this men's skin care company is successful now, but they made a lot of mistakes along the way. and this interior designer discovered the hard way to treat your small clients the same way you treat the big ones. their learning process can help your small business succeed. 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, everyone, i'm j.j. ramberg and welcome to "your business." we all make mistakes. ask any successful entrepreneur, and they won't have enough fingers and toes to count all the bad calls they make. but what you do with those mistakes makes all the difference. we met two entrepreneurs who started a company selling shaving products, who, instead of beating themselves up over all their wrong decisions used them as teaching moments. and while their bottom line took some hits along the way, it was all part of the learning process. >> we've been told more than once that if we knew what we were getting into, we probably never would have even tried. >> we made that conscious decision that we were going to enter this market space for

better or worse. >> men's skin care line j. paul may have entered a crowded field when it launched its shaving accessories in 2007 but for founders paul looney and paul strong, that was no deterrent. >> our products really are targeted for those guys that do have thick beards. like myself. and my business partner paul strong has very sensitive skin. we felt that there really was a market void there. >> for them, it was uncharted territory. >> i had zero. i had no experience at all. came from an oil and gas background and somewhat logistics. we just did not have any real industry knowledge. >> while they may have been at a slight disadvantage, you wouldn't know it. >> we've used our shavings. we've bootstrapped this business from the very beginning. j. paul's grown organically over the last seven years with very little outside investment. >> in addition to the company's website j. paul products are found all over the country. including at nordstrom, at macy's, and at dozens of high-end boutiques, which they credit for giving them a boost. >> if we didn't have those 45 to

50 different stores, we probably would have never gotten in to some of the high-end box retail stores. they need to see success, needed to see sales so we proved ourselves at each level. >> sales of shaving kits, travel razors and an anti-aging line are rising. but the pair is humble when talking about their launch. >> times where you throw up your hands and say, i'm done. other times where you feel like, hey, we are nailing it. >> they admit they've made some mistakes along the way. >> you just have to be willing, as an entrepreneur, and as a business owner, to be willing to make the mistakes. >> one of the first challenges involved the development of packaging. at first, the entrepreneurs turned to china. >> it's, you know, a lot less expensive. and you can get a lot more for your dollar. >> that just took too much time. >> what we found was that part of being in china is you're having to wait six weeks for every iteration of the packaging which you're getting. so if you get it back and it's not the right color, then you get to wait six more weeks for

them to make an adjustment. >> it just ended up being too cumbersome, too burdensome. >> a canadian company eventually produced the right packaging with the correct shade of brown. but j. paul had already wasted a lot of time and money. 18 months to move through from the time we first contacted the company in china to when we actually received the tubes. it was close to about $15,000. from start to finish. >> coo jennifer porchey says at one point this texas company used a distribution center in connecticut. >> as we were growing and the demand was growing, the orders were coming in. so at the advice of our consultant, we moved our operation to a fulfillment center that was recommended to us. we paid a monthly fee. >> but then the customers started to complain. >> we just kept getting more feedback from customers, with pictures. this is what arrived to me. and it just wasn't up to standard. we just didn't have the quality control. >> distribution was eventually

brought back to houston. but not without losing money first. >> after it was all said and done, we took a $20,000 to $25,000 hit that we won't be able to recoup. as a result of that, we're not getting product that's arriving anywhere damaged. >> marketing was another hurdle. j. paul ran newspaper ads in markets like dallas and chicago where products were starting to sell. they launched a social media campaign, too. >> we felt that, you know, we needed to have some sort of advertising campaign. whether it's print media, online, and that was a major mistake. >> the newspaper ads didn't bring in any new customers. >> it quickly added up to, you know, $15,000, almost $20,000 in these different cities. >> the social media campaign wasn't any better. >> we probably invested close to -- somewhere between $15,000 and $20,000. probably closer to $15,000. >> the company was just too new. >> if you're trying to brand a product, and you're out of the gates and no one knows your name, it's a very costly endeavor. >> the lack of name recognition

didn't help when j. paul looked for a spokesperson, either. >> we felt like inevitably we needed to be in the bigger box stores. bigger retail stores. and as a way to bring recognition, bring exposure, and bring some clout, we felt like that a celebrity endorsement would give us the cachet we needed to walk in the door. >> estate hiring a talent agent and meeting face-to-face with one celebrity, nothing materialized. >> i think the official reason was that we were not really a known company. being a small at the time didn't seem like a risk they were willing to take. >> that search cost them $15,000 which never amounted to anything. but it turns out j. paul never needed that kind of endorsement. the products spoke for themselves and customers responded. >> in the end, it really is about your product, being able to stand alone by itself. >> while all agree the money lost could have been better spent, this was a learning experience.

it may have been costly. but in the end, j. paul is a better company because of it. >> sure, mistakes probably did motivate us. i don't think every company can do everything right every single day. we're human. mistakes are going to happen. but it's how you adapt to those learn from those mistakes. >> as i said earlier everyone makes mistakes. and it's helpful for all of us to hear about them so that we don't feel badly about ourselves when we go down the wrong path. and so that we are assured there's a way out. here's another good example for you. of an interior design company which started turning down smaller clients in favor of big spending ones, and almost went under because of it. >> i have to tell you, it was my biggest mistake. i will never make that mistake again. and i haven't. and i was ashamed of myself. i have to be honest with you. >> interior designer pamela bayer does not sugarcoat anything when it comes to talking about how she used to run her business. >> i looked at this and i

thought to myself, this is one of the stupidest things you've ever done. >> there was a time when her company, pamela bayer interiors, was booming. back then pamela, who splits her time between hudson, ohio, and the new york city area, had some very large clients. >> i would say, on the east coast, four, and here, one. and the one here was the biggest. >> because she had these corporate customers, who were lining up, and willing to pay up, pamela started telling some of her smaller clients she was no longer available. >> i had to take a step back and reassess my jobs. my jobs were large. taking a lot of time. i didn't think i was going to be able to take the smaller jobs, and do the correct -- the job for my client. >> ernie house and his wife tried to work with pamela during that time but she turned them down. >> when she came, she was like, oh, you need help. but i don't have time. i got so many other things going on. >> even though pamela was saying no, she wasn't leaving these potential clients high and dry. she did introduce them to other

people. >> i would find other interior designers, and i would try to hook them up with them. make sure that they were feeling, at least that they weren't left in the dark. >> the decision to focus on larger jobs ended up coming back to haunt pamela. after refusing so many small customers, her plan to think big went bust. some of the large jobs pamela was banking on were cut back. or just cut altogether. a change needed to happen, and happen fast. pamela decided it was time to redesign her business plan. instead of just thinking big, she knew she needed to diversify by thinking big, and small. >> i think probably within 24 hours, i started calling my other clients, the smaller clients. i really hack hopped my peds ale and decided to make amends to those people. >> pamela started to repaired damage. >> i went back to these clients, and humbly apologized to them. i felt as if i had to make

amends. in a little bit larger fashion. >> pamela made it clear that she wanted back in her customers' lives. despite the fact that she had said no, not that long before. >> i hoped i did not even hurt their feelings. because it's very personal, my business. i'm in their home. >> ernie haass remembers the day he and his wife got the call. >> she was very honest. she said she had some bigger clients and some things didn't work out. >> ernie says pamela's honesty made it easy for them to decide to work to the. he knew any decision was strictly business. >> i understood it completely when she said that. and didn't take it personal one bit. and she gave, i think the thing that struck me was she came on this job and treated as if it was one of her major corporate jobs. >> gary would agree. he says pamela won him over with her top-notch customer service. >> the projects we were giving her generally were rather small ones. pamela was always very accessible to us. she wasn't here all the time. but she kept her commitments

when needed to be here, or we needed her for a project. >> part of pamela's mission is to make sure that every customer knows they are just as valuable as the next. >> i want to take every client's job and make it so important, because each client really wants to feel like number one. it really doesn't matter to me if it's small or large. >> it also reinforced for her the importance of being open and honest with her customers, and taking responsibility for your actions. >> learn by your mistakes. apologize when you make a mistake. make amends. don't point the finger. making that one mistake, that's all you have sometimes. and if you don't make amends and don't do it the right way, you don't have work. >> tweeting gets you directly in touch with your customers. but even if you're on top of your game, you may be making some errors in your execution. here now are five common twitter mistakes courtesy of ink.com. one, not having a header photo. you may already know about the background and profile photos, but by default your header is a

solid color. add a new image under your profile settings. two, weak profile text. include relevant hash tags and the twitter handles of any related organizations so people can find you easily. three, auto posting to facebook. if you do this, people who don't understand twitter get confused by hash tags. and those who do get it think you're lazy because you're not connecting directly with anyone. four, not adding video to tweets. if your stream is empty or outdated it gives the image that your brand is, too. so make sure to include multimedia in posts. and five, tweeting the full url. each character counts. using sites like bitly or sprout social to shorten the link will leave room for people to retweet. when we come back, bridgings funding gap between your first and second round. and implementing change in your company without it being disruptive. and, a sweet idea.

today's elevator pitcher wants to change this world through chocolate. if i can impart one lesson to a new business owner, it would be one thing i've learned is my philosophy is real simple american express open forum is an on-line community, that helps our members connect and share ideas to make smart business decisions. if you mess up, fess up. be your partners best partner. we built it for our members, but it's open for everyone. there's not one way to do something. no details too small. american express open forum. this is what membership is. this is what membership does. failure is a disappointment, and as a result, i think you have ary sponsibility to go back

and learn from that failure. otherwise, it's real failure. we've made a lot of beers that just didn't make it. and that's been a great source of learning for us. because every time we get a great idea we think this will be a great beer, we brew it, we taste it, and we're disappointed, we go back and say, gee, what can we learn from this? >> time now to answer some of your business questions. david s. rose is the chairman and ceo which operates a platform for early stage investing. he is the founder of new york angels and also the author of a new book "angel investing: the gust guide to making money and having fun investing in start-ups." and mon to mehta is a managing principle at seven capital a new york equity based firm that operates consumer and apparel benefits. having fun in doing your investing. >> absolutely. >> congratulations on the new book. and you guys both do it. let's get to the first question.

it is about your series "a" financing. >> how do companies bridge the gap between their seed round and their "a" round? there's usually a bit of a chasm there because you've now got your product up and working and so the question is, how do you find that "a" round funding? >> i love this question because i hear it all the time. i'm going to start with you. you're an angel investor. >> the problem is, it's starting from a faulty premise. it's not like every company has a seed round and every company has an "a" round. >> okay. >> instead, it's a very, very steep pyramid here. because fewer than one out of ten companies that have a seed round will actually have a series "a" round. in some cases, as few as 1 in 50. so therefor the expectation can't be that you're going to get a series "a" round after your seed. >> so you mean because the companies aren't successful or because they don't need them? >> no, typically it's because the company is not successful. >> so let's take monica the people who are in that position, they have a seed round, they're being -- they're successful, they're growing but they're not

quite at the position that they are attracting "a" round investors. >> well, to bridge that period, the capital can come from your friends and family. that's where most of the money for early stage start-ups comes from. but if you're actually trying to find that series "a" investors what you want to do is really network. network. network. and one of the easiest ways to really connect is to connect with entrepreneurs that have been funded by the types of people that you want to get funding from. that's sort of the back door in to venture capital. those are the people that already have confidence in in getting a qualified lead from one of those entrepreneurs can really go far to open doors. >> and so but the assumption here is that you should take the money from your seed and try and figure out a way that if you don't get that series "a" you can still be an operating business. >> got it. got it okay. and what is the average investment from new york angels? >> typically angel group will do anywhere between $250,000 and $750 method for a series seed round typically the first institutional nonfriends and family round.

>> got it. okay let's move on to the next one. this ask about paying your small business stackses. >> since it's tax season, other than my cpa, where is the best place to go in order to see if we are getting the best tax benefits of our small business? >> my first thought is maybe he needs a better cpa, right? if he says other than my cpa. but is there any place they can go? >> small business owners need to save money sometimes. but business.gov has a host of resources for small business owners. a bunch of links for various facilities offered by the irs and the sba. there's tax workshops, online webinars, lots of different ways to get different ideas. i think also your financial adviser can also give you some ways to save money with tax. but again, with your cpa at the end, i would not take any of these resources to be the very end of the discussion. >> one of the issues here, david, are a lot of people miss out on these things simply because they don't know about them. >> well, absolutely right about

business.gov being a great resource to point you to all the things available online. but more importantly your first take was even more important. and that is, if you don't trust your cpa to give you tax advice, find another cpa. it's like your lawyer. these are professionals you are hiring. you have to trust them. and so if there's any questions your cpa doesn't know enough to help you here, find another cpa. >> how do you know if he knows enough? times you don't know what you don't know. the next one is a question about dealing with change. >> how do you institute change in disruptive innovation within your business without changing too much where people get confused or get concerned about the rapid element of change within the business? >> how do you do that? >> this is a very real question but for two different reasons. one of them is the business change. which is pivoting to a different business model, different customers, different products. but the other one, and i think the question was getting to is the pace of technological change and change around you in your industry, and every business today is being turned upside down, whether it's restaurants or cars or construction, retail,

all being changed by technology. and you have to keep up with that. and so one thing to do is to help your employees understand that the world is changing. ive found that ted talks of ted.com have wonderful talks about future and things that are happening, they're thought provoking. they're only 18 minutes. so maybe setting aside, you know, your one or two of these talks a week and have your employees watch them, and then discuss how change would impact your business, might be a way to get that into conversation. >> we just profiled a baby sitting company here in new york city. and they have ted talk thursday. so every thursday once a month they sit around and watch a ted talk and then talk about it. >> i hear about this question and i think a little bit about a science fiction movie and how hard it is to get in to something that just doesn't feel real when there's no kind of anchor there. there has to be something familiar. whether it's for your customers or it's for the people in your organization. if you went from a rotary phone to an iphone i'm not sure even if you had the most fantastic device, that a person could really accept it. it would be too much technology, too fast.

still have to find something that feels familiar to your customer. something that feels familiar to the employees in your organization. >> so you say ease people in to it. >> yes. >> okay, david, monica, thank you. great advice. i love having you guys the show and getting to ask you all these questions. and we do this every single week here on the show, so take advantage of our experts and send in a question if you have one. you can submit it by going to openforum.com/yourbusiness and hitting the ask the show link. also, you can e-mail us yourbusiness@msnbc.com. let's get social now and get some advice and wisdom from great entrepreneurial minds on twitter. real estate shark barbara co corcoran for our elevator pitcher today. when pitching the most important things are equally real passion, the ability to communicate well, and to sell the idea on your feet! frequent "your business"

panelist tweets the magic of great management is to implement and iterate process without inhibiting progress. and another of our guests brian halligan warns success can build a cull turp of arrogance that will destroy a company. for almost years we've been presenting elevator pitches in an effort to teach other small business owners the right way to pique the interest of investors. david rose was a panelist on our very first show and judged our very first elevator pitch from kenny lau, his business has grown to $4 million in annual sales. we come full circumstanle now a monica joins david in the elevator for today's pitch earp who has a sweet tooth for success. >> hi. i'm julie maclean, ceo and founder of subisora chocolates. it is a two chocolate

manufacturer in maryland. we create consumer chocolates that are organic certified. i started in my basement as a single mother working on different formulas from all over the world. 0 our unique products including funky barline, amazon, and our website. we are expanding rapidly and seeking $3.7 million for new production space, expand our product offerings and to enhance our sales and marketing. we are expecting a $36 million profit by year five, a return on profits by year three and four of 30% to 35% and profit by year two. the chocolate industry in 2012 u.s. chock the lat sales were $19 billion and global $107 billion. chocolate is one sweet deal. >> all right. thank you so much. great pitch, and of course that looks very inkrieging. i'm going to give you each this. on a scale of 1-10 how much did swr

julie pique your interest? and then you get your reward. chocolate raspberry? >> a dark raspberry pop. sibusura is how you spell. >> for anyone who wants to see and buy right now. david, you are a successful angel investor. scale of one to ten, did she pique your interest? a seven. okay, good. one thing she did great. one thing she can improve upon? >> 300 stores, which is where you're projected by the end of the year is really good. that shows real traction, people are buying what you have to sell. >> okay. and one thing julie can improve upon. >> the challenge is the economics. so $3.5 million for a chocolate business is really, really tough. you don't have the numbers yet to support that kind of amount. also, the expectations of investors are usually for a much bigger return than a 15% or 20% annual. >> if you're asking for that

much money, you have to have good reasons why, explain why they'll get the return. >> that's what we're targeting. >> monica? >> i also gave a seven. i want to thank you for your passion. i feel i connected with you in the pitch with which is really good for investors. the product looks fabulous. as david mentioned, i'd want the to really understand how you're going to grow to satisfy investor targets for returns for $3.5 million. chocolate is not exactly high tech so we need to know how we're going to get that return that we're seeking. >> okay. well, fantastic. good job. good job to you. >> thank you, julie. >> you can distribute your chocolat chocolates. thank you and good luck with your company. >> thank you very much. >> and if any of you out there have a product or a service and you want feedback from our elevator pitch panel on your chances of getting interested investors, send us an e-mail. please include a short summary of what your company does, how much money you're trying to raise. and then what you intend to do with that money. i look forward to reading about your companies. how do you make sure your

product offerings are way ahead of your competition and pe permanently stay there? our guest says you have to totally embrace your customers as part of your product team and take your direction from their feedback on a constant, even daily basis. eric peacock is the co-founder and ceo of my health teams that create social networks for chronic conditions. so great to see you. so this is a big thing about basically making urbina customers your product team and following what they want. >> you have to create an environment where you not only encourage but embrace that feedback from them and you have to go out of your way to do it. >> and follow their needs. the first thing you talk about is having ambassadors. is this a group of people like a focus group? >> we have a social network for women with breast cancer called mybcteam.com. we have ambassadors on our website, we show the features to and they kick the tires on it. ambassador could be one of your favorite clients, the person who

comes in your restaurant each day. give them permission by asking them, do me the favor of giving me positive and constructive feedback. a lot of your best customers won't given you constructive feedback if they worry it will make you feel bad. >> do you give them anything or do people do this for free? >> you should thank your customers. you don't have to pay them. we give people shoutouts thanking them for doing that. they like that. they like that praise. you can give people a discount the next time they use your service or work with you. >> i think if people like your company, it maex people feel important. >> and when people give you feedback on how your product should work, your service should work, they become advocates for you the. they have a say in making a great product. >> and then staking it. collect feedback constantly. how do you do that so you're not overloaded? >> so not everyone will be your

ambassador, you do have to reach out to the rest of your customer base. if you have an online presence, you can use something like zen desk which is a little tool. we have a tab be on our web pages that say feedback. we have to release a new version of my breast cancer team every week. even if you don't have a website you can do this. you can use survey monkey and create a great survey. as long as you have e-mails of your customers you can e-mail it out and have hundreds of responses back and useful data. >> okay. and then look at what they do with your product. so you watch people. i mean, online there are services you can watch people interact or just look at your analytics. >> this is what separates the people who get the "a" from the "b" f. if you want to make your business great, look at what people are trying to do with your service or product. what they're trying to do that may not have been in mind because it's a great 0 source for new product ideas. on my bc team, women were sharing photos. they started tagging them.

what they want to do is create these pin boards. there's a woman who created her scarf fashion show, wearing these different scarves, one of our most popular features on the site. >> and this is not something you created sitting in your conference room. eric, this is great information and, again, it's this whole idea of your customers want something out there. you're giving them what they want. >> and do it constantly. >> great to see you, thanks. >> great to see you, thank you. to learn more about today's show click on our website openforum.com/yo openforum.com/yourbusiness. you'll find all of today's segments lus web plus web exclu content. please don't forget to follow us on facebook and instagram, too. next week entrepreneurs who want to cash in on the booming economy have a place to get the tools they need to achieve their small business dreams. >> we can basically start with

an idea in the morning and have a prototype at night. we do everything in here. we'll use lathes, mills, we'll use the woodshop, and then we'll grow parts using the 3d printers so that we can custom design just about anything we need. >> find out how new companies like makerhaus are helping cruiserweight t create the next big thing. i'm j.j. ramberg. remember, we make your business our business. if i can impart one lesson to a new business owner, it would be one thing i've learned is my philosophy is real simple american express open forum is an on-line community, that helps our members connect and share ideas to make smart business decisions. if you mess up, fess up. be your partners best partner. we built it for our members, but it's open for everyone.

there's not one way to do something. no details too small. american express open forum. this is what membership is. this is what membership does. debunking the notion obama is the deporter in chief. this has been a busy weekend for imfwrags reform advocates across the country. this was the scene in new orleans, louisiana, yesterday, and in des moines, iowa, on friday. here is new york city yesterday. also san jose, california, yesterday. protesters in washington, d.c., yesterday headed toward the white house marching because president obama had just reached an estimated 2 million deportations in his presidency. 2 million deportations. the president might have thought