Marcus Lemonis Reveals The 3 Keys To Business Success
The Profit, CNBC’s small-business TV program starring entrepreneur Marcus Lemonis, was just renewed for a second season. The reality-based series follows Lemonis as he invests $2 million of his own money in small businesses that are struggling but have the potential for success.
Lemonis couples his monetary investment with hands-on advice to the companies' founders and employees. If there's one person who was made for this type of show, it's Lemonis. He's the founder, chair and CEO of Camping World/Good Sam, a national retailer of recreational vehicles and related goods and services. The company generates more than $3 billion per year in sales and employs over 6,000 people—not bad for someone who hasn’t yet turned 40.
Lemonis’ passion for business led him to become a successful angel investor, and The Profit gives us a glimpse of the man in action. His interactions with small-business owners from across the country range from the unpredictable to the outrageous, as not everyone is comfortable taking advice that may conflict with how they currently run their companies. Unlike other semi-scripted reality shows that shoot for a happy ending, however, The Profit is honest about the outcomes—sometimes the deals work out, and sometimes they don’t.
In all cases, however, Lemonis puts his three-part evaluation process to work, a process he claims has played an important role in his own company's success. He breaks down any business into these three key components: people, product and process. Here's how they affect the success or failure of a business, according to Lemonis.
Throughout all the first season episodes, Lemonis emphasized the importance of people for small-business success. But making sure you have the right people working for you is common knowledge to any entrepreneur. That's why Lemonis takes this basic advice a step further by showing business owners why it’s not just critical to have the right people—you have to have them in the right roles as well. In the episode dealing with ECO-ME, a producer of green cleaning materials, the company's founder had a trusted family member in a key sales position. But this person wasn't really a good fit for the sales position—the company had the right person in the wrong job.
It’s also important to create an "enabling" environment for your employees to ensure they can perform at their best for your company. LA Dogworks was a dysfunctional, dog-related services company. The owner had caring, thoughtful and dedicated employees who were constantly insulted, berated and belittled by the boss. Having the right people in place isn’t going to lead to success if they're in an environment where they're made to feel like failures. This episode reminded me of the mantra, “The beatings will continue until morale improves."
Lemonis' second key ingredient is a company's product. In each episode, he carefully examines what's being sold and its key marketing characteristics, including pricing, packaging, sizing and targeting. Many times, small-business owners assume that consumers will view their product the same way they do, but that isn’t always the case. In the case of ECO-ME, the company decided to name their cleaning products after people they knew. But most consumers won’t clean their floors with something called “Ted”—it's just too odd of a name and wasn't clicking with customers. In the case of Planet Popcorn, a specialty popcorn manufacturer and retailer, modifying the packaging by creating a cleaner, more streamlined look allowed the company to sell its popcorn at dramatically higher margins.
The final element, a company’s operations, is key to ensuring a business's efficiency and opportunities to scale. The most memorable episode related to failed processes was Planet Popcorn. The company makes and sells its specialty popcorn to corporate clients such as Disney as well as through county fairs. This mostly cash business had absolutely no procedures in place for managing its cash flow. Lemonis found piles of cash lying around everywhere. The end result? With no process in place, the company couldn’t account for $400,000 in cash profits, money which had basically disappeared.
If your company seems stuck and can't get to the level you'd like, take a look at the people, product and processes in place at your business. Lemonis' three-step evaluation process is logical, effective and easy to implement. I recommend it.
The Profit still has openings available for companies that want to be considered for the second season. Not only will you get national publicity on CNBC, you may also get an infusion of fresh capital and Marcus Lemonis as a not-so-silent partner.
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