meet the patriarch of a fifth generation new york business who makes water tanks, still made the old-fashioned way. it's time it make money, coming up next on "your business." small businesses are revitalizing the economy. american express open is here to

help. that's why we are proud to support "your business" on msnbc. hi there, everyone. i'm j.j. ramberg. welcome to "your business," the show dedicated to giving you tips and advice to helping your business grow. it was about one minute into the debit when small business was spoken by candidates. the amount was stricken in the amount of time obama and romney directed the issues that directly affect them. particularly in jobs and taxation. >> governor romney and i do share a deep interest in encouraging small business growth. at the same time that my tax plan has already lowered taxes

for 98% of families, i also lowered taxes for small businesses 18 times. and what i want to do is continue the tax rates, the tax cuts that we put into place for small businesses and families. >> i talked to a guy who has a very small business. he is in the electronics business in st. louis. he has four employees. he said he and his son calculated how much they pay in taxes. federal income, federal payroll tax, state sales tax, property tax cab gas tax, over 50% of what they earned. and your plan is to take the tax rate on successful small businesses from 35% to 40%. the national federation of independent businesses has said that will cost 700,000 jobs. >> what is main street's reaction? we have two of our most outspoken regulars here to discuss. phil cowan, an invest adviser, entrepreneur and best selling

author. you can find him at rule 1 investing.com. carol roth, you can find her at carolroth.com. >> good to see you. >> you too, j.j. >> i think it is clear that romney ran all over president obama. from a small business owner's perspective he addressed the issues we have not seen ad dressed over the last four years. most notably, how are we going to get this economy growing again because from a small business owner's perspective, that is what is going to get them hiring and make them more successful. if the economy grows, more people are buying from them. there's more confidence, and it is just a self fulfilling prophecy. >> what we are dealing with here, four years -- apart from what president obama is saying on there, what we have seen is that small business is struggling and we are way, way at the end of the food chain.

we have banks that can't fail. $700 billion going into who knows what. snail gardens in san francisco. it is harder today because of rules like dodd-frank to get money from a bank. small banks are failing. we lost 2,000 of them in the last two or three years. that's where businesses go to get the personal loan based on my personal credibility. those are gone, and that's why we need a change. >> when you listen to them debate and you hear, this is going to affect small businesses, this is going to affect small business, i sometimes think, okay, let's get beyond the rhetoric and get down to the details of it. so governor romney very early on said, if you tax people who earn more than $250,000, if you increase those taxes, then small businesses will be affected. now, not all small business will be affected. a small portion of them. is that a big deal or not? >> go ahead. >> no, you go. >> i think on the margin, the person that just gets over the

edge and they get that tax, it might be $500 or $2500. but we are talking about an avalanche of stuff that's been coming down the road over the last four years. not just taxes which add an incremental problem but regulations which has an incremental problem. the economy that is slow which adds an incremental problem. the fear of the unknown of what this government is going to do in regulation and taxation. it is not one little snowball, it is not one little snowball. it is the avalanche of snowballs that freezes people from hiring the next employee. >> it is all, as he said, all related together. all related to uncertainty and the fact there isn't any permanence in things like the tax code and regulation. it is very hard for a small business to make a decision based on what is going on next year. they are planning out five years because when they hire one employee or make a major capital investment, it is very impactful on their business. which is different from big business, who says, this is going out next year, this is what we can do with our business now.

so with a small business owner, it is not just one tax issue. it is how does that feed into the uncertainty. how does that feed into the health care policy? how does that feed into permanence? it all comes together. look, small business owners are entrepreneurs. they have an entrepreneurial spirit. they believe people can stand on their own and make things better. they don't want the government involved in their business. they want to be able to run their businesses and grow the pie for everyone in america. >> all right. incredibly interesting discussion, which i wish we could have for the whole show. you both feel strongly and feel very similarly and over the next few weeks, we can talk to people with all different point of view. i appreciate you coming on and talking about this. when your family has run a business for well over a century, how can you possibly keep it fresh? one way is to diversify the business. meet the only of rosenwalk tanks. the family has made the same thing for generations and he has outlasted almost all of the competition. so how does he do it?

andrew rosenwalk is the fourth generation owner of new york city-based rosenwalk tanks. >> i will, thank you. >> you look across new york skyline. from brooklyn to manhattan to the bronx, and you will find his family's handmade wooden tanks proudly perched on rooftop after rooftop after rooftop. >> pizza has the leaning tower and france has the eiffel four and new york has the water tower. >> if these tanks look a bit old-fashioned, that's because they are. even today these wooden structures are shaped by hand with half century old tools made by his father wallace. based on the physics of wooden-barrel making by a family-owned company nearly 150 years old.

>> they are described as abandoned relics. actually they are used today in plenty, in new buildings. the city has the strictest fire codes in new york and the tanks service that requirement. >> as outdated as they may seem, they are in fact anything but out of date. and, for that matter, so is the company itself. >> we have a city of stone and masonary and glass and they really don't look like they belong. but it is a well-used product and probably new york's best secret. >> if you want to understand the secret of how this small family held business has managed to outlast more than a dozen competitors for more than four generations, you need to start with their very simple philosophy. >> you don't try to throw out something that works, you just build upon it. >> this has meant several things for andrew. first, he studied all the aspects of the core business by getting the five key licenses

and certificates needed to operate the company. thanks to some heavy-handed pressure early on from his father. >> i achieved the first plumbing license of the family business, the fire suppression license. license for refrigeration operation with a real estate broker's license. i went back to school on his great pressure, achieved the mba at nyu for finance. but i must admit, the master plumbing license was much more difficult than the mba. >> beyond getting him an understanding of the core business, these licenses also allow andrew to become his own subcontractors in these fields. this means better control over cost and quality. >> that may be the secret sauce, that parents always push their children to go on to greater educational heights and to advance so they could help the company move into the next millennium century.

>> clinton bloom iii, president of new york city's hundred-year association is a also an entrepreneur himself. but as head of an organization which focuses on the city's oldest multigenerational enterprises, clint knows what it takes for a business to survive. >> i would say that businesses that will survive as family business, the next generation finds a way to innovate. and leverage the assets that they have. >> really keeping up with production beautifully. >> that's just what andrew has done here. first, he leveraged his labor force of wood workers by developing and selling a line of outdoor furniture which can be produced during winter when rooftop tank construction slows to a halt. >> they have guys that work with wood, they have wood shops. they found a way to expand their line. >> fact is, it allowed us to keep the only wood shop open for wooden waters tanks that is still in business for the city of new york. >> not only has andrew leveraged his carpenters but he found another off season opportunity for his may masons and welders.

servicing and building rooftop cooling towers. >> cooling towers are a window of opportunity to work on in the winter. it almost had the same type of work with jobbing and repair and replacement. it gave us protection against unemployment. >> look at his supply yard in queens, it may look like a junkyard, but it's not. look closely and you will see evidence of several interrelated businesses, each supporting the otheres with tools, labor and supplies, all connected in different ways to the core business and key to the rosenwalk strategy for survival in a competitive market. >> i think a lot of mind-set when people go into business is to try to eat up the competition. we don't think that way. >> he says find customers in related market. >> add additional services to your menu and going elsewhere to develop on your own efforts, additional business, additional team work.

>> the strategy means rosenwalk's collection of products and services cannot be compared directly with their competition. and as andrew puts it, makes them invisible to their competitors. >> we strive to be invisible. by being invisible, the competition can't find you. as soon as they try to find you, you're somewhere else. and you can't be seen. all of a sudden, you're outside their customer base. >> i want it point out to you some concerns that we also have with this structural steel. >> today, andrew's 23-year-old son, henry, is preparing to one day take the business into its fifth generation. >> i definitely have big shoes to fill. but i'm not worried and i'm confident that i can bring a successful future. >> while these rooftop towers may remind us of past generations, the rosenwach family will be doing its best to keep them on new york city roof tops for generations to come.

to stay ahead of the times, small businesses are launching new features on their web sites all of the time. but how do you get your customers to actually utilize new openings you are promoting? clients to use your knew features, courtesy of matchable.com. one, ask customers to vote on a new feature before building it. if they are engaged early on, they are more likely to be users after the launch and have a deeper connection to your company. two, get feedback during every stage of your launch. constant assessments during each stage of development will reduce the risk of releasing a feature that misses the mark. three, know which features are being utilized. this will help you decide on the future direction of the product. four, offer notification. before users can use a new feature, they first need to know it's there. consider using an on-line pop-up notification or sent out personalized e-mails to your list serve. and number five, allow users to share. you want your customers to tell their friends once a feature is

live. make sure to give them ways to share with prepopulated tweets, posts or social sharing buttons. when we come back, phil and carol answer your small business questions on the pros and cons of venture capital and buying a preexisting company. what time is it? it is time for our elevator pitcher to show his watches that you can help design. on every one of our cards there's a date. a reminder... that before this date, we have to exceed expectations. we have to find new ways to help make life easier, more convenient and more rewarding. it's the reason why we don't have costumers. we have members.

american express. welcome in. creating a new product is incredibly risky. it can take a lot of time and money, and after all that, what if no one buys it. you can certainly go out there and survey your potential customers but saying that you love something is quite different than pulling out your wallet and paying for it. so what do you do? sylvia of uptown soap company has figured it out. when she has a new product idea, she designs what it would look like and puts it up on her website. then if nobody clicks on it to put in their shopping cart, she knows it is not worth another dime or second. if a lot of people put it in their cart, she sends an e-mail saying it is coming soon, then she develops. tip 16, test your product with your audience before actually

developing it. time now to answer some of your business questions. phil and carol are with us. once again, first one is from phil, not this phil, but another phil. he writes, my partners and i are debating whether to raise venture capital dollars or grow organically. what are the pros and cons of vc dollars? >> you might not be able to get it. venture capital funds a fraction of 1% of all of the businesses that are out there. so you have to make sure you are eligible for it. if you do have a business, that is going to be 50 to $100 million within three to five-year period and you are eligible for venture capital then you can look at pros and cons. biggest con is it is expensive. they require a large part of your company and sometimes more onerous business terms, so you

have to make sure you get something other than capital. maybe access, maybe information, maybe you're getting some other benefit. maybe just credibility. sometimes having a venture capitalist in there create credibility but they have to bring something to the table to make up for that extra expense you're taking on. >> i agree. you want to know how big you're going to get. if you don't get big enough, you won't get the capital. you also want to ask yourself, how good are you at this business? if you're really good at it, you may not need one of the really important things venture capital brings to the game, which is expertise across a lot of areas. if you really know your industry and know people in it, you may not need the other thing they bring, which is a lot of connections to other businesses and partnerships. but i think most people watching this show will be about angel investors. i would say that is a real open area. can you get $50,000 from people. >> also, the other thing is before you take any money from an outside investor who will then own part of your company and have a say, perhaps, of what you do, try to grow as big as you can organically or being scrappy so at the end you end up owning more. let's move on to the next one. alan writes, i'm shopping to

purchase a really small business for its credit value and not income. where should i start looking for small businesses with descent d & b ratings for sale cheap? >> yeah. >> why? why are they doing this? why are they buying a business for its credit score? i can't think of one reason why you need do that. if you think it is because you want to get a bank loan and you think you will get better credit, that's not how it works. so i cannot think of a reason why you would want to do that. >> i think maybe he is looking for tax credits or net operating loss or something. this is not that easy to do, actually. if you want to go find a really good really small company, business brokers don't really categorize companies like that. and dunn and bradstreet can tell you which has good credit for really small companies. you can go there and get that information but you don't know if they are on sale. >> look into some other way to achieve your goal rather than buying a company. >> this is a question about who you are hiring. >> i'm getting a lot of

conflicting information on the parameters around 1099 contractors versus w-2 employees. is there any place can i go for the definitive answer on the parameters between 1099 contractors and w-2 employees. >> this is completely confusing for a lot of small businesses but really important because you can get in big, big trouble if you miscategorize. >> the answer, i think, maybe can you contradict me. there is no place can you go. >> oh, no, there is a place can you go. >> no way. >> www.irs.gov. it is the irs's website. it is very clear. type in independent contractor into the search box and they will give you all the parameters. they are very clearly define what's a w-2 and what's a 1099. >> the truth is, this is one of the most litigated areas of business. >> this is litigated because they don't follow instructions. >> no, it is litigated because this is an intensely different

world than 1950 when these things got set up for w-2 employees. 1950, everyone goes to a job, 8 to 5, whatever. today people work at home. they are all in that gray area that irs says do the things and you are clear. half of those things are things you would apply to an independent contractor. i'm working at home. i don't take instruction from my boss. i do this moo i way. why do people want to do it? it is a way better deal. we all want it. we go into the gray area. if it was that clear, there would not be so many lawsuits on this. >> i think it is clear i think people ignore the clarity. it is not good clarity. i agree with you. >> tons of businesses are ignoring the clarity for sure. >> i agree with you. i think it needs to be changed but the information is available finally, here is a question about the right time to expand your product line. >> we are importing olive oils and sauces and looking to launch

a new product. gichbt economy and cash flow, what should we be considering before launching? >> cash flow issue is the biggest issue. >> first thing i think you have to look at, peter is the roe, return on equity and what you are putting into it. in this marketplace, you better nail it quickly, fast turn around, a lot of velocity to that money. cash is king right now. there is a lot of danger in risk, which is what we were talking about earlier. a lot of danger in risk. what's going to be the return on capital month by month on this investment. make sure you get the velocity on cash. >> you also have to look at your end goal. what are you trying to achieve? is this the best product launch to get you there. the food area, they deal on shelf stable and want to go into a refrigerated product. if somebody is going to buy them, they are not going to want both. you have to make sure it is consistent with your overall goals.

i had advocate trying it out on a small scale. test what the market wants. if the market wants it, you should do it. >> listen to this girl. she is right. >> if he has a website, one really easy way to test it is design it, put it on your website. >> sell first, build later. >> i love having you guys answer these questions. it is a lot of fun. you have a lot of good opinions and ideas. thank you, guys, so much. if any of you out there have any questions for experts, all you have to do is go to our website. the address is openforum.com/your business we have featured companies like threadless where you can design your own t-shirts and grain surf boards where designers can build and design their own boards. today's elevator pitch takes a similar approach with his time pieces. let's watch. >> hi, my name is aaron swartz and i'm the ceo of modify. my physical product your modify watches, water resistant,

interchangeable. we have something for everyone, man, woman, or child. you can mix and match to create your own style. our price point is under $50. we hit over $30,000 in sales in our first year. we are growing this year organically. we have an over 30% repurchase rate. we just landed our first retail account with best buy. we have done collaborations with google and other associations and the major baseball association. we are looking to raise $750,000 in exchange for 20% of the company. the money is marked for new employees as well as for r&d for next products, interchangeable foot wear and sunglasses. you can see more the amodifywatches.com. >> these are fun, awesome. >> they are very cool. i am going to look at this while you do this. >> how did he do? >> you did phenomenally well. i am the one that always brutalizes everyone.

you did a fantastic job. you come across very confident, very knowledgeable. you have an existing product. you have taken a lot of risk out of it. you know with are you are going. you told us how much money and what it's for. i want another meeting. >> well, i would love it if you told me the really critical thing. are you guys cash flow positive yet? i like that right away, if you have that hook. if you don't, stay away from it like you did. my assumption is, if you don't bring it up, you are not, with i means my cash is a lot more at risk than if you are cash flow positive. other than that, home run. >> look at how cool this is, you get to change the watch, change the bands. >> two sizes. >> not just watch. he is going into other products. that is key. if it was just a one-trick pony, i would be more concerned about it. the fact that you are going into foot wear and sunglasses, intriguing. >> that was easy. aaron, thank you so much. goothd good luck with everything. thanks for coming on the program. you are great as always.

>> sg on july 1st, 1978, the container store opened its doors in a small retail space in dallas filled with products like colorful milk crates and straw baskets. it was devoted sole to storage and organization products. since then, they have opened locations from coast to coast and consistently featured ond fortune magazines of best 100 companies to work for. we sat down with ceo and co-founder, kip continuedle, to talk about minding and getting the customer dance. in this learning from the pros. ♪ >> a boat's wake as you are moving along the water and back to the boat is this tri ang lar wave and the faster you go, the bigger it becomes. everything you do and everything you don't do impacts your

business and the people around you. we teach that to our people. when you get 6,000 people, all mindful of their wakes and understanding that, isn't it nice that we do actually make a difference. the average retailer only invests eight hours of formal training in each employee. eight hours is shameful, really. there is nothing worse than being on the sales floor talking about the customer about a product that you don't know more than we do. >> we do 263 hours of formal training for each first year employee. that's just beginning. >> our first, our last, our everything. >> if you really and truly put the employee first, really and truly, they will take better care of the customer than anybody else. the better you take care of your people, the better they will take care of the customer. a customer that's ridiculously well taken care of and loves your store, is going to make sure that the economics of that

works well. >> i always have my briefcase with me. it is with me when i go fishing. it is with me all the time. the real artist of life blurs the distinction between work and play. we are always playing and we are always working and when claude mon n monet was painting the water lilies, was he working on playing? he was doing what he was doing. there is no reason for the container store to exist if we sell the same products everybody else does. we have to come up with these wonderful, innovative products that people get emotional about it. we want to delight and thrill you about it for the first two weeks you go into your closet, you do a little dance. you are so excited and you love it. if you feel that way, you are going to show it to your sitsster in law and neighbor and they are going to feel that. we call that the customer dance. can you make somebody do the customer dance about something

like a trash can. we devoted our lives to make sure they are the most perfect thing that fits in that corner just right. even a trash can can make you smile if it is exactly the one you want. do you suffer from a clogged inbox that stops you from getting to the e-mails that really matter. check out our website of the week. awayfind.com is a digital assistance for your e-mail. it will alert you only of those that need your immediate attention. set filter to be alerted immediately by text. push notification or voice call when you get an e-mail from an important contact. you can choose to get voice versions of the e-mails so you can work on the go s to learn more about today's show, click on our website, open forum.com/your business. you will find all of today's segments with more information to help your business grow. you can also follow us on twitter. it is@msnbcyour biz.

become a fan on facebook. we love getting your feedback. next week, a formal model leads her to start an e-commerce site for beoutiques of their ow. >> we didn't have an online platform that allowed you to purchase goods from paris, this unique, one of a kind pair of shoes. >> we will see how she is setting her company aside from the rest and bringing the statement, content is king to life every day. >> until then, i am j.j. ramberg. remember, we make your business our business. we make a simple thing. a thing that helps you buy other things. but plenty of companies do that.