nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. good morning. coming up on msnbc's your business. now, buying into the business. a cautionary tale of what can happen when you offer too much equity in your company to too many part in other words. how to turn your social media followers into customers. that's coming up next on "your business."

hi, everyone. i am jj ramberg. welcome to "your business," the show dedicated to helping your small business grow. a few years ago we went to maryland to profile a company that did something unusual, they completely opened up all of their books to their employees and shared almost every piece of financial information, and when times got tough they found out this policy created loyal employees and amazing results. now the founders are taking another step to get their employees involved, they are turning everybody into an owner.

the year was 2009. the recession was shutting down the economy. and everyone at this maryland-based designed build company took substantial pay cuts. >> we took 20% from the employees and 30% from management and anthony and i participated at 50%. >> they were desperate. >> back then, we didn't know how long the recession was going to be but it was a strategy to buy us time. >> my thought was holy crap. i had been here eight months. all of a sudden we are getting pay cuts, who was a shock to everybody. >> and the founder remembers watching business drop off to a trickle. >> anthony and liz held the team

together thanks to a manager style that encouraged the employees to act like owners. >> we knew if we get through it, we will be stronger on the backside and it happened. >> there were no closed door meetings and no fear for gossip, and instead they held regular sessions reviewing all the financials, every month with every employee, and everybody knew the score. >> it made things transparent and there was not suspicion we are trying to hoard the cash but rather we were trying to preserve jobs and have a sustainable company. >> and it worked in ways liz said she never anticipated. >> i still get teary because people came to me and knew others that couldn't take the cut and would say take more from me. >> when it came back, we floated right into our old kind of

groove, and everybody else was scrambling trying to find people and the ones they let go didn't want to come back. >> today the company not only has a backlog of jobs, but the staff has been repaid all of the lost wages with interests. >> we paid everything back, and i think we were finished paying the back pay by 2010. >> nobody expected to see that money. >> i first got to seat workings of the unorthodoxed open book still in 2009. >> what do your employees know? what information do you share with employees? >> everything. we do hold salaries private, but aside from salaries, everything is shared with the employees. >> to many, it's a radical idea to let the employees, everyone from the truck drivers to the top designers know the details of profit and loss, and most owners consider those details to be highly confidential, and the

owners have taken another unorthodoxed turn? >> as anthony and i get older, we wanted to create an ownership culture and not just have people feel like owners but be owners. >> after more than 40 years running the show, anthony and liz are about to take the first step towards selling the company, to the employees. >> i don't think our, you know, anticipation is immediate retirement and i think this is a ten-year thing, and anthony and i will retain more than a majority for the first piece. >> i offered us ownership, so i want to buy in. >> one architect is one of the employees planning to purchase the stock and has been here more than 14 years. >> you have a minimum amount of stocks to purchase, and that gets you ownership, a small percentage, but it gives you a vote in what happens, and that's -- i think that has a lot

value to it. >> i want to do something great, and i think this is a great company. >> he said after putting down 20%, paying the rest is easy. >> you can spread it out over seven years and it can come out of your weekly check and it makes it affordable for everybody. >> it would allow other people to participate as owners, if that's something they want, i think that's part of who we are and part of our culture. >> right now the first step is to sell 20% of the company to the staff and the final goal is to sell 100% to the employees, and liz says they are working out the final structure. >> we said all of us would be in kuco concensus on all decisions, and anthony and i retain the option to veto things.

>> and meanwhile, everybody is sharpening the bottom line. >> we knew we did a lot of runs to the lumberyard that were not necessary. >> and bob and mark regularly listen to the monthly financial reports and wondered about the cost of the last-minute supply runs. >> home depot runs, and so we are tracking the receipts that we get monthly to see how many runs we're making, and it's an eye-opener. >> simply by reducing the amount of runs from 150 a week down to less than 100 it ends up being a cost savings of $200,000 to $250,000 every year for the whole company. >> we hold each other accountable. >> now as anthony and liz are planning to take the ownership mentality to the next level, they seem confident the ownership culture they have created have already taken root. >> a lot of us already feel like

we are owners so we are already in that role. >> we taught people how to be business people and how to be successful and why not give them the opportunity? as the founders, providing equity can get pretty complicated. they spepbnt a lot of times wit their lawyers on how to do it. and the owners of a soap company, they give us an honest assessment of what they did right and what they could have done better. ♪ ♪ >> equity is so much more than a salary. it's the most sacred thing in a company. >> intrapreneur save identify simnic understands ownership. >> when there is no physical currency given there is no way to value somebody's time and effort and that's the only

currency you have. >> how to value a company and district equity is tough with lots of layers, and one company mastered making the soap and body wash and had a social mission they were devoted to, and as have learned as they have grown. >> this is serious. it's real. these are real dollars. >> at the beginning, david and his co-founder decided to split the company 50/50, and they wanted a level playing field for the business, and soon enough the pair needed help and that's where dan sabres tenters the st in lieu of a salary he took a stake in the company. >> we felt the pressure to be protective of our equity. >> and they felt motivating with

ownership, they gave him 20%. looking back, david said the company was new and worth about nothing. >> he saw problems and went and fixed them and saw opportunities and went for them and we saw a partner. >> and the team saw potential in a volunteer. >> there was logging and making social media pages. >> again, there was no money to pay stephanie, but there was ownership. >> stephanie just came in and started kicking butt at everything, and after a while we said, well, we did this for dan so we should do this for stephy. >> not knowing the intricacies of distributing ownership, once again, they did not feel it was worth anything. they each gave up 1% to

stephanie, which hurt dan, who owned less. >> there was an outside force of what everybody else was telling us, protect your equity, protect your equity, but when we were going through the dan and stephanie decision, i felt okay giving up my equity because i knew i was giving skills and expertise. >> as the possibility of taking on investors neared stephanie approached the team about a larger share. >> a outside investor could have a greater voice. >> after weeks of negotiation, they gave stephanie 3% more again without valuing the company but this time the owners were diluted proportionately. soon after another equity negotiation was on the horizon and the stakes were higher, too. >> when dan was renegotiating and it was going to be the last

arbitrary rebalancing, and all of a sudden once we gain investment our portions of the company are actually worth something. >> dan knew that too and believed he was worth more. >> i was acting as if i was a co-founder but was not being compensated as if i was. >> his share went up to 23%, and he became yesterday and coo. >> i would rather be in a company of people that want more of the pie and are willing to work for that. >> when stephanie decided to leave the company the owners bought her shares back. at what value? since they didn't formally value the company, they arbitrarily valued each share, something david says not to do, and the most dramatic change was next, eric announced his exit. >> i knew with the amount of equity i had i needed to be all

in and i couldn't commit to that. >> he gave his shares back to the company. >> who gives away the largest equity, and the largest piece back for free, essentially for free. >> while david could have become the majority owner, he didn't, he shared it with dan instead, and in essence, they bought the shares, soapbox returned to a 50-50 split, and david said he learned a lot about the complications of dividing equity, and he is about how equity can trigger tax events and all of it is about the nitty gritty of how to do things, but when it comes to the spirit of what they did, david believes soapbox did it just right. >> we started at 50/50, but if i were to do it all over again, i

would do it the same way again. it's not easy, but it's going to lead to much success than either of us thought. potential customers are checking out your site every single day. and here are five tools that can amplify traffic and boost sales. >> consumers read reviews before making a purchase so use this service to gather more customer comments about your business. and two, it grabs data about your visitors and you can compile a more affective list to follow promising leads, and then improvely, make sure you are not a victim of click fraud and it looks at which ads are working and which are not. and then hotjar, you will gain a

better understanding of user behavior and know what changes you should make to your site. and five, unbounce. your landing page is the first opportunity you get to attract the attention of online visitors, so design one that can keep potential customers on your site for longer. having a strong social media presence is great but if it doesn't ultimately lead to revenue directly or indirectly, what is the point? our next guest will give us points on how to translate that into sales. and karen, you are here to talk about us about what social media can do for you in terms of revenue later on. >> i am. thank you for having me. >> it's so good to have you here, because you can do a contest or put a picture up of a cute dog, or a cat, and suddenly you have people following you on social media, but if they are not your target and they are not

going to buy what you have to sale, it doesn't mean anything. >> yeah, they have to figure out what is the right social media for them and i get people calling me, instragram is the ht new thing, but you need to pick your social media sites that are right for you and working them deeply rather than being broad, and that's the first thing you have to do in order to be effective at converting people from coming on your social media to eventually being customers. >> what you are talking about a lot is having a call to action and having them turn from a follower, fan, what have you, into something that will utilized your service and you talk about a call to action which is different than so many other people who come on here and talk about it being about a conversation. >> it is about a conversation but not just about a conversation, so for example, if on your twitter, do you 80% content and 20% of the time you

do an offer, let's say 40% off for that day with a link that goes to a specific landing page on your website, those people will follow you and you have a greater chance they will click to your website and by having a specific landing page for that offer that day, you are now encouraging people to start to purchase from you. >> the conversation brings them in and makes you friends, right, and as you would with any friend, you have a referral to something and more likely to follow-through on it. >> exactly. >> and you talk about putting a subscription to your e-mail or news letter, and is that a way you can sell more than on social media? >> if you think of it as the person goes to your social media, it's like they are come into a funnel or i like to think of it as a tunnel, your funnel or tunnel, and they will take a certain amount of touch points before they become a customer and if you sell something that costs $19.99, maybe it takes one

or two touch points but if it's $100,000, it will take more than a couple touch points so if you have somebody on e-mail you can continue to touch base with them and you offer gated content, so you have a high market e-mail or quiz, and if somebody gives you their e-mail in their name, you will send them that content and it's a way to build up your e-mail contest and you can't abuse it, you have to do it in a selected basis, and that's the way to start the relationship that started on social media but now you are nurturing the funnel. >> how do you put out testimonials that is not too salesey? >> when you have something you have done, you can put that on social media with a link back to the release, but if somebody focused you on or mentioned you

in their blog or social media, you can put a link to that and part of it is being very matter of fact. we were covered on msnbc today, here's the link, as opposed to i am so fantastic, this person talked about me. >> karen, thank you so much for stopping by. >> my pleasure. >> thank you. earlier this week i was asked to testify before the house small business committee, and one of the topics we tackled was how to inspire young intrapreneurs, and one way we try to do it on the show is by featuring their efforts, which brings us to the elevator pitch. let's see how the first one does with our panel. and our long-time friend, norm broadski. >> i am the founder of sycamore lights and a soft more of drexel

university. everybody wants a beautiful elegant home, and we make that at sycamorelights.com, we sell six colors of luminaries directly to the consumer. now we're ready to enter retail stores. there's limited competition in the luminary market, and we are the only luminary company to utilize l.e.d. tea lights which allow for over 100 hours of soft flickering light. now we're ready to aggressively tackle the $51 billion wedding and special events planning industry. by expanding our product line to include smaller luminaries, we will have a luminary that is perfect for outdoor and indoor use and has higher profit margins. the mold to create these costs $10,000, but assuming a spring 2017 release, we will have a full return on investment within a year. thank you. >> thank you. nice job. you speak with such confidence, which is really fantastic. okay.

now let's see, you have a very good panel here who have spent their lives listening to pitches just like yours. so from both of you, two numbers from 1 to 10, the product and then the pitch. how do you feel? >> i feel great. i'm, like, i can't believe i get to pitch in front of these people. >> let'sear what they think. norm, let's start with you. >> okay. so for the product, i think you didn't ask for enough money. it's going to be an easy knockoff. you're first to market, so you'll need a lot more money. for the pitch, future is secure because entrepreneurs like you, you did a fantastic job. >> thank you. >> fantastic. all right, tom? >> you did an awesome job. you really did. i'll give you an 8 for the product. i'll tell you why. it's simple. i like simple products that you can produce easily, do it cheaply, drive down the cost. i'll give you a 9 for the pitch. like norm said, your enthusiasm is overwhelming. most importantly, what you talk about is the experience and you

can carry ma message. and the message is experience. so i'll give you an 8 and a 9. >> thank you. >> thank you for comin show and good luck with everything. we really appreciate you taking time and inspiring other young entrepreneurs. 12k3w >> thank you so much. >> thank you for your advice. we'll see more of you in the show. if any of you want feedback from our "elevator pitch" on your chances of getting interested investors, send us an e-mail at yo yourbusiness@msnbc.com and include how much money you're trying to raise, what you intend to do with it and of course a short summary of your idea. you never know. somebody out there may be watching the show who is interested in you. more helpful small business advice is coming up including thoughts on how to find a mentor and how to close that sale. plus, what should you do when you start a business and then you decide you hate it?

our cosmetics line was a hit. the orders were rushing in. i could feel our deadlines racing towards us. we didn't need a loan. we needed short-term funding fast. building 18 homes in 4 ½ months? that was a leap. but i knew i could rely on american express to help me buy those building materials. amex helped me buy the inventory i needed. our amex helped us fill the orders. just like that. another step on the journey. will you be ready when growth presents itself? realize your buying power at open.com lisa writes, i have recently opened a small business. the doors have only been opened three months. here's the problem. i hate it! would it be okay to try and sell this early? >> absolutely.

there's absolutely no way that you should continue with a business that you hate. now, the question is whether you're going to get the opportunity to sell it or whether you're just going to have to let the sunk costs go. if you can sell the assets off, if you've got some customers that you can get a little money by giving the leads on to a competitor, then do it. but whatever you do, get out of it. life is way too short to work in a business that you hate. we now have the top two tips you need to know to help your small business grow. norm and tom are back with us so we can pick your brains. all right, norm. let's hear. >> let's hear what? >> let's hear a tip. you didn't know what i was picking your brain about today? >> not at all. >> all right, give me a tip. >> so when you sell and most of us in most small businesspeople are salespeople to start with is you have to listen. don't talk. and it's really interesting, i learned this lesson many years ago. i had this business where we stored records. and i was very proud that we had this unbelievable computer

system. one of the best in the industry. and i was taking a records manager through the facility with three of her people. and i was pontificating about our computer system. and she said to me, you know, i want to keep all my boxes in order. i don't care about a computer system. and i said, okay. one word. and she said, okay, okay, i've been to four of your competitors and they told me i was crazy. i closed that sale on one word. and the lesson i learned from that is if you listen, the customer will always tell you what you want to know. >> it's so true. always when i go in to talk about something, negotiate or try to make a deal, i try to get them talking first. what issue are you trying to solve and then you can change your pitch on the fly so that you are solving that issue for them. >> absolutely. >> great advice. all right, tom. >> one of the most important things you can do is have a mentor who's not an investor, board member, relative or teacher, someone who simply wants to be there to help you

understand the lesssons that you're about to learn. and you can pick that person. this is something that we're not told. you can target your mentor. say that person, i respect so much, i want him or her to be my mentor. and when i look back on my career, every door that was opened for me that was significant every threshold i crossed, it was a door opened for me by a mentor. someone who didn't need to do it, had no financial benefit, but opened it nonetheless because they saw in me something which gave them a sense of confidence and inspiration. and it inspired me. >> so you pick them, but how do you get them to then say yes in. >> you know what? you reach out sincerely and you tell the person i respect you because of x, y, z. my first rehn mentor, i wrote him because he wrote a book, a best-seller. i had just written my first book. and i wrote him and i said, jim, i'm grateful for your book. i think what you're doing is wonderful. could i chat with you? and he wrote me back a letter. and he said sure. and that was the beginning of 30-year relationship. i still see him once or twice a year. >> it's so true, you'll never know if you don't ask.

>> absolutely. >> i know you mentor quite a few people. how does that relationship start? >> it's really interesting. now people read the article, and they e-mail me or text me that they want help. so i do a lot. i do 20 or 30 entrepreneurs a month from it. >> and that mentor is a gateway to other mentors as well. one of my great mentors was peter drucker. he was introduced to me through my first mentor, jim. >> great advice from both of you. thank you so much. this week's #yourbizselfie comes from aerial arts fitness. as you can see, they teach aerial yoga as well as dance and pole fitness. now, all of you out there, keep your feet on the ground, pick up your cell phone and take a selfie of you and your business. no professional pictures, please. and then send it to yourbusiness@msnbc.com or tweet

it. thanks so much for joining us today. here's something i learned this week. i went down to washington, d.c., on wednesday to testify in front of the house small business committee. and it got me thinking, i believe many of us often forget that behind government there are real people, we like our congress to represent us, but they won't know if issues exist if nobody tells them. so if there's something you're dealing with in your business, a great example would be a law that is having unintended consequences on small business, call your representative or get in touch with the office of someone on the house small business committee and let them know. now we'd love to hear from you. if you have any questions or comments about today's show, e-mail us at yourbusiness@msnbc.com. you can also go to openforum.com/yourbusiness. we posted all of the segments from today's show plus lots more there. and don't forget to connect with us on all our digital and social media platforms as well.

next week, we'll see how one company is reimagining mental health care. >> i'm just taking my phone, and i'm texting when i feel the need. right now i'm anxious. right now i'm overwhelmed. i'm texting you. it feels so normal because this is how i'm communicating with everyone in my life. >> how technology is changing therapy one text at a time. till then, i'm j.j. ramberg, and remember, we make your business our business. our cosmetics line was a hit. the orders were rushing in. i could feel our deadlines racing towards us. we didn't need a loan. we needed short-term funding fast. building 18 homes in 4 ½ months? that was a leap. but i knew i could rely on american express to help me buy those building materials. amex helped me buy the inventory i needed.

our amex helped us fill the orders. just like that. another step on the journey. will you be ready when growth presents itself? realize your buying power at open.com donald trump looking to answer the big question. >> can we unify? how do we unify? can we unify? don't fake unifying. >> is a paul ryan endorsement inevitable? also, elizabeth warren comes out swinging. >> what donald trump has demonstrated over his entire career is it's all about donald trump. donald trump is just not used to people who stand up and challenge him. >> could warren become the democratic running mate? plus, federal civil rights charges in the walter scott shooting. >> if you want to know what civil rights history looks like, take a look at today. >> what could it mean for the eric garner case? all that, plus outrage over of