she risked it all when she decided to change the company's direction, and where is the money? an update on washington's efforts to regulate crowd funding. that's coming up next on "your business."

hi there, everyone, i'm j.j. ramberg and welcome to "your business" the show dedicated to giving you tips and advice to help your small business grow. i'm often asked which small business owner i've met over the past seven years has inspired me the most. and my answer is always the same. kim benson. she embodies what it is to be an entrepreneur. she's risk taking but calculated. and she is willing to change paths when she sees another one.

her company makes bagels to help people lose weight. kim, i cannot believe this is your company. >> i can't either. >> when i first met kim benson in 2010, she was first working out of her home running her company, kim's light bagels. she's come a long way since then. >> it's incredible. i look at this space. i have to pinch myself to believe it's here. >> in 2008 kim's husband mark was laid off from his job and because of an illness couldn't get a new one. they had some savings, $18,000, but with all their expenses it was not going to last long. >> it was very scary. we have four children, a mortgage, middle-income america. >> so what did kim do? get a job? nope. she took the money and invested most of it in an idea to make low-fat bagels.

>> here was the one opportunity. it was sink or swim. do or die. >> you certain li would have been safer betting on favor. she had no business experience and no access to deep pockets. what she did have was a keen sense of the market. a few years earlier she lost 150 pounds and became a bit of celebrity to others wanting to do the same. >> what matters is the only way you're never going to lose weight is if you stop trying. >> and she had an amazing won't take no attitude. she knocked on door after door after door until someone finally said they would sell her bagel. by the time i met her, the company was doing well, but it was early days. her son's room was the stock room. well, that was then -- ♪ this is now. >> we all really want to go from somebody not healthy to somebody

who is healthy. >> this is kim's weight loss center in connecticut, complete with a cafe. when i walked in the first question i had is where are the bagels? i wasn't getting personally from it what i get now. and the same self confidence with a market that propelled her to start the baseball company inspired her to put them on the back burner. weight loss is at the core of my body. literally. >> she still makes the bagels and other low-fat packaged goods. kim now concentrates on helping others go through the same journey she went through.

what's your total weight loss? >> 112.4. >> and sue you lost? >> 25. >> it was a nerve racking transition from primarily selling bagels to building up her weight loss customers. >> there was a big lag between being able to it was a scary tim time. >> we want to eat this way and look this way. and it's impossible. we're torn in two. >> kim is a great motivational personality. she cares so deeply about helping them achieve their goals. >> it feels to me you believe so

wholeheartedly in your company and your mission that people can't help but believe in it, to too. >> i agree. i do believe it with all my heart. it's infectious. >> do you doubt yourself? >> not really. i question and i ask. i have great supporters, counselors. >> her enthusiasm has spawned a community of people who depend on each other. >> we exercise together. we eat together. we have an on-line community that we talk to each other on-line. >> and spread the word about the company. >> in ohio, when marie goes to the doctor and he looks at her and he says, you're in a healthy weight range, what are you doing, and she tells him about it and he e-mails me and asks for some information, he starts referring to all of his clients. >> her struggle now is how it to keep up with the growth and deciding where to invest her profits. in the meetings, on-line, the packaged goods, or building out her premade meals business?

>> it takes more time and it takes planning ahead, but if you're willing to sacrifice that you get to save money. >> and during the day she spends a lot of time thinking about those decisions. except when she's up in front of her meetings. then all business issues move aside. >> when i'm standing up in front of everybody it's really all about them. i want you to know what it's like. i want you to feel how good it feels. i want you to know it's not easy but it's really simple and you can do it. >> she makes running a business seem that simple too. buzz word terms, what kim did is called a pivot. she changed the direction of her company when she saw a better opportunity. let's turn to this week's board of directors. eric is the editor in chief of "inc" and julie is a cereal entrepreneur and investors. >> great to be here. >> i said it before on the show

but this woman is my favorite, my favorite entrepreneur i've met in the past seven years. she's so inspirational. it was almost summed up in that question of do you ever doubt yourself and no. she really believes that. >> it reminds me of something that richard branson said recently, he said, no matter how good your idea is when you're starting up, 99% of people will tell you it's going to fail. it's easy to think of reasons it will fail. every entrepreneur has to have that belief because it's not easy but you have to get through it by yourself. >> julie, you are in the land of the pivot, silicon valley, where everyone starts one company and a year later the company is a totally different company. what does it take? in her case, her business was actually pretty successful. she said i can't compete with the big guys. my company will only go to here. what does it take to have the guts to say i know revenue is coming in but i'm leaving it alone and going to do something

else? >> i loved seeing this because she's the embodiment of an entrepreneur to me. she is a high-risk tolerance. the pivot is essentially about having i think one of the hardest things that an entrepreneur has to possess is the combination of passion and dispassion. so enough passion and belief that when people say your idea is not going to work, you charge ahead and you have that risk tolerance to do it. and enough dispassion to step back and look at the market and say, is this going to work. is it going to be a mediocre business, am i sideways and a bigger opportunity? the other thing i love, she honored kind of something -- what was deeply personal, to me the mark of a great entrepreneur, when doing something deeply personal to them. that becomes your unique insight, your unique advantage. she's the embodiment of her business. she lives and breathes it. when she says i couldn't not do this, it also speaks to something that great

entrepreneurs have, which is when they have a calling they feel like it's not a choice for them. they -- they're obsessed with it and have to do it and so she really kind of just struck on all those marks. >> and yes, for her selling this, she's not selling it. she's speaking from her heart and that's what makes it so infectious as we say. these people just want to follow her because she believes it so much. if you have a company that is not like this, something she says that's in every pore, if you have a company that you've started and you want that, you want what -- you want what kim has, but it's not in your heart the same way that is, not all entrepreneurs get to have that, how can you in essence fake it until you make it. how do you get that if it's not as internal? >> you have to find the part of it that you can focus on. whether it's who you serve, the

fact that, you know, that you identify with your customers in some way or that you're doing it for your kids or your families or like some people, because someone told you you couldn't and you need to prove them wrong but you have to find that spark. this is too hard to do otherwise. >> you guys stick around. we need you a lot mr in the show. we use our smartphones for a lot of our small business needs but is your information safe? here now are five ways to protect yourself from cyber attacks courtesy of small biz trends.com. one, set a password. this will make your data more difficult to access if your phone is ever lost or stolen. two, check your phone bill. be on the lookout for unusual behavior. this could include suspicious charges to the phone bill or suddenly decreased battery life. number three, download from trusted sources. make sure the app is coming from a legitimate provider and compare the app sponsor's official website with the app store link. four, understand permissions before accepting them. be careful about granting access to personal information on your phone. make sure to also check the privacy settings for each app before installing it. and number five, wipe data on

your old phone before you donate, resell or recycle it. erase any information and reset your phone to its initial factory settings. on april 5th, 2012, president obama opened up a whole new source of funding for small businesses when he signed the jobs act. in it was a provision to let small business owners crowd fund. let me back up for a second. crowd funding has been around for a while but there is a difference between the current form of crowd funding and the kind that was made legal through the jobs act. right now, you can list your company on a crowd funding site. for example, if you're hoping to raise $50,000 you may give people the ability it to give you anywhere from $10 to $20,000. and in return, you give them some sort of prize. not equity. a prize. a few years ago on this show we did a story on a guy who put his jellyfish tank company on the site kick starter and in return for providing funds the founder gave people one of the tanks or other prizes based on how much

money they gave. well the jobs act opened small business up for a new kind of crowd funding. where instead of getting a prize you give equity in your company. so for anyone interested in this, april 5th was an excitinging day. it's gotten less exciting because you still can't do it. the s.e.c. was supposed to come up with regulations to put this provision into effect by the end of last year. they missed their deadline and we still don't know exactly when they'll be done. sherwood nooes is the co-founder of crowd fund capital advisors that advises businesses, private equity groups and more about the ins and outs of crowd funding and eric and julie are back with us. great to see you, sherwood. >> great to see you, j.j. thanks for having me. >> a deadline has been missed, other deadlines have been missed. does it seem like this will be

done by the end of 2013? >> well, we're hopeful that it will be done by the end of 2013. mary shah peer ro was never quite a fan of the jobs act or crowd funding in particular, and now that we have a new commissioner coming in, we think that it's going to cause a little bit of a delay. we know that the proposed rules are there so our goal assen industry -- as an industry is to show up in washington, d.c., meet with mary joe white and help her get these goals out for public comment. >> do you have any sense of public timing on this? >> it depends when she's confirmed by the senate. we need to wait and see when the senate takes that up and we need to get in washington, again, and make sure that this is a priority for them. >> is there a deadline, sherwood? could this go on for five years? >> that's a really good point. congress did put 270 days in there. the s.e.c. has a reputation for missing deadlines. they've worked really hard, the staff, to get this, the proposed rules done, but it's really a political game. and it comes down to what the commissioners want to put on their plate and put out there

for public commenting and when they want to do that. >> okay. julie, i want to ask you, because you've started companies, advise companies, when this does become available as an entrepreneur, do you think it's a good way to get money? >> it could be very effective way of getting money. the way i think about it, it's the way democratizing access to capital and amplifying something that's happening in silicon valley, which is kind of an angel investing process or what we call friends and family where you kind of recruit people in your network who believe in you because when you're starting a company it's really about you and your idea. and so it's really more about people investing in you. this allows kind of access to this broader market of people. where you can not only kind of amplify through friends and family, but through a big peer to peer network. >> is there any downside? i know on the investor side there are a lot of worries investors might be fooled into giving money for something not real. for an entrepreneur who has a

legitimate company, is there any downside. >> i would make crowd funding a low priority in my funding search. if you go to a seasoned angel along with giving up equity you get a lot of expertise, a network of seasoned people who probably have deep ties in ur why industry -- in your industry to be rooting for you. with crowd funding you get mom and pop investors who probably don't know much about, aren't able to help you in a board of directors way a seasoned angel can, and you have a lot of owners you have to share ownership of your company with. you know, that may be the -- your best shot, but if you have another option, i would take that first. >> well, but there's two things. i mean there's crowd funding -- there's debt based crowd funding and equity based crowd funding. if you look at what's going to be happening in main street america, a lot don't qualify for equity based funding. it's an opportunity to go to their customers and look at them for loans. that's where i think -- >> debt based crowd funding exists with the lending

club.com. ? >> right. but in a limited capacity. what the jobs act does is open it up for more people to participate. >> and what is the limit again? a million dollars you can raise? >> it's a million dollars per year. >> okay. so for anyone who has the kernel of an idea, hoping this gets through the s.e.c., what should they be doing to prepare themselves, assuming they don't have access or don't want to angels, think they want to use this? what should they be doing to prepare themselves? >> you can't crowd fund without a crowd. the number one thing you need to start doing is building your social network if you haven't already done so. the way in which you're going to get people to these platforms, is by linking in your facebook, your twitter, linkedin accounts to them and solicit them. you need to build a robust crowd to raise capital from them. >> exactly what julie said as well. sherwood, thank you for joining us. i'm sure we're going to be

speaking to you a couple more times before this gets through the s.e.c. >> i hope so. i look forward to this going live. >> when we return, we answer some of your business questions on the topic of funding including getting second and third round financing and finding investors when going from wholesale to retail. and, for fat tuesday, today's elevator pitchers say let the good times roll with their line of fatty sunday pretzels. earlier in the program, we ♪ i' 'm a hard, hard ♪ worker every day. ♪ i' ♪ i'm a hard, hard worker and i'm working every day. ♪ ♪ i'm a hard, hard worker and i'm saving all my pay. ♪ ♪ if i ever get some money put away, ♪ ♪ i'm going to take it all out and celebrate. ♪ ♪ i'm a hard, hard worker... ♪ membership rallied millions of us on small business saturday to make shopping small, huge. this is what membership is. this is what membership does.

profiled a woman who launched a company called kim's light bagels. today's elevator pitchers took the exactly opposite marketing stance when naming their product fatty sunday. >> hi. i'm ali, ceo and co-founder of fatty sundays and could. >> thank you. >> i'm lauren i'm a cfo and another co-founder. >> can we eat these. >> absolutely. these are for you guys. >> thank you. >> my sister lauren and i sell naturally flavored chocolate covered pretzels. we've been able to reinvent the sweet and salty snack with flavors as peanut butter and toffee crunch. this snack makes the perfect event favor or corporate gift and can be customized. retails for 6.25 and purchased at our on-line store. and just closed up our first

successful pop up so shop at the union square holiday market. our pretzels can be found at the trump hotel in chicago and the king and grove in williamsburg. we're seeking $300,000 to expand our operation and a food broker to reach national distribution. you can learn more about us on our website. and you guys are based right here in brooklyn. did you get everything in the pitch? >> they got everything in the pitch.

they got everything in the pret zel. i think i'm going to lose all my money. the problem is we're basically talking about dough dipped in something. a lot of people can do it. so what i would want to see in a pitch is some kind of unique aspect. presumably you sell a company in the future, but to whom? >> was there anything else they could have included in there. >>? >> you struck on all the markers

i look for. people, your energy is good. you clearly love your product. the product is great. a lot of companies forget to actually demo their product. you did that off the bat. you have really nice customers in distribution. what i would have loved to have heard is how well you're doing. how far you've gotten on how little. and when you're talking about your product, you want to talk about what is unique here. are we going to be able to invest in brands? we're going to build a brand. and that's how it will differentiate and separate us. >> based on what you heard, would you take another meet sng. >> i would take another meeting. >> yes, as long as they brought

the pretzels. >> i was about to say the same thing. this is really helpful. if any of you have questions for our experts, go to our website. the address is openforum.com/yourbusiness. once you get there, hit the link. again, the address is openforum.com/yourbusiness. or email us at yourbusiness@msnbc.com. the logistics can be everything. check out our website of the week. you never know. somebody out there watching the show may be interested in helping you. time to answer some of your business questions. the first one is about switching gears. >> we're spearheading a new effort into retail. i need capital investment. being it's a different industry, i don't know where to start.

>> well, it can be tough to get funding when you're moving into a new industry. so rather than try to convince a lender based on what you think is going to happen, try to borrow against what you have. asset-based lending. ford actually came back to the way it was in 2007. so there's going to be demand for that. on the equity side, maybe he can partner with someone who knows that retail business and that can be a big help. >> any other suggestions? >> i think that in the earliest stages when you've got a source of revenue business, finding a way to fund the early stages through that until you've sort of taken the early risk out of the equation and understand the market you're in and that gives you the leverage to go. >> that's exactly right. improve yourself. okay, let's move on to the next one. this is from camp he writes where do i get a second and third round financing at

reasonable rates? why are you both landing? >> it's kind of no man's land out there. it's the dead zone. but, look, i would go back to the people who gave you the first round company. they know you. your company is stronger. if it isn't, make sure you pretty it up before you ask for second round funding. >> we did a story who just assumed the bang would give them another loan. they got the first loan, paid it on time, and the bank said number but you're still both laughing. but basically the answer is it's hard. >> it's hard. back to reasonable rates. whether you're raising venture money or money from a bank, the only way to get a best deal is let the market price it. creating a market, understanding what your sources of capital are and beating the streets. and it's tough because what's happened is a lot of things have gotten funded in the market and

now the second and third stage investing can -- the investors can step back and kind of say, okay, we're the breakout winners, so we'll invest in those. if you get a lot of money and others are left hanging. >> moving on to the next question. this is about maximizing your marketing. >> when you're spending marketing dollars or two different channels, when should you start the shift investment from one versus the other, what type of data points should you be looking for? >> this is all about measuring, right? if you're measuring, it will be very clear. how much better does one have to be before you say, okay, i'm moving all of my money over? >> we live in a world of multi-channel marketing. so i don't think it's about one versus the other and we have a highly measurable way of measuring efficacy. diversified approach to channel marketing is really important and the more measurable, the

more attractive because you know how you're spending your money. i think it's less about that and more about what's performing. sometimes you'll find your business lends itself to one particular channel that's real breakout and then you say i'm going to put all of my dollars behind that. >> that's interesting, right? really it's not that this is better than this. it's just that you have the wrong message there. >> that could be. that could be. you know about the old saying, i know half of my advertising dollars are wasted, i just don't know which half. make it your business. to find out which half. you need to be intimately familiar with your metrics. if you don't have a website, ask your customers every time they come in your door, find out what wrought you here. >> thank you, guys for all of your advice. this is really helpful. if any of you have questions for our experts, go to our website. the address is openforum.com/yourbusiness. once you get there, hit the

ask the show link to submit a question for our panel. again, the address is openforum.com/yourbusiness. or email us at yourbusiness@msnbc.com. the logistics can be everything. check out our website of the weed. the resumator.com helping you. it has free online boards and promotes your vacancies. you can easily track, rate, and organize from start to finish all from one clean interface. to learn more about today's show, just click on our website. it's openforum.com/yourbusiness. don't forget to become a fan on the show. next week it all started when two mothers offered to help their daughters decorate their school lockers.

>> on the first day of school the phone started ringing from other parents, where do you get that stuff, great, now my daughter wants it. >> today they've got national distribution, factories in china and millions in sales. next week find out how they did it step by step. until then i'm j.j. ramberg. and remember we make your business our business. good morning from new york. ♪ i' 'm a hard, hard ♪ worker every day. ♪ i' ♪ i'm a hard, hard worker and i'm working every day. ♪ ♪ i'm a hard, hard worker and i'm saving all my pay. ♪ ♪ if i ever get some money put away, ♪ ♪ i'm going to take it all out and celebrate. ♪ ♪ i'm a hard, hard worker... ♪

membership rallied millions of us on small business saturday to make shopping small, huge. this is what membership is. this is what membership does. in 2002 less than a year after the 9/11 attacks a guy named mark klein was working at at&t in san francisco. he worked for the city for about 20 years at that point. he worked in new york city and white plains, new york. he transferred to california. he worked for at&t there. and a couple of different cities but by summer of 2002 he was in san francisco for at&t. he was a lifer at at&t. he was a trusted long time employee. then one day while at work he got a message. watch this. this is from "front line" on pbs. >> in 2002, i was sitting at my work station one day.