how do you starbuck a business? see how these harvard grads are doing this through location and customer experience. and cut down on inventory that isn't selling. advice on whether to stop or not. that plus tips on keeping your business safe from cyber criminals. that's coming up next on "your business." >> announcer: 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 jj ramberg and welcome to "your business," the show dedicated to giving you tips and advice to help your small business grow. can a nail salon chain become the next starbucks? well the founders behind a boston-based company say it will. they have modeled their business after the coffee giant and hope their brant becomes equally ambiguous. it started with a challenge. >> tall cappuccino. >> what's out there that is still starbuckable? because that's pretty damn cool.

you took an industry a cup of joe on every corner and you change what it meant. >> when tony chan issued this test to his small investment firm, his partners didn't have to look far for the answer. >> one day i was walking down the street of my hometown actually, and i noticed a nail salon and nail spa and the light went off, nail salons. >> the $8 billion salon industry is just what they were looking for. >> we are now doing to the industry what starbucks did. we are taking a huge fragmented market and convincing customers to trade up for a better experience. part of that trading up involves paying more. >> these mostly harvard educated men look like a bunch that would start a nail salon, they would agree. >> i remember my mother asking me, you're dropping out of

harvard to go to a nail salon? >> in 2007 this group of management experts all of whom have extensive resumés growing and starting companies set out to build a better nail salon. they called it miniluxe testing and fine-tuning the idea in a worst case scenario location. their hometown boston where the pedicure season is short. we asked sthem to share some of their strategies for starbucking a business. their first tip? let readily accessible data form decisions, like where to open the first store. >> i remember the first location out there with a clicker counting the number of people walking by in the store. that's data data we collect for every single potential site. >> following the starbucks manifesto, they wanted to be located where there was a ton of traffic. another tip for finding a prime location? find another store that has the same kind of customers you want. in the case of miniluxe, they

search for, you guessed it, starbucks. and another company they admire and share a customer base with whole foods. >> it's amazing how much information you can find by just googling address of whole foods in the state of whole foods, addresses of starbucks in the state of massachusetts. and we know those companies have spent a lot of money on figuring out where they should be. so how can we pay you back on some of the work that others have done and build next to a whole foods and starbucks? >> another priority for the start up improving conditions for the customers and the employees by tackling lax hygiene standards. a persistent and widespread problem in the nail care industry. >> when you walk into a miniluxe, you see the miniluxe clean lab. we sterilize all the tools. if we can't sterilize a tool we'll give it to the customer or throw it away at the surface. >> and they took another page from the starbucks rule book. they wanted to elevate the overall client experience.

and at miniluxe that means a whole bunch of things. like utilizing technology for online booking 24/7 and greeting customers when they walk into the store. >> when they walk in we say when they come in that we have an open slot. and that's from the technician side to remember what nail polish was that this customer used the last time or exactly what it was how they liked their nails done. these are all strategies any good business owner would employ. they may do it on a notebook we just think that we make it so we can roll it across the whole chain. and i think we'll create an experience for consumers. >> e quaquallying to training the customers right is treating the employees right. this is an important part of the miniluxe strategy. >> when i first joined i was a part-timer. when the full-time position became available, i became

full-time and i expressed myself to them that i'm interested in moving up. i want to make a career out of this. and they listened. now i'm a senior. >> we are trying to offer a level of compensation that is highly competitive in the industry, but perhaps more important is one whether there could be a career progression. as you're learning skills as you're developing within miniluxe and building a client base, you can earn more. the full-time employees are taken benefits 401(k) and we encourage profit sharing. one of the things you want to do is help people understand they are a critical part of the overaul overall business. >> but providing benefits is costly. one of the ways they increase profitability is staffing efficiently. they predict their demand by one day to the next. >> formal weather will result in

5% increase in traffic for every ten-degree weather change. and it's going to change your like with a pedicure versus a manicure another 5%. having an expectation, the weather for a given week we can translate that into our demand forecasting. and subsequently, our staffing forecasts so that we can schedule technicians. >> miniluxe now has eight stores in massachusetts and one in texas. many, many less than starbucks has, but they say they are on their way. >> i think this is a business that's long overdue. i think others have tried it. >> if you have a company which sells products a lot of your capital is likely tied up in inventory. and if things aren't selling, that's a problem. we went to visit an art supply store in california that carries thousands of skus to figure out what and what not to stock.

♪ >> things change and things get old and new things come out. and you have to be willing to give things a chance. >> what stays and what goes? >> you have to be willing to look at things with an honest eye and say, even though i love this, it's not working. >> those are two of the toughest questions that patty and richard face in their business every day. >> we want to broaden the spectrum in our store. that's why we have so many owners here. >> the owners of custom framing in san clemente california have 4,000 products for sale in their store and on their website. >> everybody needs something different. so you have to have a mix of brushes and papers those are your basic things and canvas. >> and the challenge is to figure out what to stock and what not to stock on their shelves. it's the issue of dollars and

space. >> we're not a huge store. so if we bring something big in something else generally has to move and get squished or go. >> deciding to send a product on its way isn't easy. but the need to keep inventory in check has helped guide her to decisions. but determining what goes something has to be ready to take its place. no space is ever allowed to go to waste. >> the dividing line for me has been, do i want to bring in something new? and if i can move something out that's not doing well, then we'll have space and we'll have dollars to do that. >> once a new product the in the pipeline, it becomes a matter of sales and real estate. >> bringing things in is usually a lot easier. once something is not selling anymore, it's like a breakup. after a while you're just like no it's got to go it can't stay here anymore. >> richard's first thing to do is to look at the sales in the

system. >> if i run the top sales, it will show me what's selling and what is not selling. that will determine what stays. >> patty and lisa do things a bit differently. they have a test of their own. >> if there's a thick coat of dust it's really not moving. >> when it is down at the bottom of the shift or all the way to the left or right, it's on its way out. >> people are saying good-bye to not-so-best sellers. >> placement is really important. if i'm looking at something, the first thing i would do is put it stage center and see what happens. >> if sales don't budge, that's when it's time to send a product on its way. >> we can't necessarily sell it really quickly, but we can definitely clear it off the shelf and put it some place visible in order to help its exit. we mark things down in a gradual way. we'll mark it down a little bit and then a little bit more and then a little bit more. and we try not to go below our cost. if we can recoup our cost we're happy. >> lisa says deciding to get rid of something like a line of paint or brushes isn't as easy

as you might think, but despite any personal connection to the product, sometimes they just need to go. >> for a retail store, it's about real estate. and every part of it has to be producing for you. you can't just have something sitting there because you love it but no one else is buying it. >> well, making sure the art supply store is offering supplies that are fresh, it's happened only to give them a new lease on life. >> we let it dwindle down next to thing and we realized we shouldn't have done that and repopulated the display. >> if other entrepreneurs find themselves in patty's position you should be asking yourself a few questions. >> is it popular? are people wanting this item? or is it just you loving this item? >> patty says to be honest with your answers and your bottom line. if you think you need to make a change, don't wait. just do it. there are a lot of great

websites out there that can help your company be more efficient. and the best way to find the most useful ones are to go to the people in the trenches. so we asked our viewers for their suggestions on the tools they can't live without. >> the app that i love is fonto. i love phonto because it allows me to take images and photos and add words and copies to the image. this is perfect for instagram, which is a channel on social media that my business really relies on. >> an app that i learned about and used recently is haikudeck. it allowed me to put my messaging and branding in a consolidated format with slides that are creative and messages short and sweet because we don't have much of an attention span these days. we have to be short and sweet and to the point. >> so quora is a website where

you can ask questions and get the questions answered and they get voted up so you can see the most relevant and interesting responses for a question that is posed to the community. >> one of my favorite apps is called shipstation. we use shipstation to ship multiple packages on a daily basis. it streamlines the shipping progress. for the ecommerce company, it really saves a lot of time. >> i use onlinevideo.net because we are able to put a lot of press releases on there and also view other people in the same industry or outside the same industry to see what they are using to help each other in moving ahead in the future of the online web video content world. ransomeware and mobileware can be a big threat to your security. most data breaches are fairly unsophisticated and there are several simple things small business owners can do to make

sure that your web security is up to snuff. vinny troyez is the ceo of his st. louis-based security company called nightline security great to see you. >> thank you. >> if somebody brings their tablet or phone, how does that translate into what is happening in your office? >> so you have a lot of mixture of devices, apple devices and android devices. the apps on the android app store don't have the same rigorous testing process apple puts them through, so it is much easier to get an app on the android store. upload it and it's on. people are creating duplicate apps and devices with malware in them. then they continue to spread the apps that way. >> you talk about having filters. this is number one that you need to do when you have wireless in your company. >> right absolutely. you really want to know what your employees are looking at and block certain things. there are certain websites they don't need to be going through

anyway. there are filters to up stall to take that back from them. >> will that help with the wireless, too? so for the guest coming in and connecting -- >> that's a separate thing. for the guests you want to have a guest network. >> got it. >> so employees, obviously, employees and guests need to be separated. so anything with critical files, confidential files, personal employee stuff, that should be separate from anything that accepts tablets or outside devices. >> so these filters that you can install, they have a list, those companies have a list of places that your employees shouldn't go. you don't have to tell them a list or be up-to-date on it. >> exactly, they'll do it for you. >> okay. outdated software. i think people know this but they are not doing anything about it. >> this is the biggest problem. when malware spreads, it spreads by infecting software that's not been updated and is outdated. this is the number one thing to do, keep your software up-to-date. it is an expensive process to go around and hire someone to update all the machines but it just has to be done.

>> yeah and how often does it have to be done? when is something outdated as soon as the new one is out? >> well, microsoft, for example, puts out new security fixes every tuesday. you have to do it. apple, any time you see an update notice update your software. more often than not it's a security update. >> got it. before we talked about before having a guest network and be cautious about what you open via e-mail. again, this is something that we know, it's obvious, our employees should know about it. yet people are victim to this all the time. >> yeah it's how malware infiltrates the companies. they send out phishing attacks to random employees and they open the attachment. such as adobe not being updated, the malware can affect the computer. it's a chain reaction. >> in the scheme of protecting yourself, how much is a technology solution and how much of it is it just to make your

employees aware of things they could be doing wrong? >> security aware sns the number one thing looks in all companies. we train your employees. at the very least, you should have security awareness training annually. a lot of companies don't do that but should. teach your employees what threats are out there. show them what to open what not to open how to do things in a safe manner. it's just not happening. >> where do i get that? i'm a small business and listening to you and say, okay i want to do this annually. is there a powerpoint or perception to download to show my employees? >> there are a lot of online tutorials you can send your employees to. a lot of companies also hire spikers to come out. that's much more engaging and people will pick up and have much better experience as well. >> thank you so much. this is such an important topic. it's not a problem until it's a problem and then it's a huge one. >> exactly. >> we appreciate you reminding us to pay attention to this. >> thank you. not all information is created equal. so if you're going to take the time to read an e-mail

newsletter newsletter, it should be useful and helpful. here are five must-worthy subscriptions to make you a smarter entrepreneur one, smashing magazine newsletter caters to magazines but small business owners can also benefit from the technique. two, hbs working knowledge newsletter. with content from harvard business rules and staff members, these e-mails will help you and your company stay at the cusp of innovation and change. three, emarketer daily provides you with the complete view of digital marketing available. the information is relevant across all industries. four, expost facto by vc tomasz it is tunguz writes about his daily start up. and five wp beginner will offer

tips to allow you to bring your business to the next level. coming up a lot more good advice to help your small business including a question about how to mix-up your inventory to get customers to make a purchase and what to look for when searching for your first location. american express for travel and entertainment worldwide. just show them this - the american express card. don't leave home without it! and someday, i may even use it on the moon. it's a marvelous thing! oh! haha! so you can replace plane tickets, traveler's cheques, a lost card. really? that worked? american express' timeless safety and security are now available on apple pay. the next evolution of membership is here.

this week's yourbizselfie comes to us from pickle baron in key west florida. want to see yourself on the screen? question love to get photos from around the country. take a selfie of you and your business and send it to to @yourbusinessselfie. it's become a problem for a lot of businesses in bigger cities. rising rents are forcing them out of their stores and offices. as cnbc's kate rogers reports, some owners are fighting back. >> many consider avignone an institution in new york's west village after opening in the 1830s. it's current owner abe learner has been there three decades,

but by next month he'll close his doors for good. he says his building was sold to a hedge fund who then tripled his rent from $20,000 per month. >> we have a thriving business here. business went up every year. with all the chain stores with all the chain pharmacies around we still were able to increase business because we just provided a service here. >> but steady business isn't enough in the face of soaring rents from coast to coast. office space and storefront rentals in new york city have increased by more than 20% in the past five years. and in san francisco, the problem is even worse. with storefront rentals up over 30% since 2010. a new social media campaign called save nyc is hoping to change that. it was launched by jeremiah moss chronicling the demise of mom and pops facing higher rents. the save nyc campaign is modeling off another initiative called save soho out of london

that's aimed to protect local art venues within the city. and in san francisco, city officials recently stepped up efforts to shield mom and pops from commercial rent hikes there. but there are outliars like joe rocco, third generation owner of jim's shoe repair on the upper east side. he wound up settling out of court with landlord xl greene when dwayne reid wanted to expand in his store. a customer took his case pro bono. >> i feel good about staying here and hopefully we can start a trend where landlords stop to say, hey, we need to keep old new york something that is alive, keep the character in new york. instead of becoming a cement city. >> rocco realizes he's a rarity. an old school shoe shine shop in a city where chain retail stores have increased by nearly 2.5% in the past year according to the center for an urban future. it is time now to answer

some of your business questions. so let's get our board of directors here to help us out. investor jesse cole is the ceo of the clothing line hot hippy. and monica menta is also a ceo at her business. the first question is about leasing a new space. >> so our business is two-and-a-half years old and is run out of a garage currently. we are expanding and looking into our first commercial industrial space. and i was wondering if you had any tips on things to look for in that first location and signing that first lease. >> good sign when you move out of your apartment or garage for space. you know a little bit about real estate. any ideas? >> so start about six months out and make a list of the properties that interest you and start visiting them from worst to best. and in the process of visiting the spaces you'll be asking questions, talking to the leasing agent and educate yourself. and really try very hard not to tell graph everything you're thinking to the leasing agent.

whatever you can hold back will help you later in the negotiation process. and if possible ask them to prepare a lease and offer it to you first. >> if you have been through this process of having a leased space, any tips? >> what's most important for us is really spreading a wider human capital draw. employees are obviously the most important thing for the success of your business. so for me it was really what was going to be what was the real estate going to be able to provide my staff? transportation accessibility to food, security anything that was really going to make my either potential employee or my current employees feel very safe. >> you know it's interesting because in my company we moved offices recently and suddenly it was a bit harder for people to commute there. and that's not something, and i admit, we totally thought through for some of these people or we did at the end and compensated them for it. but it's something, some people don't remember to think about their employees.

let's move to the next question from a business owner who has a lot of customers browsing but not buying. >> how do i find new merchandise that fits my store? >> okay. well, i have to start with you, you have a store, so what happens when you see people come in and they are looking at stuff and walk out the door? >> well, sometimes they don't necessarily think it's the product. i think it is really about the human experience when they interact and interface with the customer. so for me most importantly, it's about educating my staff on how to interact with a customer potential customer. really sort of engaging to a certain extent to make that customer feel comfortable and making that purchase. >> one way you might find out is just by serving your customers, or potential customers who didn't buy anything as they leave the store. >> absolutely. talk to your customers, but if you're getting traffic through the door you're doing one thing right. now it's a matter of converting them, so it could be a matter of price or a matter of product mix as the customer is pointing out.

i think she has a stamp business and it's in a novelty type of space. so she may be getting traffic that's just interested in the concept but isn't really interested in making the purchase. so maybe diversifying her product would help. >> so if she gave some examples of neat things you can do with the stamps and suddenly opened up their imagination. >> takeaways are very important. and what i mean by takeaway is the price points for a clothing company potentially could be too high for a customer that has a great experience. something offered at a register something that really sort of identifies that customer with their shop. something they can afford to take away as a remirnd of their experience in the shop will bring them back for a second visit. >> and set up a website so you can get that traffic an convert them later. >> right, of course. we'll move on to the last one, it's a question about striking a balance in a business of one. >> what kind of tips and interesting do you have for

balancing all of it when you're the person trying to do your own accounting and your own web development and all of these things you need to do as a business when trying to go but you're not yet in a place where you can hire all that out? >> by the way, you also have a life you're trying to balance perhaps in there, too. any ideas? >> it's the parade of principle,0% of the bank comes from 20% of the buck. so figure out what you're spending your time on and where the vast majority of the income or sales are going to come from in your business. i think in the very beginning of a business process, you don't have a business until you have sales. so you should definitely be prioritizing the product and getting out there and selling. then everything after that is just a matter of being effective and how you spend your time. otherwise you won't scale, it's a very common problem for small business. >> for me i really would suggest keeping your expenses in line. there's a lot of tools on the technology front that will enable and help and assist future business owners or entrepreneurs to be able to do it themselves. one rule of thumb or one advice

i would have is not do the accounting yourself. know the accounting practices, you should know your business but it's always best to have somebody else keeping an eye on your financials for you as a layer. >> we hear that a lot. if there's one thing you're going to outsource, that's the smart thing to do unless you have to be very good at it yourself, which most people frankly are not. that's a good idea. you know there are also places you can hire one task or desk where you can get people to help you at not a huge expense if you have a discreet project. >> the complication is just training these people. it takes so much time. >> that's very true. thank you so much, guys. this is really great advice. we appreciate it. thank you, everyone, for joining us todd. if you want to learn more about the show, head on over to our website, it's openforum.com/yourbusiness. you'll find all of today's segments plus a lot more content with more information to help your business. you can also follow us on

twitter, it's @msnbcyourbirks, z. and we are on instagram and facebook as well. next week a business that cuts its payroll to zero. >> we don't have payroll, no. >> we don't have employees. >> nor do they have the legal authority to treat me as an employee. >> they have also done away with having an office, a warehouse, a factory and file cabinets. find out their secret right here next week. until then i'm jj ramberg. and remember, we make your business our business. american express for travel and entertainment worldwide. just show them this - the american express card. don't leave home without it! and someday, i may even use it on the moon. it's a marvelous thing! oh! haha! so you can replace plane tickets, traveler's cheques, a lost card. really? that worked?

american express' timeless safety and security are now available on apple pay. the next evolution of membership is here. good evening. thanks to you at home for joining us. i'm in for rachel tonight. and we have got a lot coming up this hour, including selling the iran nuclear deal by president obama. in just about every congress for the past two decades someone has produced the nonemployment discrimination act. it would prohibit employers from discriminating against employsees or potential employees on the basis of their sexual orientation. the first time this got a vote was back in