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 partners. all that plus how to turn your social media followers into customers. that's coming up next on "your business." american express open can help you take on a new job or fill a big order. or expand your office. for those who constantly find new ways to grow on every step

of the journey. american express open proudly presents "your business" on msnbc. hi, everyone. i'm 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 rather unusual, they completely opened up all of their books to their employees. they shared almost every single piece of financial information. and when times got tough, they found out that this policy had created some very loyal employees and some amazing results. now the founders are taking another step to get their employees involved, they are turning everyone 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%. >> elizabeth wilder co-owner of anthony wilder design was desperate. >> back then, we didn't know how long the recession was going to be but it was a strategy to buy us some time. >> my thought was holy crap. i had been here eight months. >> chris thomas, a lead carpenter at the company remembers that time well. >> all of a sudden we're getting pay cuts which was a shock to everybody. >> anthony wilder who founded the company remembers watching income drop off to a trickle. >> it was a scary time a long painful for everybody. >> while other builders survived by laying off staff, anthony and liz held the team together. thanks to a management style

that encouraged their employees to act like owners. >> but you know, we grouped together realized if we get through this we'll be stronger on the backside. and it happened. >> there were no closed door meetings. >> george is over at avagon. >> no fearful gossip. they held regular sessions reviewing all financials every month with every employee. everyone knew the score. >> it made things very transparent. people understood. there wasn't suspicion that we were trying to hoard all the cash but rather that we were trying to preserve jobs and have a sustainable company. >> and it worked in ways elizabeth says she never anticipated. >> i still get a little teary within i think of it. people came to me that knew other people couldn't afford that cut and said take more of my salary. people were grateful for their jobs. >> reporter: the team remained together long enough to outlast the broken economy. >> when it came back we floated

right into our old kind of groove where everyone 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 their lost wages with interest. >> we paid everything back and i think we were finished paying all the back pay by 2010. >> nobody expected to see that money. >> i first got to see the workings of this unorthodox open book management style when we visited liz and anthony 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. most business owners consider these details to be highly confidential. today as they prepare for the

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

i think that has a lot of value to it. >> i want to be part of something great. >> chris thomas is also buying in. he says after putting down 20%, paying the rest is easy. >> you can spread that out the rest of the remaining up to seven years. it can come out of your weekly check. >> we'll be able to maximize the value of the company but allowing other people to participate as owners if that's something they want i think is part of who we are and part of our culture. >> right now the first step is to sell 20% of the km to the staff. the final goal is to sell 100% to the employees. liz says they're still working out the final structure. >> we said all of us would be in consensus on all decisions. anthony and i retain the nuclear option to veto things but it wouldn't be in our best interest to use that on any kind of regular basis. >> meanwhile, the combination of open book accounting and

employee ownership has everyone from the carpenters to the marketers sharpening the bottom line. >> we intriziccally knew we did a lot of runs to the lumberyard that weren't necessary. >> mark and bob regularly listen to the monthly financial reports and wondered about the cost of those last-minute supply runs. >> home depot runs. we're 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 per year for the whole company. >> we hold each other accountable. everybody has everybody else's best interest in mind. >> now as anthony and liz are planning to take that ownership mentality to the next level, they seem confident that the ownership culture they created has already taken root. >> a lot of us already feel like

we're owners. we're already in that role. >> we've taught people how to be business people and how to be successful. why not give them the opportunity? >> as the founders of anthony wilder design, providing equity can get pretty complicated. they spent a lot of times with lawyers and accountants on how to do it. owners of a soap company we met used that as compensation when they first started out. 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 is the most sacred thing in a company. >> entrepreneur david simnick understands the power of equity. >> it is ownership. >> dan dahl agrees. >> when there's no physical currency given, there's no other way to value time and effort.

>> how to value a company and distribute equity are tough decisions with lots of layers. the owners of the alexandria, virginia based company mastered making bar soap liquid hand soap and body wash and had a social mission they were committed to. when it came to dividing up the company, they've learned as they've grown, admittedly making some mistakes along the way. >> it is serious. these are real real dollars. >> they decided to split the company 50/50 in the beginning. they wanted a level playing field for the business. soon enough, the pair needed help. that's where dan enters the story. in lieu of a salary they gave him a stake in the company. >> he was doing a lot of work for us but we felt the pressure to be protective of our equity. >> they decided his work was worth more than just 10%. and that motivating him with ownership was more than important than retaining equity themselves, so they gave him

20%. they didn't value the company at the time which they should have. looking back david says the company was new and worth about nothing. >> he saw problems. he went and fixed them. he saw opportunities. he went for them. more importantly, we saw a partner. >> the team also saw potential in volunteer stephanie appiah. >> there was blogging rewriting of web content, making social media pages. >> there was no money to pay stephanie but there was ownership. >> stephanie came in and started kicking butt at everything. so after a while, we said well we did this for dan, we should do this for stephanie. >> not knowing the intricacies of distributing equity they didn't exactly do it right. once again, they didn't value the company but they believed it still wasn't worth much. >> equity didn't have a concrete meeting for me. signing the paper was like i'm officially on the team. >> they each gave up 1 percentage point to stephanie

which hurt dan who owned less. >> there was an outside force of what everybody else was telling us protect your equity. when we were going through the dan decision stephanie decision, i felt okay giving up my equity because i knew i was getting skills and expertise. >> as the possibility of taking on investors neared stephanie approached the team about a larger share. >> my stake was so little that an outside investor with a large amount of capital could easily have a greater weeks of negotiation, they gave stephanie 3% more again, without value be the company. this time the owners were diluted proportionately. >> dan contributed slightly less to bring stephanie up to 6%. >> soon after, another equity negotiation was on the horizon. the stakes were higher too. >> when dan was renegotiating, it was going to be the last arbitrary rebalancing of equity

that i expected. 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 wasn't being compensated as if i was. >> dan's share went up to 23%. he also became president and coo, spirit of of the increase was right in line with soap box's philosophy. >> i would rather be in a company of people who 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? well, again, since they didn't normally value the company, they arbitrarily valued each share, something david cautions other entrepreneurs not to do. the most dramatic equity change was next. eric announced his exit. >> i knew in my position as a co-founder with the amount of equity i had i needed to be all in. and i couldn't commit to that. >> in a pretty unusual move he

gave his shares back to the company. >> who gives away all their equity? a largest piece tied with your co-founder of the company back for free essentially for free. >> while david could have become the majority owner, he didn't. he shared it. contrary to what some people advised them soap box returned to a 50/50 split. david says he's learned a lot about the complications of dividing equity. >> there are a million theories out there. >> he's more aware of the need of creating vesting schedules and how equity can trigger tax events. all of this is about the nitty-gritty about how to do things. but when it comes to the spirit of what they did, david believes soap box did it just right. >> when you start out, you don't know what you're doing. we started out at 50/50. if i were to do it all over again, i'd do the same exact

thing. it's not easy. it's going to lead to much greater success than if one of us was over the other one. potential customers are checking out your site every single do. do those browsers turn into customers? "entrepreneur" magazine has five tools they will say will boost sales. one, yotpo. consumers read reviews before purchasing a service. two, leadfeeder connects you to your google analytics and grabs data about your visitors. that way you can compile a more effectively of promising leads to follow up with. three, improvely monitors your businesses online ads to make sure you're not a victim of click fraud. the tool also tracks which ads are working and which ones you could do without. >> four hotjar uses heat maps to show you which sections of your website are most popular.

you'll gain a better understanding of user behavior and know what changes you should make to your site. and five unbounce. your landing page is your first opportunity to attract the attention of online visitors. design one that will 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, either directly or indirectly, what's the point? our next guest is going to give us ideas on how to translate that influence into sales. karen leyland is the president of the sterling marketing group. you are here to talk to us about what social media can do for you in terms of revenue later on. thank you for having me. >> so good to have you here. >> you can do a contest and put up a picture of a cute dog -- >> or cat. >> or a cat, right? suddenly you have all these people following you on social media.

but if they're not your target and they're not going to buy what you have to sell it's not going to help. >> people say instagram is the hot new thing. i've got to be on instagram. not necessarily. it's figuring out your demographic, your market and picking the one or two social media sites that are right for you and working them deeply. 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. >> so what you're talking about is having a call to action eventually turn from just follow or fan into someone who is going to utilize your service. you talk babout, again, a called action. which is different than about a conversation. >> it is about a conversation but not just about a conversation. if on your twitter you do 80%

content and 20% of the time you do an offer, 40% off for that day with a link that goes to a specific landing page on your website, those people will follow you. the people that follow you, you'll have a greater chance that those people will click through to your website. by having a specific landing page for that offer that day, you're encouraging people to start to purchase from you. >> got it. the conversation brings them in makes you guys friends. as you would with any friend you have a referral and you're more likely to follow through. >> exactly. >> you talk about putting a subscription to your e-mail or newsletter. do you think of e-mail as a way where you can sell more than social media? >> think of it like this. if you think of it as the person goes to your social media, they're coming into a funnel or a tunnel. there's going to take a certain amount of touch upons before they're going to end up being a customer. if you're selling something tohat

costs 19.99, it may only require a few touch points. if it costs more, it may take more touch points. you want to offer gated content so you have a high value e-book or a webinar or quiz. if a person gives you their e-mail or name some people call it an ethical bribe, you will then send them that con tan the. it's a way to build up your e-mail list. the key here is you can't abuse it. you have to do it in a selected basis. that's a way to start to create this relationship with the person that started at social media. now you're nurturing it along the funnel. >> how do you do testimonials in a way that isn't too salesy. >> when you have a press release about something you've done it's good to put that out on social media with a link back to the release.

if someone mentioned you in their blog or social media, you can put a link to that. part of it is being matter of fact. we were covered on msnbc here here's the lunk. as opposed to i'm so fantastic, this person talked about me. >> thank you for visiting with us. >> 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 entrepreneurs. one way we try and do it here on the show is by featuring their efforts which brings us to today's elevator pitcher, a drexel university stup thedent who started her business as a sophomore. we have tom and norm with us today. >> i'm noel wiggins, founder of sycamore lights an a sophomore

at drexel university. everyone wants a beautiful, elegant home. we make that easy for you at sycamore lights eco friendly luminaries. we sell six colors of luminaries directly to the consumer. there's limited competition in the luminary market. we utilize led tea lights. 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's perfect for outdoor and indoor use and has higher profit margins. the mold to create these cost $10,000. assuming a spring 2017 release we'll 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. you have a very good panel here who have spent their lives listening to pitches just like yours. from both of you, two numbers from one to ten, the product, then the pitch. how do you feel? >> i feel great. these guys are amazing. i can't believe i get to pitch in front of these people. >> let's start with you. >> well 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. you'll need a lot mr money. for the pitch, future is secure. entrepreneurs like you, you did a fantastic job. >> thank you. >> you did an awesome job. 8 for the product. it's simple. i like simple products that you can produce easily do it cheaply, drive down the cost when you go to volume. i'll give you a 9 for the pitch. your enthusiasm is overwhelming but most importantly what you talk about is the experience.

you can carry that message and the message of the product is an experience message. you deliver that so wonderfully. i give you an 8 and 9. >> thank you. >> thank you for coming on the show. >> thank you for having me. >> good luck with everything. we appreciate you taking time and inspiring other young entrepreneurs. thank you for your advice. if you want feedback from our elevator pitch panel on your chances of getting interested investors, send us an e-mail yourbusiness@msnbc.com. in that e-mail please include how much money you're trying to raise and 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 need. 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. the question is whether you're going to get the opportunity to sell it or whether you're going to have to let the cost go. if you can sell the assets off, if you have customers that you can get money by giving the leads to a competitor, then do it. just 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. 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. >> your tip? >> when you sell, most of us and most small business people are sales people to start with listen don't talk. it's really interesting. i learned this lesson many years ago. i had this business where we stored records. 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. i said okay one word. she said okay okay i've been to 40 competitors and they told me i was crazy. i closed that sale on one word. and 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 into 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 floor so you are solving that issue for them. great advice. >> one of the most important things you can do is have a mentor a mentor that's not an investor relative board member, not a teacher.

someone who simply wants to help you understand the lessons you're about to learn. you can pick that person. this is something we're not told. target your mentor. say that person i respect so much. i want him or her to be that mentor. i when i look back on my career every door that was opened for me significant, every threshold that i crossed was open to me by a mentor. they didn't have a financial benefit but opened it nonetheless because they saw a sense of confidence and inspiration and inspired me. >> you pick them but how do you get them to then say yes? >> you reach out sincerely and you tell the person i respect you because of xyz. my first mentor i wrote him because he wrote a book, a "new york times" best seller. i wrote my first book. i said jim, i'm grateful for your book what you're doing is wonder. . can i chat with you? he wrote me back a letter. he said sure. that was the beginning of a 30-year relationship.

i still see him once or twice a year. >> you never know if you don't ask. you mentor a few people. how did start? >> people read the article and e-mail me or text me that they want help. i do 20 or 30 entrepreneurs a month from it. >> that mentor is a gateway to other mentors as well. >> exactly. it's networking. >> it leads to other opportunities. >> thank you so much. great advice from both of you. >> welcome. this week's high flying your biz selfie comes from angela chabbit who ands aerial arts fitness. they teach aerial yoga as well as dance and pole fitness. 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. send it to to yourbusiness@msnbc.com or tweet it to @msnbc your biz.

please don't forget to use the hash tag your biz selfie. 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 elect our congress to represent us. but they won't know that if issues exist if nobody tells them. 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 our website, it's openforum.com/yourbusiness. we've posted all of the segments from today's show plus lots more there. don't forget to connect with us on digital and social media

platforms as well. next week we'll see how one company is re-imagining 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 testing you. it feels so normal. this is how i'm communicating with everyone in my life. >> how technology is changing therapy one text at a time. until then i'm jj ramberg. 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. will you be ready when growth presents itself? realize your buying power at open.com >> this has been a busy friday. there are a couple of serious stories still unfolding tonight as we speak that we're going to keep an eye on we'll be talking about over the course of this hour. one of them is this shooting that happened this afternoon in downtown washington, d.c. very, very near to the white house. apparently what happens is a man with a gun approached secret service officers right outside the white house at one of the perimeter check points that's manned by armed secret service agents. the man reportedly had a gun, he was told he should drop the gun. they did not do so.