I’m hooked: on The Profit
The Gist: Marcus Lemonis is a successful businessman (CEO of Camping World) who saves failing small businesses with his knowledge and his own money. In each episode of CNBC’s The Profit, Marcus makes an offer that’s impossible to refuse; his cash for a piece of the business and a percentage of the profits.
What I love about the show is that it teaches business principles and features Power-Point ready tips in each episode…And I love the no-BS guidance in order to get businesses back on the right track. (Marcus and I have a lot of similar commonalities – hence why I like him so much!)
I recently watched the Planet Popcorn episode. This is about a Southern CA popcorn business that generated $2.5 million dollars in revenue last year, with a balance sheet showing over $400,000 in profits, yet the business is over $200,000 in debt.
Marcus wants to turn this business into a mega brand like Mrs. Fields to generate $10 million dollars in the next two years.
Here are some of the problems that are quickly uncovered:
-No website (they didn’t even own the Planet Popcorn url name – so Marcus bought it).
-A lot of cash lying around and no controls (no money drop safe, no cameras, anyone could walk off the street and grab a handful of cash).
-The office and owners’ desk is a mess with stuff everywhere.
-Doesn’t have a tight inventory control (no codes on popcorn bags packed, no tracking mechanisms, no understanding of what have or don’t have).
-The owner borrowed money from her mother in order to keep the business afloat.
-The owner is trying to expand into the crepe and funnel cake business too. The problem is that this business takes 80% of her time, and only generates 20% of the profits.
Marcus says, “Let me get this straight, Popcorn has better margins and has more business, yet you’re in the crepe business?” The owner says, “Yes.” Marcus see’s things the owner doesn’t see – if the owner just focused on the popcorn business and nothing else, she would make money immediately.
Marcus and I share the same business philosophy – a business succeeds based on three key components: PEOPLE. PRODUCT. PROCESS.
And you have to have at least 2 of the 3 to survive!
The owner says she has the quality people and an amazing product, but she knows her process needs helps.
After evaluating the business, Marcus devises a game plan for the owner:
-Sell all those gypsy vans and stop traveling around to the fairs
-Open a store front
-Launch a website
-Become an iconic brand like Mrs. Fields
The bottom line is her business will not survive without a cash infusion. He tells the owner, “If you think you have the IT, the marketing, and resources that I have, then stay on your own.” “If you think I can launch you and finally make you real profits then you should do a deal with me.”
The owner decides to do a deal with Marcus and an action plan is established and set in motion immediately.
Location. Location. Location.
One of my favorite scenes is when Marcus and the owner scout out the perfect location to open the Planet Popcorn store front.
Marcus wanted a location around people with medium income, lots of foot traffic, that also contained a gas station, a coffee place and an ice cream place for consistent foot traffic throughout the day. He found one and the owner hated it.
The owner showed Marcus her idea for the perfect location; a location that was close to her house, around the corner from a busy traffic street and had zero foot traffic.
This is an easy answer for me because I have the business knowledge in this area. So if this (or another area in your business) isn’t your strong suit, hire someone who is and you’ll save a ton of money, aggravation and time!
Note: There are two types of purchases (1) a destination purchase (like a hardware store because you know what you’re going there for…that is unless you’re like my husband!) and (2) an impulse purchase (like an ice cream shop or popcorn shop). Your best odds are to have an impulse buy in a high traffic area, where people are spending their discretionary income.
I also like that Marcus doesn’t mess around, in one week he…
-Brought in a web designer to talk about a new website and provide some design mock ups.
Note: Having a website is the cheapest store you can possibly have! It’s a 24 hour store, 7 days a week, with the lowest cost.
-Brought in a brand designer (to provide a national customer appeal logo vs. the current ‘carnival looking’ logo + new packaging ideas).
Note: Packaging is one of the easiest things to do to increase sales and profit. Great packaging will sell a product before anything else.
-Showed the owner how she could make more margins on her existing product offering by simply adding a tin packaging option. (The bag costs $0.17 and the tin costs $0.80, but they both contain the same amount of popcorn. The tin has a higher perceived value and can retail for $16, whereas the bag retails for $7)
Note: Perception matters more than anything in retail and packaging is a BIG part of perception.
Okay, I’ve rambled on way too long. Check out The Profit on CNBC…you might get hooked on it too!
Do you need some marketing advice or business mentoring? You can have a one-on-one consultation with Tana, find out more here.
Want to watch the full Planet Popcorn episode? You can watch it here…and then tell me what you think!