is an american crisis, and i'm not sure america's paying attention. i'm marcus lemonis. ♪ ♪ lemonis: tonight, we're going to california. more than just scenic, sunny, and trend-setting, the golden state is also the greenest. man: we're ending prohibition and we're mainstreaming pot.

damian: there's blue dream, gorilla glue, sour banana, green crack. lemonis: why do i think green crack is more potent than sour banana? medical marijuana has been legal here for years. but now, the game changer -- proposition 64. woman: marijuana is now legal in california. lemonis: soon, any adult will be able to buy weed. did the vote passing increase the odds of you becoming a billionaire some day? adrian: absolutely. lemonis: my name is marcus lemonis. on my show, "the profit," i invest my own money in all kinds of companies... everything's going to change. everything. ...and help turn their fortunes around. marijuana isn't my thing. i've never even considered investing. is the business easy for you? andrea: hell no. there's nothing easy about this industry at all. lemonis: but the market here could reach $6 billion, and that's impossible to ignore.

adam: we have this opportunity to create once-in-a-lifetime, multi-generational wealth. lemonis: the risks are huge. you're in a room filled with what the federal government considers illegal. jeanette: that's what makes it more exciting. lemonis: but so are the returns. what's the end goal for you? dan: selling my company for $120 million. lemonis: i'm here to take you on a journey and show you where the profit is in pot. ♪ ♪ i'm here in desert hot springs, california. now, many of you have probably never even heard of it. it's the forgotten son, the neighbor, to palm springs, where the golf courses are big, the night life is big, but not around here. what you'll see are plenty of signs that say "sorry, we're closed." back in 2001, the town went bankrupt,

and came close again in 2014. tired of money troubles, people here took a chance. desert hot springs became the first place in southern california to allow industrial-scale indoor pot farming. a once-dying town is dying no more thanks to recreational pot and people like adrian sedland. adrian, nice to meet you! adrian: likewise. lemonis: is this your business? adrian: yes, it is. welcome to canndescent. lemonis: i mean, you're literally in the middle of the desert. adrian: there's no better place to grow cannabis. lemonis: i've never smoked pot. in fact, i'd never even seen pot. adrian: come on in. lemonis: i walked into canndescent and suddenly found myself surrounded by it. very fragrant. adrian: yes. lemonis: how much inventory is in this room right now? adrian: we want to get to 65 pounds of dried flower. lemonis: per harvest? adrian: per harvest,

and we harvest the room every 10 days. lemonis: 65 pounds... adrian: of finished flower. lemonis: uh-huh. so, $195,000. adrian: you got it. so, we're pulling down a room every 10 days. it runs at $600,000 a month. it's not a bad business. lemonis: it's not a bad business? it's a great business. armed with a harvard mba, adrian is part of the new money behind california's exploding marijuana industry, which is still considered criminal under federal law. are you the first drug dealer to ever graduate from harvard? adrian: no. there's plenty of them in biotech. go talk to the guys in amgen and pfizer. they're dealing stuff -- percocet, all that highly addictive xanax. that stuff will mess up your life. this won't. lemonis: in desert hot springs, they seem to agree and have issued permits for more than 3 million square feet of construction to more than 30 growers. good for business, but i wondered if the town's reputation would be hurt.

are you originally from this town? scott: born and raised. lemonis: scott matas is the mayor of desert hot springs, a self-described conservative. scott: i was a "no" on marijuana use in our community in 2007. lemonis: what happened? scott: the economy went bad. we needed to find another revenue. lemonis: when they put it to a vote, more than 70% of the residents here said "yes" to growing recreational pot. mayor matas doesn't smoke, but the side effects of weed are saving his town. job creation? scott: job creation -- it's taxation... lemonis: think about this. it costs $15 million a year to run desert hot springs. the town could eventually collect $50 million a year from pot taxes alone. goodbye, budget crisis. hello, cash flow. and what has happened to the prices of the land out there? scott: well, let me give you an example. the city bought a piece of property in 1980 for $5,000, one acre. we just went into contract to sell that for $378,000.

adrian: we have two buildings. we call them brad and chad. lemonis: okay. adrian: they're named after the guys who built them in the 120-degree heat. lemonis: if you grow pot outdoors, you get two harvests a year. but indoors, a high-tech climate-controlled environment can triple that. adrian says canndescent will soon be selling about $75 million worth of weed annually. photographer: that's gorgeous. nice, nice. your smile's great. go for it. lemonis: with a slick advertising campaign, he's pitching his pot as a luxury brand. woman #2: with us, you and the flower will always come first. we are canndescent. adrian: call us the courvoisier of cannabis, or mayors of cannabis. we're going after that high-end adult use. lemonis: well, that's just packaging. look. packaging is one thing, but price is another. adrian charges hundreds more per pound than the market rate. to me, that's a very risky strategy.

you said to me you can get $3,000 a pound. adrian: correct. lemonis: how do you actually differentiate your product to get an extra $1,000? is it the packaging? adrian: packaging is one piece. the quality of our weed, the quality of our cannabis... lemonis: what is "quality of our weed"? you've got to give me more than just "quality of our weed." adrian: okay. smell the nose. you'd recognize that our nose doesn't have any chemical burn. you'd recognize that the cure on our product is perfect, that when you break it, it has a perfect snap, which means it's going to be a perfect smoke. lemonis: is there quality control? adrian: there's huge quality control. lemonis: does that mean that you throw a lot away? adrian: what's that? lemonis: you throw a lot away? adrian: absolutely. lemonis: and he's dropped the usual stoner labels you see in dispensaries. canndescent comes in just five varieties, named for the feelings or moods they're supposed to create. adrian: we've moved to a brand architecture where it's just "calm," "cruise," "create," "connect," and "charge." it's making it accessible. it's giving people analogies in their life. your purchase becomes a reflection of who you are. when cannabis starts doing that, it's not about being sexy.

it's about being relatable. and that's where cannabis is going. lemonis: i give adrian a lot of credit for simplifying the approach to marketing the product from a naming standpoint. i think the name is interesting. i thought the packaging was fantastic. and to simplify things like "calm," "create, "charge" -- those are words that, i guess, yoga enthusiasts can relate to. it has a whole foods-esque packaging to it. the future seems promising in desert hot springs, but don't forget the feds could still shut it all down. if the current administration decides to change its perspective and enforce the laws that they say this is illegal, what happens to the town? scott: if we were to allow them to build all that out there and then the federal government comes in and says, "you can't do this," this would kill a small city. lemonis: adrian and his investors, well, they don't seem worried. he's raised nearly $15 million in just 18 months.

adrian: we pay our taxes. we're good corporate citizens. we conform to california law. lemonis: yeah. and you're employing people. adrian: and guess what. i'm going to be employing 280 people within 18 months. lemonis: it surprised me, the level of sophistication that is being put in here, the amount of money that's being invested, and the steps in the process. i'm a process guy. but i'm not fooled by sexy packaging and sexy marketing. and maybe not to him, but to most people, marijuana may be a commodity for now. and so, price will matter. margin will matter. whole foods, you know you're getting a superior product. is the product really superior here? i don't know. coming up, a house call. four wheels, two guys, and one huge order of pot. and you could eat this whole bag? megan: yeah, i could eat that whole bag. lemonis: and not even be fazed? megan: not even be fazed. lemonis: but first, don't try this at home. i mean, if somebody drank this, they'd be... cindy: oh, unh-unh. lemonis: unh-unh. cindy: you don't even want to take a finger.

well, thomas, you've got prediabetes. but with more exercise and a change in diet, it can be reversed. but i've tried exercising, and it just makes me hungry for bacon. i love bacon, too. and who really likes to exercise? not me. me neither. nobody! [both laughing] mmm! so we're good? what? oh, you still have prediabetes... big time.

you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. ♪ lemonis: my trip to the california desert was eye-opening, and it helped me get my head around just how big the pot industry was becoming. but not everyone is ready for the big time. and that's what brought me here to a quiet neighborhood in orange county,

not a marijuana plant in sight. [ knock on door ] leani: hi! lemonis: hi. leani: i'm leani. lemonis: i'm marcus. leani: nice to meet you. cindy: hi, marcus. lemonis: nice to meet you. cindy: i'm cindy. lemonis: i'm excited to see what you guys are working on. cindy: we are so happy to have you here. we're very excited. leani: cindy pinzon and leani posad are best friends. they think they've cooked up the next big thing in edible pot with their company, treat yourself. cindy: we make healthy edibles that happen to have cannabis in them. lemonis: vegan, gluten-free tarts -- very california. okay. so, can i open this? cindy: yeah! definitely. lemonis: okay. all right. so, it's literally a little pop tart. cindy: yeah. hi, there. would you like to try a strawberry rose? they're vegan and gluten-free. lemonis: hoping to attract first-time users, they've kept their tarts low in thc and cbd, the two main ingredients in pot. cindy: for the minis, it's 10 milligrams cbd, 10 milligrams of thc. lemonis: it doesn't get any more startup than this.

they do everything -- packaging, deliveries, and all the baking out of this very tiny kitchen. cindy: so, we've already pre-measured... lemonis: it's time to channel my inner chef. the cops aren't going to show up, are they? leani: hopefully not. lemonis: okay, good. cindy: i can't guarantee it, but... leani: yeah. lemonis: oh, that's good. they start with a mixture of coconut oil and cannabis extract. a little goes a long way, seriously. you didn't put a lot in there, 'cause it's so clear. leani: mm-hmm. cindy: it's very concentrated. lemonis: i mean, if somebody drank this, they'd be... cindy: oh, unh-unh. lemonis: unh-unh. cindy: you don't even want to take a finger. lemonis: next, we add maple syrup, chia seeds, almond extract... smells good. cindy: mm-hmm. lemonis: ...and flour. speed it up? leani: do you do a lot of baking? lemonis: i do. a little secret nobody knows. but my baking doesn't have any of, uh... cindy: right. leani: not yet, anyway. lemonis: each tart costs about $1.27 to make. they wholesale them for twice that amount.

not too bad. cindy: the medicated version has a one-to-one ratio of cbd to thc. lemonis: cindy used to be an actress. leani was a police dispatcher. avoiding pot was part of her job. leani: it was a very educated decision for me to actually try it for the first time. i had, for many years, had a very strong stance against it. i was one of those people who would roll my eyes when people would say cannabis is good for you. that was my reaction. lemonis: right, yeah. sure it is. now, it's a labor of love. and i mean labor. cindy: and then we head over and we start rolling. lemonis: it takes them an hour to make just 30 tarts. and at that rate, there's no way for them to compete in california's booming edibles market. and that's not the only obstacle. i love the vegan, gluten-free, soy-free, refined-sugar-free. i love this idea. i love the name. i love the logo. so you have me on this side of the package. cindy: yes. lemonis: but on the other side, i see a problem. "great for menstrual cramps, relaxation and inflammation."

cindy: yes. lemonis: why did you choose to alienate men from the product? cindy: we just wanted to make something that was female-friendly. lemonis: female-friendly, or totally female-directed? cindy: female-friendly. lemonis: by the way, every product in the world should be female-friendly since more than half of the people that buy things are females. leani: yes. lemonis: so, let's start with that. but i feel like with some of the vernacular, is almost like saying if you are a man, put it down. cindy: mm-hmm. lemonis: i love the enthusiasm that the ladies have in trying to craft something where they think there's a hole in the market. there's clearly a void. i worry about small entrepreneurs like this in california who think this green rush is going to solve all of their problems. if they're wrong and they miscalculate, what's the backup plan? woman #3: is it gluten-free? cindy: mm-hmm. woman #3: they're all gluten-free? lemonis: they have their work cut out for them. edibles and concentrates make up a third of the market,

and there are hundreds of products on the shelves. competition is fierce. so to see just what the ladies are up against, i headed to one of the largest makers of marijuana edibles in the country, kiva confections. they're headquartered in oakland. think willy wonka for weed. chocolate everywhere, bars, blueberries, espresso beans. how long have you been in business? kristi: since 2010. lemonis: kristi knoblich runs this edibles empire. kristi: that's our tangerine dark-chocolate bar. currently, we offer products to about 960 dispensaries throughout the state. lemonis: 85 employees crank out over 1,000 pounds of pot-infused chocolate a day. it would take cindy and leani eight months to make that many tarts. and all that takes a ton of this.

i want to be like santa claus. kristi: yeah, these are about 40 pounds. lemonis: i may not get pot, but i can't ignore the numbers. kiva's already a multi-million-dollar company. and next year, once recreational sales begin, they're expecting their revenue to double... cindy: we have cherry almond, which is the other flavor that has a higher... lemonis: ...a giant compared to treat yourself. you know, it's clear that you guys have a great idea. you are passionate about what you do. it's still small, right? cindy: yes. leani: mm-hmm. lemonis: are you too late to the party? cindy: we don't think so. there are bigger companies, but they're not creating the products we're creating. lemonis: what is your ultimate goal in this whole process? cindy: oh, man. like, big dreams? like, sky's the limit? lemonis: big dreams, the biggest you can come up with. cindy: we want to be a global brand. we want to be everywhere. lemonis: i think these bakers could make some serious dough. let's do the math. nearly 8 million people voted to legalize recreational pot in california.

let's suppose a third of them buy edibles. that's a potential market of more than 2.6 million customers. if just 1% of them bought one treat yourself tart every week for a year... you would do $3,461,000 in business. leani: yep. that's exciting. lemonis: y'all better get... leani: yeah! cindy: awesome, right? that's good, right? lemonis: their first step? start selling. today's a big day. cindy and leani are pitching their product to one of l.a.'s top dispensaries. and i'm going to drop in. what could go wrong? josh: these are going to be a little bit of a struggle... lemonis: plenty. that's coming up. but first -- kid in a candy store? not quite, but i was impressed. do i call that a pot store or marijuana store? adam: you can call it whatever you want. i call it the future. lemonis: wow, this place is cool!

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♪ lemonis: in california, there may be no easier place to buy weed than los angeles. with more than 1,000 pot dispensaries, the city of angels has a devilish side.

i came here because after seeing how marijuana is grown and turned into edible treats, i wanted to know more about how it's bought and sold. i've never been in a pot store, ever. and i'm honestly a little nervous. man #2: why? lemonis: i don't know if i want anybody to see me going in. look, i don't judge people for using marijuana. that's a personal preference. but at the end of this journey, what i want to decide is do i want my money in here, and more importantly, is it a good investment for other people? is there really an investment opportunity here, or is it all a big risk? i chose a dispensary on santa monica boulevard, a place called medmen. how are you? adam: good morning. lemonis: i'm marcus. adam: adam. lemonis: nice to meet you. adam: welcome to medmen west hollywood. lemonis: adam bierman is medmen's co-founder and c.e.o. do i call that a pot store or marijuana store? adam: you can call it whatever you want. i call it the future. lemonis: wow, this place is cool! it was definitely not what i expected. medmen was open, airy, and modern --

nothing seedy about it. adam: there's no bars on the windows. there's no guy with a gun at the front. you're walking in, we're open to the community. lemonis: i like the design. there were ipads everywhere loaded with information right next to gizmos that let you see and smell before you buy. adam: this allows the consumer to actually see it through a magnifying glass, to smell it through a little door that slides open there. lemonis: this door right here? adam: yeah. so, you would actually stick your nose in there. lemonis: i caught a whiff of madmen's strategy -- more style, less stigma. was it just window dressing, or would it entice customers to actually pay more? have you ever been in a cannabis store before? crystal: i have, but not one as nice as this. lemonis: what do you think of it? crystal: it's amazing. yeah, it's really cool. lemonis: crystal jane says she started using medical marijuana three years ago. crystal: this is my dog, by the way.

lemonis: oh, hey, dog! how are you? would you expect the pricing in here to be higher or lower based on the environment? crystal: based on the environment, i would say this is, like, a very high-class kind of joint. lemonis: so, how much do you normally buy? just to get a comparison. crystal: yeah. maybe -- i think that the term is called, like, an eighth. lemonis: an eighth, okay. what would you normally pay for an eighth? crystal: like, 40 bucks. lemonis: $40, okay. how much is an eighth here, on average? $65. crystal: okay. so it's nicer. lemonis: yeah. crystal: higher quality. lemonis: i guess that window dressing works. adam: so, this renovation was completed about nine months ago. in those nine months, we have doubled our average customer count on a daily basis. up to 180 people a day are walking through this store right now. lemonis: the medmen formula is adding up. bierman says those 180 customers spend an average of $85 each per visit, meaning this one store pulls in more than $15,000 each day. how many locations do you have?

adam: so, there's five in southern california, four in new york. lemonis: they look just like this? adam: so, they all will, ultimately, look like this. lemonis: but there's more to madmen than just a pretty face. it has its own capital fund. they've already raised $60 million from investors, and they're looking for more. adam: think of us as the four seasons. lemonis: okay. adam: and imagine if the four seasons had a private equity arm that also bought hotels. lemonis: and then converted them? adam: and then signed a management contract with the four seasons to run them. so, our private equity firm will, essentially, go out and buy something like this... lemonis: okay. adam: ...and then turn around and sign a management contract with our management company. lemonis: who would've thought a pot company would be that complex? this is the new world of cannabis in california. so if i get a license, i should call you? adam: you should. lemonis: when it comes to its bottom line, medmen have another big idea -- cut out the middleman. how are you? i'm marcus. damian: marcus, i'm damian solomon. nice to meet you.

lemonis: nice to meet you. what do you do here? damian: i'm the director of cultivation for medmen. lemonis: dispensaries usually pay from $1,500 to $3,000 a pound to outside suppliers. but medmen can grow its own for under $1,000 a pound. do i need to get dressed like you? damian: yes. you have stuff here ready for you. and it's just part of our quality assurance and quality control. lemonis: yeah, yeah, yeah. damian: these are the different strains. so, you can see there's a strain sour banana, green crack, tangie dream, euthanasia. lemonis: yeah, that one's probably pretty mild. it's a balancing act cultivating strains and catering to customers. how do you measure demand? damian: being tied to retail dispensaries, we're able to then get that data very quickly. we're able to analyze the metrics that we get from the retail side for the point of sale. lemonis: is it that sophisticated? damian: it's getting that sophisticated, yes. i'm going to get the feedback from the consumer that says, "i really want this taste. i really want this flavor."

and therefore, we have to then change our production cycles to meet the market needs. this is just like any other business. lemonis: i had one final question for adam. if pot is so lucrative, why isn't the big money investing? how many traditional private equity firms would love to be in this space, but can't stomach the repercussions of getting in this space? adam: most of them. lemonis: and why is that? adam: because their hands are tied, because they're running legacy funds that have vice clauses in their fund that disallow them from doing it. lemonis: because pot is still illegal under federal law, big pharma, tobacco, and other giants -- they're sitting on the sidelines... for now. adam: you don't have many people competing. it's the most inefficient market of our lifetime. lemonis: because people see the risk of the federal government not really allowing it, and wondering if they're going to flip flop. adam: i welcome the perception of that risk because it allows me to run as far and as fast as i can. lemonis: i thought adam was a very smart guy,

very sophisticated. he understands his business. i would've never imagined that the retailing of marijuana would ever be this slick, this well-merchandised, and this lucrative. prior to going into the store, i would've never contemplated investing in this concept. but after seeing the frozen goods, the beverages, the consumerables, this is a real business -- a real business with a real retail footprint. you may not like it morally, but you definitely have to pay attention to it. up next, chasing their dream one edible at a time. if this doesn't work, you've lost the money and you have no income. cindy: right.

♪ -best friends cindy pinzon and leani posad are working around the clock. the duo behind treat yourself is preparing to pitch their marijuana-infused tart. the hustle is real. and so is the risk. how much have you put in? cindy: around $15,000. lemonis: it's pretty much everything you guys have. leani: everything we have, yeah. cindy: yeah, yeah. lemonis: if this doesn't work, you've lost the money and you have no income. cindy: right. lemonis: well, you better get to work. cindy: yeah. and then, i did pack some unmedicated in case they want to try. leani: that's a good idea. cindy: should we bring that? yeah, okay. lemonis: they're leaving their tiny home kitchen for the big city,

hoping to sell their tarts to medmen, the popular dispensary chain in los angeles. they're barely breaking even. they need this. who's excited? leani: we're excited! lemonis: i'm no pot expert, but i know a good pitch. so i caught up with them outside the store in west hollywood for one last pep talk. what i wanted to do is just come for moral support, because i understand the stakes that you guys have and how enthusiastic you guys are. do you feel prepared? leani: yeah. cindy: yes. lemonis: what did you change about your presentation from before you met me to now? cindy: the main thing is to really hone in on letting them know one of our main goals is to increase their margins on our products. lemonis: all right. leani: all right! lemonis: kick ass. let's go. leani: thank you. lemonis: high five. cindy and leani are meeting with medmen's head buyer. cindy: hi! josh: hey, how's it going? i'm josh. cindy: so nice to meet you. leani: leani. josh: nice to meet you. you guys want to come back, and we'll... cindy: yeah! lemonis: it's a big deal just to be here. josh is flooded with as many as 40 pitches every day,

but only 3% of those products make it to medmen's shelves. the way you kick off this pitch? give him a sample. no pot, of course. he's on the clock. josh: it's delicious. cindy: thank you. josh: you could've blindfolded me. i would've thought this was, like, some kind of regular pop tart. lemonis: so far, so good. cindy: one of our main goals for you guys is to create larger margins for you compared to... lemonis: margins, packaging, product quality -- i like what i'm hearing. but i saw this one coming. cindy: on our packaging, we wrote that are products are good for menstrual cramps. josh: sure. cindy: i'm sure you read that. is that going to make some male consumers shy away from it? josh: yes. no men are going for that. you might be able to find more delicate words. cindy: and honestly, part of it was a shock factor. it's because we, at the time, felt so underrepresented. lemonis: okay. i know i said i was just here to listen, but i have to step in. that's part of your sales pitch, that it was a shock factor?

cindy: i mean, it's real! i don't know. lemonis: it could be on there, just not the first one. i'm not convinced he's buying what they're selling. josh: what are the -- what's, like, the next steps look like? like, when do you think you're going to maybe have a few more employees? cindy: i would say in the next four weeks. josh: okay. cindy: yeah. josh: i mean, you know, it's hard for me to say off the top -- like, i know setting this on my counter downstairs, it will draw attention. cindy: yeah. josh: but that's not enough anymore, you know what i mean? so i kind of have to just dig a little bit deeper. cindy: yeah, definitely. lemonis: for now, it's wait and see. but in my mind, they missed some opportunities. i never heard you say, "we're already prepared. we know about the regulations, and we can scale." you didn't really -- objection, response, objection, response. cindy: okay. lemonis: whether this is the cannabis industry or the cookie business, it shouldn't matter. the business has to... they need to keep their eyes on the prize -- the $3.4 million

that treat yourself could generate in a year. that's the possibility if you do an average job and you can produce. cindy: right. lemonis: you need to keep that number in your mind, okay? cindy: okay. leani: i like it, yes. lemonis: deal? cindy: yeah, deal. lemonis: okay. i'll see you guys. good luck. leani: thank you. cindy: thank you so much. lemonis: i left the women from treat yourself and headed up to berkeley... for a glimpse at the future of pot, if only i could find it. andrea: hi! lemonis: hi. i'm marcus. andrea: andrea unsworth. lemonis: how are you? andrea: welcome. i'm well. lemonis: nice to meet you. customers don't have to worry about coming here. this is a delivery service called stashtwist. it brings medicinal and soon, maybe recreational, pot right to your door as easy as ordering a pizza. woman #4: your order. thank you. man #3: awesome. thank you so much. lemonis: and the menu is vast. andrea: concentrates of all variety, from tinctures to dabs of shatter, rosin, hash -- kind of keep it old-school.

lemonis: yeah. andrea: pre-rolls are a big one as well. lemonis: what's a pre-roll? is that also known as a joint? andrea: yes. lemonis: okay. we'll just call it a joint. pre-roll's like some mba word. it's a joint. let's just call it a joint. andrea unsworth has an mba and used to be an analyst at moody's, the big credit-rating agency. she feels strongly that her presence as a woman is essential in an industry that's dominated by men. and how hard is it being a woman in this business? andrea: i'd say -- i'd say it's an advantage here to be a woman, honestly. lemonis: you do? why? andrea: yeah. andrea: i think it's just a natural -- you know, we're healers. you go to mom when you're sick. lemonis: i agree with that. andrea: so, we've got an order here going out to megan. she's got our flour. she's actually got a really good mix here. lemonis: $135. andrea: oh, yeah. lemonis: what's the average-size order? andrea: $150, i'd say, is. lemonis: and so, what do you do on your website to try to drive that average sale? do you think about the size of their cart? andrea: our photos have to be on point. that's a big deal. lemonis: so, what's your answer? what do you do to grow the average size of the cart? andrea: a lot of advertising, so our newsletter's huge.

lemonis: you know i'm going to press you. andrea: i know. i know you're looking for something very specific. lemonis: no, i'm looking to see if you're doing it. so, do you have suggestive selling in your checkout cart? andrea: we are -- we're working on that, 'cause we need some tech help. lemonis: so there's clearly room for improvement online. but now, i wanted to find out how the delivery side worked. andrea: okay. i believe matt is going to take you. matt's getting ready over here. lemonis: you're going to take me on a delivery? matt: i guess so. lemonis: are you excited? matt: yeah. lemonis: all right, let's do it! andrea: all right! lemonis: i never thought i'd end up delivering pot, but i wanted to find out who's on the other end of that order, so i joined matt for a 10-mile ride north of berkeley. how many runs do you make a day? matt: oh, anywhere between 5 and 20. lemonis: wow! matt: yeah. lemonis: she got a lot in that box. matt: yep. she usually has big orders. lemonis: how many times a month do you come to this delivery? matt: like, twice a week, i'd say. lemonis: twice a week? matt: yeah. megan: hi, matt! matt: hi!

megan: how are you? matt: how's it going? lemonis: how are you? i'm marcus. megan: hi, marcus. it's a pleasure to meet you. lemonis: nice to meet you. matt: here you go. megan: thank you so much. lemonis: why do you choose delivery as opposed to going to a dispensary? megan: i choose it for convenience. i'm a parent. i can't always go to a dispensary. if a kid's with me, that's impossible. lemonis: right. megan: i also like the fact that it's discreet if it needs to be. lemonis: megan dooley fisher told me she uses cannabis to treat the pain she suffers from her auto-immune disease. and she uses a lot. how long will this last you? megan: okay. well, i'm probably a far heavier user than almost anybody out there. lemonis: okay. megan: this is 250 milligrams. i could eat this right now and go on with my day. you would never know anything. lemonis: 250 milligrams? megan: i'll eat that whole bag. lemonis: okay. so, i've never used. how much could i have? megan: i would say that you wouldn't even have one of these. you would have to start with a 2.5 milligram. lemonis: and you could eat this whole bag? megan: yeah, i could eat that whole bag. lemonis: and not even be fazed? megan: not even be fazed. lemonis: megan spends a ton of money on her orders, but how much does andrea unsworth

make on those deliveries? it's $135. for this discussion, we'll say it's got a 60% margin. andrea: okay. lemonis: so we'll call it $75. andrea: yeah. lemonis: what are the expenses that you have to pay for out of the $75? andrea: right. lemonis: let's start with what it costs to deliver. andrea: so, let's say average -- around 20 bucks an hour is the average wage for folks in the industry. lemonis: if andrea's margin is 60% or about 75 bucks on this order and she aims for 15 deliveries a day, she grosses about $1,125. after she pays her driver $160, she clears $965. that's almost 7 grand for a 7-day-a-week business. that's not bad. andrea: yeah. lemonis: and if the rent's $2,000 a month... andrea: yeah. lemonis: ...you're doing okay. andrea: doing okay. lemonis: i haven't been able to get my head around the repercussions of putting money in an industry that still isn't federally legal. andrea had a poise about her and a confidence about her and a knowledge about her that i would invest in her in any business.

but not this one. up next, the desert town goes boom. you paid $1 million an acre. dan: yes. lemonis: is that a lot for this? dan: that's way over. that's a lot. lemonis: are you just not good at real estate? it wasn'taking ceasy at first. she learned how to better communicate her needs. and you learned how to not ignore yours. i discovered how to make healthier meals. and i discovered how much i enjoyed them. narrator: becoming a caregiver is a learning experience for everyone. find articles, tips and tools from experts and others who have been in your place. the caregiving resource center at aarp.org/caregiving.

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i could stay here all day. sleep on it for up to 100 nights and love it, or you'll get a full refund. returns are free and easy. go to buyleesa.com and get $100 off. and free shipping too. you need this bed. man #4: so, this is our approach to making cannabis more approachable. lemonis: call it a sign of the times... greta: okay, a toast to desert hot springs and our future. lemonis: ...a dinner party unlike any i've ever seen. all you can eat, drink, and smoke. man #5: peer pressure? is that what it is? dan: yes. everybody's doing it. lemonis: enough high-grade pot for a grateful dead tour.

the men and women here are owners and operators of the huge indoor marijuana farms in desert hot springs. they say federal laws that criminalize pot are out of step with the times. greta: i'm a republican, and i've been a republican my whole life. this is not me being a radical. this is having my eyes open. lemonis: greta carter is building a 30,000-square-foot facility, hoping that washington stays out of her way. greta: we all know. the people know. they're smarter than what our politics are at right now. but we know that this is -- the time is coming. lemonis: the growers here face the threat of a crackdown. but it's not slowing them down. dan: my facility's going to be 170,000 square feet of indoor medical marijuana. lemonis: dan osbourne is the owner of clc brand labs. i met up with him at his grow-house. and how much money have you invested in the business so far? dan: about $6 million. lemonis: $6 million? dan: and this year, we're going to spend $10 million.

lemonis: spend an additional $10 million, so you'll have $16 million total invested? dan: yes. lemonis: included in his spending spree, $3.8 million for just 3.8 acres of land. you don't need a calculator for this one. you paid $1 million an acre. dan: yes. lemonis: is that a lot for this? dan: that's way over. that's a lot. that's a lot. lemonis: are you just not good at real estate, or...? dan: no, i'm good at investment. lemonis: that philosophy isn't new. sometimes you've got to spend money to make money. and you project that you'll do $22 million in 2018, then? dan: yes. lemonis: is there that much demand? dan: there is, especially when it becomes legal, recreational. there's going to be a lot of demand. it's going to shoot through the roof. lemonis: big money requires bright lights. at clc, sunglasses are required. dan: here's your safety sunglasses... lemonis: okay. dan: ...'cause the light is very intense in these rooms. lemonis: okay.

i feel like i'm ready to go, like, on a safari with you. dan: yeah, all day long. it's fun. lemonis: let's do it. for dan, cultivating pot is all about the tlc. dan: well, i'm more of a hands-on. you've got to feel the plant, look at it. you've got to water it by hand. it takes quite a bit of personal attention. lemonis: so, how much inventory is in here? dan: about $400,000 worth. lemonis: holy [bleep] wow. just another day at the office for dan's lead grower, jeanette. you realize you're in a room filled with what the federal government considers illegal? jeanette: yeah. and i think that's what makes it more exciting. lemonis: it does? jeanette: yes. lemonis: do you know, it's funny, people that don't know the industry like me... jeanette: mm-hmm. lemonis: ...i used to think that the marijuana was actually this. jeanette: you know, that's what everyone thinks, too. lemonis: i didn't know it was this. jeanette: yeah, the bud. dan: gently touch them, and then touch your fingers. lemonis: ooh, it's sappy. dan: yeah. lemonis: is that how you know? dan: uh-huh. that's good. and i'll show you what gives you this...

lemonis: ooh, strong! a pot user in high school, dan says he gave it up for nearly a decade. how come? dan: i was a minister for eight years, and i was raising kids. lemonis: you were a minister of a church? dan: mm-hmm. lemonis: do people from your church know you do this now? dan: no. no. lemonis: what do you think they'd say? dan: they would be really surprised, i think. lemonis: then it was my turn to be surprised. dan: i voted against recreational use. lemonis: you did? dan: yes. lemonis: you voted against prop 64? dan: right. lemonis: tell me more about that. dan: you know, i'm a dad and a grandpa, so we've got a responsibility. i don't want my grandkids or my kids, you know, just walking into a store and buying medical marijuana and getting high. then, we have our 45,000-square-foot building. lemonis: when his buildings are completed, dan expects to net at least $30 million a year. but his success is coming at a great personal cost. dan: my son-in-law won't even talk to me because i'm in this business. he's a pharmacist in utah. and he's so against this, so... lemonis: well, that makes for an interesting thanksgiving. dan: well, i don't see them during thanksgiving.

lemonis: because of this? dan: uh-huh, because of this. lemonis: and you have grandkids? dan: uh-huh. lemonis: and so you don't see your grandkids, either? dan: no, i can't see them, either. lemonis: he won't let you? dan: no. lemonis: how hard is that? dan: that's tough. but when their kids grow up and they find out that their grandpa is in the medical marijuana business, they'll like it. lemonis: oh, they're going to love you just the same. dan: yeah, absolutely. lemonis: do you ever think about stopping? dan: no, no. i'm going to ride this business out until i sell it. lemonis: what's the end goal for you? dan: selling my company for $120 million. lemonis: you've picked that number of $120 million? dan: yeah. lemonis: $120 million sounds like a low number if you get to $35 million in earnings. dan: well, i'm not a -- i'm not a greedy person. lemonis: coming up, the dangers of dealing illegal weed. were you ever scared for your life? zack: yeah. i mean, you can't not be scared for your life with a gun to the back of your head for 20 minutes as some guy searches your apartment.

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♪ lemonis: in california, buying marijuana legally is almost as easy as grabbing a gallon of milk. man #6: have a good one. man #7: thank you. have a good one. man #6: cheers. lemonis: but there's another side -- a multi-billion-dollar underground that continues to thrive. hidden inside an l.a. warehouse, a sea of black-market pot carefully grown by a man we'll call zack. would you call yourself a drug dealer? zack: no. i wouldn't. lemonis: how come? zack: 'cause it's just weed. the word "drug dealer" makes you immediately think of, like,

a violent guy with guns selling cocaine... lemonis: yeah. zack: ...when this is more of just a friend who has weed and his friends want weed. i'm not, like, on a street corner selling it. lemonis: he doesn't need to. zack has a steady client base he's been cultivating for 12 years, from dispensaries to everyday people. would it surprise me to know the customers you have today? zack: yeah. lemonis: professionals? zack: yeah. lemonis: white collars? zack: yeah. lemonis: yoga moms, soccer moms, the whole deal? doctors, lawyers? zack: yeah. lemonis: part of the reason you're facing this way and not towards the camera is that you know that it's illegal. zack: yeah. lemonis: right? zack: yeah. lemonis: and now, proposition 64 might put him out of business. reporter: prop 64 has one-handedly legalized... lemonis: so when the law passed, that night, election night, you're watching the tv with the rest of the world, right? zack: yeah. lemonis: what's the first thing that goes through your mind? zack: well, i'm going to probably have to get a real job soon. lemonis: why?

zack: 'cause you can see it just taking out any kind of black-market stuff. the prices have already gone down drastically. lemonis: how many pounds can you produce out of your facility? zack: we do about 16 every two and half months. lemonis: 16 what? zack: pounds. lemonis: six crops, five crops a year? zack: about five crops a year. lemonis: okay, so 5 times 16 pounds is 80 pounds a year? zack: roughly. lemonis: and you're selling it for how much? zack: about $2,000 a pound-ish. lemonis: so, $160,000 in revenue? zack: gross revenue. lemonis: after expenses, he and a partner net about $60,000 a year each, tax-free. but there are other costs. have you ever been held up at gunpoint? zack: yeah. i had a home invasion. two guys came in with guns. lemonis: how much did they take? zack: they took about $3,000. lemonis: were you ever scared for your life? zack: yeah. i mean, you can't not be scared for your life with a gun to the back of your head for 20 minutes as some guy searches your apartment. lemonis: zack's future is a game of wait and see.

if taxes push the price of legal weed too high, his business might survive. you can undercut the retailers. zack: yeah. i can already come in 20% lower than the legal shop. lemonis: and so, we can call it whatever we want, but at the end of the day, you're a businessman. zack: exactly. lemonis: is that how you think about it? zack: i think about it like that, yeah. just making money. you're trying to just survive, honestly. lemonis: look, i don't like the fact that he's engaging in illegal activity. but what i understand is that he's trying to generate a living for himself in a state that's now legal. nice to meet you. zack: you, too, brother. lemonis: thank you. clearly a smart gentleman who understands risk and reward. and he knows where the lines are, what not to cross. but he's also smart enough to know that he needs to be thinking about where his next income stream's going to come from. it's a striking turn of events when legalized pot threatens to put a drug dealer out of business. but marijuana isn't like other industries.

by 2021, it's projected to be worth more than $20 billion. leani: thank you. good morning. lemonis: for some, it's already paying off. cindy: so, that's why we bring our non-medicated samples, so you can try it and... lemonis: remember cindy and leani? they scored with their sales pitch. josh: thank you, guys. cindy: you're welcome. josh: i think you guys are going to do really well here, and i look forward to seeing you guys in the other stores, too. cindy: awesome. lemonis: treat yourself tarts are now selling at madmen's newest store in santa anna. i came to california wary of a business with a criminal past. i'm leaving convinced its future is already here. i'm marcus lemonis. ♪

♪ lemonis: tois this my tiny home?... a colorado manufacturer of tiny homes has dreams of building an empire. the quality of workmanship is unbelievable. but the owner's finding out that the big business of little living is more than he bargained for. i want to help you be a better c.e.o.. 'cause right now, you're a nice man and a terrible c.e.o. he's put the business in over a million dollars of debt. do the people that work here know how bad it is? steve: the top managers do. the rest don't. bernadette: it puts a lot of pressure. lemonis: his lack of leadership has killed morale. steve: i avoid conflict and i have not done a good job at holding people accountable. lemonis: if i can't get him to change his mind-set... this doesn't even, like, faze you. that freaks me out. ...and fix the foundation of his company...

tracy: these people are here because they care. lemonis: ...the entire tumbleweed business will collapse. do you know what "fercockt" means? my name is marcus lemonis, and i risk my own money to save struggling businesses. we're not gonna wake up every morning wondering if we have a job. we're gonna wake up every morning wondering how many jobs we have to do. it's not always pretty. everything's gonna change. everything. but i do it to save jobs, and i do it to make money. this... let's go to work. ...is "the profit." ♪ in 2012, steve weissmann took over tumbleweed tiny house company... steve: how are sales going? lemonis: ...now america's top manufacturer of mobile tiny homes. tracy: this is our roanoke model. lemonis: he had little experience building homes. still, he managed to grow the company from five people working out of a garage to 70 people working out of a 20,000-square-foot facility.

tracy: we have hundreds and hundreds of floor plans. lemonis: and today, sales exceed $6 million per year. however, as the company has grown, so have the operating costs. tracy: if i do not get my windows ordered, it is gonna really kill us. lemonis: desperate to keep the lights on and expand, steve turned to unconventional loans and credit cards. now, with over $1 million of debt, tumbleweed is on the verge of bankruptcy. steve: the company is in jeopardy. lemonis: with my ownership in camping world, i've been in the rv space for over a decade, and i feel that investing in tumbleweed would allow me to make a huge splash in the tiny-home market. pat: yes, sir. how may i assist you today? lemonis: hi, there. pat: welcome to tumbleweed. lemonis: how are you? i'm marcus. pat: oh, marcus. so wonderful to meet you. lemonis: nice to meet you. steve: hey. lemonis: i'm marcus. steve: i'm steve. lemonis: steve, nice to meet you. steve: nice to meet you. it's so surreal, actually,

meeting you face-to-face. lemonis: we're here. let's do it. so, this is your business. steve: this is it. lemonis: what prompted you to get into this? steve: i'm a minimalist by trade. lemonis: do you live in a tiny home? steve: no. i live in a regular house now. i've got a family and kids. i actually live in sonoma and in colorado. lemonis: what happened to, "i want to be a minimalist"? steve: i still am a minimalist. lemonis: yeah. what did you do before this? steve: i was a restaurateur. i really don't have much experience in manufacturing. i can manufacture a burger. lemonis: okay. can you show me a few models? steve: so, we have cypress, the farallon alta, the elm 26 equator, and the roanoke. lemonis: i mean, it's like a log cabin. steve: yeah. lemonis: but it's movable. steve: yes. they can pick their floor finish, they can pick their roof and window colors. people really want to get into these and customize them. lemonis: so, what is your typical price for an average unit sold here? steve: right now, $80,000. lemonis: and what's the maximum capacity that the factory can actually produce? steve: we're currently producing anywhere from eight to ten a month. and we have about three to four to five month backlog at any given time. lemonis: three to five months? steve: yes. in the beginning, when we started off,

we were building about two to three a month, and we started selling more, and so our backlog grew and grew and grew and grew. lemonis: uh-huh. steve: well, we're gonna go out in the shop and take a look. lemonis: well, show me the shop. steve: yeah, all right. lemonis: what's fun about tiny homes is that, although they're mobile, they typically stay more stationary, and the craftsmanship really matters. when i look at this particular product and i look at the materials that they use and the work that's going into them, the work is unparalleled. i have never seen anything with this high of quality. start to finish, how long will it take? steve: it should take 16 days. this one's probably gonna take us 21, maybe 22. lemonis: well, how do you not know? steve: we're gonna know when it's done. lemonis: no, no, no, no. how are you pricing the unit before you know how long it's gonna take? steve: we have a lot of estimates on our pricing. people really want to customize these a lot, so we get curveballs all the time for things that we've never done before. lemonis: like? steve: like folding porches. we had no idea what that was gonna entail. lemonis: what did it cost you to make? don't say you don't know.

steve: our costs of labor and materials on one of these units is around 60%. lemonis: so, your margins are 40%. steve: well, okay, so, besides the cost of goods, there's probably about 10% additional costs in design, servicing, labor, sales. lemonis: so, your margins are 30%. steve: 30%. lemonis: do you think those are good? steve: i don't know if they're good or bad. lemonis: the more i dig, the less i think he knows. i think any business owner's lack of research will ultimately lead to bad decision-making. you can't run a business that way. what's up, guys? brian: hello. lemonis: how are you? brian: good. lemonis: i'm marcus. brian: i'm brian. lemonis: nice to meet you, brian. mason: mason. lemonis: mason, nice to meet you. where did you learn how to do this? brian: military. lemonis: you were in the military? brian: yeah. lemonis: thank you for your service. brian: thanks for your support. lemonis: i'm gonna put everybody on the spot right now. if all the models that you guys made were standard units, how much quicker would the production process be? mason: significantly. brian: yeah. lemonis: double the output? mason: i would say so. lemonis: how are you doing, sir? austin: i'm austin baker. lemonis: hey, austin. austin: production manager out here. lemonis: how are you, sir? austin: great. lemonis: nice to meet you. so, are you in charge of the floor? austin: yes, sir. lemonis: you want to give me a little tour, just you and i?

austin: please. so, i'm gonna show you the two types of trailers we build on. we are fabricating our frames right here. we're building them. lemonis: you're not even buying them? austin: we're building them. everything we can do, we do in-house. we are so jammed, and it's unnecessary. the word "custom" is sexy, and it sells. lemonis: it also does one other "s." austin: ruins us. lemonis: slows things down. the real problem in this production process is that the customization slows things down. in tumbleweed's current manufacturing process, there are two distinct lines, meaning that only two homes can be built at one time. and while they're being built, they're done in four distinct stages. in stage 1, the trailer comes in and the floor goes in. in stage 2, the walls and the roof go in. in stage 3, the interior starts to get put in. and in stage 4, that's where they do the finishing touches. if there's one thing that needs to change in the unit, it slows down the entire line. when you've taken those ideas to steve, what does he say to you? austin: my ideas were shut down. he doesn't understand what we do out here, yet.

he's a restaurant guy. lemonis: has he ever worked in the shop? austin: no, and that's okay. that's not his job. that's what he pays me to do. lemonis: i'm surprised that steve isn't immersing himself on the floor with the guys, step-by-step, learning. "how do i improve it by a day?" not just to make more money, but to help your people be more successful. i-i don't know why that's missing for him. austin: marcus, i wanted to introduce you to lee. lee: hi, marcus. lemonis: hi, lee. how are you? lee: very nice to meet you. lemonis: nice to meet you. what do you do here, lee? lee: c.o.o. lemonis: okay. steve: lee is brand-new. he's been with us a week and a half. lemonis: and so, how does the reporting structure work here? austin: so, we have employee... lemonis: yep, one. austin: ...we have leads... lemonis: two. austin: ...we have the foremen... lemonis: three. austin: ...we have the production manager... lemonis: four. austin: ...then, i have stephen schlosser, who's the gm... lemonis: five. austin: ...then, that's his boss... lemonis: six. austin: ...who's his boss. lemonis: seven. austin: yeah. lemonis: so, seven layers between you and the people that make the magic happen. steve: correct. lemonis: does that seem like a lot to you? steve: yes, it does. lemonis: how about to you? lee: no, it doesn't. the only redundancy that we might have is austin,

because you have general manager, foreman -- the foreman's over the two leads. lemonis: i was with you up until shop foreman. the further we get away from the work that, i get nervous. steve: lee's like flight control. do we have the parts we need? which house is coming into the line next? are the plans complete? lemonis: which is, normally, in a small business, what the owner would be doing. steve: so, i don't personally think that i've got the time to do all that. lemonis: so, what are you spending your time doing? steve: i do a lot of the website, back-end work, as well. it's not a small job. lemonis: okay. it was kind of interesting meeting lee, because the things that he is doing, i would expect steve to do. steve is too separated from what happens on the front lines. ♪ how are you? tracy: i'm tracy. lemonis: tracy, nice to meet you. i just spent a little bit of time with austin. tracy: my husband's name is austin, yes. lemonis: oh, it's your husband. tracy: uh-huh. lemonis: okay. tracy: we've been married almost 13 years? something like that. lemonis: i like him, by the way. tracy: he's very passionate about what he does. lemonis: yeah. tracy: and his people out there. lemonis: so, could could you take me through

the sales process? like, if i want to order a certain type of floor... tracy: so, you're basically asking for a customization on this? lemonis: yes, can that be done? tracy: if the production team says we can do it, i'm not walking away from the sale. lemonis: why? tracy: so, we get 20% of the cash up-front. lemonis: uh-huh. tracy: if i don't have a lot of cash customers for the month, those guys are struggling for materials. lemonis: so, better said -- you say "yes" to anything, especially if they're a cash buyer. tracy: yes. lemonis: okay. it's become clear to me that every single unit that is bought from this company has some nuance to it that is slowing down the process. tracy: this house, right here, is a custom one. lemonis: i don't understand how you're getting upstairs. austin: you'll never see this in any other house. this was this lady... lemonis: how do you get up there? austin: she's gonna get her little step-stool right here. lemonis: so, is there a disconnect between sales, design, and what's happening in the shop? austin: i can't blame sales, because they have to make money. lemonis: i want to ask you a question. does steve know what he's doing? austin: no. lemonis: does he know how to manage people? austin: no. lemonis: does he know how to design things? austin: no. lemonis: who's really running this company? tracy: he's running the outside, and i'm running the inside. lemonis: doesn't something have to change?

tracy: yeah. austin: if something doesn't change, it won't happen. lemonis: okay. what's wrong? austin: so... what's wrong? lemonis: talk to us. tracy: just that we love this place so much, and we love those people. we do it for these people. these people are here because they care. they're not because of the paycheck, i can promise you that. lemonis: the idea of being in the tiny-home business excites me. and after talking to tracy and austin and seeing the folks on the factory floor, i mean, there's a good recipe there. it just needs some major tweaking. steve: hi, marcus. i want to introduce you to my wife, bernadette. lemonis: bernadette, how are you? bernadette: nice to meet you, marcus. lemonis: nice to meet you. bernadette: thank you for being here. lemonis: i thought it may be a good idea for the three of us to go outside and talk, just, away from everybody. bernadette: yeah. lemonis: is that okay? let's head out. you have kids? bernadette: two. they're in there. lemonis: oh, they are? bernadette: yeah, stocked up with snacks and games. lemonis: how old are they? bernadette: 5 and 7. lemonis: what's the year been like for you? bernadette: we've worked really hard, and i'd hate to see what we've worked for, um, disappear. lemonis: he smiles a lot. bernadette: he does.

lemonis: is that a real smile, or is that just for show? bernadette: it's a real smile. steve: i smile when i'm stressed, i smile when i'm nervous, and i smile when i'm happy. lemonis: well, that's good. steve: it's my default position. [ laughs ] lemonis: how hard has this been on him? bernadette: incredibly difficult. a lot of questioning himself. steve: i have taken a huge risk just to get here today, and i've pushed myself to the limit. lemonis: do the people that work here know how bad it is? steve: the top managers do. the rest don't. lemonis: you know that it makes me crazy that you have all these layers of people, right? steve: i know. lemonis: and so, if the business closes, what happens? bernadette: we start over. we start over from scratch, yeah. lemonis: what does that mean? you have to file bankruptcy? bernadette: mm-hmm. about, like, a week away from that. it puts a lot of pressure. you can hear it in his voice, and then i know it, and then i can't sleep, and that's all you can think about and it's spinning in your head and your stomach's clenched and... it's been very difficult. lemonis: wow. steve: when business doesn't go well, it's hard to be a good father and a good husband.

and that's the biggest disappointment. to me, the most important thing of my life is my kids, you know, being there for them. i haven't been. bernadette: it's okay. lemonis: okay. do you have some financials we can look at? steve: yeah. lemonis: maybe head inside? bernadette: mm-hmm. lemonis: i feel like i've gotten a good sense of the great people that work here. the fantastic product, while inefficiently made, still a really quality product. so, i commend you for that. steve: thank you very much. lemonis: let's go through the p&l. steve: okay. lemonis: so, your total revenue for the last 12 months is $6.9 million. your gross profit is $2.5 million. your total expenses... steve: $2.6 million. lemonis: and so, then, your net profit would be... steve: minus $100,000. lemonis: okay. have you ever made money here? steve: yes. lemonis: what'd you make in '12? steve: about $100,000. lemonis: what'd you make in '13? steve: about $100,000.

lemonis: what'd you make in '14? steve: $400,000. lemonis: what'd you make in '15? steve: in '15, we lost money. when we expanded, about $1.1 million. lemonis: okay, so, $100,000, $100,000, and $400,000 is how much? steve: $600,000. lemonis: you're at a $600,000 positive. you lose $1.1 million in '15. steve: mm-hmm. lemonis: takes your $600,000 positive to a $500,000 negative. steve: well, there were no retained earnings, so these earnings were all taken out. lemonis: what do you mean they were taken out? where did they go? steve: to me. lemonis: so, you took all the money out of the business? and so, at the start of '15, there was no money here. steve: yeah. lemonis: so, if i take everything -- your total liability of $2,885,000 against assets of $1,239,000, and that means that you're negative equity. this business is upside-down -- insolvent -- to the tune of $1.6 million. steve: correct. lemonis: the debt is so significant, really, it just sits with me in a very bad way. so, when i look around this factory,

how did all of this get funded? steve: so, originally, the customers were paying up-front. lemonis: so, essentially, customers financed this whole business. steve: and also, in addition, i put some money in. it was $1,500. lemonis: 1,500 bucks. steve: correct. lemonis: okay. from an outsider's perspective looking in, you put very little money in the business. whatever money the business made, you took out. the hole in this business, now, is $1.6 million. steve: correct. lemonis: that's not even to provide any more working capital. that's to get the payables current and all of the debt paid off. steve: correct. lemonis: and where you're sitting today is, in a business that, quite frankly, is out of business. and i have a real problem with the fact that you took $600,000 out of the business, in a business that's growing. why did you take it all out? steve: i didn't see this coming. i didn't know it was gonna happen. lemonis: is this really a smoke-and-mirrors business? steve: no. we have a real product. lemonis: okay. are you running a house of cards? steve: i'm running on the edge. lemonis: do you know "fercockt" means? steve: yes. lemonis: what does it mean?

steve: it means "all screwed up." lemonis: debt doesn't scare you, does it? lemonis: i'm curious as to why you say that. lemonis: because you're reckless about it. and because you didn't save any acorns for the future. the fact that you're not scared of debt in one breath, but you've taken on debt. this doesn't even, like, faze you. that freaks me out. austin: i mean, we were both yelling at each other, cussing. it's only a matter of time he's gonna fire me. i'm nervous. i don't know what to expect, and that's why, i guess, i'm scared. lemonis: let's go talk to him.

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that freaks me out. that you're not scared of debt -- this doesn't even, like, faze you. am i totally, like, bat [bleep] crazy, here? steve: no, i completely understand what you're saying. lemonis: so, you have a business that's $1.6 million underwater, but the product is great, the people that work here are spectacular. so, i'm willing to lend this business $3 million to clean up the payables, the lenders -- everything -- so that the employees can continue to work and so that the company can breathe. steve: yes. lemonis: in exchange for that, i want to be paid back, and i want 75% of the equity. based on steve's pattern of how he deals with money, i have to structure this deal very differently than i normally would. and so, the money that i'm gonna put in is gonna go into the company in the form of debt and equity. so, not only am i gonna be the lender,

i'm gonna have 75% of the equity. and while that may seem aggressive, i have to protect myself. because when you look at the pattern here, i don't think i have a choice. steve: it's certainly not the offer i was expecting. lemonis: what'd you think the offer was gonna be? a few million dollars and i sprinkle fairy dust in here? steve: 51%. lemonis: i want to help you be a better c.e.o. 'cause right now, you're a nice man and a terrible c.e.o. c.e.o. is not a title. it's a philosophy. this would be a business that i would invest in with camping world, so that we felt like we were fully integrated. and so, do we have a deal? can you agree to those terms? steve: yes. thank you very much. lemonis: okay? steve: okay. lemonis: i'll see you soon. steve: thanks. ♪ lemonis: hey, guys. we need to get everybody together right here. all right, so, come on down.

so, i've agreed to invest $3 million, and i will be 100% in charge. now, the challenge is, in my opinion, we have to standardize this process to really start to crank things out. we will have four standard models, and that's it, okay? i believe i can take any standard floor plan and make simple adjustments to it and sell them on the value of what we already created. 'cause honestly, people will change anything if you give them the right to. how many people like cake? raise your hand. i like a one-layer cake, not a seven-layer cake, and this company has so many fricking layers, so we're gonna flatten out the organization, but we're gonna be a team. i love investing in american businesses. we want to really be proud of what we're making, and we need to put out good product. all right, let's get to work. [ applause ] tracy: good job. man: all right, let's go to work. ♪

lemonis: all righty. i want to spend the evening, overnight, in a tumbleweed tiny home to understand why customers love it and how we can make it better. [bleep] when i went inside the unit, what was most interesting to me was how space gets utilized. this isn't well-thought-out. furniture's in the way. i wish this furniture was integrated. this window's too small. no collapsible tables. i think their use of space is not really great. my fat ass up here... it's actually kind of cool. what i felt was missing from the unit is little things that we have become accustomed to having in our homes, like charging stations -- a variety of things. ♪

[ knocking ] steve: good morning. lemonis: good morning. steve: how'd you sleep? lemonis: i didn't sleep bad. i like the fact that there was a very homey feel to it. i like the pitch of the room. i didn't feel claustrophobic. as i think about this place, there's a number of design changes i would make. i look for little creature features. and so, i thought about, like, "where do i charge my phone at night?" so, have you really slept in one? steve: i have. lemonis: overnight? steve: overnight. lemonis: for how many times? steve: i've slept in one in sonoma. lemonis: i am candidly shocked. this is how a leader gets closer to his business. does he not care? steve, let me ask you a question. steve: yeah? lemonis: how passionate are you about this business? steve: this has been a very tough and hard journey for me. lemonis: i need to see more from you. steve: tell me what you want to see. lemonis: looking at the finances, looking at the decisions you've made, looking at the layers you've added, rather than serving the business, you've had the business serving you. steve: you know what? i have to admit that you're right. i really don't have much experience in the manufacturing business.

so, as far as construction goes, i don't know that we're doing it right, and i know i need to improve that. i avoid conflict and i have not done a good job at holding people accountable. and when i brought in lee, i recognized, here's somebody who's really good in execution, and if i hire him, hands off, solves my problem, i continue to be bad in execution. lemonis: in order for steve to prove to me and to the rest of the employees that he truly can be a leader, we're going to have to remove some of those layers between him and the workers. what i want to see going forward is that you have the personal sacrifice and the commitment. that's gonna be something that we're gonna have to work on together. why don't we head back to the office. steve: all right. lemonis: all right? ♪ in order for us to start designing the standard model, we're gonna have to get feedback from customers. so, i'm taking a unit and the team over to camping world in colorado springs.

tracy: so, this is a rvia-certified rv built on a travel trailer. i'm excited to actually have a couple of you guys go up there, so... woman: you need some more storage. lemonis: in order for steve to continue to develop his leadership skills, asking customers questions and getting ideas from them, and then, figuring out how to work them into his business is a good step. steve: all right, folks, i want to hear some feedback about what creature features this is missing and what other changes you would like to see. man: i would give it more storage space. i didn't see much cupboard space or storage space in the unit. girl: you should always have, like, something that you can pull out, and it'll just be there as a piece of furniture. lemonis: integrated into the walls. the key to selling a product like this is selling value and experience, not selling customization and price. thanks, folks, very much. woman: thank you. guys, i'm gonna take austin to the service department. i'll see you in a little bit. since austin is in charge of overseeing

the production of the tiny homes, i wanted to show him some features and benefits from rvs here at the dealership. all of this furniture is integrated. this table can extend, but it's part of the place. and i think the thing that's missing in the tiny homes is the lack of integrated stuff. but i also wanted to spend a minute with him away from steve, getting some feedback on how he and the other employees are feeling since i've made my deal. how do you think steve is right now? austin: i think, as a leader, very, very strong. but i will tell you, with lee, it's only a matter of time until he fires me. lemonis: why? austin: stephen and lee -- they were meeting. they had conversations about a seven-layer cake, and i was the sacrificial lamb. i'm nervous. i don't know what to expect, and that's why, i guess, i'm scared. lemonis: so, why wouldn't you talk to steve about solving that problem for you? austin: with lee, he's an authoritative person. steve, he absolutely hates conflict. lemonis: but he can't lead you if he doesn't know what you're thinking. 'cause if he's the ultimate leader... austin: right. lemonis: ...then why wouldn't you allow him to lead?

let's go talk to him. lemonis: i love the fact that austin feels comfortable enough to talk to me about what's happening in the business, but they need to learn to deal with their issues by themselves. i can't resolve their problems. i'm not here every day. austin: i guess i'm just gonna squash this. i'm afraid that, with lee, the way he was treating me, it's done. it's only a matter of time. lemonis: if your business is in trouble and you need my help, log on to...

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austin: i guess i'm just gonna squash this. i'm afraid that, with lee, it's done. it's only a matter of time. lee's new. he's only been there a couple of weeks, but he's an authoritative person, and he's gonna fire me. i'm the sacrificial lamb, if you will. i guess, what i'm getting at is, just, asking for a little bit of help. steve: there's been a disconnect between you and i, for sure, right? austin: it's the layer in between us. steve: so, first thing monday morning, it's obviously something we should talk about. lemonis: first of all, i love the fact that you're having an open dialogue. and you've been a great listener, and you've been a great communicator.

the guy gives you 100%. you have to hold onto them. they have to feel protected, and your job is to protect them. steve: yeah. austin, you don't have to worry. lemonis: layers in the cake are creating a problem for the business. in most cases, it would be easy for me to make the decision for steve, but i really want steve to show leadership, that he will make sure that he addresses the issue himself. the reason people will go to battle for each other is, if he knows you'll have his back. austin: shoulder to shoulder. arms in arm. i'm -- you -- steve: okay. austin: yes. lemonis: let's roll. ♪ i think it'd be a good idea if we can start working on what a standard unit would look like. steve: absolutely. tracy: perfect. lemonis: now that we've gotten the feedback from the customers on what they like and don't like, i want to take that information and incorporate it into the process of making the four standard units. woman: i would advocate for the door to the opposite end. lemonis: is that move possible, guys? mason: definitely possible. it opens up space to enlarge the bathroom, if needed, and the closet space.

lemonis: in order for the design process to actually come out right, there has to be communication. so, i want to show steve another leadership tool, which is collaboration. tracy: this is a true great room here, and if i really wanted this to be a bedroom, i don't have a door intruding into my area. steve: you've got a tape measure there. can you just measure the width versus the depth on that thing? lemonis: i like what i'm seeing with the team because everybody feels like their opinion's being heard, and steve's doing a decent job of actually orchestrating it all. so, next time i see you guys, i want to see two standard models, okay? ♪ lemonis: when we talked the other day about austin and lee... steve: yes. lemonis: i wanted to get an update on where you are. steve: myself, lee, and stephen started talking through the situation, and austin was pretty frustrated by it and left. he said, "i quit," and he walked out. i think he's having a hard time with the changes. lemonis: so, he's not working here anymore? steve: correct. lemonis: i got to be honest with you, i'm totally confused,

because a couple of weeks ago, steve and austin are talking about how they're gonna work together and how steve is gonna protect him. and now, i'm finding out that, yesterday, austin stormed out of here and quit. like, what happens when i'm not here? so, i call austin because i want to know exactly what happened. i want the facts. what happened yesterday? austin: they said that we need to figure out how to talk about the seven-layer cake, and their way of addressing that and through our conversation was showing the hierarchy on the board. lemonis: okay. austin: and i jumped the gun because they circled me, and then, the three people below me. lemonis: meaning that one of you guys was gonna go away? austin: right. lemonis: and you just wanted to protect them. austin: if i've got to be the casualty, that's fine. lemonis: i partially invested in this business 'cause of you. we thought we were gonna work together. i told you, [bleep] happens out here, not in some fancy office. austin: someone's gonna get the ax. lemonis: right. austin: and it better be me and not them. lemonis: nope. it ain't gonna be you, and it ain't gonna be them, either. austin: i mean, i -- lemonis: it ain't gonna be anybody that's on the floor.

austin: thank you, man. thank you, and i believe you. lemonis: why don't we get everybody together in the conference room from yesterday, okay? austin: yes. lemonis: hey, so, i know you guys had a get-together yesterday. you want to, maybe, lead the process? steve: sure. okay, so, what happened is, yesterday we had a meeting that started off on the shop floor and led into here, where, austin, you walked out. austin: guys, come on. i put three years of my heart, soul, and energy into this place, and then, my world's turned upside down. lee: i agree in premise that we have a structural issue to fix in this company, but there's a difference between staying in the room and hashing it out and looking at your colleagues and saying, "you don't know your business. i resign." there is the chance that this is the path that we're going to go down. austin: well, what i saw was my family -- it's turned upside down. that's how i felt. lemonis: so, were you mildly relieved when he left yesterday? lee: the company's not profitable. the business model is not successful. austin: is it their fault? lee: the plan -- you're not letting me finish. austin: okay. lee: you resigned. you can't have people, especially managers, who just resign and then decide,

"mm, i'm gonna come back the next day, and i'm going to start work. maybe the next day after that i'll decide to resign again." steve: if you would've stopped and said, "guys, i am not comfortable with this. i need the rest of the day to process," that's one thing. but you didn't contribute. you just said, "hey, i'm out of here." austin: but i mean, steve, a guy that had been with you from the beginning that you talked very highly about -- you panicked. what is your opinion about what should change in the seven layers? steve: these two would go to one layer, and these two would go to one layer. lemonis: so, you're going seven to four. lemonis: and so, just out of curiosity -- i'll just go ahead and start with you, 'cause you're squeezing yourself -- is you or lee surviving? steve: why not both? why can't there be two people on the same layer? lemonis: are you really trying to sell me on this [bleep]? anything change in the staff? steve: actually, a couple people have left. lemonis: people left? steve: yes. lemonis: oh. steve: yeah. lemonis: okay. who left?

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steve: why not both? why can't there be two people on the same layer? lemonis: are you really trying to sell me on this [bleep]? in one breath, you're saying you think there's too many layers. your suggestion is, they're co-managers? steve: correct. lemonis: steve, this is a very important moment. both of our jobs is to put the company in front of our own personal interests. and so, you are permitted to come back to work here. austin: yes, sir. lemonis: and you and i will continue to work together. steve: perfect. lemonis: all right? this is the most drama-filled manufacturer i've ever been to in my life.

lee: so, what are we thinking about the next few weeks? what would you like out of me? lemonis: i think you have to decide if you feel like, you know, you could add value here. i think that's the question. lee: i mean i've been around long enough that i think you need me lemonis: yeah. lee: austin has some capabilities, but i'm not sure that he could run at the layer that really should be required for a company of this size. the right model is to have a gm or a site leader for this sized operation this plant you'd have to burn it to the ground and redo it lemonis: if steve was actually managing correctly and austin was able to get the raw materials and not have all these layers over him. things would be fine. i just need to make a few tweaks not burn the business to the ground and start over the question is are you going to be here? is steve going to be here ? or are neither of you going to be here? lemonis: currently, the trailer manufacturing of the frames themselves takes up over 30% of the floor space and so what i want to do is outsource the manufacturing

of those trailers and the amount of production that i can run through that area will almost double the production of the company lemonis: so we are at a local manufacturer called excalibur which by the way can produce twice as much as tumbleweed was able to produce before lemonis: if i gave you 75 to make, what's the best you could do on that 75? 'cause we think we're gonna make -- call it 250 a year. man: let's do 80 of them at 4,900. lemonis: okay. steve: great. man: all right. lemonis: now that we've struck a deal to move trailer production off site, with the additional space being freed up in the factory, they'll be able to finish the existing customized units and now start making standardized units. ♪ oh, hi! steve: good to see you. lemonis: what's going on? i'm heading back to tumbleweed. i want to check in on progress, and i want to see what's happening with the standard unit. steve: so, we're moving along. lemonis: anything change in the staff? steve: actually, a couple people have left. lemonis: people left? steve: yes.

lemonis: oh. steve: yeah. lemonis: okay. who left? steve: so, lee did leave. lemonis: why did he leave? steve: he was really, really... upset about austin being brought back, being overruled on that. that was a hard thing for him. lemonis: right. i'm surprised that lee made the decision to resign, and that he did it so quickly. and i never want to see infighting inside the business, and i don't ever like to see a power struggle, but there's a layer problem. and so, i feel like it's necessary, anyway. and how has austin been? steve: he's been amazing. i'm actually really grateful that you said you're bringing him back, because it was the right call. lemonis: austin. austin: how you doing? lemonis: so... where is there a standard unit? is there one started? [ sighs ] steve: no. we haven't started it. we still have to work these. lemonis: ones that were sold months ago? steve: yes. we did find a spot where we're gonna squeeze a new standard unit, and the guys have done a great job. they've put the creature features into it. lemonis: while i'm a little disappointed

that they haven't put the standard unit into production, i do like the fact that the team is starting to work closer together, and that they've taken feedback from the customers to start to come up with new ideas, new innovation, and new efficiencies. austin: this is our utility closet. lemonis: for what kind of model? steve: it's actually going to all the models. lemonis: what's in here? austin: we have a furnace. we have an air exchanger. this could be an on-demand water heater. your electrical panel. and your 12-volt action going on right here. lemonis: i want you to patent this. this is the reason that the company can be worth something, because you've designed something that allows standardization to work. this cube can go in any unit. steve: correct. lemonis: when you take out layers out of the business and you push yourself closer, what happens with the organization? steve: communication improves. understanding of what our goals and objectives are improves. i love the direction that it's going. when we show you the other models... lemonis: can we gather up those plans? steve: yeah. that'd be great. christian: and so, we have four models total with two floor plans per, is what we're gonna work through,

and end up with a total of eight. lemonis: so, i think now that you guys have got your head around that, what i want to do is, i want to take one standard unit and this team to a national company that could potentially buy, maybe, 10 to 15 or 20 a year. but i need it to be done in probably two and a half weeks. steve: i'm gonna push back on marcus here, for a minute. pat: we have a similar unit, and the pitch of the roof was a little bit higher. austin: yeah, you raised it a little bit. pat: yeah. would you have that flexibility?

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stevso, my concern is,back on mwe took our best guysute. and we put them on this unit to get them to two and a half weeks, and the other ones get slowed down. one of our rules is, we've got to protect the floor, and when we do this, we don't protect the floor. lemonis: hallelujah. i think your explanation of wanting to protect the stability of the floor makes me want to follow your lead. and i appreciate you having that evolution to say, "i want the sale bad, but i'm not willing to break my people or my customers for it." and that, for me, is really the epiphany. so, what is the time? steve: well, it's about 3 1/2 to 4 weeks. lemonis: so, can you compromise 3 1/2? steve: yeah. we can do 3 1/2. lemonis: so, the task is to get this unit made. we will take the unit to a location, and the group will pitch the entire company... steve: okay. lemonis: ...on becoming -- having a national account

that will buy from you on a regular basis. okay? i'm gonna let you guys work. ♪ now that the team has standard units in production, we can accelerate the purchase of raw materials, improving our margins. not only do we have them readily available, but we're getting a pretty significant discount because we're buying in bulk -- almost 8% on the material side. i estimate that it will be close to $4,000 a unit. across 200 units a year, that's $800,000 of additional gross profit. this is a standard floor plan? steve: it's a standard floor plan. lemonis: so, how many days will this have normally taken to make as a custom unit? steve: would've been about 21, 22 days. instead, it's gonna be about 16, 15 days. lemonis: and now, what did they pay for it? steve: $80,000. lemonis: and what did it cost you to make? steve: our costs on this one are gonna be $46,000. lemonis: so, your margins are 40%? steve: 40%. we're improving. lemonis: and how has austin been? steve: he's been amazing! he's doing an amazing job. we're communicating in a way

that we've never communicated before. austin: he's talking to us. he's getting involved in the decision-- instead of just making a decision, he's seeing how the decisions are affected. lemonis: is he spending time on the floor? austin: heck yeah. i don't even know when he's left. lemonis: it's clear to me that the elimination of layers actually brought people closer together -- particularly, steve and austin closer together. you can see that there's a relationship built on mutual respect, and that, for me, is progress from both of them. austin: we're not having to reinvent the wheel, per se. we know what we need to do, and we're just gonna execute on our plan. ♪ lemonis: now that the process is really right and the standardization has been implemented, i want to take steve and the team, along with one of the units, to meet with representatives from equity lifestyle properties -- the premier campground operator. the primary reason is to really see if there's a real potential for big orders here and if steve truly can sell it with conviction. oh, this is awesome! look how cool this is! steve: yeah. lemonis: how are you? jeff: hi, there.

lemonis: i'm marcus. jeff: i'm jeff wehrung. nice to meet you. lemonis: jeff, nice to meet you, sir. steve: good to meet you. i'm steve. jeff: nice to meet you, steve. annie: hi, i'm annie. nice to meet you. lemonis: annie? annie: yes. lemonis: nice to meet you. steve: tell us about this place. pat: okay. annie: sure. this is the mt. hood tiny-house village. lemonis: what's the most popular unit here? pat: lincoln is one of our most popular units. annie: they all have names and personalities. lemonis: well, let's go look at the new tumbleweed tiny home. pat: sounds good. jeff: thank you. annie: thank you. pat: all right. so, this is the new unit. steve: i wanted to start by having tracy and austin -- you two have spent a good amount of time working on this unit, perfecting this unit. tell us about what you guys accomplished. austin: i've built about 350 of these now. this is probably the first one you can actually move in right away. there's more storage in this house than any of them. pat: very nice. tracy: some of the biggest feedback that we've got from some of the focus groups is that they didn't want to just expose their clothing or expose their food. so, we really honed in on that on this unit.

annie: yeah. it looks very clean. pat: very clean. jeff: it's bright in here. pat: it is very bright. steve: we did change the lights, didn't we? austin: yes. we went to recess lights, led lights. the bedroom's up on a dimmer. lemonis: oh, let me go try it. [ laughter ] tracy: we wanted to integrate some of the creature features of your daily life in this unit. we are actually prototyping some different built-in furniture. pat: you did a great job. annie: yeah, you did. pat: it looks really nice. it does. tracy: how you doing up there, marcus? lemonis: good. tracy: you like that dimmer? lemonis: just so you know, dimmers are my favorite thing. [ laughter ] austin: you see the usb up there you can plug your phone into? lemonis: i think what i love about this standard unit more than anything else, is that, the team really listened to what the customer said -- integrated furniture, space. and the fact that they were able to process that information and integrate it into the standard model shows me that they're good listeners. and that's the key to manufacturing -- feedback to final product. tracy: the bathroom, ladies. annie: yeah, this is huge. pat: wow, nice!

oh, this is great. tracy: it was really just about making sure that we were really maximizing. pat: every inch counts with a tiny house, right? annie: absolutely. pat: that is great. yeah. very nice, tracy. austin: and this room right here is our utility closet. it's all located in one area for your maintenance man. pat: yeah, this is great. and then, i know we have a similar unit and the pitch of the roof was a little bit higher. austin: yeah, you raised it a little bit? pat: yeah. it makes a big difference when you're in the loft. lemonis: to make the roof higher? pat: yeah. would you have that flexibility? lemonis: what i'm wondering is... what steve's response is going to be? if he starts agreeing to well we'll change this by an inch and that by an inch and move the roof up and we'll do all these things i just wasted a bunch of time we're not doing that for exclusives, extras, and business advice, visit theprofit.cnbc.com.

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choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. kes a big difference when you're in the loft. lemonis: to make the roof higher? pat: yeah. would you have that flexibility? steve: so, just keep in mind, as long as we can make them standard, then we're gonna be great. we can't be doing the custom game. lemonis: i got to be honest -- i'm really impressed that steve isn't falling back to his bad habits where he would let a buyer of a product just drive the process. [ chatter ] we're all in the back room! "this is the product we make. we know it's awesome. we hope you buy it. thank you." pat: well, it looks good. you guys did a great job. steve: thanks. so, what, would you say -- 5 units, 10 units, 15? pat: what's the price point on this unit today? steve: all right. so, the price on this one is $79,000. it does have a couple upgrades. pat: you're ordering multiple units, then what does that do to the discount?

steve: when you're buying half a million dollars, you've got your discount. when we get over $750,000, if we get an order past that, we will increase the discount. and then, if we get past $1.5 million, we'll increase the discount even a little bit more. lemonis: retroactive. steve: retroactive, right. lemonis: and so, does that seem like an arrangement that we can move forward on? pat: absolutely. lemonis: awesome. pat: yeah. the relationship has evolved. lemonis: thank you very much. jeff: thank you very much. lemonis: impressing an industry leader like els is no small task, and the fact that there's a real potential for big orders is a big accomplishment. what's changed with steve, guys? tracy: i feel like he's actually reaching out to a lot of our employees, and they're recognizing it and they're seeing it. austin: i've heard from the floor they use your name now. you helped involve people in the business. so much so, this guy is in my business too much now. [ laughter ] he knows things i know, and i don't like that. so, i mean -- lemonis: but you respect it. austin: i respect the crap out of it. that means -- 'cause he's actually out there on the floor, and it's a hard job. steve: thanks. lemonis: steve and i -- we've made the decision to have you guys become partners in the business.

tracy: wow. lemonis: we want to distribute some equity to you, and we want you to feel like you're connected to the business as more than just a team member with a paycheck. tracy: i don't even know what to think about that. i mean, that's amazing. austin: i don't even know what to think. i feel like i'm dreaming or something right now. tracy: it's just, hard work pays off. lemonis: that's right. you're building something for your family together. okay? austin: well... steve: congratulations. lemonis: when i think about my investment into tumbleweed, i probably couldn't be more excited because with the new standard models and the new manufacturing process and an unbelievable team on the floor and a new revived leader, as far as i'm concerned, tumbleweed has a very bright future. lemonis: okay. i'm gonna run, guys. i'll leave you here. steve: okay. al right. lemonis: i'll see you soon. i'll see you soon. tracy: bye, marcus. lemonis: thank you for everything. i'm very proud of you. tracy: thank you. lemonis: i'm very proud of you.

♪ lemonis: tonihow are you?profit"... ...an actress comes home to ohio to build a health and home-goods brand. monica: i would make all of my own essential-oil products with my dad, with my sisters. lemonis: you've seen real results from this product, and other people have, too. but several years in, there's no happy ending in sight. monica: i am crying more today than i have on seven seasons of "parenthood." lemonis: she won't let her team make decisions, even though she lives and works thousands of miles away. caity: you think i'm going behind your back. i don't know how long i can do it for. lemonis: she is resistant to every change... monica: i hate it. lemonis: ...even though the business loses almost $100,000 a year. you're throwing money into the trash right now. and now the stress is pulling her family apart. monica: [ voice breaking ] anybody who wants to support my mom, [bleep] go for it.

lemonis: if i can't convince her to trust my process, monica potter home may be at risk of closing forever. monica: i just -- i can't do it. lemonis: sit tight for a second. monica: i-i can't do any more. lemonis: my name is marcus lemonis, and i risk my own money to save struggling businesses. we're not gonna wake up every morning wondering if we have a job. we're gonna wake up every morning wondering how many jobs we have to do. it's not always pretty. everything's gonna change -- everything. but i do it to save jobs, and i do it to make money. this... let's go to work. ...is "the profit." you might recognize monica potter from nbc's long-running series "parenthood." but when she's not making movies or tv, she's making products like skincare, room sprays, and candles and selling them through her company, monica potter home. monica: the best part about the whole company

is we are bringing jobs back home. lemonis: a cleveland native, monica opened her first retail store in nearby garrettsville in 2014, employing her sister jessica, along with other members of the community. they soon found success with their signature product -- a balm that monica personally developed. monica: sea buckthorn balm. people use it for eczema, burns, scar tissue. it's made of all natural ingredients. lemonis: before long, they opened a second shop in downtown cleveland, and sales blossomed to over 400,000 a year. but monica's expenses? well, they grew even faster. al: credit card's basically maxed out. lemonis: today, the business loses money. debts are piling up, and the downtown cleveland store has closed. monica: i don't want this to fail, because if it fails, you guys lose. lemonis: the personal-care industry is extremely competitive, but having a celebrity attached to the brand

can separate it from the pack. so i'm headed to monica's store in garrettsville. oh, this is pretty. when i walk through the front door, it had a warm and homey feel, but i spent time trying to find these "skincare" products. i saw everything from scarves to jewelry to greeting cards to dishes, but that isn't what i thought i was coming to. hi there. how are you? i'm marcus. jessica: hi. jessica. hi. nice to meet you. lemonis: do you know where monica is? jessica: she should be here any second. lemonis: okay. jessica: i'm her sister. lemonis: oh, you're her sister? jessica: yeah, i'm her sister. lemonis: okay. i'm surprised she wasn't here. jessica: yeah. well... lemonis: you're surprised, too? jessica: no. lemonis: you're not surprised? jessica: [ chuckling ] you'll get me in trouble. lemonis: how often is monica here? jessica: once every, honestly, month, couple months. lemonis: every couple months? jessica: yes. lemonis: what do you do for the business? jessica: in the beginning, i started it with her,

with the product line. i was kind of -- lemonis: where's the product line? jessica: very, very first product that we ever had was a candle. lemonis: okay. what's the reason that you guys started the business? jessica: this has always been a passion of hers. my dad was an inventor. we're very creative people. lemonis: parents still around? jessica: my mom is. dad passed. lemonis: dad passed away. your family's here. jessica: yeah. we're here. lemonis: okay. and what are all these products? jessica: this is kind of monica's baby right here. it is a product that -- it's all natural, made from the sea buckthorn berry. lemonis: and why do you say it's her baby? jessica: she had eczema as a kid, and it's good for scars, burns, psoriasis, eczema. lemonis: it's obvious to me that monica has come up with something unique with the sea buckthorn, but in order to really demonstrate that, you want to have the packaging reflect the uniqueness. the jar, to me, looks like somebody just bought a jar off the shelf and slapped a label on it. so who's in charge of the store? jessica: right now, officially, caity. lemonis: and where's caity's at? jessica: caity is...

she's back here. caity: i'm caity. nice to meet you. lemonis: i'm marcus. caity: thanks for coming. lemonis: so you're really the person that runs this business? caity: yes. lemonis: okay. caity: but with the help of an amazing team. lemonis: do you guys sell online? jessica: we do. lemonis: how much does the web do? caity: it varies. we're really trying to increase web sales, but right now, year to date, our average is about $2,700 a week, and our goal is more like $5,000 a week. lemonis: oh! jessica: speak of the devil. monica: you guys, i am so sorry. hi. lemonis: how are you? monica: you're really cute. lemonis: nice -- thank you. but you're really late. monica: i said i was sorry. lemonis: i'm kidding. jessica: [ laughs ] lemonis: talk to me about the store. what are you thinking about? monica: this store and the website are both extensions of my home. lemonis: everybody said you don't spend much time here. monica: i don't. lemonis: why? monica: because my job and my kids are in los angeles. lemonis: makes sense. hello, ladies. welcome to monica potter. monica: hi. lemonis: come on in. monica: how are you? woman: hi. lemonis: how are you, by the way? i'm marcus.

kali: i'm good. i'm kali. lemonis: nice to meet you. okay, so i want to understand who the full-time crew is. caity, kali. adrienne: hi. i'm adrienne. lemonis: adrienne, nice to meet you. adrienne: nice to meet you. lemonis: adrienne. so can you guys walk me through the store? it's a bit of sensory overload for me. like, i'm not really sure what i'm supposed to focus on if i came in here. who buys all of this -- monica? jessica: monica has a say in it, yeah. lemonis: like, who picked this? jessica: that i did not pick. lemonis: don't know? jessica: it's -- i -- lemonis: who picked stuff like this? caity: kali actually purchased the angel stuff. monica is big into angels, so she wanted to have some angel-inspired items in the store, so we purchased these. lemonis: and the dishes? jessica: that's probably caity. lemonis: and the clothes? jessica: the shirts were monica. lemonis: and the scarves? jessica: that would have been caity. lemonis: okay, it looks like you guys basically just buy stuff and put your sticker on it. like, is there a buying plan? jessica: no. i don't know. lemonis: 'cause i look around, and i see bowls and scarves and popcorn and coffee.

it's like, am i at a country store? am i at a five-and-dime shop? am i at a flea market? i don't know where i'm at. ♪ so all this stuff they've just collected over the years? adrienne: yeah. kali: me and her have started throwing a lot of things away. adrienne: just making decisions. kali: we know it's junk. kali: but we're also told a lot, "don't throw it away, 'cause we'll know." lemonis: you guys have a lot of good stuff in here. monica: i already know where you're going with this. lemonis: how much money do you think is locked up in here -- $50,000, $60,000? so how many times have you guys tried to sell stuff or get rid of stuff? adrienne: we had a yard sale this summer. lemonis: did monica know about it? kali: i don't know. did you? monica: you guys, this is the [bleep] problem. there's no communication. so if i'm e-mailing you, like... adrienne: no, it's not -- i don't mean it to come across that way. monica: no, for real. no, it's like you guys are afraid. you can't walk on eggshells with me. tell me so we can address it.

lemonis: it's a little odd that this early on, the business owner would go from cold to hot so quickly. and what i'm sensing is that there is this undertone of tension that exists between the people that work there and monica. lemonis: i think this really gets back to, what is the purpose of the business? jessica: oh... monica: don't look at me. jessica: we may need therapy for that. lemonis: is it a skincare company? is it a wellness company? what are we selling on the internet? adrienne: there's a whole shelf i can show you. lemonis: can you show me? adrienne: yeah. so, it's right over here. i do all of the shipping. lemonis: these are all the products that have your name on it, right? so there's diffusers, room sprays, candles? monica: right. lemonis: this is the facial oil. monica: the lip balm. lemonis: this is the buckthorn. monica: i had eczema growing up, and everyone always said to me, "what do you use on your skin?" and i would make all of my own essential-oil products with my dad, with my sisters. lemonis: you've seen real results from this product, and other people have, too. monica: that are tangible. lemonis: and it's the ingredients that you believe create the difference. my big question is -- hi, sir. al: i'm al. lemonis: how are you?

jessica: this is monica's accountant. lemonis: you handle the financials? al: i do. lemonis: as you look at the financials, are you able to say how much revenue is generated from these items? al: it's significantly strong. lemonis: 50% of the revenue? al: probably more. lemonis: and what are the margins on these two products? al: the margin on both of those is 82%. lemonis: what's the total revenue that you guys do as a company? al: approximately $450,000. lemonis: $450,000? that's awesome. how do you break your revenue down? what are the categories that make up the $450,000? monica: skincare, right? lemonis: is that one? al: yes. we do manufactured goods. lemonis: manufactured goods. that's sprays, candles, balms. al: absolutely. lemonis: how much is that? al: $200,000, yes. lemonis: okay. the next category? al: branded wholesale. lemonis: private-labeled products where you source them, and you put your brand on them. al: yes. $45,000, $50,000. lemonis: okay. al: wholesale would be all of the items, some apparel, other home goods you'll see out there that don't have the monica potter brand on them. lemonis: third-party vendors that you buy and resell. al: right. lemonis: it's clear to me that this company needs to get very focused on the manufactured products --

those are the skincare products, like sea buckthorn -- because their margins are exceptional. 80% margins means we need to pay more attention to that. do you guys have defined roles? does everybody know what their role is? caity: we all do everything we can do every day. there is a lot going on in this business. sometimes i end up having communication issues with monica due to her schedule. i was hired to make decisions. i don't feel like i can do those things without you thinking i'm going behind your back. really, i have your best interests at heart. there's a lot on my plate. i don't know how long i can do it for. lemonis: have you thought about quitting before? caity: yes. lemonis: has anybody else thought about quitting? jessica: i did. lemonis: what did you quit, jess? jessica: i felt like i had nothing enough to offer to help this business. i didn't want to fail her, and it was like, "i got to get out of here. i'm turning into a crazy person." lemonis: and you came back. jessica: yeah. i missed it. i missed the customers. lemonis: you can sense that jess has a level of insecurity.

i don't know if the reason is because monica wants to drive the process. lemonis: have you always struggled with self-confidence. monica: can i answer? yes. jessica: i guess. lemonis: why? jessica: because she went and did the acting thing, and she's very successful. and i had resentment. money and myself and finances and paperwork -- i don't. lemonis: you don't have to apologize any more for, like, "i'm not good at something." we're here to find out what everybody's good at, not point out what they're not good at. jessica: i think, too, marcus, what i try to do is tell her what to do, and i can be extremely critical, because i'm critical of myself. lemonis: i think when jess compares her life to monica's, she feels less significant. and enables monica to take control. let's you and i go outside and get away from everybody. the family dynamic in a business like this really has an impact, so i want to take monica aside and see if i can get a little bit deeper on this issue.

what was the real reason you started with this? monica: my dad. when i was little, i would go to the factory where he made fishing lures. i felt, you know, very inspired by that. and his products were good, and we have great products. and so it's just like with my dad, this goes way deeper. my dad thought i was gonna be a boy, so he designated me the boy of the family. and a week before he died, he was like, "make sure you take care of your mom and your sisters." lemonis: i think she's convinced herself that she was ultimately now responsible to be everybody's caregiver. and i think when she took that role, jess accepted that that was monica's role. and that's why there's this tension between them. so, what's the revenue for 2016? al: total gross sales were $427,000. lemonis: okay. that's a good number. monica: really? lemonis: yeah. monica: i didn't know that. that's really cool. lemonis: that's a problem. [ laughs ]

$14,000 of gross profit a month, and the operating expenses are $20,000. and so there's a $6,000 loss a month, or $72,000 a year. and so where does that $72,000 loss come from? how does that get funded? al: in 2017, it has been funded by our payables. lemonis: which means you've deterred your vendors and said, "i'll get to you when i can"? al: right. and the credit card payable. lemonis: i can see that. so there's a credit card payable for $12,000. al: yeah. that's higher today. it's almost -- lemonis: there's a line of credit at city national for $44,000. there's a huntington line of credit for $50,000. there you go. you're funding your losses with debt or payables. something has to dramatically change. al: absolutely. lemonis: you have $99,000 of assets. that's made up of cash and inventory. what's the total paid-in capital? al: she's put over a million dollars in. monica: [ sniffles ]

lemonis: that's a lot of money. monica: my job. i saved it up for -- lemonis: how many years? monica: 10. from shows and movies and stuff. yeah. lemonis: and it's all gone? monica: yes. lemonis: if you hadn't gotten new gigs, how would you be funding this? monica: i don't know. al: all of her advisers would have been telling her that she couldn't support this anymore. lemonis: you're throwing money into the trash right now. monica: [ sobs ] jessica: we were treated different by our dad, if you want to go way back. monica: [ voice breaking ] i'm tired of the resentment. if anybody wants to support my mom and the [bleep] city of cleveland, then [bleep] go for it.

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so you don't miss your favorite show. and with just a single word, find all the answers you're looking for - because getting what you need should be simple, fast, and easy. download the xfinity my account app or go online today. lemonis: you're throwing money in the trash right now. monica: sorry. [ sniffles ] lemonis: i'm gonna go talk to her. what's up? monica: i'm okay now. lemonis: huh? monica: i'm sorry. lemonis: there's a lot of emotion coming out today. monica: i'm crying more today than i have on seven seasons of"parenthood." you know, like, i'm -- lemonis: but this is real. monica: this is beyond real. lemonis: did you start this business because you thought it was gonna keep the connection between you and your dad together? monica: yes. but i also love people and want to help people. i thought, well, i can do more through acting

and use that money for something good. lemonis: and you've done it -- put people to work, delivered people products that they can benefit from. and so i feel like i can help. i think that the business will need a cataclysmic change. ♪ there's no doubt that monica has some good ideas here, and i've had a few days to look over the financials. so i was out in california while monica was working, and i thought it'd be a good idea for us to sit down and see if there's a way for us to do business together. ultimately, the reason that i really like this idea is the sea buckthorn products have benefits to people, have purpose for you. the margins are great. it requires product development and packaging, and to me, that's the easy part, by the way. monica: yeah. lemonis: the hard part is, is that one person has to be in charge that isn't you.

monica: i don't want to be in charge. i can't be in charge. lemonis: yeah, no. yeah. and so i'm willing to put up 100 grand to get things off the ground so that i can have full control of every change that has to happen, and we'll be 50/50 partners. monica: marcus, what about the million i've put in? lemonis: where is the million you've put in? monica: in all of the mistakes that i've made. it's gone. lemonis: so why would -- monica: but it's also in the products that we've developed, too. lemonis: how much did you spend doing that? just the actual product development. monica: you're smart. lemonis: probably what? monica: $100,000. lemonis: right. we got a deal? monica: deal. lemonis: it's your check. monica: can i give you a hug? lemonis: you can. monica: okay. that's my deal. lemonis: bye. monica: thank you. bye. i'll see you soon. lemonis: see you soon. monica: travel safe. lemonis: thank you. monica: thank you, dad.

lemonis: so, i agreed to invest $100,000 into the business. i would like to invest in you guys. but at the end of the day, this business can't be managed from california. who's in charge of this business today? al: day-to-day operations is caity. lemonis: okay, and we're gonna respect that leadership. once we build out what this business needs to look like, jess, i want to work directly with you to try to figure out what a perfect role is here for you. what would you want to do? jessica: you know, business isn't my thing. i did take photography, and i did go to art school. lemonis: jess, if something like that interests you, i'd like to help you do that. monica: i don't know if that's the right decision. i need to okay what she does. this is the stuff that -- lemonis: yeah, we're moving forward. monica: i get that. but it still needs to be addressed. jessica... jessica: no, it's okay. monica: i think the biggest problem is -- jessica: it's okay. that's why i walked away -- 'cause i felt like a piss-on. all right? lemonis: you can sense that jess has a level of insecurity, and she became subservient 'cause monica wants to drive the process.

and so rather than her trying to compete with monica, she just pulls back. lemonis: that's okay. we're gonna work through it. we just have to get everybody in the right roles so that everybody can be successful and we can sell product and everybody can smile again. we got to know what inventory is in this building and how much cash is here. we got to get it freed up. we have to rebuild the website and get every product on here, and if it doesn't belong, we got to get rid of it. we're gonna do more research about the sea buckthorn. we're gonna want to create scents around it. we're gonna want to create other products around it and build the whole lineup. monica: scents? lemonis: yeah. monica: that's so cool. lemonis: that's it. it's literally that simple. if you liquidated everything in this building other than the things that you absolutely had to have, how many skus would be left? monica: oh, can i just show you? lemonis: can we put them down right here? monica: yeah. let's do it. lemonis: everybody grab the things that they absolutely cannot live without. in order to develop a brand strategy, i'm having the team choose the top sellers

so we can determine what we're gonna sell online and in the store. caity: one's essential oil. one's fragrance oil. jessica: the summer is our first candle ever that we ever made. lemonis: we'll have a whole candle lineup. monica: great. the essential oil, sea buck, and the full-size barn box. lemonis: the box thing is a great way to create gifts, centerpieces. monica: yeah. lemonis: anything missing? monica: um... yes, actually, a textile. lemonis: it's in the store. grab it, okay? lemonis: i'm comfortable moving forward based on four categories -- textiles and paper, number one, room scents, number two, gift box, number three, and then body care and skincare. now that we have the four categories that we're gonna move forward with, we can develop a plan of how we're gonna sell online and in the store. each category is scalable. for example, in the textile category, adding more scarves, linen, and paper will increase sales. in the home fragrance category, we can develop more candles,

room sprays, and diffusers, including seasonal scents. the body care category includes a number of items, but it is anchored by monica's signature product, the sea buckthorn balm. and the last category is the gift boxes, allowing customers to compile the things from the previous three categories and create great gifting items. so is everybody on board on this is the business plan moving forward? monica: i don't agree to that right now. i'm not gonna agree to that. lemonis: what was the point of all this, then? monica: i need to think about it for a second. i really do. i'm not gonna be put on -- this took a long time to evolve. lemonis: obviously, i know there is extensions of this missing, and the full collection is missing. monica: got it. yeah, okay. then i'm on board. because we're basically coming full circle, which is really cool. lemonis: okay. caity: yeah, it is. lemonis: awesome. monica: yeah. lemonis: caity? caity: mm-hmm? lemonis: do you think maybe the three of us

can just sit down for a minute? caity: sure. jessica: yeah. lemonis: we've made some really good progress in narrowing down the four categories, and now jess, caity, and i are gonna sit down to understand what's jess' role gonna be going forward. jessica: i'm all screwed up. lemonis: so i thought maybe the two of you guys could just talk about, how do we make this work for everybody? caity: we have had issues in the past with the dynamic between jess and monica that has caused chaos across the board because of the arguments or whatever that you have on a personal level, being sisters. if jessica is around, monica will call her and say, "what's going on?" or, "facetime me. i want to see everybody's desks." jessica: it does put me in a bad -- lemonis: stop it. monica! monica: yeah. lemonis: so, we were just talking about, in order for this relationship to work between jess and caity, they have to be able to communicate without any outside distractions. monica: that's great. like, i really want you to understand that's great. i want you to feel good about you.

like, i see so much of dad in you sometimes, and it pisses me off because you're so [bleep] talented, and i think it goes deeper. jessica: i mean, we were treated different by our dad, if you want to go way back. it's just we were treated different. monica: i can't handle this. jessica: i'm proud of her. lemonis: tell her now. jessica: she knows how proud i am of her and the things she does for people or the things she's succeeded at. monica: [ voice breaking ] i just need to go for a ride. i'm tired of the resentment. [ bleep ] if anybody wants to support my mom and the [bleep] city of cleveland, then [bleep] go for it. jessica: monica is very resistant to change. she is a self-sabotager. lemonis: are you comfortable moving forward with not derailing the process? tell the truth.

monica: [ voice breaking ] i'm tired of the resentment.

i was told what i had to do to take care of the [bleep] family. i'm tired. i'm tired. no, marcus. lemonis: yes. monica: i need to go for a ride. lemonis: you're not going anywhere. monica: yes, i am. lemonis: monica, look at me. monica: i am tired. lemonis: i know you are. monica: i'm [bleep] tired of it. a week before my father died, i told you what he said to me. because i was the golden child and the favorite, that comes with a price. lemonis: but you're putting some of that on yourself, too. monica: of course i am. lemonis: it's clear to me that monica's dad has had a huge impact on her, and it's put a lot of pressure on her. and she has this notion that she has to put everything and everybody on her shoulders. come on. let's go. if this is gonna get resolved and not continue to impact the business in a negative way, then we're gonna need to have an open dialogue that involves everyone. i think monica feels like she's supposed to carry the torch of your husband. nancy: yeah, and she doesn't have to. that makes me feel bad, 'cause i can't help you. i don't know what to do.

jessica: and by the way, he was a great dad. i just want to make that clear. monica: i'm not saying that he wasn't a good father. jessica: but you're carrying this pressure that you feel that's been on you. monica: mom, you shouldn't feel guilty. nancy: well, i do. monica: don't. please don't. nancy: i do. monica: please don't. [ voice breaking ] i love you. nancy: maybe it's good it came out. lemonis: you guys needed to have this conversation. i think we're in a better place. let's take a little break. let's get some food. let's take it down a notch. this was a good conversation for everybody, right? good morning. monica: good morning. jessica: hi. lemonis: are you ready? jessica: yeah! lemonis: all right. let's do it. jessica: all right. lemonis: come on. today, i'm bringing the team to a meeting that i've set up in pennsylvania. it's with the emerson group, one of the largest distributors of personal-care products to the retail industry. matt: welcome. hi. i'm matt. jessica: jessica. pleasure to meet you. welcome. monica: hi. i'm monica. matt: monica, i'm matt. welcome. lemonis: i'm hoping that we can get some professional feedback

on the monica potter branding and to get some advice on how we can get the sea buckthorn product into stores nationally. matt: we did experience the product, and so i want to know a little bit more from your perspective how this is different relative to other brands in the category. monica: we developed it because i grew up with eczema, and people started using it for a variety of ailments. every home should have this. matt: but why? what you've got to do is you've got to tell them why. the consumer that's walking in a retailer today, they are not gonna know what sea buckthorn is. for a business of your size, the packaging is gonna be your number-one communication. i can appreciate some of the elements where you want some of the monica potter branding in there. and that's a little bit of a differentiator, as well, and that may help it stand out. monica: well, that's a huge differentiator. matt: sure. but not everybody knows you. there are people that know you, but not everybody knows you that would use this product. will the consumer care that it's coming from you? debra: and in 10,000 stores, it's gonna be hard to do.

monica: but... matt: how does sea buckthorn as an ingredient differentiate versus other ingredients, like a petroleum or dimethicone or -- jessica: it's better than everything you mentioned. lemonis: but we have to tell people why. debra: we have to get that across to the consumer. monica: tell -- then that's -- okay, so we're stuck. debbie, how would we do that? lemonis: it's definitely concerning to me that anytime anybody has anything to say about monica's business that she doesn't like, she gets agitated so quickly. look, i understand what all this means to her, but she has to be able to talk things out in a professional manner. if we can explain all those things, they'll rep it. and if they rep it, it will be successful. thank you, guys. monica: well, thanks. matt: absolutely. lemonis: i'm excited to get started with the new products and the gift boxes. but first we have to get things right at the store. if you don't use it, chuck it. monica: hi. how are you? lemonis: we decided to have a neighborhood garage sale so that we can not only clear cash, but we can free up some much needed space for the online fulfillment center.

caity: there you go. thank you for coming. so, this is looking at our online-ordering reports. lemonis: i'm also working on caity setting up a technology system that allows monica to track the financials, the ordering, the inventory in real time while she's in l.a. when she calls from california, when she's fancy, you can say to her, "well, you can just go into the system and look." my hope is that the systems, along with the open dialogue, will put monica's mind at ease and allow her to trust everybody, including caity. [ cellphone rings ] morning. caity: good morning. how are you? lemonis: how are you feeling today? caity: [ sighs ] i'm running on fumes, but i'm still going. lemonis: it's only been a few days since i left ohio, and i'm already getting a phone call from caity. this can't be good. caity: monica is very resistant to change. every time we try to do something, whether it's developing a new scent of candle, you know, develop the product line out, rebrand, all of these things that i feel are superimportant,

it becomes a very tedious process, and monica pulled the plug on it. i think she's a self-sabotager. lemonis: i'm starting to notice this very odd pattern where monica agrees to changes, and then she backtracks from them. and she did it when we picked the four categories, and she's doing it again now. i want you to know that i'll continue to support you and i'll continue to push her. you just got to hang with me for a minute, okay? caity: all right. well, thank you very much. lemonis: okay, bye. caity: bye. ♪ monica: hi. lemonis: come on in. today i'm having monica meet me at my los angeles office. i want to present her with some new packaging options. but before we jump into that, i want to have a separate conversation with her. so i left ohio. i gave caity very clear direction to start working on certain things. she started working on it, and then all of a sudden she stopped.

monica: mm-hmm. lemonis: and so when i asked her why she stopped, she said that you told her to stop. monica: that's the truth. lemonis: why? monica: because i didn't know what the outline looked like with you and i. and i have a lot of issues with trust right now. lemonis: right. but i took the keys and said i'm in charge. monica: and i didn't trust that. lemonis: yep. monica: and i'm sorry. lemonis: but it's inconsiderate. for me to be pushing people in a bunch of different directions, like, you didn't even have the courtesy to tell me that you wanted to stop. are you comfortable moving forward with not derailing the process? tell the truth.

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lemonis: are you comfortable moving forward with not derailing the process? tell the truth. i don't want to feel like you're working around me. monica: that's fair. lemonis: are you comfortable moving forward with the four categories that we agreed to? monica: yes. lemonis: are you comfortable not derailing the process? monica: yes. lemonis: okay. you want to look at the boards? monica: i'm excited to look at the fun stuff. lemonis: let me get chloe. this situation ended up costing us days of progress in ohio, but we still have the chance to get something done today.

monica, this is chloe. one of the things that i wanted to do is change the packaging. the packaging is so plain that it's not really gonna appeal to anybody. so i asked chloe, one of my best graphic designers, to start working up a logo. chloe: i have a few logo options. the first one is very similar to your current logo. i connected the m and the p. monica: it's a little thick. chloe: yeah? okay. all right. well, we'll put this one to the side. so, this one -- this one is the most modern, but it's very easy to read. monica: i just don't like the two lines between the "monica" and the "potter." chloe: okay. the last one is my favorite. monica: no. chloe: no? monica: i hate it. i don't like that at all. chloe: okay. monica: it feels very sterile. it gives me a little anxiety. i know that sounds weird. chloe: yeah. monica: but it also doesn't feel like me. lemonis: okay. you brought your computer, right? okay, so when you finish, maybe you want to take a crack at a couple? chloe: sure.

so, you don't like that, right? monica: mm-hmm. chloe: so i could just take this off. monica: i feel like it feels very masculine now. lemonis: monica, i think you really need to decide who's gonna drive this. monica: jessica is the artist of the family. she went to art school. she has her art major. lemonis: so, do you want jess to work on this with chloe and let her really work on it? monica: yeah. lemonis: we're gonna connect you with jess so you can get some influence from her. but by next friday, we need to be done. monica: thank you, chloe. chloe: thank you. ♪ lemonis: hey, bill. bill: good morning. lemonis: good morning to you. i'm marcus. as we work to develop our own skincare line, i want to make sure that we know everything we can about the sea buckthorn berry. so i'm taking monica to a local farm to meet somebody that specializes in the plant. the more we understand the plant, the more we can develop products and communicate to our customers about the benefits.

bill: see, in asia, this would be used as a vitamin c source. monica: so good. lemonis: you know what it tastes like? a sweetart. bill: right. lemonis: juli, go on to monicapotterhome.com. and can you make a list of all the things you need from us -- images, product images, everything? juli: yeah. lemonis: in order to maximize the revenue for the company and for me to get a return on my investment, i want to create an entire online marketplace and really inexpensively upgrade what they're doing today. so i'm having my team work with monica's. they'll have it done in a week. it will cost nothing. monica: like, that's amazing. lemonis: caity, you are now in charge of the web business. meanwhile, i'm having jessica work with chloe on finalizing the packaging and the logo. chloe: hi, jess. how are you doing? lemonis: and from what i'm hearing from chloe, she's doing an amazing job. chloe: awesome, yeah, i'll send over something as soon as i have something mocked up. [ cellphone rings ]

lemonis: good morning. monica: hey, marcus. so, there's lots to talk about. i don't know if you have a minute. lemonis: so, what's up? [ sighs ] monica: well, here's my concern. i know that you have the utmost trust in caity. you said, "caity, you're gonna be the face of this company." lemonis: no, i didn't say she was gonna be the face, first of all. you're the face. i said she has to be in charge of the day-to-day. monica: for her to take things into her own hands --d i'. i said, "cait, listen, i'm twice your age. i know that you don't think that i understand business, but i do." lemonis: monica, look, other people can make decisions. i have to be honest, i'm starting to get annoyed that every time we start to move forward, monica puts a roadblock in front of me. if she really ultimately wants this business to succeed, she's gonna have to learn how to trust her employees. the role that you need to play in this company for it to be successful has to be different than it's historically been. okay? i'll talk to you soon. bye. monica: take care.

[ horn honks ] natalie: hi. monica: hi. how are you? i'm monica. natalie: hi, monica. natalie. lemonis: today i'm taking the team to agilex. it's a company that specializes in designing custom fragrances that meet the business' brand. natalie: the perfumers make recipes, right? and this is where their compounded. lemonis: in order to make sure that our time is well spent at agilex, i sent in advance a number of things from our company to give them an idea of what our brand is, what our goals are, so that when they make their presentation to monica, there's some thought behind it. natalie: i spent a lot of time on your website and trying to understand your brand. christie: we've reviewed a lot of your products, and we spa'd, and we smelled. and kind of my feeling of your line is that it's very much an aroma wellness -- what we're calling aroma wellness. jeannine: so this is a citron honey tea. it has touches of sweetness, which brings you to the honey. monica: mnh-mnh. it's not my favorite.

jeannine: okay. monica: honey -- mnh. because it can smell a little bit like bad foot odor. jeannine: okay, now we go into more of a fruity citrus. fruits and citruses, again, is a consumer favorite. jessica: see, i like that. monica: i don't like it at all. [ laughter ] lemonis: juli and chloe, you guys have done a lot in the last couple weeks with agilex, working on the packaging. why don't we go through the colors, just to see how the packaging in the boards works? chloe: for the packaging, jess created a pattern. and i think it would be really awesome for every line to have its own unique pattern. so we could have a lavender line, we could have a buckthorn, based on the different flavors. lemonis: yeah. nice job, jess. christie: i'm totally digging the label. the label's dead-on. chloe: this might be easier to see the pattern. it's really easy to show the different scents with the different colors. monica: it's...

um... caity: in order for this to be successful, monica needs to be comfortable. monica: i'm sorry. then this is all on me. then this is all on me. no, i just -- i can't do it. lemonis: just sit tight for a second. monica: i can't do any more. [ voice breaking ] i don't know what else to say or do.

chloe: it's really easy to show the different scents with the different colors. monica: it's, um... christie: i like it a lot. it's very, like, boho-chic, and the color palette's beautiful.

it looks natural. lemonis: you don't like it? monica: mnh-mnh. it's not our customer. we're not boho-chic. to me, it looks like everything else out there. it feels like there should be a little bit more warmth to it. lemonis: you approved the colors, so the colors are not an issue. 'cause the colors came from you guys. monica: no, the colors are great. lemonis: we have a lot of people trying to collaborate here. my goal was to include jess in the process. monica: absolutely. jessica: for anything. monica: feels too busy, and i want a little bit more warmth. i mean, i can sit here and not give my opinion, but why the [bleep] am i sitting here? lemonis: that's sort of what i'm asking myself. because throughout this process, i've taken you down these steps and asked you to trust that i know what i'm doing. and so i brought chloe to the table with juli. we brought emerson to the table. let me finish, please. monica: i'm not saying anything. lemonis: we brought agilex to the table. and so everybody has really collaborated into this. is it perfect? definitely not. but we're taking all your feedback,

and we're sitting here today, and we don't have [bleep] so... monica: okay. [ mutters ] lemonis: thank you, guys. and, jess, honestly, the work you did was very inspirational. jessica: i'm not -- juli: i think you really showed up, jess. i think that there was a real strength in what you presented and brought to the table. and i don't think chloe would have been able to create something that felt so intrinsic to, like, the brand without you. lemonis: thank you. natalie: okay. lemonis: thank you so much. natalie: oh... lemonis: obviously, at this point, there's more going on with monica than she wants to talk about, because we didn't even get to finish our agilex meeting. quite frankly we didn't get to finish a lot of the things that we started. and in order for this thing to actually not end badly, it's probably a good idea that we all sit down and understand what direction we're going. so, what do you guys think we do now? jessica: i don't know. whatever she's happy and decides.

it's her money. it's her business. monica: i don't want this to look like every other brand. that's it. caity: in order for this to be successful, monica needs to be comfortable with what we're doing. and i think she has a lot of uncertainty, which makes me uncomfortable. monica: my whole thing about this whole process is not losing sight of why we started it, how we started it, and where we want to go. lemonis: are you really gonna try to sell me that? you've navigated the whole process. so i was at your office. i asked to take over the website. you told me that was fantastic. you asked me how much it was gonna cost. i told you "nothing." you're like, "oh, my god. i've been waiting for this for a year. this is amazing." you're supposed to get them everything. what happens next? caity: you had asked us not to provide that. monica: because we didn't -- marcus... lemonis: right, but you were there, and you gave me permission to do it. monica: because, marcus, i felt like everything was happening so quickly. caity: don't take this the wrong way. if you're uncomfortable, sometimes, so are we.

monica: i'm sorry. then this is all on me. then this is all on me. jessica: it's you. monica: i don't understand. [ voice breaking ] no, i just -- i can't do it. lemonis: just sit tight for a second. monica: i can't do any more. i don't know what else to say or do. lemonis: you don't have to do anything, monica. monica: what i'd like to happen is for you guys to take it over. lemonis: really? if your business is in trouble and you need my help, log on to theprofitcasting.com.

monica: and what i'd like to happen is for you guys to take it over. lemonis: really? monica: [ sniffles ] lemonis: hey, monica, all we're doing is talking. monica: i just -- i can't talk.

like, this is so messed up. jessica: why is this messed up? lemonis: i think the reality of it is, and this is you take two strong personalities, mine and monica's, and one person wants to take the car in a direction that he or she knows is better, it's not easy. and that's okay. that makes us friends. that makes us -- you can call me and get advice from me. and you want to drive the process, and maybe that's what makes you and i very similar is that i like to drive the process, you like to drive the process, and there's only one steering wheel. and i'm not gonna take it from you. monica: i want to protect things to a fault.kg and going, "okay, he's got my back." lemonis: it came down to trust. monica was really fragile throughout the process, and i believe that monica made it difficult because her connection to her father is so strong. and the idea of changing this business, maybe it possibly threatened her relationship in her mind

with her father. but i wanted her to know that it was okay that it didn't work out, and that it didn't need to end bad. monica: and i feel like all the girls are in a better place, all of them working collectively. it's been such a huge change for them. each one of them feels superempowered, and i'm really proud of that. lemonis: there was a lot of good things that happened. jess, caity, the resources that i have, they're available to you from this day forward. and the good news is, monica, you're still 100% in charge. monica: shut up. lemonis: all righty. i'll see you soon, all right? okay. i feel good about the fact that i left the place better than when i found it. i'm disappointed that i'm gonna miss the opportunity. lemonis: keep in touch, okay? jessica: thank you. lemonis: but sometimes it's better to get out while you're ahead.

cory: 13.e you? lemonis: really? cory: yep. lemonis: a pint-sized entrepreneur and his mom have created a popular cookie brand. cory: would you like to try a cookie? jennifer: these are really good. cory: thank you. lemonis: but now their company is going through growing pains. lisa: when you don't have the right resources or the brain, this is what happens. i'm back to square one. lemonis: the c.e.o. struggles with the fundamentals. how much does it cost to make a dozen? cory: a dozen is around... lemonis: you don't know. cory: oh, no. lemonis: his mother struggles with self-doubt. lisa: i don't think i can take the company where it needs to be. lemonis: you can. i'm positive. i wouldn't be standing here. their product tastes great, but it can't be sold in stores. what's the shelf life? cory: two days.