NEW YORK—According to Marcus Lemonis every struggling company can be saved.
As star of the CNBC program “The Profit,” Lemonis invests in troubled businesses and works with his new co-owners to fix every aspect of the companies.
That could mean changing every product and service. And it also may require that the owner set aside a little pride.
“The business is bigger than you, and while you’re an important part of it, you are not the business,” said Lemonis. “That includes telling the owners all the mistakes they’ve made. It’s a blow to their egos, but it has to be done to save the company, Lemonis said.
Businesses on the show have included food manufacturers, restaurants, a beauty salon, and a used car company. Some have been close to collapse.
“Taking something and fixing it is enjoyable, but more important, it’s equally enjoyable to fix the people,” Lemonis said.
One of Lemonis’s favorite turnarounds on “The Profit” was his first, New York-based Car Cash, which bought used cars and sold them to wholesale car dealers. The company was owned by two brothers who inherited it from their father but because of their personalities, they didn’t work well together. They were also working with wholesalers who were paying too little for the cars. Lemonis restructured the company to give the brothers separate roles so they had fewer conflicts, and he eliminated the wholesalers. Car Cash, which was on the verge of closing, now has more than 70 locations across the country.
Lemonis made his name in business by buying recreational vehicle companies and turning them into Camping World RV SuperCenters. He’s invested $23 million in 15 companies on “The Profit,” and has turned around more than 100 companies over the past decade.
He spoke with The Associated Press recently about turning companies around. Here are excerpts, edited for brevity:
Q: What are the biggest mistakes small-business owners make?
A: The first is not understanding the importance of people. They don’t understand that people make the difference. No. 2, they typically don’t know their financial numbers. They don’t understand the entire business and the decisions they make circulate around numbers. They don’t know the difference between a debit and a credit, a profit or a loss.
No. 3 and most important, they have trouble putting their pride aside. It’s something all of us have trouble with. When it comes to having somebody look at you, or your business, it’s difficult to put your pride aside and be objective about it.
No. 4, understanding the importance of picking the right product, whether it’s the type of clothes they manufacture, or the way they run a salon.
One more: the willingness to be vulnerable, honest, and transparent. People often come in with so much bravado and arrogance and it turns off employees, vendors, and customers.
Q: What kind of company can be saved?
A: Any type of company can be fixed. Some people say, if the product is irrelevant, like eight-track cartridges, the business can’t be saved. It can be, if I can get them to understand how to get the same content of music and distribute it a different way. We’ve had plenty of businesses where we’ve had to change the product and process entirely and transformed the people. I went into a women’s clothing company last spring called Courage B. We analyzed and simplified all of the products they had, put them in categories, and looked at sales records. We eliminated products we knew weren’t selling. We brought in products we knew were selling.
Q: How can someone be sure they don’t end up in a place where they need someone like you?
A: The first mistake is saying, you don’t need someone like me. Even I need someone like me. Why would anybody ever think they don’t need help? Why would anybody ever think they’ve already figured it all out? I’ve hired people to work in my organizations because I believe they bring something that I just don’t have, some skill, perspective, insight, knowledge.
Q: What’s the most important thing you’ve learned from the show?
A: The importance of giving someone a second chance. You’ve seen people be rude to me, totally nasty, and I’ve put it into context and understood it’s the circumstances and give them a second chance. It’s taught me to be more willing to stay longer, listen more, and build my tolerance when people are just off the wall crazy. I’ve slowed down and it’s made it better for me and the business.