-edge technology. “After our first three years in business, we realized that to grow and scale the business we needed to go paperless,” Eric says. The pair selected a service provider and began integrating iPads into the day-to-day tasks of running their business. “Suddenly all our information could be accessed anywhere at any time. Scheduling and appointments were made in real-time, and technicians could look up customer histories on-site, during emergencies, or while on the go. The change was monumental.”

Technology is not always perfect, however, and sporadic software performance sometimes made Eric and Michelle question their decision to rely on technology. Many owners would have given up full implementation due to the repeated and painful hurdles of learning a new system. Michelle and Eric, however, were not such people. “While some of my fellow business owners may have chosen to accept mediocre software, we chose to upgrade. Making this change had a significant cost, but we could see the pros far outweighed the cons,” Eric says.

These cons were not minor however, not only was new software expensive, but it took hundreds of hours to fully implement and learn. However, the effort paid off and Washington Generators’ field and office efficiency increased significantly. “Communication and invoice creation saw incredible improvement. Our ability to service more customers with the same crews increased 3x. Customers also loved the professional appearance and invoice accuracy of our cloud-based iPad system,” Eric recalls.

Another less concrete factor of Eric and Michelle’s success was simply their experience with failure. You learn a lot from your failures,” Eric explains. “We really failed before we started this business because I was a union electrician. We had a great paying job, we had real estate we had just purchased. And then the dot-com bubble burst in 2003, I lost that job, I lost that real estate, we literally had no money, we had nothing. This was a really low point for us.”

The couple’s experience with hardship in 2003 allowed them to be more agile and resourceful when the economy crashed again in 2008. “We looked ourselves in the mirror and asked ourselves, ‘If I don’t push through these painful moments caused by the recession, where will we be? What would that look like for us, our family, and our employees? What would that feel like?’ The truth was we already knew! because we already experienced it!  Failure was worse than working through the challenges. So out of necessity, and with an unusual amount of tenacity, we came up with solutions that other people wouldn’t have,” Eric says.

Michelle and Eric were also able to identify a niche in the market that was not being filled—installing generator systems—and made it their strength. “We saw that nobody was really focusing on it. So, we were like, ‘What steps do we need to take in order to be the number one provider of backup generator systems?’ There were so many individual legs of that stool that it took to become a premier dealer, and we achieved that.”

Their decision to pursue this niche paid off, as the need for backup generators has grown, particularly during the COVID-19 pandemic. With everyone working remotely, having a secure internet connection became critical for school and work. “You had all of these people shifting to a home environment and in order to do their job or go to school, they’re going to need that backup power. And with the [electrical] grid in Seattle, it was huge for us. People saw this wasn’t going away and there’s a need here,” Michelle says.

Like the dot-com crash in 2003, and the Great Recession in 2008, the COVID-19 pandemic was a moment of extreme economic hardship, but Michelle and Eric were primed to make the most of it. The first time the economy collapsed they lost everything, the second time they started a business, the third, they used that business to meet the needs of thousands of struggling, vulnerable people.

Any instance of upheaval and social struggle, while terrible, also provides an opportunity for those who are able to meet the moment. “Catastrophic events always have the potential to crush even the most vigilant owner,” Eric says, “but they are also an opportunity to be nimble and skillfully make the changes that fit the circumstances of the moment. We were able to see what was occurring and make monumental critical changes to how we handled our inventory. I cannot understate how dramatic these changes were.”

At the time, the demand for generators was high but the shipping delays were extreme. If Eric and Michelle had mishandled their inventory during such a tenuous time, they likely would have gone out of business. However, due to their forethought and agility, they were able to take action far faster than the competition.

Key decisions were made prior to the crisis to submit for large bank inventory allowances that were approved because of years of timely payments and proper financial management. Huge additional warehouse space was secured before it was actually needed after looking at monthly and yearly trends. When the sudden and pressing need arose for bank financing and warehouse space, the company was completely prepared. The company leapfrogged the broken supply chain with uncanny skill. “At one point during the pandemic we were the only local company with the inventory and ability to perform the installation of new products,” Eric adds.

The need for backup generators is likely only going to continue to grow, with already weak electrical grids across the country put under duress by the effects of climate change. “Is there more of a need for backup power,” Eric asks “Yeah, I think there is. I think the local Utility Companies across America have not made critically needed investments in the electrical grids. This leads directly to more frequent, and longer duration power outages.”

Eric first spotted the need for backup generators 12 years ago, shortly after Washington Generators was first born. Generac Corporate, the largest distributor of generators in the Seattle area, had gone up by 30% from selling generators. While initially skeptical, Eric decided the opportunity had too much potential to pass up. “I remember thinking to myself when we started the business, ‘Get a candle, get a flashlight, this is not a big deal.’ But over a period of time, I really began to see that there was a market, and it didn’t matter what I thought. Maybe I personally was willing to go ahead and rough it, but my customers were not,” Eric says.

Eric’s hunch was right, in some instances even too right. After severe storms, Washington Generators would receive more demand than they could possibly meet. After one particular power outage, they received 600 calls over the course of one weekend. “We couldn’t keep up. We didn’t have enough staff. People wanted estimates, they were like, ‘I want a generator now!’ Well, we didn’t have the manpower in the field, and we didn’t have the office staff to be able to handle that kind of call volume,” Michelle says.

“It was complete mayhem and insanity,” Eric adds.

As any entrepreneur knows, however, too much demand is better than not enough. The story shows just how far Washington Generators has come when compared to a similar instance early on in its business journey. “In the first 24 months that we opened the business, there was a massive ice storm that came through the area. Ice was on the utility lines and poles. Tree branches were down. It literally ripped the wires off houses. I didn’t really even know anything about backup power at that point, and I just remember our phone did not ring. There was all this work that needed to be done, and nobody was calling our company.  It was beyond frustrating,” Eric says.

“As a business owner, you could decide that you’re in the wrong industry, that this isn’t for you, that it just isn’t working. Instead, I was like, ‘What do we need to do so the next time this happens our phone does ring?’”

Eric and Michelle took the lesson to heart and invested in strategic advertising efforts to get their name out there. They also established a digital estimating platform that provided all the information customers would need to know about the price of products and services.

“Our digital estimating platform was unique to the company and set us apart from anyone else offering services in our space,” Eric says. “Many entrepreneurs start with the question ‘how do I close more sales at a higher profit margin?’ we looked at it from the angle of ‘how can I tailor my sales presentation and make it more understandable and appealing to my customers?’ We have proved over time that when you truly understand customer needs and present a clear and compelling estimate, sales and profit margins naturally follow. That came from asking customers questions instead of trying to push them to see it our way.”

In marketing, Eric found a passion. He researched SEO and how best to connect with potential customers. That, along with field management became his area of expertise. Michelle continued to do all the accounting and oversee the office. They tackled hiring together.

Like her husband, Michelle too wanted to better herself and increase her capabilities. She received a certificate in human resources from Green River College. “I always wanted to go ahead and do more schooling so I could feel more competent in my role,” she says.

Throughout their entire ownership, Michelle and Eric had an attitude of identifying what they did not know and going out and learning it. They constantly committed themselves to exceed their limits and further developing their skill sets. They still were able to admit, however, when they could not learn a new skill or take on a new job. “Accept if you can’t do it, it’s okay. Admit it and hire someone who has that expertise. We did that with accounting-based business coaching, website development, and more” Eric says.

The pair understood that they needed to build out their workforce, but that they also needed to choose their hires wisely. “The biggest thing I learned was to be very patient [in hiring], even for an office position where I’m taking on the additional role,” Michelle says. “You need to be patient because it doesn’t pay to make a quick hire.”

Like any good parenting unit, the pair made important decisions together, and both Eric and Michelle made sure to be present for every candidate they interviewed. “We look at things differently. Michelle would notice things about our applicant that I wouldn’t notice and vice versa. After we had an interview, we would discuss and talk about it,” Eric says.

While every company says they’re like a family, this becomes much closer to reality for small businesses, where the owners and employees know one another well and are very involved in each other’s lives. When hiring, Michelle and Eric not only considered who was the most qualified, but who was the best fit for their family.

The pair also considered the company culture they wanted to build, and how to create a strong, happy environment. “Our company philosophy was H.E.A.R.T Honesty, Excellence, Accountability, Respect, and Teamwork. At company meetings, we talked about what this meant. We would choose one of the five principles and give a short thought about how we could apply this in our work,” Michelle says. They also established an incentive program to motivate employees to meet goals and embody these values.

For the majority of the 12 years Eric and Michelle ran Washington Generators, they did so out of their home. They originally ran the business out of their house in Auburn, Washington, but got in trouble with their HOA for having tools on the side of the house. The family then moved to Kent, Washington where they worked out of a four-car garage behind the house before putting on an addition.

“We added two small offices, and then you had the conference room, which was our kitchen, and the breakroom in our family room, that was where [staff] had their breaks and we held our company meetings,” Michelle says. A family business indeed!

When Washington Generators did eventually move out of the Johnson home and into their own building, the business grew exponentially. “This move catapulted the company to a new level,” Eric says. “Employees could more clearly see tangible evidence of company success and there was no doubt that it had grown to a point where we required a large warehouse for inventory and space for staff.”

Still, the pair prioritized maintaining that familial culture, no matter where the business was located.

After that first year of making $175,000, the next year’s revenue went up by 25%, then 30%, then 40%. Over the course of 12 years, Washington Generators had grown astronomically, almost 30x its original size. It was becoming clear that Eric and Michelle’s baby was all grown up, and perhaps it was time to let it go.

“As we went along that arc, it became really clear that we were starting to exceed the limits of a family-run business,” Eric says. “It was super cute the first four years. I had my tools, and I would actually go out and do work. For the second four years, I would go out in the field maybe half the time, then I was doing office stuff and working with corporate partners like Generac and Costco. It didn’t feel like the core that we began with.”

In many ways, Washington Generators had achieved everything Michelle and Eric had wanted for it. They were awarded the Emerging Dealer from Generac. They eventually got Elite, and then Premier Status from Generac. Premier status is exclusively reserved for the top 2% of dealers worldwide.

But during this time, Eric’s father had quadruple bypass surgery. It was an experience that called a lot into question for him and Michelle. “My dad had five kids, and I was the last person to be able to visit him while he was recovering because I was so busy with the business,” Eric says. “I just remember thinking, ‘Is this really what I want?’ The business was so consuming, and I had to ask, ‘Do I really want to be the one who can’t come when my family really needs me?’”

They decided it was time to make a change. Eric and Michelle reached out to Gregory Kovsky and IBA. “Gregory came in and did a wonderful job,” Eric says. “He really has the confidence and experience we were looking for. In opening a business, one thing I learned is that it’s not always about the price that you pay, but whether you are receiving what you paid for. We felt Gregory was the best possible chance of having a successful outcome, and he delivered. He absolutely delivered.”

“What I enjoyed most about him was that I didn’t feel he was making our decisions for us,” Michelle adds. “He very much wanted to be sure that we were the ones that chose. He presented information in a very clear manner with zero hesitation, but he always let us make our decision.”

In late September 2021, Eric and Michelle sold Washington Generators. Their baby had finally left the nest.

Through economic hardships, Eric and Michelle learned to thrive rather than simply survive. Where others saw difficulties, they saw an opportunity and were able to build a successful business because of it. “Looking back, I think we achieved the American Dream,” Eric says. “I was like, ‘I want to have a real business,’ and we did, that happened. We don’t really have any financial concerns now. For us, working now is optional.”

“For me [The American Dream] is being able to provide for our family, but also provide for others,” Michelle says. “It was really rewarding being able to provide income to employees and their families. We tried really hard to make sure the employees were well taken care of. That benefited us in achieving our goal, and it also helped them.”

For Eric and Michelle Johnson, family is everything. Washington Generators allowed them to not only provide for their family but expand it as well. For their employees, customers, and community, their door was always open.

Nesha Ruther

Nesha Ruther is a writer and editor from Takoma Park, Maryland. She received her BA in English Creative Writing from the University of Wisconsin Madison, where she received a full tuition scholarship through the First Wave program based on academic and creative merits. She was a 2016 Young Arts winner in spoken word, a 2016 winner of the DC Commission of the Arts Larry Neal Writing Award, a 2017 winner of the Mochila Review Writing Award, which was judged by Nikki Giovanni, a 2020 winner of the University of Wisconsin’s Eudora Welty Fiction Thesis Award, and a 2022 Tin House Winter Workshop Participant. She has been commissioned to write and perform for the National Education Association, and has had work published in NarrativeNortheast, Angles Literary Magazine, Beltway Quarterly and more. She currently lives in Cincinnati Ohio and is the Lead Manuscript Developer at Holon Publishing and Collective Press.