Discussion about tv show "The Profit" or any other businesss-related show

[SumpinSpecial]

Hi guys,

Since Harold turned me on to "The Profit" I've been watching them all, or at least the last few seasons. Great show! The latest one was especially wonderful, a 13-year old kid launched a cookie business, but was successful really because of his mom's support. I'm sure she's the one doing all the bookkeeping and contracts and such, definitely all the legal stuff since he's under age. But she was fantastic because she seemed to come from the inner city and School of Hard Knocks and she channeled all of her street smarts and determination to succeed into helping her son succeed. Very impressive woman!

What I really wanted to chat about, though, was the product. I don't mean to start a flame war, but welcome education on this. When starting a business, you're always told to find an underserved niche. How in the world are cookies an underserved niche? There are a baziilion and one cookie companies.

However, it looks to me like she sort of "forced" a niche by really clever marketing: she sold the cookies to local businesses who then serve them to their customers and clients for free. Everybody raved at how good they were, and word spread locally. Then word seemed to spread to media channels, because they mentioned some major companies who wanted to buy them in quantities they couldn't produce so they missed those opportunities, but that was proven demand for THEIR product.

What do y'all think about this episode?

[Bobjob]

I saw the commercials for the episode but did not see it.

I adopted the business idea that there is always room for one more a long time ago. People say "find a niche" because it increases your chance success. I would say the cookie peoples niche was their marketing.

[SumpinSpecial]

Sure, and I can see that working on the local level. But as they move on to selling online, I don't see that it will be successful long-term. The most important part of their product was "no preservatives, all natural" cookies that are delicious like they're fresh baked. Once you get into larger distribution, it's hard to control your product quality with no preservatives.

Maybe they'll be smart enough, or Marcus will coach them, into migrating the business saavy into something that will succeed on a nationwide or global scale.

[Bobjob]

I watched the episode. I agree, I question the ability to control the temperature accurately. They never tasted the cookie after it was frozen. I believe Creative Cookie would have gone through all the steps Marcus did once Mr Cory's made the Ellen show.

[Harold Mansfield]

I didn't see this episode but will look for it over the weekend and will comeback to this thread.

[turboguy]

The Profit is one of my favorite shows as well. Unfortunately we are tightwads and have only the basic cable package which doesn't include CNBC but I have managed to see all episodes up to this year and two from this year including the cookie one.

Now you mentioned in your first post that a 13 year old kid launched the business. As I recall what they said he launched it when he was 7 or 8. He baked the cookies and loaded them in his little red wagon and pulled it down the street selling them out of his wagon so that is pretty amazing and now even before Marcus it is a $ 100,000.00 business. I thought the kid was an interesting character. I liked the part when the kid told Marcus his dream was to meet Jamie Dimon (President of JP Morgan, Chase) and Marcus took him to meet Jamie.

Cookies to me seem like a tough business to carve a niche in. Of course being on TV can help a lot. Cupcakes are another tough nut but Wicked Good turned into a big business after being on Shark Tank. All natural ingredients is a nice selling point but anyone can do that and if they are local the short shelf life isn't much of an issue. Still, I liked the episode and think they will do well. Freezing the cookies should be a solution to the shelf life but the proof is in the tasting. The mom seems like she could be a tough person to deal with.

[SumpinSpecial]

We don't pay for CNBC either, so I've been watching it on their live stream online service. The problem with that is they only have the current season up for streaming, so the only way to watch earlier shows is to rent them from Amazon Prime or something. Ugh!

Anyway, about that episode, one of the things I really especially loved was the mom. She was I think the under-appreciated hero in the story. She's clearly come from hard economic living situation, inner-city schools or something that's jaded her so she has no self esteem other than "you mess with me and I'll mess you up". However, she has enough smarts to guide her son into succeeding in the business. There's more to her than she lets on. I hope she is able to form a good friendship with the other business ladies that Marcus introduced her to, because I think she's really CEO material with a little peer support.

Some of the episodes are fun because they reveal really stupid things that the business owners do. I forget exactly what it was, but one of the episodes this season actually made me gasp. It was something financial, though. Also, I really learn a lot about running my own business by watching the show. It was Marcus always asking for numbers that made me research what numbers I should know for my online retail business, and then set up spreadsheets or whatever I needed to make sure I track them and know them.

[Fulcrum]

Some of the episodes are fun because they reveal really stupid things that the business owners do. I forget exactly what it was, but one of the episodes this season actually made me gasp. It was something financial, though.

The Planet Popcorn episode where the business dealt almost exclusively in cash and had zero controls for handling the money and access to it.

[turboguy]

I do think that many business owners who got into the habit of watching every episode would turn out to be better operators from the things they learn from watching the show. I am actually watching this years episode 3 online as I write this. Try watchfree dot ws and they have all the episodes from all the seasons. I liked the mom in the cookie episode as well. She was a cool lady but very much a worrier.

[turboguy]

This weeks episode made me think about SumpinSpecial since the last half was about pet supplies. It was interesting that he invested in a chain of 6 pet stores a few years ago and now they have 80 stores. I believe they are up to about 50 million in sales so there is a nice target for you with your business.

[SumpinSpecial]

Yes, I watched that pet shop episode a little while back. And took a few lessons from it, of course. :)

[turboguy]

This was a new episode that aired for the first time last Tue. The first half he looked at a shirt manufacturing business and walked away because one of the owners also was a radio DJ and his show was both racest and sexist he didn't want to deal with the guy and the second half he revisited the pet store and went with them as they were wanting to buy out another pet store owner. Basically it was an update on the first show. During the first show the guy he invested with had 6 stores and was losing money now Marcus has invested 50 million more and they are up to 80 stores +/- and making 4 million or so a year. The pet part of the show focused mainly on an update, improving margins, adding one more store and adding doggie rain gear to the product line. Their margins were at 47% and he wanted it to get to 50. The rain gear had a 70% margin.

[SumpinSpecial]

I finally watched the latest one yesterday. I love updates on that Bentley's shop because it's so close to what I'm doing. On the other hand, it also makes me feel like a complete loser because their success seems so skyrockety compared to my tiny numbers. Granted I'm not quitting my full time day job to work full time on my business and I know that's one problem. I also don't have the goal to grow that fast. But it's one of those "there's always someone better than you" kind of things, and if they ever come into this area it will be yet another competitor. There is a lot of money in pet goods, but it's also extremely competitive, to the point where I think the industry is going to start .... (looking for the term).... imploding, but not in the failure sense but in the mergers and acquisitions and developing monopolies sense.

[turboguy]

I believe Marcus said he had invested 50 million in Bentley's and I am sure if someone invested that much in your business it would grow faster but I do agree with you it is good to grow slowly. One of the major reasons for business failures is growing to quick. I started my manufacturing business off pretty small as well. I started in a two car garage I owned and bought a cheap drill press, cheap band saw and cheap welder for a total of about $ 750.00. Later we moved to a little bigger place I rented for $ 450.00 a month and built some of my own equipment and bough a little used stuff pretty cheap and just kept growing. If you have a ton of cash or take in an investor you can grow fast but I think you appreciate it more when you do it on your own even if you grow slowly.

One of the things I have noticed about Marcus's program is how little some of the people know about their numbers and has he points out you have to know your numbers. That is what I have spent a big part of this weekend doing, taking a hard look at my numbers which I do every year. Sometimes you get some big surprises. I was a little surprised how much my costs have gone up over the past 5 years.

[SumpinSpecial]

Thanks for the reassurance. Yes, when I'm not feeling envious of the show's business successes :o I do feel pretty good about what I'm doing. I did launch the business more as something to do with my high energy (that's not being utilized in my day job), all of the other skills I have that are also not being used in my day job, and to learn more. I seriously learn from that show and forums like this, and books, so that I start doing things right before I start losing buckets of money. I've made an effort to learn my numbers, and because I'm such an Excel geek, I created a bunch of other spreadsheets that other people don't do so that I can make charts and graphs.

For example, I put my last two years of monthly gross profit, expenses and net profit into a spreadsheet and then made a couple of line graphs from it. One graph shows gross profit and expenses side by side, month to date. The other one is just the net profit, as an area chart. Added a some trend lines and... it's a thing of beauty! According to the gross profit/expenses trend lines, I broke even last November (the two trend lines crossed at zero, with gross profit going up and expenses going down). Things like that motivate me more than anything! But the numbers have to be correct because I don't like deluding myself.

Back on topic, I can't wait for the next episode!

[TAG]

I am a fan of the Profit as well. It is interesting, if you just do a search you will find tons of "haters" who think he doesn't know what he is talking about. I find the show interesting it has taught me, I knew this but it reinforced it, numbers don't lie.

I think it is funny, I'm sure some played up for TV, that some of these owners are so hell bent against changing. The man is a multi-millionaire who has invested and helped tons of businesses I think he knows what he is doing.

[SumpinSpecial]

This is tangential, but for some reason all of a sudden I can't watch the show on my Mac anymore. It keeps saying that I don't have Flash enabled, but I do. Google searches only address this problem on iphones and androids, not macs. Does anybody here know how to fix it?

[Bobjob]

What browser are you using Safari? Chrome?

[SumpinSpecial]

Ack, sorry. I prefer Firefox. I've tried Safari but it's even worse and shows some broken code on their site! :)

[Bobjob]

I am sorry, I do not know anything about firefox. When I had the same issue with Safari I went to Safari preferences and under the general section I did... something. I cannot remember it was a while back. But after I did it, a pop up would show every time I watched a flash video asking for permission to show it.

[SumpinSpecial]

It's weird and I suspect they just have a crappy site because I had this problem last year, and then thought I fixed it, and then it stopped working again for a few months and the started working again all by itself, and now it's not working again. Oh well.

[SumpinSpecial]

They must have fixed something on their end because starting last week I could stream the show to my computer again. So now I'm caught up again.

The second Farrell's episode made me catch my breath... that was a mindblowing level of mis-management. Apart from that, I'm curious about something they did. Near the end of the show, when they were putting together the Farrell's/Sweet Pete's combo store, Marcus commented that the candy racks looked like a 7-eleven because all the candy was in it's original packaging. He was right, it did. He told them to re-package it all, and they did, and it looked amazingly better. But what did they do, tear open all those packages of candy and put it into their own packaging? Wouldn't that take days of pissy manual labor? Or is there a re-packaging company out there that does this kind of thing?

[Harold Mansfield]

They must have fixed something on their end because starting last week I could stream the show to my computer again. So now I'm caught up again.

The second Farrell's episode made me catch my breath... that was a mindblowing level of mis-management. Apart from that, I'm curious about something they did. Near the end of the show, when they were putting together the Farrell's/Sweet Pete's combo store, Marcus commented that the candy racks looked like a 7-eleven because all the candy was in it's original packaging. He was right, it did. He told them to re-package it all, and they did, and it looked amazingly better. But what did they do, tear open all those packages of candy and put it into their own packaging? Wouldn't that take days of pissy manual labor? Or is there a re-packaging company out there that does this kind of thing?

They probably did it that way because they already had the stock and probably ordered it from a distributor. . In the future I'm sure they could order direct from the manufacturer in their own branded packaging. When I ran bars I know you could do this with certain liquors, so I'm sure it can be done with candy and other food products. For example I know for a fact that Hershey's does it and think about things like peanut packages on flights.

[turboguy]

Being a cheapskate is just starting a free 30 day trial for Hulu which has all of this years Profit episodes. The site I used before to view them didn't seem to work but if it is the same site you used may be working now. I just started my free trial so I have only watched one episode which was the recap of his losses and successes. The Farrell's episode is number 10 so normally it would take me a while to get there but I may just watch it today so I know more about what you are talking about. I can't see repacking a Hershey bar but if it was something made special for them that would be different. I will try and watch that episode and see if I have any comments. A day or two ago Marcus tweeted that he would be someplace in Illinois and anyone wanting to be in the show should stop by. I wish he had done that when he did the local one which was Simple Greek. That would have been pretty cool to be there when they were filming.

[turboguy]

I just finished watching the Farrells episode. I can see what you mean by repackaging but sometimes presentation can make a big difference and make the extra labor worth the investment. It amazes me how many turkey's Marcus manages to partner with when here on SBF we have all wonderful people who are experts at marketing and running their business.

[Fulcrum]

This has turned into my favorite show. From shaking my head, to sitting in stunned disbelief, to wanting to reach through the screen to swat some people upside the head, to the respectful nod of the head (Bently's and Sweet Pete's).

That most recent Farrell's episode raised many red flags for me. I really don't think that it was mismanagement that caused the issues. It looks to me like it was a complete disregard for the long term profitability over short term gain for some "investors". The biggest flag was the email directing the one partner to close out an account as it makes me think that a paper trail is being covered up.

With that said, who wants to build and sell some tiny homes?

And I can't forget:
Gobble, gobble, gobble.

[turboguy]

I have to wonder with some of the issues that the managers of the companies in trouble have how they made it as long as they did without driving their businesses broke. There are some great people like Sweet Pete that just let people take advantage of them and really are pretty smart operators. Some of the people Marcus partners with I would not want for a partner. I just watched the tiny home episode tonight but had seen it before. it's my favorite program as well. I just wish it was easier to watch.

[SumpinSpecial]

Oh, I need to go watch that one. I accidentally skipped over it during all the browser probiems.

I think what is clear is that they do drive the business into being broke but they often prop it up with debt and just bury themselves in deeper. It's one of the things that I'm most leery of and why I'm very likely undercapitalized rather than taking on a loan to cover my operating expenses. I have a tidy retirement saved up and there's no bloody way I'm spending all of it in a year or two!

[turboguy]

I agree with you that many seem to let debt get out of control. It seems like a lot of them want the life they could have after the business is successful before it is successful. As I recall the Farrells Ice Cream follow up the main restaurant was profitable but the one owner pulled out all the profits and did that without paying Marcus the money he was supposed to get which I believe was 5% of sales to pay back the loan part of the deal.

The Sweet Pete's original episode had something similar. Pete was hard working and not greedy but he had a partner who was renting him a house to use as their store that wasn't very appropriate and he was charging his partner a sky high rent. The location could not draw in the business and the sky high rent was wiping out any profits.

I thought the pop corn one that aired a few years ago was neat. The owners were terrible and a big part of their business came from the rights to sell popcorn at DisneyLand. The episode made them look so bad that Disney pulled their rights.

I don't doubt that there are businesses where the right move is to borrow enough to really have the business take off but I do agree with you that in most cases it is better to grow the business slow and avoid debt. Usually we learn a lot as we go and trying to get too big too fast can be a big mistake. Once the business does take off not having any debt can be a big plus and can really help if times do get tough as they did in 2008.

[SumpinSpecial]

The second Farrell's episode blew my mind. How can you take profits out of the store before paying off your debtors? That's finance 101, isn't it? I can see pulling profits from one store to prop up another one (temporarily!) but to pull the profits just to cash out? Beyond irresponsible.


Love this show! It's full of small business lessons, and I love learning from the mistakes of others! LOL

[turboguy]

I love the show as well. I think even someone who operates their business well would become an even better manager if they watch that show. It is so much cheaper to learn from the mistakes of others than to make them ourselves. I do think it instills the importance of presentation as with the candy at Farrells/Sweet Petes. His People - Product - Process thing is also key. One of the main things is how important knowing your numbers is.

I just posted in the thread I started about my straw blower web site but never really said why I have been trying to improve the sales of that product. It goes back to his show. With most of my products I try to have a 50% margin. On that product it is near 70% and my prices are 20%+ lower than any competitor. If I could get sales up I could easily raise prices to improve the margins even more. This year the two products I want to promote the most are the two with the highest margins although the other with similar margins does sell well.

[Fulcrum]

I just posted in the thread I started about my straw blower web site but never really said why I have been trying to improve the sales of that product. It goes back to his show. With most of my products I try to have a 50% margin. On that product it is near 70% and my prices are 20%+ lower than any competitor. If I could get sales up I could easily raise prices to improve the margins even more. This year the two products I want to promote the most are the two with the highest margins although the other with similar margins does sell well.

I don't know if you do many sales up this way, but 2 of Ontario's largest farm shows happen within 25 minutes of me. One is wrapping up today in London and the other runs in mid September (Canada's largest outdoor show I believe). I can see a straw blower doing well in barns when spreading bedding in stalls. Not to mention your other products peddled to the right people.

@ SumpinSpecial
Finance 101 these days is to pull as much liquidity out of companies for short term "shareholder benefit" rather than a focus on long term planning. Look at many of the largest, publicly traded companies and study their financials. I wouldn't touch Bombardier unless it was free, I get majority ownership and authority, came with no personal debt obligation (to me), and I'm guaranteed at least $100K a year until profitable without relying on non-repayable government bailouts every 2-3 years.

[Harold Mansfield]

The second Farrell's episode blew my mind. How can you take profits out of the store before paying off your debtors? That's finance 101, isn't it? I can see pulling profits from one store to prop up another one (temporarily!) but to pull the profits just to cash out? Beyond irresponsible.


Likely because of greed, or a feeling of entitlement that they were supposed to make a certain amount of money by now, or because they had personal bills and a lifestyle that needed supporting no matter what. It's a short lived action, but I see people do it all of the time.

[turboguy]

I just watched the Southern Culture episode yesterday (actually for the second time). I had talked about so many of the companies he is called in to save not knowing their numbers. When Marcus sat down with the owner to go over her financial statements she commented she had never seen them. That is sad. She had a half million in debt and really had no awareness about how much debt she had and to top it all had been using alternative lenders and was paying a 40% interest rate. No wonder she was in trouble.

[Harold Mansfield]

I don't understand how people can have so much debt, be in negative numbers every month and still have the lights on and be open. What are they using to pay the bills? Are they using credit?

[turboguy]

Unlike a job I think your own business becomes a big part of your self identity. When you don't understand the numbers you don't want to let go and feel like a failure so you do whatever you feel you have to to survive. In the case of Southern Culture that was borrow from alternative lenders at sky high interest rates. Others may run up a ton of credit card debt to keep their dream from crashing and burning. She was actually able to liquidate a lot of junk and inventory and pay down a lot of the debt.

[turboguy]

I don't know if you do many sales up this way, but 2 of Ontario's largest farm shows happen within 25 minutes of me. One is wrapping up today in London and the other runs in mid September (Canada's largest outdoor show I believe). I can see a straw blower doing well in barns when spreading bedding in stalls. Not to mention your other products peddled to the right people.



I am really late with this answer but I have been to that show in London but that was a long time ago. There is also a large farm equipment show in Febuary and a landscaper show in January. We displayed at the landscaper show for probably 10 years but dropped out a couple of years ago.I could end up back there.

Thanks for mentioning that and I apologize for the late answer.

[turboguy]

I have been binge watching this years episodes. Since I don't get CNBC it is tough to find them but I found them on Yahoo View. I have two to go to catch up. I have never seen so many dysfunctional business owners as he seems to find. It makes me wonder if the whole world is nuts or if they try to add drama to the series to make it more interesting. This year he seems to be walking away from more businesses than he is investing in. I still enjoy the program and I find myself relating the things that happen in the businesses he is looking to buy or invest in and the operation of my business. I do think watching that program would help make anyone a better business person.

[Fulcrum]

I'm halfway through the Ellison Eyewear episode and I'm flabbergasted at the how the 4 guys act and talk. I don't normally talk to the people in the program on TV but I actually made the comment


Time to get your head out of your rear, sunshine.

after the one said he doesn't like math because it


limits my true potential because it's a construct, it's an idea, it's a framework. I know that he is fumbling and I do have empathy.

[turboguy]

I am sure there is a lot that goes on behind the scenes that we don't see. I have to think some things are staged to add a little more drama to the show. Still I have to wonder how some of the business owners who need help ever got as far as they did. I have to wonder why some whose business is pretty much beyond hope without an influx of money from Marcus and whose business plan obviously hasn't worked are too afraid to give up equity and control to save the business they seem to love.

I do have to wonder as well how so many who seem to have obvious character flaws and in some cases a lack of business knowledge make it as far as they did.

[Harold Mansfield]

I do have to wonder as well how so many who seem to have obvious character flaws and in some cases a lack of business knowledge make it as far as they did.

I wonder this all the time. So far based on experience, I've come up with a few answers:

1. People lie. They portray themselves as having bootstrapped it all with nothing, but in reality their business is more of a hobby that doesn't make much money and their lifestyle is actually funded by a spouse or some other source.

2. Ignorance is bliss. Some people have one skill that works, but have no skills in anything else. This can carry you a long time if things never change.

3. They have or had one good client when they started and never learned to actually build a sustainable business if they lost that one client.

4. They have an in demand, highly lucrative skill that they are so good at that others overlook how crappy they are at running a business.

5. Back to lying. They spend it all on looking successful without having ever built any actual success.

6. Good old boys club. It's all connections and friends who throw them business and they only need to put forth minimal effort to keep the gravy train coming.

I used to get upset and say things like "how did this idiot get so far?" until I realized whatever they're doing to be more successful than me works, and apparently I'm the idiot for not doing it too. Today I say whatever works. Kudos to anyone who makes it no matter how they make as long as it's legal and they aren't ripping people off.

On the flip side of everything listed above, I've seen people who knew they were lacking in a lot of skills and knowledge, knew one thing well, busted ass to get few good contracts or sales or whatever to bring in some money, and were smart enough to hire someone to help with the rest of the stuff.

The worst thing any business owner can do is work in a bubble, only listen to themselves, and think that they don't need any help from anyone.
I think being honest from the beginning about your limitations and where you need help is the smartest thing any business owner can do. It helps you focus on the things that you are good at and really knock them out of the park.

[turboguy]

Nice post Harold. I think you covered a lot of good points in one post. Very well thought out.

[journalist55]

Interesting! I've never heard of that show. Just wondering, who bakes the cookies?

[turboguy]

It is a pretty interesting show if you are into "Businesses". He basically buys into businesses then fixes the problems. Usually, the business was losing money. Much of it is poor management and, in some cases, the owners are the problem and once he is gone, they go back to what they were doing. In other cases, they stay with the plan and become successful. One of his first investments was a car dealership that he grew into a 50-store chain and then sold for a big profit. Another was a struggling pet store than he turned into a large chain of stores. There also seem to be some cases, however, that he seems to have ripped off the original inept owners. One was a local, to me, Greek Restaurant chain that the owners say he left them out in the cold.

[journalist55]

I think that was a very interesting and unique marketing idea. Selling your products to local businesses who then serve it to their costumers and clients for free is a great way to get your name and product out there while making money! I wonder if they will ever just sell directly to customers instead of only local businesses after marketing this way?