the business became more than she could handle so she found herself a ceo to run it. what you should look for when choosing somebody to steer the course. that, plus getting your start-up to go from zero to 60. that's all coming up next on "your business." small businesses are revitalizing the economy and american express open is here to help. that's why we are proud to present "your business" on msnbc.

hi there, everyone, i'm j.j. ramberg. and welcome to "your business." where we give you tips and advice to help your business grow. there comes a time in the life cycle of any business, when the founder has to take a hard look and say, i may have done a great job building this company, but am i the right person to run it now? it is a big and difficult question for many. but for the owner of one clothing company, the answer was perfectly clear. when people think of the clothing line chaiken and capone it's no surprise they think of its founder julie chaiken. >> it's been doing this for the better part of 17 years. >> she launched the company in 1994.

with an mba from new york university, and a keen sense of fashion, it didn't take long for the brand to become successful. >> the very first store that we shipped was barney's, new york. and it was a very auspicious start. and it kind of took off from there. next thing we knew we were in all the best stores in the country, and it was a pretty short period of time before we were a really well-known brand. >> for 13 years the company flourished. but julie ran herself ragged. as she describes it, she was burning it at both ends. >> you're exhausted. you aren't motivated. you don't make the best decisions. and i think that ultimately, it's setting it up for failure. >> unwilling to keep up the pace, especially with two young children at home, julie did the unfathomable. at its peak, she pretty much shut down her company. >> it really just was overwhelming. there was a lot going on in my personal life. there was a lot going on with the company. and i decided the best thing i

could do was to back away. >> now, julie is back in the office. but when people in the industry think of chaiken and capone today there's someone new they think about, as well, david lazar. >> i ran into david at a trade show. and i very casually said to him, hey, i'm looking for a new ceo. >> and i said to julie, might be interesting. i said, maybe it can be mean and she said, yeah, right. >> you've got to be kidding. i mean that's genius. >> i said no, seriously. this really may happen. >> we continued the conversation. and it just made sense. >> david is the new ceo of chaiken clothing. >> david took over. >> it's a common story, a company grows up and the founder moves aside to bring in someone else to run it. in many cases, the results are disastrous. for julie and david, it's been a dream. >> as we had conversations, i really realized that he and i see things very similarly. not always the same.

but very come from the same place. >> the vision is the same. >> this move didn't come without risks for david. an entrepreneur himself, he left his own company to join chaiken. >> you leave something where you have incredibility security, the only person that could get rid of me was me. >> so when it came time to do the deal, it had to be good enough to get him to join. >> it comes down to the whole art of the zeal. what does it look like? not just compensation. if we were to sell it, what happens? >> there's upside incentive for him. and he knows that if he succeeds then there's more. and it's on his shoulders to do that. >> both david and julie said the deal making was surprisingly easy. the more important part was understanding if they could actually work together. after many, many conversations, david came over for a 40-day trial. >> it's kind of like dating. you know. you date someone you see one side. you get married, you see a completely different -- waking up with the same person every

day is a very different thing than dropping them off at their doorstep. so here we're able to -- she was able to see how i behave. how i react. how i look at things. >> david also needed to know julie would step aside and let him truly run the company. >> i was accustomed to, you know, dealing with julie directly. >> delila has been with chaiken for 11 years. she says the transition was pretty seamless. >> i think i've been able to really rewire my brain into going to david. >> and i know what they saw was how julie deferred to david. so, when julie deferred to david, it brought everyone -- it made the transition so much easier. >> this is not to say julie and david don't disagree. but how they do that is key to the company's success. what do you do when you're at a meeting, david is charge, he's telling the employees something, you disagree. what do you do in that situation?

>> i will step back and wait to discuss it with him after. if i get in his way and i contradict what he's doing or saying in front of employees all i'm doing is undermining him, and i don't want to do that. >> julie and david are also both keenly aware of where each other's strengths lie and they play to them. when it comes to meeting customers, the nature of the meeting decides who speaks up. >> sometimes david will work with them because there's negotiations about some of the back end stuff. and on the front end, i will work with the bigger stores to present the product so that they really understand the product, and he and i both get involved in that conversation. >> so far, their partnership has been nothing but a dream come true for both of them. julie gets to be involved in her company, but also gets to have a personal life. and david has gotten the chance to build a brand he truly believes in back into a fashion powerhouse. >> it's kind of serendipity. we ran into each other when i needed a new ceo and he was looking for a new place to hang

his hat. timing is everything. >> this story was particularly interesting for me because i went through the same exact thing when my brother and co-founder and i hired a ceo to run our company. we, too, had a fantastic experience, but not everybody does. so let's see what this week's board of directors has to say. les mckeown is the president and ceo of incubation consulting companies, predictable success. he is also author of a book by the same name. and david anderson is the president of learn to lead. an international sales and leadership training and consulting company. great to see both of you guys. so i loved doing this story. as i said i went through the same thing and it was so interesting to me, to hear about the conversations they had, and how it went. because it also went easy for us. but i think we were also the open and very fair about our conversations, which i think a lot of people aren't. so what do you think are some of the biggest pitfalls that people approach when hiring a ceo? >> well, i think you need to, in

this situation, you need to make sure that you share the same values. you share the same vision and the same mission. you can't really be on separate pages there. now you can debate this strategy, but if you can align in those key areas i think that's just a key to getting off and sustaining a great progress. >> and how do you figure that out? do you figure that out in a conversation? i mean for me it was a feeling. we had good conversations, i just sensed this was a good guy and i trust him. >> i think figuring it out is -- is a step past where the real brilliance is. the real brilliance is deciding, we need to do this. i think it's a lot less usual than you might think. about a third of the ceos of the former owns are that i work with shouldn't really be ceos. >> they just can't give it up. >> only about 5% know it. i think et the recognition and after that it's getting the roles right. the thing that i loved here, this was textbook good is they clarified the roles really clearly. the other really clever thing is get at least one of the big dogs in the company, employees, to come right onside very much

earlier. because everybody's watching to see whether this is going to really take or not. i just think they did a magnificent job. >> one of the things he said was, it was even for the employees to defer to me because they saw julie deferring to me and they just followed suit. >> yes. >> and one of the issues that they talked about, too, when we said what do you do when you disagree? and we have this issue, too, we'd be at a meeting and i would be used to speaking up and speaking my mind and i realized, you not what? you've got to step back. this isn't between you and the employees anymore, it's between you and the ceo. >> it's about differentiating, i think, ownership and management. and that's really hard. it's unfortunate that often the person that comes in is coming in not as an owner of the business, and therefore spends the first number of months thinking, well, can i really push myself forward? because she's the owner in this case. she did really well -- >> i think that's a good question. if you were going to bring in somebody who is going to lead your company, does it make sense in all cases to give them some ownership? >> well, i think it's huge. and i think it's a great

incentive to do so. you know, and very often, it's just getting to the point, as les says, where you recognize it. ego is probably the number one thing that will stop people from doing this. >> founderitis. >> well, you know, bill ford basically saved his family's company in 2009 by giving up his ceo position. >> right. >> and bringing in the ceo of boeing. and he took a risk by coming over and bill says today it was the best thing they ever did. bill is still on the board but he gave allen the reins and just brought the company to a whole new height. >> i think to the ownership point, it's absolutely right to have some ownership as part of the deal, but i would say defer it and make sure that it works first. give it at least a year. it's too easy to give ownership too early and then it's really, really hard to unwind that. >> get it back. all right, well great advice. this was a fun story for me to do. sending paper bills to your customers can take a big bite out of your profit margin. here now are five ways to cut your invoicing costs, courtesy of business news daily dotcom. optimize the use of bill batching.

if you send fewer envelopes, you'll pay less in postage costs. make sure that all bills for the same customer are sent in one envelope. fix your uncertified address. nearly one quarter of all mail that goes through the u.s. postal system contains an error. if the address on your mail is not recognized, it will be mailed at full rate, and not qualify for presorted discounts. leverage postal discounts. the usps grants significant discounts for properly preparing and presorting mail. so make sure to do that. maximize marketing opportunities. use part of your paper statements as marketing vehicles. this can be an effective way to bring in more revenue. convert to electronic billing. sending your bills via e-mail, fax or the web is the most effective way to avoid the cost of u.s. mail delivery. you may have a start-up business with a great product, a brilliant team, and amazing technology, however, you need to know the right process to turn your insights into a great

company. here to share tips on how to accelerate your business in a atlanta scape filled with risk is eric ries. he's an entrepreneur and blogger in silicon valley who advises other entrepreneurs on business and product strategy. he is also the entrepreneur in residence at the harvard business school and author of the book "the lean start-up." great to see you, eric. >> thanks for having me. >> congratulations on all the success. your book is quite a hit. >> thank you very much. >> we're happy to have you. okay. so we want to get quickly your tips for axle rating your start-up business. you know, to our point you've got all the pieces to the puzzle there. how do you make it grow now? the first thing you say is, identify activities that create value. do you find a lot of people are spending a lot of time on activities that don't create value? >> yeah, that is really the curse of entrepreneurship. because most of us who have been trained in any kind of functional specialty, we learned how to make stuff really efficiently. but the problem for most start-ups is that they're making the wrong stuff. really efficiently. so it's like you're driving a car off a cliff but you're

bragging about the great gas mileage you're getting. >> so what do you do to identify these? do you just look at each activity and say, how much money is this bringing in? >> no, because oftentimes in a start- start-up, the numbers, what we call the vanity matrix are too small. the key is to think about everything we do in a start-up as an experiment designed to help us learn whether we're on the path to a sustainable business. and when we make that switch, we can start to ask ourselves for each activity, what is this helping me learn? and then, is there a way i could get that same learning faster or cheaper? >> all right. that's such a good idea. okay. use the power of small batches. this is to your point of testing, right? >> exactly right. instead of making the biggest, most complicated version of the product we can, we want to create the minimum buyable product which is the smallest version of our product that can start that process of learning. this is something they learned in lean manufacturing in the toyota production system, which is that the smaller the batch size, the less work you do at a time, the more efficient the process, the faster the feedback. >> yeah, and put it out there.

don't wait for everything to be per effect, perfect, perfect. just get it out there and get some feedback. >> we like to say it's better to have bad news that's true than good news that you just made up. >> yeah, exactly. we do. we do make up a lot of good news in small businesses. everyone's going to love this just because you happen to love it. >> every idea seems like genius in the shower. >> yeah. okay. employ just in time scaleability. >> instead of worrying about how to make the company grow in scale once its successful, once we have millions of orders and zillions of customers, we want to do less of that and respond just in time. so the key is, we need to change our -- change our mind-set from trying to prevent problems that might happen, to learning how to respond quickly to the problems that actually do happen. so whenever we have a chance to invest in process or architecture we want to invest not in prevention, but in fast response. >> explain that to me a little bit. a lot of times people are

building things, building this now when we're a $50 million company this is the way it's going to work. and really we should be building it for now? >> oh, yeah. in the software business we have this problem all the time. we have this imagination that once we put the product out there millions of people are going to flock to it, the servers are going to crash so we've got to be ready to handle that. the truth is most of the time nobody wants the product so nothing crashes. so what we want to do is figure out when the problem happens, how will we know that it happened, how can we detect that we have a problem, and then how can we respond really quickly? >> got it. because you could end up wasting a lot of money building something for 20 million people when 500 people are going to come. >> exactly. >> then identify your pattern of growth. how do you do that? >> we had this concept in the book we call engines of growth, which is that sustainable growth, not like a ponzi scheme, not like a one-time pr stunt, sustainable growth means that the new customers come from the actions of past customers. either through viable growth because the past customers tell their friends, or through what we call sticky growth because they come back to our product

over and over again, or through what we call paid growth meaning we reinvest the revenue from past customers into advertising, or retail store fronts or whatever is needed to get the new customers. and so that is the mechanics of sustainable growth. it has that feedback loop quality where customers themselves are providing the resources that allow us to get more customers. >> and it's great, because a lot of people spend a lot of time getting new customers when really they're growing because of their current customers. >> exactly. >> and so they're wasting money on these new people in some way. all right, eric ries, i wish we could talk for a half an hour more, but unfortunately, it's the end. but everybody should go read your book "the lean start up"because it's very helpful. >> really appreciate it. thanks for having me on. >> still to come, small business owners tell us what they think about the president's plan to create jobs in this country. and we'll answer a question on pricing from the owner of a spa for dogs. plus, today's elevator pitchers have a solution about what to do with all of your bags when you still have more shopping to do.

shazi: seven years ago, i had this idea. to make baby food the way moms would. happybaby strives to make the best organic baby food. in a business like ours, personal connections are so important. we use our american express open gold card to further those connections. last year we took dozens of trips using membership rewards points to meet with farmers that grow our sweet potatoes and merchants that sell our product. vo: get the card built for business spending. call 1-800-now-open to find out how the gold card can serve your business. the future of president obama's jobs creation plan is

unclear after failing a procedural vote in the senate. congress could consider voting on individual parts of the package in order to pass it in stages. despite the setback, though, the president remains committed to the plan. recently, we asked some small business owners at an entrepreneur magazine gathering in miami beach what they thought of the president's jobs plan. here's some of what they said, from the floor. >> republicans say one of the most important things we can do is cut taxes. then they should be for this plan. this jobs bill would cut taxes for virtually every worker and small business in america. every single one. >> i did not hear obama say anything about creating jobs through entrepreneurship and small business. where was that part of the job package? everything seems to be about spending money, and putting money out in the economy. >> i think that anything that is

going to promote tax cuts, especially like the payroll tax cut or any other benefits for small businesses is really critical, because we need to grow at this time. so if we can hire more people we can get effective tasks done better and faster. i'm really in favor and i'd even like to see it better than it is. >> i don't believe it goes far enough in terms of job growth. i think that payroll tax cuts are not going to help small business hire more people. and i don't think extending unemployment benefits do anything to help people get back into work there. >> i'd like to see the jobs package focus on the smallest individual voter. the single entrepreneur, the companies that are one to ten employees. because we don't have the political power, in the past to get the big chunks of money. >> i would say that if any of the small businesses were to receive any of the $30 billion on the table it would be a huge benefit. i think the tax increase credit would be beneficial for small businesses to increase wages, by

increasing wages you increase motivation. >> have you ever been out shopping and gotten bogged down with all of the bags you're carrying? today's motivation. today's elevator pitch says they have a solution to the excess baggage. >> my name is sean and this is paul, and we are the cofounders of cubby, we're a company that stores bags like this. two years ago paul and i met and we found new yorkers carry too much stuff and has nowhere to put it, and we built a mobile application for android and ios that allows people to find us and drop off their things, and we work with hotels and restaurants and we are working with partners to find our reach. >> we have couriers 10% of the bags.

that's with virtually no advertising. we are looking for $650,000 for expansion, and in the next 18 months we plan on opening four locations, and achieving monthly revenue of $750,000. go to the website at gowcubby.cm information. >> you forgot the most important thing, you won a business plan. how did they do? >> i think it's a great idea, guys. i have no doubt that four or five years ago we will see whatever version there is of cubby. i would be going for going everywhere fast. and they have got the market, and the spread and the retail locations and the actual premises. here is what i would be asking myself. what you have got that is

special, that prevents them the people you are partnering with from saying this is good but i think i would heart to get a comparative advantage. >> what about you, dave? >> if you are going to survive in the long term, as les yes, you have to get going fast. >> are you interested? >> yeah, in logistical network, because there's a huge first move for advantage and you will advance your cost scales, and i any over time, those services can make up a majority of revenue. >> i would want to know more and take another meeting. >> i would recommend them to a few close friends. >> good luck, guys. i have been bogged down with bags and needed you guys at times. if any of you throughout have a product or service and you want to see back on your

chances of getting interested investors, send us an e-mail. please include a short soummary of what your company does and what you intend to do with the money, and you never know nobody out there watching the show might be interested in helping you. it's time to answer some of your business questions. les and dave are here to answer them all. the first one comes from judy. she said we are a year round massage and swim service with an indoor pool for dogs. we have over 200 loyal customers with new ones coming every day. we raised our prices from $20 to $30 to half an hour, and we would like to phrase it to $45. is this too much of a jump? should we wait until january. seems like you can't tell your customers, we're raising them. >> almost doubling them in two years, and it sends a message

that you are either greedy or n ine inept. and i had a friend that raised the dues, and in their mind it's they are getting something for their money. and so i would be careful there, and i would fix that business model to create an increase that substantially, there is maybe something fundamentally wrong with the model. >> if she is going to do it, she should think long term. should she wait? >> she has three times more business than she can cope with, and sure, she will lose some people, but she needs to start planning ahead and getting projections produced and looking at a regular scale of increases once or twice a year at a percentage people will accept,

and tell people in advance, and we are trying to keep up with inflation, but she has to plan it and give a little bit advance warning or she will have a lot of folks leave. the next question is finding investors. >> there's a lack of venture capitalist down here, and we are wondering what is the best way to reach out and capture venture capitali capitalist. >> if you are someplace and not new york city or silicon valley, how do you network? >> get on an airplane. occasionally you have to get on the web and find out where people are who are investing in the industry you are in, and call ahead and say i am coming up from wherever, and in this case florida, and get yourself an agenda of meetings for three

or four days and work it like crazy, and it means you are going to up your game as well, so you have to plan it and decide where you are going to go and go to where the investigators are and work it like crazy. >> i agree. and there are websites that link ventures with capitalist. and there are outlet's that will help to connect you. and have the meeting and show why you are different and better and worthy of the investment. >> this is a question about credit. >> how do service businesses create collateral and business credit for their business? >> any ideas? >> when we started our business we had no products to sell, we were a service business and we got credit by our own personal credit, and we were able to get

credit based on we got good credit personally, and however, you could use receivables, if you have contracts and receivables that companies will loan for as well. >> longevity. i would emphasize the customer side of things, if you are on the customer service, ub have to educate paying in advance. if you don't do it right away at the beginning, and you feel you need the money and go for it, you will never put it in place later, and you have to start early on, and happy to do this but we need 50% to get started. >> thank you. very helpful. if any of you have any questions for our panel, all you have to do is e-mail us, it is

yourbusiness@msnbc.com. or you can go to the website, the address is openforum.com/yourbusiness. hit ask the show link to submit a question for the panel. looking for a way to streamline your online marketing strategy? look at the site of the week. make professional news letters to e-mail out, or use a site as an events planner for your business, and keep track of your social media account and there are new ways to use the internet as the ultimate marketing tool. click on the website to learn more about our show. you will find all of today's segments plus web exclusive content to help your business grow. and don't forget to become a fan of the show on facebook, and follow us on twitter, and it's

@msnbc/twitter. and next week we will follow a salon owner to locate customers, and we'll find out how a school lunch provider sells itself to potential customers. until then, i am j.j. ramburg, and remember, we make your business our business. sam: i'm sam chernin. owner of sammy's fish box. i opened the first sammy's back in 1966. my employees are like family. and, i want people that work for me to feel that they're sharing in my success. we purchase as much as we can on the american express open gold card. so we can accumulate as many points as possible. i pass on these points to my employees to go on trips with their families. when my employees are happy, my customers are happy.