tv The Profit CNBC July 21, 2015 7:00pm-8:01pm EDT
buckle up, because change is coming.. ...a progress report. stephanie: this is so good! lemonis: over the past two years, i've introduced you to 30 small businesses. i'm 100% in charge of everything. i didn't make deals with everyone. you're a thief and a liar and a cheater. but today, i have 17 new partners. -do we have a deal? -jon: i'm in. lemonis: i've already invested over $30 million. nicolas: i've never seen a check that big before. lemonis: but the work doesn't stop when the cameras are gone. and success is never a guarantee. nicolas: i'm having a tough time. lemonis: tonight, we head back to new york city to a company that buys used cars. you're taking...margin right out of your pocket.
do you not see that? we overhauled their business model and their building. but they recently received news... marcus lemonis with carcash regarding an eviction. ...that could shut the business down for good. andrew: it's not right. really, it's not right. lemonis: in jacksonville, a talented candy maker tied up in a bad deal. dane: i don't want to sell. lemonis: in 18 months, that tiny company has been transformed into a multimillion-dollar business. you did $538,000 compared to like $35,000 the year before. peter: that's a big difference. lemonis: but the biggest move... what do you think we would do with this building? ...is yet to come. and a family-run clothing company, once crippled by bad designs and bad tempers, got a new look... man: oh, my god. lemonis: ...and new clothing lines. noemie: i love it. lemonis: but some very familiar problems still exist.
nicolas: you don't change that. we will tell you whether it is feasible to do. lemonis: it's another progress report, tonight on "the profit." about 15 months ago, i came to jacksonville, florida, to check out a small candy company, sweet pete's. man: yeah, that's good. lemonis: the business was being run by allison behringer, but the creative force was pete. peter: we mixed our sugar. who wants to eat this? lemonis: and while they brought in around $400,000 in sales, they were still losing money. allison: the first year, we made $10,000 combined. lemonis: you can't live off $10,000 a year combined. business was facing all sorts of obstacles. they were making candy in a tiny kitchen with equipment that was substandard. even worse, they were in a house in a residential neighborhood with no foot traffic. why did you specifically pick this location?
allison: because our partner said, "i own this location." lemonis: that partner, dane baird... dane: this is still delicious. lemonis: ...had made a small investment but wasn't willing to invest any more time or money. peter: how do we buy you out? what do you want? dane: so, i don't want to sell. peter: you're just trying to hold us hostage. that's all it is. lemonis: but it all seemed fixable, so i made a deal. we're sharing 50/50 in the profits. i'm 100% in charge. so, we have a deal? my first move was to untangle the toxic partnership, so i bought dane out... you're essentially not gonna be in charge anymore. ...then set a whole new plan in motion. peter: [ laughs ] lemonis: since the shop was hard to find... look away. ...we'd make sweet pete's impossible to miss. turn around. peter: oh, my god! lemonis: the more time i spent with pete and allison, the more i believed in their mission. so i doubled down and purchased this historic mansion in downtown jacksonville.
the renovation was massive. it took over eight months and cost just over $3.4 million. this place looks ridiculous. the new sweet pete's is 22,000 square feet of color, candy, and fun. the kitchen... what's up, pete?! this place looks great. peter: this is kind of like what you see in the movies. lemonis: the kitchen is industrial grade, and it's been outfitted with over $300,000 of the best candy-making equipment you can buy. peter: this will hold 450 pounds of dark chocolate, and this is a cooker. lemonis: in the first month after the move, we topped over $100,000 in sales, more than triple what they were doing in their old location. peter: we couldn't have done it without you. lemonis: send me my christmas order. -allison: [ laughs ] -lemonis: a lot of candy. the store's been open for close to six months, and we're generating nearly $200,000 a month. but this is just the beginning of something really big.
today i'm meeting pete and allison at the candy expo. -peter: hey! -allison: [ laughs ] -lemonis: how are you? -peter: how are you? lemonis: look, i know we're here to do business and we're supposed to be doing research, but honestly, i just love going to the candy show. it's a ton of fun. allison: [ laughs ] peter: how do i look? -allison: perfect. -peter: [ laughs ] lemonis: i'm thrilled with the fact that pete is the face of this company. peter: hi. woman: i loved your show. -allison: thank you. -woman: congratulations. lemonis: and did you wonder if his hair was really that crazy? -woman: i did, yes. -allison: oh, wonderful. lemonis: people absolutely love him. business is up, margins are up, profitability is up. but what i think is even more exciting is pete went from being a candy maker to a candy mogul. today sweet pete's is a north florida destination. we've got the best candy, but we also offer up great food. this year, we'll generate almost $4 million in sales. [ beep, cash register dings ] but that's not enough, right?
the business has to continue to grow. i think the hotel market's huge. what i want to try to do is get into their rooms, get into the minibars. so what we're working on right now is a meeting that's gonna happen later today at the ponte vedra inn and club, the biggest resort in jacksonville. is there anything we could do in their colors? allison: i think a jelly bean's always good. so if you did pineapple and coconut, that's beachy and it's yellow and white. lemonis: okay. i feel like we've put a great collection together, and i'm excited to see how it goes. i'm marcus. how are you? -steven: i'm steven jones. -lemonis: nice to meet you, sir. allison: hi. i'm allison. lemonis: this hotel is one of the best resorts in all of florida. people from all over the country come here. how many total rooms in the entire property? steven: the property consists of 250 rooms. lemonis: i think it's a real opportunity to not only make money, but get the brand out. steven: if you're looking at our colors, is that something you could incorporate into it? allison: yes. absolutely. john: how do i know if this has been in a room for four months?
allison: we would co-date. however, once your guests are tasting it, that's not going to be an issue. lemonis: we sell about $1 million a year just in sea salt caramels. john: wow. -steven: a lot here. -john: yeah. a lot of options and a lot of customization, which is nice, as well. allison: yeah, we would love to work with you. steven: okay. lemonis: this could be one of the most exciting projects that sweet pete's embarks on. a typical hotel room would have about $30 worth of candy in each room, with a profit margin for sweet pete's at about 50%. if that candy turns over once a week, that means that in an annual basis, it would be $1,560 worth of revenue, or $780 worth of gross. for every 1,000 rooms that we're able to secure, that would be an additional $1.5 million worth of revenue, $780,000 worth of gross profit. that's just on 1,000 rooms. woman: and if you ever have an event, we have a candy buffet.
lemonis: you could even use the mobile trailer. -allison: yeah. -steven: excellent. lemonis: the fact that ponte vedra is all-in on having the product sold there makes me very happy. it's the first time we've taken sweet pete's outside of the actual location. thanks for taking the meeting. -steven: our pleasure. -lemonis: thank you. -john: thank you. yeah. -lemonis: appreciate it. this business has had incredible growth. but the momentum we have we have to capitalize on. we have to take advantage of every opportunity. i had a phone call with the jacksonville jaguars, a team in the nfl. and they're looking for a partnership with sweet pete's. and when the nfl calls, you listen. hussein, good seeing you again. hussein: welcome to jacksonville. -how are you? -lemonis: good. this is pete. -hussein: pete, how are you? -lemonis: from sweet pete's. and this is allison. -allison: hi. nice to meet you. -hussein: it's a pleasure. let's go. lemonis: the jacksonville jaguars were second in the nfl with concession growth last year, and that presents a real opportunity. peter: oh, my gosh. that is awesome. lemonis: there are close to 70,000 people
that come to events here, not only nfl games. peter: that is so cool. lemonis: we're gonna have access to the entire stadium. we'll be able to sell into the private suites. peter: are you kidding me? there's like cabanas here. lemonis: we'll also be able to sell in the concession area. hussein: so, i was thinking this sort of area. these are portable carts. they come in all shapes and sizes. lemonis: and we're also being given access to the club level. i think the biggest benefit with the club level, they're the decision makers that come from the corporations that are sponsors at the stadium. our goal is to meet those decision makers that ultimately control how their business spends their money. if he's here, he's gonna get business cards. people are gonna say, "i own the bank." "i own the big real-estate company." allison: corporate orders. like, we just got one for $48,000. you land one of those... -lemonis: pays for it. -allison: yeah, and you're good. lemonis: corporations not only buy products for their customers, but they buy it for store openings, new product launches, and marketing campaigns. one corporate client could be anywhere from $50,000 to $100,000 a year.
when you go into the club level, there are hundreds and hundreds of companies. to get to $1 million, you only need to shake about 10 to 12 hands. are you guys comfortable moving forward for this fall, for this season? peter: i think so. yeah. lemonis: i know that this intimidates pete because he was comfortable producing $400,000 a year. he's now producing $4 million a year. this stadium deal for pete means more inventory, more staff. this is a game changer for them. with the development of all this new business, whether it's the jaguars or the hotel or the constant customers that are coming through the front doors, something has to change. things definitely can't stay the same. i'm concerned that we're out of space. what do you think we would do with this building?
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lemonis: we opened up the new sweet pete's in downtown jacksonville over six months ago, and business is off the charts. sales are up tenfold. now we're making new deals with the jacksonville jaguars and the ponte vedra inn and club. but i have to be honest -- this thing is bursting at the seams, and something has to change. but i may be staring at the solution. and what do you think we would do with this building? i put an offer in, so we're gonna do it.
-allison: wow. -lemonis: you want to see? allison: yeah. i would love to see it. lemonis: let's go. what became available was a building right next to sweet pete's. it's a 17,000-square-foot building... allison: wow. lemonis: it's three floors. ...that gives me the opportunity to increase our internet and wholesale business, host more parties, conduct more classes. i mean, honestly, it opens up a whole new world. allison: look at all the windows. it's nice. lemonis: it's got great bones, solid walls, but the inside, it looks just like the first building did -- a war zone. peter: holy... allison: yeah, that's a little -- [ laughs ] lemonis: this building is gonna cost me just under $1 million, and i'll have to spend another $1 million to get it right -- a $2 million investment. i've already spent close to $4 million at sweet pete's, and this will take my total investment to $6 million. peter: you could take the third floor and make that retail space, too. lemonis: in order to be successful in business, you have to be willing to take risk.
but it has to be somewhat calculated. we know we need more storage, and we know we need more classrooms, and we know we need more retail. most of my money is going into real estate, which is a lot safer, but i also know that people like fun and they like candy. it's not a fad. it's here to stay. all right, let's head back. so, the first quarter in 2015, we did $538,000 compared to like $35,000 the year before. -allison: yeah. -peter: that's a big difference. oh. lemonis: with this business doing as much as it is today, what would you say the business is worth? peter: i don't know how to put a value on it because i just see how magical this place is. lemonis: what do you think it's worth, allison? allison: i mean, $3 million or $4 million? lemonis: that's right. in a year.
peter: that blows my mind. allison: such a short time. i feel like i'm learning a lot all the time. lemonis: all of us. me, too. and we are gonna open up another one. peter: so we can just do more. so, this formula works. lemonis: yeah, so now all of a sudden, you're, like, down with it, right? over a year and a half ago, i was in a very small house with a very small group of people. i'd like to get the staff together in the other room. and i'm proud of the fact that the crew has grown so big. when i was a kid, i always wanted to have a candy store. but i never would have imagined in a million years that i would be on a team with all of you with a candy store that looks like this. i mean, could you ever have imagined? man: i was hoping something would happen. [ laughter ] lemonis: and so it's been a hard process, right? but we learned that people do make the difference and that when i come here and everything is organized, perfect, and you guys are smiling -- and you guys did not know i was coming. [ laughter ]
all you guys do a great job, and i know that pete and allison are very proud to call you their family. and i'm proud to be part of the family, right? allison: i'm not crying. [ laughter ] lemonis: when i first showed up at sweet pete's, there was four or five people working there. today there are close to 90 people working there. and this business provides a lot of opportunity for not only people to make a living, but for them to grow with the company. and that's what i think people are ultimately looking for. what are you crying about? woman: i'm so excited you got a candy store. [ laughter ] [ applause ] lemonis: since we've started this show, i've crisscrossed this country, and we've seen over 30 businesses. and i've made 20 deals. but the first one is always the most special. woman: good morning. this is 1-800-carcash. lemonis: carcash is a new york city auto-buying business where you can literally drive in and sell your car for cash.
jon: i'd feel comfortable paying $8,000 for it. lemonis: in 1977, this was a big idea, and bruce baron was the guy who came up with it. the money was good, and when his sons came of age, they joined him. andrew: pleased to meet you. lemonis: but in 2008, the country was in a big recession, and carcash took a big hit. just a few years later, bruce baron passed away. and his sons andrew and jonathan were left trying to fix what was now a struggling business. andrew: my job's on the line. lemonis: by the time i showed up at carcash, they were literally just days away from having to shut their doors. jon: we're dangerously low on cash right now, which means i can't buy cars. lemonis: the place looked terrible, and their process was totally broken. jon: if i gave $16,000, you'd pay $17,000 for it? -what do you think? -man: that'll work. lemonis: they were selling their cars to middlemen who were walking away with most of the profits. they're taking...margin right out of your pocket. do you not see that? the financials were not pretty,
and even though carcash was taking in $13 million of sales, they were still losing around $200,000 a year, and they were borrowing money to buy time. and with the losses mounting, you could see that the relationship between the brothers had turned toxic. jon: there's no...way -- to saym pissed" would be an understatement. lemonis: but what was a great idea in 1977 was still a great idea. with a few changes, we could fix this business and scale it and turn carcash into a national brand. so, i'm willing to give you guys $200,000, but i have to be convinced that the prototype works. -do we have a deal? -jon: i'm in. lemonis: we shook hands and started the overhaul. first, i spent over $350,000 totally renovating this facility and creating a better customer experience. i paid down another $300,000 in debt and liabilities and put aside another $450,000 for working capital.
you can't be in the auto-buying business if you don't have the money to buy the cars. it turned into a million-dollar deal and was money well-spent. we changed the process. the wholesalers were out. and our average profit went from $1,100 to $2,000 a car. we started advertising, and that brought in a lot more customers. we used to buy and sell around 70 cars a month, but now we're closer to 200 cars a month. within our first year, the revenue went from $13 million to $20 million. and that $200,000 loss turned into a $400,000 profit. carcash was back in the black. bruce baron's big idea was back on its feet. carcash has expanded dramatically over the last two years. there are locations around the country, and we have a call center where 1-800-carcash calls go into. the cars are either going directly to the auction,
where we're maximizing our profit, or they're being sold at automatch, a used-car retail center that was started here on the show. but back at our original new york store, we're facing a very serious problem. andrew: the landlord has revoked our lease here. lemonis: what do you mean, he's revoked it? andrew: he's trying to use a clause from like 30 years ago to kick us out. jon: he sent this letter. i wanted to show you this letter. lemonis: do you have the letter? jon: yeah, i do. -lemonis: can i see it? -jon: sure. lemonis: lease dated 1987. "dear mr. baron, landlord hereby exercises its right to terminate the lease." jon: i grew up here. i was this big running around here. andrew: yeah. jon: to lose this spot would be catastrophic. lemonis: if you go back and you look at what these brothers have been through, for the last couple of years, they've done an amazing job digging out of a very big hole. they're making money. they pay their rent on time, and now this? [ dialing ] [ ringing ]
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at ally bank no branches equalsit's a fact.. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda. leso, these guys have been here carcash for 30 years.eviction. you're getting paid. they made improvements to the space, and you just decided you didn't want them here anymore. unfortunately, their landlord, who didn't want his voice recorded, wasn't willing to budge. carcash has been in this location for almost 40 years, and they currently pay about $27,000 in rent. now, i know the new york city market is hotter today than it ever has been, but what's he gonna get, $28,000, $29,000? after this business being here over 30 years and always paying rent on time? after $9 million in rent?
andrew: i feel like my father worked his whole life here. and now just like a flick of a wand and, you know, you're out. it hurts. [ sniffles ] it really hurts. lemonis: standing here looking at andrew, i feel somewhat helpless because this is two brothers who spent their whole life here and they built a lot of memories with their dad. andrew: it's not right. really, it's not right. lemonis: i need to kind of get them collected and realize that we need to move forward and look for a new opportunity. move on? jon: i want to move on. i'd like to keep the business on the west side of manhattan. andrew: this is the heart of the automobile industry in new york city. lemonis: okay. all right. guys, let me make a few calls, okay? -jon: okay, marcus. -andrew: thanks, marcus. lemonis: you know, there's this old saying that when one door closes, another one opens. man: these walls are gonna be all blown out.
lemonis: i think i just found that door on a much better location. man: 250,000 cars a day pass here. lemonis: the west side highway runs from west 72nd street all the way down the hudson river to lower manhattan. it's one of the busiest streets in manhattan. quite frankly, the exposure is gonna be great for business. man: you could fit about 18 to 20 cars within this space. lemonis: the challenge with our current space is that there's one way in and one way out. this has one way in and another way out. jon: i could literally look at like four or five cars at once. lemonis: in the old location, we were appraising around 600 cars a month and buying about 1/3 of everything we appraised, so 200 cars a month. in this new location, we should appraise about 1,000 cars a month and buy about 1/3 of them, so 333 cars a month. not only is it a better location, but the rent's only $1,000 a month more. so you bring them in and you back them in. jon: mm-hmm. lemonis: you know, what initially looked like a really bad situation
may be turning out to be not so bad. i think bruce baron would be very happy about what the future looks like. okay, guys. last october, i came to new york city to meet the goureau family. they own an upscale clothing company called courage. b. noemie was the chief designer. noemie: look all the detail inside. lemonis: and her kids, stephanie and nicolas, ran the business. nicolas: did you make the labels for these yet? lemonis: the goureau family have been designing and retailing upscale clothing since 2008... noemie: voilà. lemonis: ...with seven stores across the country. courage. b was doing around $5 million in annual sales, but they were losing $500,000. -stephanie: we're losing money. -nicolas: calm down. lemonis: their connecticut store was chaotic, their merchandise a mess. some of their clothing had serious quality issues. it's disturbing. but even worse, the stockroom. nicolas: so, the inventory that we have down here -- this is what didn't make it.
lemonis: this was a room that was filled with years of bad decisions and hundreds of thousands of dollars of dead inventory. who designed, like, these two things right here? stephanie: noemie did. nicolas: well, we could probably pick 100 things like that. noemie: we liquidate that. nicolas: it doesn't matter if we liquidate. don't try and justify it. it wasn't correct. lemonis: and then there was nicolas. nicolas: you want all of the accolade without doing any of the work. lemonis: he was constantly sniping at his mother. there was a lot to fix. but there was a lot to like. so i made a deal for $800,000 for 30% of the business. nicolas: i've never seen a check that big before. stephanie: [ chuckles ] lemonis: you'll be making checks much bigger than this. i believed in noemie's ability, but she needed discipline, so i had them focus on five categories, the pillars of the new courage. b -- dresses, tops, pants, bags, and the new noemie collection. i wanted them to get these five basic categories right first
before they expanded. woman: this is 128 inches. lemonis: while we were creating a new line, we were also starting renovations at all their locations across the country. but one problem still lingered. nicolas: you don't change that. we will tell you whether it is financially and logistically feasible to do. lemonis: i need to kind of understand what i just walked into. nicolas: [ scoffs ] lemonis: you can't run a successful business if the relationships are broken. when you walk in that door, you are her boss. but you would never talk to an employee that way. so why do you? nicolas: it's just sadness i've been carrying my whole life. lemonis: about your dad? nicolas: [ voice breaking ] yeah. i heard something fall, and the first thing i saw was my mother on top of him trying to wake him up. and he was dying. he was having a heart attack.
i saw my 5-year-old sister, and she looked at me, she goes, "what's going on?" and i said, "everything's gonna be okay." [ sniffles ] and i looked at my mother, and i said, "i think stephanie and i need to go to school." i was 8 years old. lemonis: nicolas started to address the old wounds and really started to open up about the burden that he felt. and in the end, that helped all of us move forward. gonna have to show your mom some more love. nicolas: yeah. come here. lemonis: immediately there was a spike in business, and it was obvious to me that customers were loving the new look... woman: this is amazing. so high-end. lemonis: ...and the new product. woman: oh, my god. i love this top. lemonis: business was up almost 10%, and the margins were heading in the right direction. you guys are a dangerous trio. i'm just trying to keep up with you guys. -[ cork pops ] -stephanie: whoo! noemie: wow. lemonis: a lot of things have happened over the last year
at courage. b. all of the unprofitable stores have been closed. we've rented a warehouse in plainview meant to do one thing -- take all of the dead inventory that was sitting in the basements and the back rooms and the offices and get it in one place so i can liquidate it. we've also established a third-party logistics business in visual pak, and that allows for the inventory to come into a central location and go out to the stores in an organized manner, and so it's a totally different model. while sales are up 30% and while there's $150,000 in the bank and there's no debt, nicolas and stephanie still are struggling to follow a process. -hey, guys. -stephanie: hey, marcus. noemie: good morning! lemonis: so, i thought we could get some stuff done. nicolas: okay. lemonis: and i want to talk about inventory. -nicolas: okay. -lemonis: why are you smiling? [ laughter ] -nicolas: no, yeah. -lemonis: yeah. that's it, so... courage. b has a ton of potential, but in order for this to work, they have to follow the plan.
and they've kind of gone off and made some mistakes in decisions without me. so, we spent a lot of time talking about staying in your lanes and having a plan. -look, let's not -- -stephanie: wait. i'm curious. do you not think we're staying in our lanes? lemonis: no way. you guys are all over the place still. -stephanie: really? -lemonis: yep. -stephanie: wow. -lemonis: yep. and so, at the end of the day, right, we created five pillars, and we created them for a reason. -nicolas: yeah. -lemonis: to do what? nicolas: to segment the business and be able to analyze it properly. lemonis: okay, so how many pillars do we actually have right now? nicolas: today, we're at seven. lemonis: okay, and so how many of those pillars got added without me knowing it? -nicolas: one. -lemonis: okay. what is the pillar that you added? -nicolas: outerwear. -lemonis: why? nicolas: we already had items on order that we couldn't cancel. lemonis: now, i'm gonna call...on you. stephanie: no, we had a commitment to order. lemonis: i'm gonna call...on you, okay? we spent june, july, august, september, october, november, december together.
never once did i ever hear about outerwear. never once. why? nicolas: i screwed up. lemonis: the fact that nicolas went out and spent money is part of my issue, because he didn't do it with permission. the bigger issue that i have is that we started with five pillars and we all agreed that we weren't going to expand those categories until we felt like we had everything right. adding the pillar on his own just flew in the face of following our plan. that's how this business got in trouble before. nicolas: i'm not even gonna come up with an excuse. it is what it is. lemonis: and so when you -- why do you seem so agitated, by the way? -nicolas: agitated? -lemonis: yeah. nicolas: my back hurts. lemonis: that's why you're agitated? nicolas: yeah. tired. lemonis: mm-hmm. nicolas: it's okay. no problem. lemonis: if you want to be sarcastic, that's fine. nicolas: i'm not being sarcastic. lemonis: are you sure it's not me coming at you? nicolas: you've never come at me before? -lemonis: i always come at you. -nicolas: okay, so... lemonis: because my job is to make you better. nicolas: i have never denied that.
lemonis: i've seen this before with him where he kind of just shuts down and kind of smirks and smiles. he's not really laughing. he's nervous. and he knows that he got caught doing something that he wasn't supposed to. i want to look upstairs and see what's there. stephanie: sure. yeah. nicolas: that was awesome. lemonis: what the... is going on in here? if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event,
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most health plans. lemonis: what the... is going on in here? stephanie, nicolas. they both knew that we were putting a plan in place to have all of the inventory in a central warehouse, and the way they were handling this inventory in the stockroom was totally against that plan, and they knew it. would it be an accurate or an inaccurate statement for me to say that there's more inventory dollars in this room than there is in the entire store? nicolas: yes, it's accurate. lemonis: all of that inventory that's in there is basically cash sitting on tables and shelves and on the floor. on a retail basis, this is a couple thousand dollars. okay. i'll see you guys back at the office later.
-nicolas: okay. -lemonis: okay. stephanie: i didn't know all this was here. -lemonis: hi. -stephanie: hey. -lemonis: hey, nic. -nicolas: what's up? lemonis: business is up 30%. i get it. and the fact that the debt is all paid off and the fact that there's $150,000 in the bank does not give them the license to be sloppy and to not follow the plan. part of the reason that i've been ice-cold -the last couple of weeks... -nicolas: [ scoffs ] lemonis: ...just so you know. it's, like, do you want to hear this, or do you want me to shut up, or what do you want me to do? nicolas: no, please. lemonis: part of the reason that i wanted the central distribution warehouse put in place is to bring law and order to the number-one thing that you told me killed this company
prior to me getting here, which was a lack of an ordering process, a lack of a review process, a lack of a knowledge of what money was able to be spent to buy stuff, and a lack of an inventory process. those were your words, not mine. -right? -nicolas: yes. lemonis: okay. so, tell me why you still don't buy off until the inventory cuts up at the warehouse. why do you still believe that things have to come here first? nicolas: i don't think they have to come here first. lemonis: nothing is gonna come here, nicolas? nicolas: i don't think so. lemonis: and nothing's gonna get tagged? that changed in the last two weeks? because your comment was, to my team, is that things are gonna still come here and they're gonna get tagged because the other people don't know how to tag them. i have a relationship with visual pak, the warehouse, and i don't appreciate him thinking that i'm not gonna find that stuff out. so why can't it be tagged and bagged at visual pak? nicolas: we haven't shown them how to do it yet.
lemonis: why not? nicolas' problem is that he believes sometimes that he knows it all, and he's a control freak. if it's not his idea, it's not a good one. and we're literally sitting across from each other at the desk like it's a poker game. and i'm not gonna play poker, not with my money. i'm just -- i'm not gonna play this game with you guys. stephanie: i don't understand. what just happened? (trader vo) i search.
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nicolas: we haven't shown them tagged ahow to do it yet.al pak? lemonis: why not? there's a tremendous power struggle that goes on at courage. b, and while he sits across from me with an arrogant sort of attitude, i'm not gonna tolerate it. i'm just -- i'm not gonna play this game with you guys. stephanie: i don't understand. lemonis: i know deep down he knows i'm right. i just think he's struggling to admit it. and i'm not gonna play games anymore. nicolas: can i talk to you for a second? lemonis: sure. what do you want to talk about? nicolas: okay, i want to resolve this. lemonis: you basically sat there, and you've been grinning at me for an hour. he wasn't being straight with me about the fact the product was making a pit stop in new york city, something that i was very clear about wasn't gonna happen. we all agreed the product goes from the manufacturer
to a central distribution warehouse. and it only goes to the stores where we know the product's gonna be sold, essentially eliminating steps along the way. well, eliminating the steps is eliminating a u.p.s. bill. and eliminating a u.p.s. bill is lowering the cost of the product and raising the gross profit on the item. nicolas: i've been grinning at you because i'm very uncomfortable with this, and you're 100% right. lemonis: okay, well, the inventory that's sitting in greenwich, the inventory that's sitting in any store -- it just needs to go to plainview kind of once and for all. nicolas: yeah. lemonis: we have been talking about it a while, and so when you tell me that it's done and then it's not, i kind of feel like you're kind of, like...me 'cause you don't want to deal with it. that was kind of like a big "'f' you" to me. nicolas: but... lemonis: that's where my dark space is coming from. nicolas: right. i messed up. lemonis: so, nicolas, here's the deal, okay? we're gonna move forward from all this noise.
both of you still struggle to trust the process a little, but why? nicolas: it's unbelievable. that's the only way to describe all this. lemonis: that what we've done in a short period of time is unbelievable? nicolas: yeah. like, in the... lemonis: tell me. nicolas: i can't speak. lemonis: tell me. nicolas: like, i don't feel... [ sniffles ] -i'm having a tough time. -lemonis: i understand. i've worked almost a year with nicolas, and i have a tremendous affection for him as an individual. but he has these moments where he just totally melts down. and what i'm learning is that it comes from insecurity. nicolas: i have a personal issue. lemonis: we all have personal issues, bud. i mean, my list of personal issues is, like, huge.
nicolas: yeah, i'm sure you've created mechanisms to deal with some of them. i haven't. lemonis: i think all of us have a level of insecurity that we don't want to show people. i know that i do. nicolas has struggled trusting people all his life. and now that we're close, he's struggling to trust me. and so his defense mechanism is to shut down. talk about it. personal in the trust issue? nicolas: no, it's -- it's here. it's nowhere else. lemonis: you don't feel like you're deserving of it? nicolas: that's right. lemonis: is that what it is? why? -nicolas: i don't know. -lemonis: you work your ass off. nicolas: yeah, it's unbelievable... that you find a mentor that you can have a -- that believes in you so much. lemonis: i genuinely and wholeheartedly believe in you.
you need to know that. i think part of the issue that exists with nicolas in business is that he's been on his own for so long. the loss of his father at such an early age created this void in his life where he just doesn't trust people, and he feels like they're gonna disappear. i'm not going anywhere because i know the potential that he has inside of him is unbelievable. want to look at some of the cool spring stuff? -nicolas: yeah. -lemonis: let's do that. steph? let's look at some of the cool spring stuff. it's always good to clear the air, but we actually have some business clearing to do. we're gonna go to plainview to see what i call the final resting place of years of mistakes. this represents how many years of mistakes? nicolas: four years? lemonis: and how many years have you been in business? nicolas: 5 1/2. lemonis: we're gonna get rid of the product and we're gonna move on and we are never gonna make these mistakes again.
so, all this stuff is sold, and i sold it for cents on the dollar. this is really a fresh start for you. nicolas: just... i don't ever want to see this stuff again, you know? lemonis: yeah. -you ready to do this? -nicolas: yeah, let's go. lemonis: all right, let's load it up on the truck. nicolas: these weigh a...ton. lemonis: let's do it together. this is the moment in time where the years and years of mistakes, whether it was, "my mom bought product, or stephanie bought product, or i bought product," or they stuffed it in the basement... nicolas: [ chuckling ] oh, my god. lemonis: ...it basically all came together in one building. but it's better than nothing. nicolas: it's better than sitting in boxes. lemonis: and in a matter of a minute, we made the decision to move on. the day we got rid of the inventory in plainview
marked a turning point for not only nicolas, but the business, as well. man: so, when you get an order, we know that it punches in, and we can pull up this order, pack it, and ship it out. lemonis: and now that we've put more process in place, we're experiencing good sales and good track record, we're now having some real fun. -noemie: yeah. perfect. -woman: beautiful. lemonis: noemie put together a photo shoot to display some of her new products for spring and summer. woman: yes, darling. sweetie, absolutely fabulous. lemonis: and even bigger stuff, like opening up our first store in chicago. i'm about to walk into what i think is the beginning of the next chapter for courage b. -that looks great, doesn't it? -noemie: yeah! lemonis: for business advice and extra scenes from the show, log on to...
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take off...and take on anything. lemonis: what's up, happy train? stephanie: happy. [ laughs ] isn't this awesome? i'm good! lemonis: it looks great, doesn't it? stephanie: yes! -he's so happy. -nicolas: thank you. lemonis: this has been a long week. nicolas: thank you. lemonis: the store that we've opened up in chicago isn't just exciting to me because it's in my hometown and it looks nice and the product looks great. it really is the point in time where i really feel like nicolas and stephanie are starting to understand what the process should look like.
you know what i like the most? look at nicolas and stephanie working together. they both look happy. he's actually smiling. nicolas: [ laughs ] lemonis: and what does the stockroom look like? nicolas: the stockroom here? it is as organized as organized can be... lemonis: let me see it. nicolas: ...because this will be the model for our stockrooms moving forward. lemonis: so, what's most unique about it is what? nicolas: the size. lemonis: mm-hmm. how small is it? nicolas: this stockroom is about 1/3 the size of one of our stockrooms that we had before. -lemonis: or 1/5. -nicolas: 1/5. lemonis: it isn't just about seeing the clothes on hangers and having the shelves be right. it's about nicolas understanding that this is the right way to run his business. and really, it's just about trusting the process. the next 12 months have to be a little smoother -than the last 8 months. -nicolas: yeah. lemonis: and i'm not saying they were bad, but i think you've grown amazingly in the last eight months. and i have to give you a lot of credit. nicolas: thank you. lemonis: i have to give you a lot of credit. he's getting better at trusting me. he's getting better at letting go of having to control every single detail.
and it tells me that the future is very bright. nicolas: we did something, and, i mean, if you can tell from today, the last week, like, something's happening here. some sort of magic has occurred. and this is art. what we've done here is art. lemonis: i've been trying to tell this to people for years. business is never about dollars and cents only. business, 100%, is about people and relationships and the inner workings of them. nicolas: this brand was founded by a family that had a lot of courage, and now marcus is part of the family. we want this to be not just a place for you guys to buy something, we want this to be a place for you guys to belong to and come to and to have courage. and i think having courage in life is the most incredible attribute and the most important one. so we invite you to be courageous with us. noemie: thank you. thank you, everybody. lemonis: i'm not the smartest guy in the room. i'm not the richest guy you'll ever meet. i'm definitely not the best-looking guy. but i understand people. and so i have to use that talent.
-i'm proud of you. -stephanie: thank you. lemonis: and i really feel like that's my purpose in life -- to help people in business. ♪ (man) this is the shark tank, where hopeful entrepreneurs come seeking an investment from the sharks, five powerful, self-made investors worth billions. last season, the sharks invested over $5 million in products and businesses. this season, the stakes are even higher... would you go to $4 million? and the sharks are even richer. what if i offered you $1.25 million? hey, mark, when i become a billionaire, can i negotiate with people like that? in the tank, the sharks are ready to invest using their own money... is there a number you would take to sell the whole company? one check. (laughs) you don't have a million-dollar business yet. but only for the right person with the right business. i know that this is a billion-dollar industry.