7 Business Lessons from CNBC’s “The Profit” by Marcus Lemonis – Part 1

Marcus Lemonis The Profit

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Marcus Lemonis is the star of CNBC’s hit reality show, ‘The Profit‘. Marcus puts his own money on the line to save struggling small businesses and makes a profit while doing so. He’s also the chairman and CEO of Camping World and Good Sams Enterprises, with over $3 billion in sales in 2013.

Every episode of ‘The Profit’ focuses on one business that Marcus wants to invest in. These are typically businesses that are struggling to stay afloat, or unable to reach the next level. Marcus proposes a deal which offers his money, expertise, and resources in exchange for a percentage stake in the company. Once they agree on the deal, Marcus assumes full control of the company for about a week, and you watch in awe as he rapidly gets to work in turning around the business.

Watching the thrill of the deal and the erratic personalities of the business owners provides much entertainment value. However, we are hooked onto this show for all the insights and valuable business lessons that Marcus Lemonis provides to these small business owners.

We are very excited that Season 2 of ‘The Profit’ is underway, and we just can’t get enough of it. So we decided to go back and review all the past episodes from Season 1 to see what valuable business lessons Marcus teaches us. Of course, we’ll follow-up on this post with the lessons learned from the current Season 2 episodes. So if you like this post, please subscribe to our newsletter at the end of this post for future updates!

 

The 3 Ps – People, Process, Product

Obviously, if we’re writing about business lessons from Marcus Lemonis, we have to talk about the 3 Ps: People, Process, and Product. It is his “business mantra”, and is a recurring theme throughout the episodes. He stresses that for a business to be successful, it has to have at least 2 of the 3 Ps going for it. Out of the three, he mentions that People are the most important.

We won’t go into too much detail with the 3 Ps since there are many other articles out there that talk about this in detail already.

Marcus Lemonis’ Keys to Success: People, Process, Product

 

Communication

Season 1, Episode 1: Car CashMarcus Lemonis - Car Cash

In 1977, Bruce Baron, father of Jonathan and Andrew, opened up Car Cash on West 55th street of Manhattan.  They allow customers to sell their used cars for cash, on the spot. Business thrived, but after the 2007 recession and their father passing away, Jonathan and Andrew started to struggle.  In the previous year, the family business had $13 million in sales, but recorded a $200,000 loss. In addition, they were $200,000 in debt with sales down 70% from the previous year.

Marcus steps in to fix the process of appraising cars and converts the business to a licensing model. However, he finds another pressing issue between the two brothers. Even though the two brothers have a 50/50 stake in the company, Jonathan, who is 4 years older than Andrew, is not open to the various ideas Andrew has for marketing the company. Jonathan states that he doesn’t have time for Andrew’s ideas, and Andrew says that this has put a strain in their relationship.

Marcus reminds the two brothers that they must communicate as business partners, and if they can’t, they should not be in business together. Marcus sees value in Andrew’s ideas and eventually, Jonathan gives Andrew an opportunity to prove himself. By the end of the show, the relationship between the two brothers has significantly improved and Car Cash is well on its way to opening multiple locations throughout the United States.

 

“If you guys can’t communicate as business partners, you can’t be in business together. If you can’t tell him what’s wrong, then you shouldn’t be in business together.”

- Marcus Lemonis

It’s no question that communication is crucial for any relationship to succeed. But it’s even more important when running a small business. Because there are so many moving parts, you and your business partners need to be in constant communication. As Robert Kent, former dean of Harvard Business School has said, “In business, communication is everything.”

Why Good Communication is Good Business – Marty Blalock

 

Passion

Season 1, Episode 2: Jacob Maarse FloristsMarcus Lemonis - Maarse

In 1961, Jacob Maarse opened up a high-end florist and gift shop in Pasadena, California. It was very successful, but ever since Jacob died in 2010, it has failed to earn a profit. Hank Maarse, the founder’s son, has struggled to lead. The business generated $3.6 million in revenue, but had a loss of $20,000. They are also $300,000 in debt, $200,000 from Hank’s mom, and $100,000 from bank.

Marcus finds that the layout of the shop needs to change, delivery vehicles need to be upgraded with the latest navigation technology, and that the price of the flowers needs to be adjusted in-line with inflating costs.  The shop closes to implement these changes and has a grand re-opening where all the employees are excited. But Marcus sees one problem. He can’t find Hank. On the grand re-opening day, Hank decides to just disappear, while others are hard at work.

Marcus is frustrated at Hank for not being a passionate leader. He calls up Hank to come back immediately. Marcus emphasizes that a successful business owner leads with passion by being there before others show up and leaving after everyone leaves. He considers Hank’s actions as being disrespectful to the employees and to the customers who showed up for the grand re-opening. Ultimately, Hank falsely accuses Marcus for not holding up to the deal, stating that Marcus didn’t do anything to help the business. Hank forces Marcus out of the deal, making Marcus seek legal measures to get his money back. In the last episode, we find out that the mother gives back all of Marcus’ money.

 

“A successful business owner subscribes to one theory: They show up first, and they leave last”

- Marcus Lemonis

When a leader lacks passion for their business, their attitude trickles down to the employees. Why would anyone want to work for a leader who is not even interested in their own business? I wouldn’t think this is a typical trait of the founders of a company. But you may see this in the successors of a family business. In trying to keep the business in the family, you have fewer choices for your succession plan, and as a result you may end up handing over the company to a child or relative who lacks the passion to lead.

Passion and Leadership – Tim Elmore

Choosing a Successor in a Family Business – BizMove Business Guides

 

Integrity

Season 1, Episode 3: Planet PopcornMarcus Lemonis - planet popcorn

Planet Popcorn is a multimillion dollar business with a huge Disney contract. In 1999, Sharla Mcbride started Planet Popcorn with $250 and a single cart. They now have 30 employees, 3 flavors, and products ranging from kettle corn to churos and crepes. They generate an annual $2.5 million in revenue, but still can’t turn a profit. They are also $200,000 in debt, most of it coming from Sharla’s mother.

Marcus loves the product, but thinks that they should just focus on popcorn. He looks into different packaging options, considers launching an organic brand, as well as launching a website. As Marcus looks into the accounting, he finds it strange that a business that generates $2.5 million in revenue and $400,000 in profit does not have any cash to show for in the bank.

In addition, Marcus finds out that Sharla tries to undermine him by going behind his back to buy out the website domain name that he had already acquired. Marcus had doubts earlier on in the show about Sharla’s integrity and trustworthiness when she kept trying to pursue her crepes idea, but this incident made it clear that moving forward with the deal was risky. Marcus says that integrity is one of the most important things in business for him, and if people don’t have integrity, nothing else really matters. In the end, Marcus walks away from the deal.

 

“Integrity is the only thing in business. So, you can be very wealthy and you can be very smart, but if you don’t have your word, you don’t have integrity, none of the other stuff is worth a damn thing”

- Marcus Lemonis

Again, integrity is a character that is universally admired, not just in business. As President Eisenhower said, “the supreme quality for leadership is unquestionable integrity. Without it, no real success is possible, no matter whether it is on a section gang, a football field, in an army, or in an office”.

5 Ways to See if your Business Integrity is Showing – Forbes

 

Business isn’t personal

Season 1, Episode 4: Eco-MeMarcus Lemonis - Eco Me

Eco-Me is an all-natural cleaning products company, run by two life-long friends. In 2006, Robin Kay Levine and Jennifer Mihajlov founded the company after Robin’s sister was diagnosed with breast cancer. They grew the small, do-it-yourself cleaning kit to a 17 piece cleaning line, which now includes dog grooming products. Their products are sold nationwide, including Whole Foods and Target. The company generated half a million in sales with only 6 employees. However, they were suffering from nearly half a million in debt, with a broken process.

Marcus finds flaws with the branding and with the production process. He invests in a new logo and state-of-the-art production equipment which would allow the company to produce more to meet its growing demand. With this increased production capacity, he feels that the company needs to go out and sell more. He sees one big problem. Jennifer, co-founder and friend of Robin, heads the sales department by herself and is not even working from the same location as the other employees. In addition, Marcus feels that Jennifer is just not a good salesperson.

He puts Jennifer to the test by making her present to his trusted people from Camping World, where she fails to impress. Jennifer claims that she was just not prepared, so Marcus gives her another big chance in presenting the Eco-Me product to a major hotel chain. Again, Marcus does not feel that Jennifer is qualified for the job. Marcus tells Jennifer that she should not be doing this job, and will not do this deal if she is leading the sale department. Jennifer breaks down and Robin sides with Jennifer and tells Marcus that what he’s saying is disrespectful to her friend and she will not allow that. Marcus reminds Robin that this is business and it’s not about friendship. In the end, Robin, Jennifer, and Marcus agree that Jennifer will get more training. The owners transform their attitudes and the company seems well positioned for future growth.

 

“It’s not about a friendship, it’s a business. This is about putting people in the right place.”

- Marcus Lemonis

Doing business with friends and family can be tricky business. In fact, many advise against it. Even being roommates with your friend can ruin your relationship, so it’s not surprising what would happen when livelihoods are at stake. This is not to say that doing business with friends or family cannot be done. As long as they see each other as business partners and can take constructive criticism, it’s possible.

5 Dangers of Doing Business with Family and Friends – CBS News

 

Value your people

Season 1, Episode 5: LA DogworksMarcus Lemonis - LA Dogworks

LA Dogworks is an upscale dog-boarding facility located in the heart of Hollywood, California. It was founded in 2004 by Andrew Rosenthal. The facility has 36 employees and is a 24-hour full-service center for dogs. It has everything from grooming to training with a state-of-the-art indoor dog park. They generate $1.3 million in revenue annually, but sloppy business practices, together with lax management have driven down sales and piled up $150,000 in debt.

Marcus loves the brand and he wants to expand it by offering their own dog products. He quickly sees that their biggest problem is with their owner, Andrew. Andrew thinks that he’s bigger and better than everyone. He’s a control freak and treats his employees like servants. For Andrew, it’s ‘my way or the highway’, and when someone doesn’t listen to his orders, he starts belittling them and often shouts and curses at them in front of others.

Marcus tries to get counseling for Andrew and he continues to remind Andrew that he should not treat his employees like servants, or else everyone will just leave and he will no longer have a business. At first, Andrew seemed to be making improvements, but it becomes clear by the end of the show that Andrew is not changing. Marcus walks away from the deal knowing that he cannot work with someone who does not value their employees.

 

“Treat employees as people, not servants.”

- Marcus Lemonis

When an owner is passionate about his business and is successful, it’s difficult to change his ways and listen to others. This problem may be similar to people who get promoted for their great work, but once they become a manager, they start micro-managing or just do a horrible job of leading others. In order to make the next step and become a leader, you need to listen to your people and let go a little. Unless you value your people, your business will never get to the next level.

Are People Really Your Most Important Asset? – Deloitte

 

Know your numbers

Season 1, Episode 6: Mr. Green TeaMarcus Lemonis - Mr Green Tea

Mr. Green Tea is a 2nd generation family run ice cream business that has hit a wall. The company supplies exotic ice-cream flavors ( green tea, ginger, and red bean ) to the Asian restaurants in NYC. Richard’s father, Santo Emanuele, founded the company in 1968 and he ran it with Richard’s older brother. After Richard’s father and brother passed away, Richard inherited the company with his son, Michael. Unlike other companies in previous episodes, this company isn’t facing a crisis. They generate $2.5 million in revenue and Richard’s family has a comfortable living.

Marcus wants a piece of the ice cream business and thinks that the business can grow if Richard is able to take some calculated risks by investing in their own factory. Richard plays it safe and worries that making the wrong decision would jeopardize the current state of the company. Michael is young and willing to take risks because he worries that their small company would get eaten up by a big corporation if they don’t act fast.

Michael presents Richard and Marcus with his estimates on the cost of getting a factory up and running. He estimates the total costs to be $600,000, and based on these numbers Marcus and Richard decide to invest. However, when the architects and engineers get to work, it turns out that the actual costs will be over $1 million dollars. Marcus confronts Michael about this miscalculation in estimates and emphasizes to him that numbers are everything when it comes to investments. Marcus also teaches Michael to always under-promise and over-deliver.

 

“If you don’t know your numbers, you just don’t know your business. If an investment is going to be made, numbers are everything.”

- Marcus Lemonis

This was a case of big ideas versus playing it safe. To expand a business, there comes a time when the owner needs to be bold and take chances. When taking chances, one should be taking calculated risks, and this is why Marcus emphasizes that numbers are everything when it comes to investments. Entrepreneurs may seem like they are always willing to take risks, but the ones who take smart calculated risks are the ones more likely to succeed.

Entrepreneurs are ‘Calculated Risk’ Takers – Forbes

 

What Lessons Have You Learned?

Are you a fan of Marcus Lemonis? What lessons resonated with you after watching ‘The Profit’? Do you disagree with any of his views? Tell us more in the comments section below.

You may also like our 6 Tips on Starting Your Own Part-Time Business

Also, please subscribe to our newsletter to get updates on Part 2 of this post, where we’ll go over the lessons from Season 2.


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