what you don't know about your company can hurt you. they put their trust in an outside payroll company only to discover that their payments were gone along with the owner. how can you prevent this from happening to your small business? find out next on "your business." small businesses are revitalizing the economy. and american express open is here to help. that's why we're proud to

present "your business" on msnbc. hi there, everyone. i'm j.j. ramberg, and welcome to "your business." the national payroll association says that at least one third of the private american workforce is paid not directly by their employer but through independent payroll services. these services can seem like a godsend for small business owners who have plenty on their plate already, but for this kind of service to work, it means that you trust them with large amounts of your money. something that shouldn't be a problem if there are mechanisms in place to protect you from fraud, but as we found out, in some cases there's almost no protection at all. >> we had over $53,000 stolen

from us. >> i lost $20,000. >> i lost between 80,000 and $90,000. >> robert meltser and his wife melissa are the owners of a children's my gym fitness franchise in los angeles. this is a dentist with his own practice locate in beverly hills. zach gray is the owner of urban pet, selling healthy pet supplies at three store locations around los angeles. >> the payroll company is provided with access to our bank account. and they take our money, pay our employees and withdraw the necessary funds to pay taxes. >> all four reported to the police that they were swindled by their payroll service located here in this building near west hollywood on wiltshire boulevard. >> we were receiving our salaries on a timely manner as planned, so we thought everything was okay. >> then suddenly last december

everything was not okay. >> it was actually christmas eve. and i got a call from my agent at l.a. payroll. at first i didn't understand what she was saying. >> i received this letter, is this a typo? is this a mistake. >>? are you saying that all my deposits from july to present have disappeared? she said yes. >> my first thought was this can't be. >> this is not a mistake. this is bigger than a mistake. we think something bad has been in process. >> today the l.a. payroll offices are vacant. the owner is missing. and former employees did not return our phone calls and e-mails. >> by the time the irs notified us, we almost lost half a year's worth of payroll tax. >> according to these and other former clients we contacted for this story, there were about 150 small businesses in the los angeles area who together have a total of about 3 to $4 million missing from their payroll accounts, stolen, they believe, by the owner of the company who

is rumored to have fled to russia, according to what these clients were told by the remaining staff. >> we found out the owner of the l.a. payroll company had taken off and his employees hadn't seen him in i guess two weeks as of then. >> the person who did this knew exactly what he was doing because he knew how long it would take for the irs to catch up and figure out the moneys weren't in, by then he was gone. >> the first thing they did was contact the los angeles police. >> i contacted my accountant, then from there i filed a police report. >> the police officer was very polite and very cordial, but it seemed to me at the time that he was trying to ask me questions to get information so that i wouldn't make the report at that station. >> they said, you know what? if you're in immediate danger, if someone is taking money from your office right now we can send people over to your office. but a case like this, this is an

embezzlement and we don't get involved with these things. it's too big for us. >> i got a letter from a detective in the commercial crimes division. >> the lapd responded to these complaints with a letter. >> due to the number of victims am the complexities of the investigation involving federal and state tax issues as well as the issues involving the movement of money out of state and/or out of the country, lapd would not be able to properly and fully investigate -- >> the payroll. so these people tell me to go to these people. these people tell me to go to fbi but fbi is not willing to talk to us. >> we contacted the lapd, the los angeles d.a.'s office, the california state employment development department, the fbi, the irs and even homeland security, but each of these agencies told us the same thing -- they do not comment about ongoing investigations or whether investigations are even taking place.

>> it's galling to me that $4 million, which is approximately the total of what was taken from all of the clients could be stolen and there wasn't more of a response. for all i know they could be investigating this like crazy, but we're not being informed if they are. >> next, they discovered they were themselves in deep trouble with the irs and the state of california for tax obligations never fulfilled. >> this is the notice i received from the irs. you now have an outstanding balance on your account of $30,776.03. that was quite a shocking notice to receive. >> here it says $31,000. you get the form from the irs, it says zero. >> the big problem for these business owners is that while the tax money they owed was removed from their bank accounts, it was never sent to

the government. now they not only owe the past due taxes, but they owe penalties and late fees as well. money they say they don't have and insurance may not cover. >> we definitely did not have this kind of cash laying around. you know, to pay these taxes a second time, which is basically what we're having to do. >> we did let one employee go that, you know, we just had to really sort of tighten our belt. >> we were looking forward to opening a fourth location, then this hit us. you know, it blindsided us. >> with thousands of payroll providers around the country serving an estimated 40% of the private workforce, you'd think there would be direct regulations in place to prevent this kind of thing. >> there's no fda, there's no governmental agency that regulates this system. and it definitely needs some regulation. >> if your company uses a payroll provider, it's highly unlikely that you'll run into this kind of trouble, however

this swindle is far from the only example of its kind. according to a 2012 congressional report, over a period of five years, at least 24 payroll service providers nationwide have collected and not paid more than $300 million in employment taxes using similar schemes. last year, that was enough to get the attention of maryland senator barbara mikulski. that's when she held hearings on how to protect small business owners who had been victimized by companies like l.a. payroll. >> they disappeared and these businesses paid in thinking that they had paid their taxes also disappear. >> until congress figures things out, what can you do to protect yoursel yourself? >> if you're using a payroll definitely find out if they're bonded. >> you may want to find out if the company you're working with is insured.

find out how they deliver your payments to the government and how you can verify those payments have been received. and if you do get scammed, you might take a lesson from dr. dardashti who immediately set up a facebook account. >> by having this facebook page, it brought us together. >> he use this to find and contact other victims like himself, share information about what's happening, organize group action and get the media attention to support their cause. but according to robert, preventing this kind of fraud in first place will take much more than just a page on facebook. >> people who are always yelling about we want less government involvement and get less government regulation, i say, you know, in a situation like this, somebody should be overseeing what a payroll company is doing to make sure that small businesses aren't being victimized. as small business owners, this is a scary story to watch.

we should take it as a cautionary tale, allowing a third party or outsource company to take such an integral role in your company can absolutely be risky. how do we protect ourselves? chief technology officer at cyber security firm bitnine. harry, great to see you. that's a hard story to listen to. >> yeah, it certainly is, j.j. good to speak with you today. >> i want to just get right to the solutions. and in the piece we talked about making sure the company you work with is bonded. can you explain a little bit more about what that means. >> sure. so there's a confusion and there is a little bit of a difference. people think that bonded and insured are the same thing. if they do damage in the course of business, if something happens to them, that's where their insurance comes in and their insurer will pay them. bonded is for your protection if you're doing business with them. when a company's bonded, it's a three-party contract.

so the shuurety bond, those tha issue the bond have already vetted the company. that gives you validation that this company at least does business well, is in good standing and if their services, if something goes wrong this their services with you that's where the bonding comes in and you can seek damages or seek recompense for that. >> a lot of companies outsource things. small business owners are up to their ears with things they have to think about. if they can just move payroll to someone else, it's a great relief. how can you make sure the money's going where it needs to go? how could they have gotten in touch with the irs and said, are my taxes being paid? obviously their employees were being paid. >> right, this is one of the big challenges. there are so many aspects, credit card processing or payroll where you really do have to rely on third parties because of small businesses. you can't afford to do all of those different services yourself. so one of the first things you have to do is you have to ask the right questions. in the case of payroll, for

example, there is actual an electronic tax payment system or esps where you can check that your taxes are being paid. if you are outsourcing your federal payroll, you should ask that question, are they using the many. and then you yourself have access to it and you should be checking it regularly. >> this isn't just about outsourcing either, you could have an accountant somebody working in your company that's doing the same thing if you're not double-checking. >> absolutely. so it could be an employee, could just be a contractor that you hire part time to come in and do work. certainly with anything when you're a small business and you have to outsource or just contract out important critical information, you always have to be careful. you should be asking the right questions and you should be following up making sure that you can follow up on a quarterly, weekly and in some cases daily basis to make sure that the money or the data that's personal information is exactly where it's supposed to

be. >> a lot of the companies that we ber viewed said they ended up going with l.a. payroll because they wanted special attention and l.a. payroll was a small business, they get more taens than with a large payroll service that works with big customers. is that a bad decision where you're giving up so much information and so much money? >> hard to say, if you deal with a largenty, for example, you're more likely to have check ks and balances and controls in place, but i get it. as a small business, you want to work with somebody who is more personal. you want to have that face-to-face time. it just means that if you're going to do that, you need to be more cautious. you need to ask more questions. in the case, for example, of l.a. payroll, they changed ownership a couple years back. did they notify -- did everybody that was using their services were they notified. if not, if i were a small business and dealing with that company because i wanted the personal attention and their ownership changed, i would be surprised. because that's the kind of

personal touch i would be looking for. >> harry, thank you very much for coming on. you said it many times, you have to ask the right questions to find out the answers. thanks a lot for joining us. since we are on the topic of protecting your company, let's take a look at how you can make sure your private team communications stay private. our app of the week does just that. tigertext is an app that gives users full control of all the texts they send. you can send secure encrypted text messages and files that permanently disappear from phone company servers and devices. users can set a time limit for how long content stays in the system and restrictions keep recipients from forwarding or storing texts sent to them. if you're doing it right, every e-mail you send out is an opportunity to connect with your customers. in case you are not doing it right, here are five simple but essential elements you should have in all of your future e-mails courtesy of small business computcomputing.com.

one, a legitimate "from" label. this is the first thing people see when they scan their inboxes, so make sure it matches your company and it's easily identifiable. two, add a pre-header. some e-mail programs like e-mail give you the option to show the pre-header right after the subject line. so take advantage of this second opportunity to grab people's attention. three, relevant content. any e-mail you send out should provide value to your subscriber. make sure you vary the content so readers stay engaged. four, creative images. pictures will catch the eye and give your readers of what a new product looks like or how they can use it into yoo lives. and five, social media buttons. be sure to include links that allow social sharing. this will help expand the reach of your message and help to bring new customers to your door. when we come back, our experts will answer your small business questions about using

online advertising. marketing master john jans has three things you need to know about getting sales leads. he says look no further than your current clients. and an inspiring father's day story about a dad who started a car wash business to help his son and others affected by autism. 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.

that's great. let's do it if you're thrown into the deep end, if you're thrown in a swimming pool as long as you have your parents watching you, most chance is you'll end up swimming. the best way to start a business is just do it. struggling and trying you can become an entrepreneur. that applies to most people. if they fall flat on their face, they'll try again and the next time around, i suspect they'll be successful. people start companies for all kinds of reasons. they have a passion for the product. they simply need a job or they're struck by some idea and they can't help but follow through. for one father, the motivation to start his company came from his son. nbc's harry smith has this inspiring story from florida. >> word is spreading around parkland, florida, that they do

a really nice job at the rising tide car wash. thorough, attention to detail, and polite. >> nice to meet you, harry. >> when he dreamed up this place, most everyone told john derry he was nuts. >> this is definitely insanity. this is really just blind commitment from the standpoint of i don't carry i'm doing it. and i know it will work. >> john's crazy idea? build a business with the primary mission of employing people with autism. he's got 35 guys working here who fall somewhere on the autism spectrum. >> you don't see any guys on cell phones trying to get out of work because, because, because. >> the key to rising tide success is day to day the job doesn't change all that much and for many on the autism spectrum like vila, matt and john's son andrew, that's kind of perfect. what's the best part of it? >> doing tire shines on the customer's car. >> going through a car wash two years ago john thought, andrew

could do this. >> busy for a monday? >> an answer to the question that every parent of a child with special needs worries about, what happens when they grow up? what does this give your son? >> that gives him a life. that was john's vision from the beginning but now we all see it. >> do a good job on this one and you can go on break. >> including his brother tom who chose not to work on wall street to help with the family business. >> we wash cars right next to each other sometimes. >> with tips and not a penny in government subsidies the men here average about $11 an hour and while a few have quit, john hasn't fired anyone. and he wants to build more car washes to see if the business model is viable. >> we're setting people up for success, not for failure. i don't want to throw a life line and have to pull it back. >> dignity, independence, a paycheck, frankly, what every parent dreams of for their

child. harry smith, nbc news, parkland, florida. time to answer some of your business questions. larry bratton is a cereal entrepreneur who is best known as the founder of bratton hotels in california and chicago. he's also author of the book "flashpoints for achievers" inspiring messages that bring significant results. and the founder and ceo of grow biz media, that helps national marketers reach small business owners and helps entrepreneurs start and grow their companies. great to see both of you guys. let's dive right in. the first question is about ways to expand your marketing. >> we've never done any online advertising. it's all been word of mouth. we've been successful at it, but we want to take our business to the next level. so what would you recommend when we're just starting out doing yob line advertising? >> you do a ton of online

advertising. maybe you know this. >> the first thing she said word of mouth. is that actual word of mouth or is she using social media for word of mouth? that's the best way to start. it's free, cheap except for time. you have to invest some time in it. do you want to do paperclip, what are you trying to do, reach a lot of people in terms of impressions or hone in on a specific audience? you really have to create a marketing plan that really targets what your budget is, define your budget and how you're going to best do it. i think the niche sites if you broadcast large, you're going to pay for people who have no interest in what you're doing. >> if you narrow it down to where you can advertise, you can do seo, go on facebook, that's a design company, retail store, you can have some kind of content detail. >> people need to know who is our customer, we need to really

drill down. we've done our ideal client avatar so we know who is buying from us, then go where our customers are hanging out online. what magazines, what websites are they reading and advertise there. we need to go right to them. i've seen so many small businesses waste money that they can't afford to lose by just doing this shotgun approach that rieva is talking about. we need to notch this down. >> a question about competing against the big guys. >> how do you compete with a much larger company even though you're a small company and you know you can do it better? >> that's a great question, right? because oftentimes you can do it better but people don't know they can trust you yet. big company have been around, they have a reputation, friends should have used it. >> the key is to build value. sometimes small companies can do it better. we cheer for the underdog,

goliath, not david. if we are all subscribed to the same vision of providing value and excellence to our customers, then we can do that. but you've got to build that emotional connection with chints. >> once you do it, then you have the trust and word of mouth and people will spread the word. but in the beginning where you don't have that yet and you're trying to get someone to hire you instead of an established company. >> if you go in and -- because you can relate to that person, they're a small business, you're a small business, if you underscore that, we understand what you're going through and we're going to give you better, more personalized service, you're not just a cipher to us, you're a real business and we're going to help you. do what he said, create that emotional attachment, so it's more than sort of an unemotional business transaction and you're almost saying, hey, we're going to take care of you. >> somehow you need to mitigate the risk for them. maybe it's not the boss making this decision.

i know if i tell my boss i'm working with these guys nobody will ask me any questions. but if i tell them i'm working with some small unknown company, then if it fail, it's on me. >> any relationship needs to be a co-labor at effort. we need to co-create what the end goal is here, let's do this together, how many big companies do that, sit down with a potential client and say, hey, let's do this together. usually here's my product, my service and you must subscribe to this. but when you go in with the let's co-create the end result here? wa don't we want that power in life? >> if you have happy customers, make sure you connect them. because nothing will be as valuable as someone who says, yeah, i've used them, they helped me, i'd use them again. >> thank you guys so much for letting us pick your brains on the set. really appreciate it. if any of you out there have a question for our experts, we answer them here every week on the show. go to our website.

the address is openforum.com/business. or if it's easier send us an e-mail to yourbusiness@msnbc.com. our next guest says that taking a look at your current customers is a great way to figure out who to target to be new customers. joining us now is john jance, a marketing consultant best known for creating the duct tape marketing system. his new book is called "duct tape selling." hey, john. >> hey, how are you doing, j.j.? >> good. this is a great topic because this is how you gain revenue by getting new sales lead. talk to me about how you can use your current customers to get new xherdz. >> really one of the traps people fall into is they just want any leads, any business, any customers what you really

want are ideal customers. you want the customers that have the attributes that you're uniquely suited to serve. the way you do that is you do studying of your existing customers to really understand who they are. again, i'm saying your best customers. so i like to actually tell you -- i have my clients create a spreadsheet of all their customers and say, let's rank them by profitability. we all have 20 to 25% of their customers that for one reason or the other don't have the right fit, we don't do that work any more. >> it helps you figure out who you should be targeting. now you're looking at all your clients anywayhow, look at which ones can refer you business and then you ask hem? >> no, no, what i like to do is look at the ones who are already referring you business. now what we're going to do is get an even narrower subset of that profitable client. the reason i say that is because people refer -- for two reasons, you got what you promised, you did what you said you would do.

but they loved the experience, they loved your people, the way you delivered value. if you can really narrow in and focus on understanding all the characteristics of your most profitable clients who already refer business, that is who you want to go after and that's who you really want to build your business and all your communications around attracting. >> this sais all about mining yr current clients to find out who the next client should be. look for common behavior. >> what i mean by that is there's a lot of times you can spot an attribute like for example i know that in my marketing consulting world if i'm talking to a small business owner who is very involved in their association, they're very into continuing their education, maybe they serve on a board of their chamber or something, i know that those are people that are really going to value our approach. we've learned that behavior as a great marker for identifying them. because sometimes you can't really identify all the characteristics that you'd like to identify. so if you can find some of those

behaviors that are really good signals, that's another great way to start identifying who you should be going after. >> i love this, john, because this isn't stuff you have to go out and research. you have all this data, they're your clients, you have to take a minute to look through it. you have to be brave to say here's who we don't want to attract. that's the catch. >> les mckeown who comes on this show all the time says you have to fire the bottom half, maybe not half but bottom quarter of your clients each year. >> there's some truth to it. >> congratulations on the upcoming book you have. great to see you. >> thanks so much. >> thank you so much for joining us today. if you missed anything, just head on over to our website. it's openforum.com/your business. we posted all of today's segments plus some web extras about. you can follow us on twitter. and we're on facebook and instagram, too. next week we meet a veteran

who has maze it his mission to help men and women who are returning from service. >> i always like to ask people why not? why not hire someone who's giving us americans the opportunity to do what we do every day. why not? the skills that they have are skills that we learn while serving. >> we'll tell you why the owner of this contracting company says hiring our country's finest means you're getting employees that are dedicated to the mission and the team. till then 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. happy friday. here is how congressman paul ryan spent his friday. >> being forthcoming -- >> you know what, i'm sorry, investigators -- >> will you let him answer the question! >> i didn't ask him a question! >> yes, you did. >> gentleman -- the. >> i control the time. >> i realize that disrupting a hearing sort of -- >> no, come on. >> to this sort of people -- >> but the gentleman from wisconsin -- >> i control the time. >> here's what being forthcoming is -- >> regular order. >> gosh! what has got paul ryan so exercised? well, for m