tv Your Business MSNBC November 7, 2015 2:30am-3:01am PST
washington, d.c. small businesses combine commerce and culture to get customers to shop local and why a beloved actress put aside her career to pursue her entrepreneurial passion. stories and information to spur growth coming up next on "your business." >> american express open can help you take on a new job. or fill a big order. ♪ or expand your office. for those who constantly find new ways to grow on every step of the journey american express open proudly presents your
business on msnbc. hi, everyone. i'm jj ramberg and welcome to "your business", the program dedicated to helping your small business grow. with small business saturday coming up, we decided to see how communities around the country are getting customers to shop local. in washington, d.c., that means staying up late to see the business and arts communities come together to celebrate art all night. the festival blends culture and commerce in five different neighborhoods boosting foot traffic, visibility and business not only during the event but also long afterwards. >> in many of our small businesses have told us that art all night is their busiest night of the year. some cases record setting sales.
>> it's the biggest night of the year. i don't think we get traffic like that any other night of the year. >> it's a warm night in washington, d.c. and the city is gearing up for the fifth installment of art all night. it is inspired from paris where museums stay open all night. ♪ a cultural night of live art. native washingtonian was a teaching assistant in paris in 2008 when she first experienced the event. >> i went and i just loved it. i never seen public space activated quite like that. when i came back home, i wanted to see if i could kind of bring a smaller version to washington. >> the d.c. version of the festival has a decidedly american feel where small, local businesses blend seamlessly into the evening's festivities. >> we transformed an event that was focused on the arts into one that blends art and commerce and that is unique to the
washington, d.c. art all night experience. >> five of the city's main street neighborhoods participate in the free event bringing over 30,000 attendees to areas of the city that might not otherwise get explored. >> every year art all night basically has these funky, cool installations. they have dancers, they have visual artists and musicians. as you walk around, you let yourself be drawn toward these different happenings, different events. >> ultimate goal of the event is to encourage discovery, art installation, a new restaurant or a retail store. >> it brings people to the neighborhood. introduces them to our businesses. maybe they don't even walk in that night. now that they see there's something here, they'll come back. >> in more established and ageing commercial corridor of dupont circle, art all night reminds that dupont is an art destination. >> 8,000 people who don't come to dupont on a saturday night were here shopping and dining so washington studio school did so
well drawing people in, they sold out their art classes after the art all night. it was successful for them. tonight they have a dj. >> art all night helps reinvigorate this transitional often forgotten part of the city. >> art all night brought exposure to this area to north capital street to florida avenue. some of the prettiest views of the city, of the capitol but people drive through typically and rarely do they actually stop. by having art all night gives everyone an opportunity to experience the neighborhood. >> shannon, owner of uncle chip's cookies, sees things changing in the neighborhood in part because of the positive exposure art all night has brought to the area. >> one business does not make a corridor where somebody wants to go and enjoy themselves. within the past year i've seen the opening of three new
businesses so there are multiple places for people to go on north capitol street and not just one place or see one thing. they can enjoy the whole corridor which is wonderful. >> melvin hines is the owner of d city smoke house, decided to invest further by opening the sicked bloom social club to coincide with art all night. >> a great opportunity for foot traffic and people in the neighborhood and people passing by. we thought it would be a great chance to open up and get started. >> you see businesses. they'll be open until 3:00 a.m. you'll have the businesses packed with people. they sold out of food last year. they sold out of drinks. you'll have lines down the block. i can't even tell you how -- if you look out there now versus what you'll see in a couple hours is amazing transformation. >> the north capitol main street organization also goes to great lengths to make sure all of their artists and suppliers are
local. >> a lot of the artists that we use are local right here within a one-mile radius of north capitol street. we want to make sure that whatever we do, we take care of our small businesses first and then if anybody benefits, that's really, really great. we make sure we take care of home first and our own business. >> throughout the years we've interviewed a lot of entrepreneurs who have had two jobs. one where they work for someone else and one where they started their own company. how many of them can say that their day job included harrison ford, jeff bridges and bill murray. that was the case for karen allen. her design of knit wear involved opening her own store in great barrington, massachusetts. with another "indiana jones" movie in the works, we thought we would visit her as a busy actor and director and a small business owner.
when we visited karen allen, it had been six months since she set foot in her massachusetts textile design studio. she splits her time between acting, directing and her business. a boutique that sells her collection of knit wear. when she gets back, the never idle allen has a lot of catching up to do. >> i decide when i'm coming to work and i decide when i'm leaving and decide if i want to take a day off and there's not many jobs like that out there. that's a pretty good gig actually. >> that freedom is a far cry from the demands of a movie set. with an acting career that took off with her film debut in 1978's "animal house." >> is this what you're going to do for the rest of your life? >> allen's films, characters and co-stars are legendary like
playing the original indy girl opposite harrison ford in "raiders of the lost ark." >> come back tomorrow. >> why? >> because i said so. that's why. >> people used to make jokes because when i would go to work on a film i would have a suitcase full of clothing and suitcase full of yarn. i would often set up a design studio in my trailer. you have an enormous amount of time to kill often when you work on a film. >> for allen knitting has always been an integral part of her life leading her when she was 17 to study textile and clothing design at the fashion institute of technology in new york. then the acting bug bit and textile design took a back seat. >> it was a learning by the seat of my pants experience. >> and that seat of the pants experience is what prepared her to do something far outside her life as an actor. she became a entrepreneur.
>> i thought at some point when things maybe settle down a little in my life i would start a little textile company. >> the time to start that company came in 2002 when she decided to take time off from her acting career to raise her son, nicholas. >> i would put things into a gallery and people would buy them faster than i could make them. i thought, well, this is a good sign. the light bulb went on. maybe this is encouraging. i felt encouraged. >> two years after starting her design studio, allen opened up a store now on railroad street in great barrington, massachusetts. as allen's business became successful, it quickly became more complex with several employees on the payroll, she realized the joy of working and designing her knit wear line was being replaced by stress and deadlines. after lots of trial and error and tinkering with the formula for making her business work, she got excited a few years ago by the prospect of outsourcing her production. especially since knitting her
designs by machine was so physically demanding. >> i'm operating this machinery and sometimes in the course of a day i'll move this carriage across four or 5,000 times. >> when outsourcing wasn't an option because her designs were just too complex for mass production, she decided to take a radically different approach downsizing her studio and simplifying her business so she could do most of the production herself. >> it means that it's sort of at zero growth in a way. and i've learned to think that that's not such a bad thing. >> her simpler business is now set up so it carries not only her line but a bunch of other unique small batch designers as well. many of them local like herself and with less pressure for constant growth, she's able to step away when she would like to go back to acting. >> i can go to a project and
come back to this. this will always be here. a stable resource. it doesn't belong to anybody else. nobody can take it away from me. nobody can tell me i can't do it or i didn't get the job or something like that. >> i spoke to an entrepreneur the other day to reads 100 business books a year while growing her successful company which got us thinking what resources can we give you to help you keep learning while you're on the go because not everyone has time to read all of these books. here are five podcasts that will help you make the most of your time on the go. one, entrepreneurs on fire. the host brings on executives to discuss their biggest failures, most rewarding successes and everything in between. >> two, the tim ferriss show. he speaks with top performers from a range of industries to give you tips and tools you can
practically use. three, mixergy. great street smart education for any entrepreneur through the interviews he features on this podcast. four, online marketing made easy with amy porterfield. she shares highly tactical strategies showing you how to be effective in promoting efforts and building authority. and five, problogger podcast making case studies and actionable challenges to build a better blog. podcasts are part of our digital world that's made many analog formats obsolete. there's one form of analog entertainment that's having a resurgence. as kevin tibbles reports, that's music to the ears of one small business. >> all this may sound like a racket to you, but it's music to the ears of the folks here at the national audio company.
>> we attribute our success as i say often to stubbornness and stupidity. >> stubborn because when many other cassette tape manufacturers surrendered in the battle with compact disks, they cranked up the volume literally. she crisscrosses shop floor hundreds of times a day filling orders from around the world. >> i wear out a lot of shoes. >> we're too busy to stop. >> why are consumers listening to audio cassettes again. >> you hear the warmth and presence in an analog recording you will not hear in a digital recording. >> how old is this stuff? >> 1970s. almost new equipment by our standards. >> he bought up everyone else's old equipment and brought it to springfield missouri hq. with binder time keeps it running. >> i was a geek before there
were geeks. >> robert and his team tore these machines apart to learn what makes them tick and click and clack. this one used to wrap cigarettes in the 1930s. now it wraps cassettes. you can't learn this stuff in school. >> no. you don't learn this in school. you learn this in the school of hard knocks. >> and it's the young and up and coming independent musicians who are driving the newfound demand. >> kasette culture is digital streaming is so short-term where a cassette is the opposite. it's tangible. >> rewinding the way we listen to music has fast forwarded one company to the top of the charts. kevin tibbles, nbc news, springfield, missouri. >> when we come back, what you need to know to keep your small business from being audited by the irs and today's elevator
pitcher hopes he gets a four-star rating for his app for finding reputable landlords. our cosmetics line was a hit. the orders were rushing in. i could feel our deadlines racing towards us. we didn't need a loan. we needed short-term funding fast. building 18 homes in 4 ½ months? that was a leap. but i knew i could rely on american express to help me buy those building materials. amex helped me buy the inventory i needed. our amex helped us fill the orders. just like that. another step on the journey. will you be ready when growth presents itself? realize your buying power at open.com this selfie comes from david
who owns haylon's market in connecticut. they sell yummy food there and do some catering. why don't you pick up your cell phone and take a selfie of you and your business and just send it over to us or tweet it to us. don't forget to hashtag it yourbizselfie. finding a new apartment is hard enough. finding one with a responsible landlord can make the task even more daunting. today's elevator pitch saw a need to make that easier when he was vice president of the student body at temple university. let's see if our judges are moved by his pitch. mike is ceo of profit first professionals and jeffrey is author of a new book "think big, act bigger, the rewards of being relentless." >> hi.
i'm ceo and co-founder of who's your landlord a web app helping renters find their next home. today in the u.s. the rental industry is booming. over 35% of us are renters and collectively we spend $440 billion on rent last year. over half are under the age of 30. two years ago after realizing there was a lack of transparency we launched the app. we're partnered and paid partnerships with target and we have partnerships with several large landlord associations in philadelphia and d.c. and charge members $20 to $100 to post listings. we'll expand our reach into cities to reach over 100,000 monthly users. we expect to give investors 10x return by selling the company or going public. >> nice job. i'll let them -- i need two numbers.
one for the pitch, one for the product. product first. pitch second. but for me watching on the side, poised and likable. >> thank you. >> you did a really good job with that. most people aren't able to get that perfect balance at least from my opinion. mine is not the opinion that matters. okay, mike? >> pitch, 8. it was the very end you said we'll make money as an investor only if we sell the company and go public. i want to make money from profitability. otherwise, very poised. very confident. i like that. the product, you have the next carfax here. if you own cars you can sell them giving them a report. you have the exact same thing. i think you're on with the product. >> i gave you a 9 plus for product because i think you're spot on and great. you need to get more users and add another zero. always add zeros. i gave you nine for pitch. like mike pointed out, you have to show me you can make money without selling the company
because i want to stick on long haul. this product has legs for a long, long time. >> definitely. >> good luck with everything. thank you for coming and sharing your idea with us. >> appreciate it. >> thank you, guys, for your advice. >> great job. >> thanks so much. i appreciate it. >> very well done. >> if any of you have a product or a service and you want feedback from our elevator pitch panel on your chances of getting interested investors, send us an e-mail to email@example.com. we look forward to reading your pitches. do not forget to include what your company does, how much you're looking to raise and what you're going to do with that money. we look forward to seeing some of you here on the show. it's time to answer some of your business questions. jeffrey and mike are back with us. the first one is about a conversation you may need to have with your lawyer. >> when should you sit down and decide with your attorney it's time to make operational agreement and when is it too soon to do that? >> i'm so happy we are talking about this.
literally in the past two weeks i've had this conversation with three people who are coming to it too late. my answer is now. >> ten days ago. before you even started partnership. you need to sit down with your partner right away. even if it's on a sheet of paper or napkin start writing those down. and the other thing i do with my partners is sit down with the spouses and we talk about what will happen if something happens to me, if something happens to my partner, do we have them involved, no, we cash them out. so any of those operational things you want to put into agreement before they become problems. trust me, there is always going to be problems. >> so the answer is right in the beginning. >> immediately. >> only time you don't know about, if you don't have one it's mandated by most states. most states force their own standard operating agreement which is usually a train wreck for your business. so i agree, you have to do it now and if you haven't done it you have one and it's a bad one. >> so with the woman i spoke to the other day, started her company, 50-50. now, right, they are getting
traction, one of them seems to feel like she is doing more work than the other person. it's going to be successful. who know the other person feels like she is doing the same. it's a mess. >> easy to put everything, even the salaries, the cash out, what happens if you know you have a three partners and one leaves does that person get to retain ownership. you should have a buy-out agreement as part of that. with some set fee on a formula, all of those things. >> the discussion to have now is the worst case scenario. it's a hard conversation, it's much harder when it happens down the road. >> exactly. >> always when there is money and family involved. it's going to be huge. huge. >> okay. this helps you just think through all of the what. >> and it's an operating agreement, not operational agreement. >> except that they were doctors. >> in that case. >> let's move on to the next question from roberta and she writes, my two leases have only one year left and i'm beginning to question my next steps. my questions concern possibly selling the business, how to value it if we so decide and how
to structure a sale to pay off debt and still derive an income. big question. >> if you want to sell the business usually it's not the best time to sell. when you are doing very well and don't want to sell the,that's when you'll dictate the biggest premium. get a business broker involved so that you're not trying to sell it yourself. second, amplify your assets. she is getting out of a lease, if that's a perfect location that may be your biggest asset. what are the assets or the elements you have that make the business more valuable. increase those and deplete the stuff that's not working. bad inventory, get it out of the house. put your best foot forward. >> really clean up the problems before you take that step. make sure it looks really clean and the other piece is when you're looking at selling your business usually about five times net earnings is a good formula to look at for what my business is worth. then plus or minus depending on the inventory if it's sitting there or if your receivables, typically you want to take with you because that's your money and it's tough to collect it.
>> is your business growing, or is it going the other way because that's going to affect the value also. >> absolutely. >> let's move on to the last question about finding balance in your business. >> how do you manage the employment sales balance. as a growing company you can outsell your team very quickly or you can overstaff for the sales opportunities you have. so what's your advice to balance that out? >> by and large one of the things i like to do is part of an industry, look at the industry averages, see what other people are doing, how much they are selling per employee, that will give at least some kind of indication of what's out there. and especially in a franchise organization you can look inside the group. if you're not look inside the industry and give you some kind of ratio so i need to have $498,000 per staels person or per employee or whatever the figure might be. >> so this is called the double helix trap. so half your team sitting there, then when sales peak they start
working and those people don't need to sell because the revenue is coming in. you go through this. the solution comes from manufacturing, i'm a co-owner of a small manufacturer, a little klug, and we use lean principle. one of the concepts is having worker skilled on a diverse set of skills. your sales people also need to be able to deliver the work and the people delivering the work need to sell. if you can balance out the team with both now when you go through peaks and valleys you can shift your team and never are depleted on resources. >> have you been able to do that? sales is a specific skill. >> yes, i've been able to do it because i tell sales people or people that don't sell, don't try selling, this isn't wowing people. just show them why you're so valuable. share your story. just connect with people. when you are delivering something that's of central share what you do. is of value. people are persuaded to buy that. the best sales people are not sales people. >> the other piece always be looking to upgrade the team.
look at getting rid of the dead weight, getting rid of the bottom 20% because they are not performing, never will so always be looking to upgrade that sales team and in the end you'll find that balance. >> okay. this was great advice. thank you both for stopping by. good to see both of you. >> good to be here. as a small business owner the prospect of getting audited by the irs can be daunting. even if it turns out you don't owe money, the time it will take to gather all of the documentings that you need for the audit can take you away from the important bills of actually running your company. so, you do not ever want to raise any eyebrows with the irs reviewing your taxes. dawn is a certified 3ub lick accountant and managing member at powerful accounting. you may also recognize dawn from some of our your business makeovers. she is here to share information on red flags that may trigger an audit. it's good to see you. >> my pleasure to be here. >> this is every small business owner's nightmare. >> absolutely. >> it takes -- it's so time
consuming. >> and expensive. >> so let's go through some of the things that will cause a red flag. >> so one of the pieces that we try to tell people, a lot of business owners use cash. so they either are selling things for cash or expensing cash out. and they don't track those receipts. so either not keeping invoices or receipts, they have multiple bank accounts, and so the irs looks at that and says okay, this person is a cash business, they have five accounts, moving money between accounts constantly. and so that's a concern. >> even if you are doing it correctly, it's going to get them to say hey, i might want to look into this. >> absolutely. >> two, co-mingling. >> so we go in and work with small businesses often and a lot of times with credit cards, something where we find often you know, they pull a card out and they pay for a business expense on their personal credit card. now that says to the accountant we need to track that card. they are using it frequently. >> claiming 100%. >> 100%. so bills use of your vehicle.
so the irs says listen, okay, maybe a contractor buys a truck and it's 100% business. take a picture of your odometer at the beginning of the year, have a mileage log which you mentioned apps a minute ago, there are apps that will track your mileage as you are in your car on your phone at the end of the year take a picture of your odometer. it date stamps it. you have a mileage log to say yes, i used my business because i went to a client, backs and to a client. >> we're talking about raising red flags. if you claim, talking about now you have the documentation if they come to you and audit you. but how do you get that to be not a red flag in the first place? >> well, it's because a lot of times people do that 100% and there are check boxes that say do you have evidence supporting your deduction. they say yes or no, i don't which you really have to admit it. you are certifying by law when you sign that return that you are being truthful. >> got. so if they know you have evidence they are less likely to
question you about it. >> right. >> and then the home office deductions. >> that's a great one. the home office deduction if you think about it, it's considered exclusive use of your home office. so it's not the porch where you entertain your clients on a sunday to watch football. it's the time that you're spending in the area of your home and so we tell people to get a street card from your town and highlight that area, measure it out and have a documentation because if you put down that i use 40% of my home for my business and you're running an accounting business, it's hard to say that maybe that's really the truth. >> dawn, so good to see you. >> my pleasure. thank you again for having me. thank you everyone for joining us today. if you want to learn more about the show just go over to our website it's openforum.com/yourbusiness, we will post all of the pieces we had on plus a lot more content to help your business grow. you can also follow us on twitter, and we're on facebook
and instagram. next week we head to minneapolis to see where history intersects small business and how it's been a boon to some towns across the country. >> it brings people to lake street, to engage in the museum, engage the history, but then also to discover the local businesses. >> find out how a historic land mark program in minneapolis attracted customers and inspired them to shop small. till then i'm jj ramberg. remember, we make your business our business. we thought we'd be ready. but demand for our cocktail bitters was huge. i could feel our deadlines racing towards us. we didn't need a loan. we needed short-term funding. fast. our amex helped us fill the orders. just like that.
you can't predict it, but you can be ready. another step on the journey. will you be ready when growth presents itself. realize your buying power at open.com. i want to show you what i'm made of! >> it's easily one of the most volatile inmates to ever appear. >> so help me god they can't transfer me! >> but now is it possible that he's discovered true love? >> we have been together four years. it's just something that happened. >> this man ranks as one of the most talked about inmates featured on lockup. >> look at his eyes. >> they're tattooed. >> now he's out of prison and his tattooed eyeballco