coming up on msnbc's "your business," they wanted to be the uber of flowers, but the business started to wilt because of bad accounting. find out what moves they made to get back on track. and what kat cole learned from going to a hooters waitress to the ceo of the billion dollar company cinnabon. that, plus the chairman of the house small business committee on small businesses possibly being targeted by the irs. that's coming up next on "your business."

hi, everyone. i'm j.j. ramberg, and welcome to "your business." the show dedicated to helping your small business grow. when things are falling apart or just not going perfectly well, how much do you tell your employees and how much do you tell your customers? it is a tough question. we hear the word transparency a lot. but can being too transparent also hurt you? we went to san francisco to meet the people behind the upstart flower company bloom that, about

their meet orric rise and their more recent troubles. they say part of what brought them through the rough patch was simply letting everyone know what was going on. >> you know that cliche of assembling the plane on the way down. what do you do when you realize it? do you let it go down or fix it? >> this is the story of one entrepreneur's oh, shoot moment, and how he brought his company back from the brink. >> i was in new york in i guess summer of last year when it really hit me that, oh, man, we've got a bit of a problem on our hands. >> david at bloom that in san francisco was riding a wave a few years back. like so many entrepreneurs at the time, with plans to become the uber for this or the uber for that, the idea was to become the uber for flowers. >> we started bloom that, it made sending flowers as simple as sending a text message, would you send more often? >> oh, thank you. >> you're welcome.

>> like many start-ups, it blossomed from a desire to streamline a fairly common but often frustrating experience, ordering flowers. >> the experience is horrible. it's a really painful process to select something that's going to represent you well. the pricing is ridiculous. and then i gotta order like sometimes two, three days ahead to get it done. >> the idea was simple. give the customer just a few choices, and deliver the same day. usually within 90 minutes. prices would be low and there would be no delivery fees. >> it was $35, flowers delivered within 90 minutes anywhere across the 7 x 7, the dimensions of the city of san francisco. on demand flower delivery, the uber for flowers. and sort of from the beginning, that was -- it worked out very well. it was pretty simple. >> and the flowers, they would be exactly as pictured online. they would be high quality, farm fresh, seasonal blooms that were just picked. wrapped beautifully in burlap and hand tied with a bow.

success came fast. venture capitalists and celebrities like ashton kutcher and joe montana swooned over the idea, forking over millions of dollars, hoping bloom that would succeed and disrupt the $8 billion floral industry. >> as an entrepreneur, your job is to go and disrupt some things. so you are a crash dummy in a car crashing into a brick wall and you hope you have enough steam to sort of get through that wall. >> but the business model that worked so well in san francisco didn't work as well when they moved into other cities. >> we launched los angeles, 90-minute delivery. and we launched new york, 90-minute delivery. before we knew it, we built up the infrastructure to accommodate the speed, but not the base line revenues in the expanding markets to support all of the infrastructure. these new economics, the assumptions we were making around what was happening in san francisco are no longer applying to the new expansion markets. and we couldn't keep up. >> suddenly, the business which

was flying high since day one was hemorrhaging money. david was busy launching the new york market when the shocking reality of their situation became crystal clear. >> at the peak of last summer, i think we burned a little over a half a million dollars in the month of june. so that was just like, takes the breath out of your lungs. and it's just one of those things where you question if this is even feasible. >> how in the world did this happen? customers love the product. they seemed to be growing. but when you lifted up the curtain, they were spending too much money. like many start-ups moving fast, accounting was an afterthought, and they simply didn't have a foundation or system in place to keep up with their rapid growth. >> and the problem was that we were moving so fast that we were maybe 60 to 90 days in arrears of actually closing our books. so by the time we sort of found out what was really happening, it was, you know, 90 days ago.

and 90 days is a lifetime in the world of start-ups. so i would say advice to any entrepreneur is like get your financial house in order from day one. make sure that you've got systems and processes in place that are going to scale. >> david swallowed hard and knew to right the ship, he would have to make swift and dramatic changes. his approach was to break the business down and build it back up. this included layoffs, shutting down same-day delivery in los angeles, and streamlining and thinning out all of the fat in their distribution model. >> we focused on really fixing the unit economics of business. here's what i said to everyone. every touch that a person that bloom that pays on each bouquet, that costs $1. think of that, every touch cost said a dollar. we have to find a way to reduce touches. >> part of that effort to reduce touches included a change in the way they created their signature burlap wrapped bouquet. instead of folding each individual burlap which takes

time, they created a sleeve so it just slides in, speeding up the process. >> it's a cost saving in that it's a time saving. consistency and efficiency obviously, like, those are key ingredients to making this work. >> the next step was raising the price of their flowers. >> so we sort of moved our $35 product up to $45, and then we introduced a higher-end product. we went from $35 to $55 was our range before. now it was $45 to $85. so we created more differentiation. >> and the last bitter pill that helped correct their margins, they added a delivery fee. >> so we basically said, we're going to roll out delivery fees, and the response we received sort of in turn was, i think i received an e-mail that said it's about time. i'm like, it's about time? you know, this -- if i would have known that, we would have done this sooner. >> now, a year after that oh, shoot moment, bloom that is thriving again.

they have re-opened in los angeles same-day delivery market as well as expanded delivery nationwide by shipping flowers overnight, and though they have more competition, bloom that is in a stronger position than ever to succeed with their original idea of becoming the uber for flowers. >> i think the competition is what the customers have needed for a long time. and it's a thing that's going to jolt this industry out of stagnation. and so, you know, i say sort of bring it on. >> it's been a busy time in our nation's capital when it comes to addressing issues facing america's small businesses. those issues include evidence that the irs may be targeting small businesses disproportionately for audit. legislation to help small companies combat cybercrime, and a federal lawsuit brought by more than 50 business groups, including the chamber of commerce and the nfib seeking to block new overtime rules that go into effect december 1st. steve chabot of ohio is chairman of the house small business

committee and he joins us from washington. so good to see you again, congressman. >> great to be with you, too, jj. >> i want to take these issues one by one and let's start with the irs. where it seems a professor at the business school at american university, david williamson, has found from his studies that it seems that the irs is disproportionately targeting smaller businesses. a, do you find that, too? have you heard this from other people? b, why? and c, what can we do about it? >> very good questions. i think he's absolutely right. they are targeting small businesses for one major reason, and that's because small businesses don't have the resources to fight back like the large corporate entities do. and we understand that the irs has quotas for some of their agents now, and they're just hauling them in. they're abusing them. oftentimes, they're literally fishing expeditions. they generally don't find anything that the small business person has done right -- excuse me, done wrong, but even if you

did everything right, even if you win, you lose, because you have attorneys fees oftentimes or accountant's fees and the irs isn't going to pay that. >> what can i do as a small businessperson who has been targeted if i think it's unfair? >> you can contact your local congressman who can weigh in to some degree as an advocate. you may well need to get a good tax accountant or attorney. but legislation that we're pushing for here in the house would do a couple things. one thing, simplify the tax code so that it isn't such a cumbersome thing you have to deal with that's tens of thousands of pages and nobody understands it. and just as importantly, as part of the legislation that we're pushing is to rein in the irs. make them much more customer friendly. not have the person or the small business being targeted. it's somebody you ought to be able to work with but not feel you have committed a crime.

>> let's move on to the next issue here, which is the house, this week, passed the improve small business cybersecurity act, where it's going to empower small business development centers to help small businesses with preventing cybersecurity. what does that mean? what will these sbcds do? >> well, right now, the sbdcs, there are probably 1,000 all over the country generally tied to a university or college and it will make small businesses, they would have access to training, to other types of things that can help them to avoid a cyberattack themselves. and cyberattacks are becoming a huge problem all over the country. bigger and bigger. we have seen the government itself hacked innumerable times. we've seen the office of personnel management, over 20 million files hacked. we've seen the state department, the white house itself. we've seen large companies like target and home depot targeted, but now they seem to

be going after small business folks, and we have seen in fact over 70% of the cyberattacks now are targeted at companies that have fewer than 100 employees. so it's something that small businesses really need to take seriously because it could happen to you next. >> absolutely. okay, finally, a little time left to talk about this lawsuit to try and overturn the evertime rules, which is supposed to take effect on december 1st. talk to me a little bit about why this is important from your perspective? >> well, it's important -- we're getting more complaints from small businesses all over the nation on this than anything really since obamacare that i can remember. because what it would do is it would say you're now going to have to pay overtime rather than people under $23,000, it's going to double up to $47,000. and it's going to kick in december 1st. a lot of people, small business folks who are busy running their business and hiring folks or paying their employees, haven't been thinking about this, but in a couple months, that's going to hit them. >> let me ask you a question,

then. what you're talking right now is the burden is about the process. and i'm with you. the process of changing over for a small business, it is hard. but is the issue that people don't believe that this should happen at all, that there should be more time around it, that the numbers are wrong? >> it's both, i think, j.j. and for good reason. what we have heard as a direct result of this, a lot of folks that are now salaried employees, moving up the ladder, their boss is now going to have to -- a lot of these folks, they'll make them hourly employees. they may cut back on their hours. there may be people laid off. it's unfortunate, and they're going to have to treat them differently. >> i really appreciate you coming on. it is so great to see you as always, unfortunately we have to end it here. >> thanks for everything you do for small businesses. >> and you. >> thank you. a former hooters waitress

who would eventually end up turning cinnabon into a billion dollar brand. it sounds like the plot of a made-for-tv movie, but it's the real life story of kat cole. the 37-year-old business mogul whose creative ideas and marketing strategies helped the food franchise become the mega force it is today. she shared three great business tips with nbc's jenna bush hager. >> i'm kat cole, group president at focus brands. i believe anyone has the potential to start and build a billion dollar brand. >> reporter: because she did. as president of cinnabon, she led the 30-year-old brand across the billion dollar threshold. that recipe for success came from an unlikely start. at 17, cole started working at a hooter's restaurant in jacksonville, florida. >> i was a hostess and i became a waitress when i turned 18. i learned how to cook in the kitchen and pulled bartender shifts and helped run shifts

with the managers. >> reporter: she says her work ethic ca from her mom who worked hard to raise three girls on her own. >> she had to work three jobs. she fed us on $10 a week for three years. this was not 1933. this was in the '80s. >> reporter: she encouraged her daughter to dream big. kat became the first in her family to attend college with plans of becoming an attorney. but her life took a different turn. >> when i was 19, i was offered the opportunity to open the first hooter's in australia. >> she was soon opening franchises all over the world. she dropped out of college and quickly rose through the ranks, becoming hooters youngest vice president at 26. >> you say you worked at hooter's. what type of reactions do you get? >> i got so many reactions but i remember several times when people would say, how can you work there? how can you say you advocate for women yet you work with this concept that has socially acceptable sex appeal at the center. my pride around what we had built was so high, and my

gratitude for all the opportunities i received, let's be serious, i was a 19-year-old college dropout, child of a single parent, alcoholic father, you tell me what large fortune 500 company would have sent me around the world to open their businesses? no one. >> that inspired her to earn her mba while attending school part-time, and in 2010, her rise at hooters led to an opportunity at cinnabon where she was tasked with re-energizing the brand. kat's idea for cinnabon became a game changer. it's what she calls a taste of the bond. >> we knew people loved a taste of cinnabon in their home. so international delight coffee creamer has been an awesome partner. we launched cinnabon popcorn. >> that taste of the bon was everywhere. restaurants, grocery stores, online. that strategy helped turn cinnabon into a billion dollar brand. her success earned her a promotion. 37-year-old cole is now the

group president of focus brands. where she's hoping to work the same magic with all six of their companies. >> this is the focus brands research and development center. we call it our innovation campus. >> reporter: from mine bons -- >> that cake, really good. to salsas. >> salsa. >> salsa tasting. >> my expertise. >> reporter: with all her success comes hard and fast rules of business. >> one, be honest and authentic and confident in who you are and what you stand for, because ultimately, it's all that's going to differentiate you in the marketplace. two, stay incredibly close to the customer. they have all the answers. three, do the right thing for the right reasons and use that to guide who you partner with. what products you launch, whether or not you take funding externally. >> as the architect of a billion dollar brand, cole understands the power of words and messaging. she has a brand of her own. >> your twitter handle, very

important. reads, connected, creative, conscious, community building, capitalist, building adviser, mba, coffee loving chronic learner. is that the definition of you? >> i would say that definitely describes a lot of the things that i believe. i hope the definition of me is someone who helps people see they're capable of more than they know. >> doing well by doing good. that is the goal of our elevator pitcher this week. he's created an interesting product that he hopes will address an important nutritional health issue around the world. he calls it the lucky iron fish. now, let's see if our judges take the bait. they're two of our favorites, jeffrey hayzlett is the head of the hayzlett group and the author of "think big, act bigger." and carol roth is an entrepreneur and an investor. >> i had, i'm dr. gavin armstrong, founder of the lucky

iron fish. which is a simple solution for iron deficiency, which negatively imp pacted 3.5 billion people in the world and is a $30 billion market in the u.s. alone. we need a simple solution for the serious problem. we need the lucky iron fish. simply cooking with the lucky iron fish for ten minutes will add natural iron to your diet. it's safe, sustainable, and affordable. our clinical trials have shown it reduces iron deficiency without adverse side effects and it's reusable for up to five years. what's more, if you buy the lucky iron fish on our website at luckyironfish.com, we'll donate a free fish to a community in need around the world. this year, we're giving away 70,000 free lucky iron fish, which is amazing. we're poised to gross $2.1 million and are seeking a $250,000 investment for a 6% stake to increase our retail presence and expand into new markets. together, we can put a fish in every pot. >> all right. nicely done. thank you. these are for you. two numbers. okay, i'll take your fish. two numbers, one, what do you think of the product?

two, what do you think of the pitch? i know something you missed in the pitch. i'm going to ask you, i like your pin, which is where are you selling right now? >> we're selling on our website at luckyironfish.com for $25. >> any retailers? >> we're going into retail right now with our new packaging. >> got it. great, let's start with you. >> i got to give you a 7 for the product. i'm not sure if it is right for me. i would rather take a pill than drop something into the pot. i give you a nine for the pitch but i want to hear how sales are going and i didn't hear that. >> carol? >> this is good for me. everybody knows i usually give very low numbers. so 7 1/2 on the product. very interesting product. i don't know how protectable it is. so i would have loved to hear something about what is proprietary and can anyone else come up with a lucky iron fish. and an 8 on the pitch. you were really competent in terms of communicating what it is you do, how much in terms of sales you have, what was being used for.

i still think there's a little more in terms of what makes yours the special sauce, what you've done to date, where it has been selling and all those kinds of things. but i like the social angle. i think that's very on trend and i would love to hear more. >> i have a question for both of you. do either of you know anyone with an iron deficiency or someone that takes pills? >> yes, very good friend just told me about that. >> got it. you understand. >> i've had anemia on and off. i have a lot of family members who have anemia on and off. i know it is an important issue to a lot of women and certainly in other areas around the world as well. >> did you give the sales in your pitch? >> i think i did. >> i missed it. >> i missed it too. >> she picked up. she's a money person. she would. i didn't get that. that's strong. that excites me. >> in terms of tangibles, not just the numbers, if you're selling in a certain retailer, have an online presence, would have loved to hear more about that. i know you have a very short time.

those are important things to get out. >> talk about the big fish. >> yes. >> all right, great. thanks. fantastic advice. good luck with everything. i know you're doing great work. we really appreciate what you're doing. good luck with the company. >> thank you. >> if any of you have a product or service and want feedback from our elevator pitch panel on your chances of getting interested from investors, send us an e-mail, yourbusiness@msnbc.com. include a short summary of what your company does, how much money you're trying to raise and what you're going to do with that money. we look forward to reading all the pitches and seeing some of you here on the show. from snapchat to instagram stories, adding live streaming to your marketing is one way to separate you from your competitors. "yfs" magazine gives us five ways to integrate live video into your social media campaigns. one, choose the right platform. pick the tool your audience uses the most. ere are quite a few options available, but you don't need to

be on all of them. two, provide value and earn their time. facebook reports people spend three times longer watching live video compared to prerecorded footage. but, to get the initial click, you need to add content that they will care about. three, you can't automate your feed. but that doesn't mean you should stream on the fly. take the time to pick out what you're going to share and when you'll go live. four, give a glimpse of your human side. you're sharing a behind the xeerns look at your company when you upload video. optimize ways you can use it to bond with your community. and five, think about viewer perspective. post things they'll relate to and identify with. when we return, we answer one viewer's question on whether it is better to create a complementary product or find a company to do it for you. plus, what you need to know about taking care of your network.

will your business be ready when growth presents itself? american express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services can help prepare you for growth at open.com. we're looking to add complementary products to our cracker line, like dips or spreads and the question is, do we invest in equipment to develop those products ourselves or do we acquire a small company that makes those products already? >> so i don't think you should

do either. if you run a cracker line and are looking to expand into adjacent product categories, i think the number one thing you can do is first work with a co-packer or another manufacturing facility to run a small line of that product. test it. prove that there is a need for that product. prove that you will win in that category. once you do that, then you can look into your alternatives in terms of purchasing, manufacturing equipment to keep on your books on your own or acquiring another business. we now have the top two tips you need to know to help your small business grow. carol and jeffrey are back with us once again. hi, both of you. two of my favorite panelists. always with great advice. carol, you're up. >> so my tip is how to take care of your network so eventually it takes care of you. so when you're out meeting somebody or maybe we're just having a conversation, you have to take notes as your first step. we just met, write it on the back of the business card, send yourself an e-mail, if you're in

your office, type it into your outlook or other calendar program, but find out personally and professionally what matters to the people you're talking to. then schedule something, maybe twice a year, just to check in randomly with them. hey, wanted to see what's going on, was thinking about you, go back to your notes, wanted to see how this project was going on, so you have that constant back and forth. and then do personal reachouts when something hits those items you've taken the notes on. so let's say it is personally you know i'm a bears fan, you reach out, you go, my god, the chicago bears finally won game, carol, i was just thinking about you, you must be so happy or maybe it is a professional connection, you know, i was thinking i found these people, i thought you guys would make -- do great business together, and if you do that on an ongoing basis and have that process down, you will feed your network, it will be healthy, and it will be there for you when you need it. >> okay, you're up. >> time, time, time. that's our biggest commodity in

business and we waste it all the time. i'm going to give you permission to do a do-over. every morning, wake up, look at your calendar. it is usually filled to the point where we don't have time to go to the bathroom during the day. it is that busy with all the things that people have put into our calendar. as an entrepreneur, as a business own, i want you it look at your calendar and say, you know what, everything can go off and look at your priorities of your business and decide will this get me to where i want to go? and if it is not, get rid of it. toss it off. give it to somebody else or just cancel it. >> so you've got the sharpie. >> exactly. >> in the morning. >> the delete button if you're using your iphone or android, you want to delete it. i do this all the time. i used to think, i've got to do that, because this person set the meeting or this person -- no, i can say, you know what, i had something else come up and i got to get to the things that are the highest priority in my business and that's the only way to do it, to drive it.

do a do-over. >> it is true. we don't have enough time in the day to do everything we want to. >> you can block on your calendar, swing time. that's so important to put in there. just put in a block of time that says do not schedule anything so if you have those critical things that come up, you have that block in your calendar. >> love it. from both of you. thank you. this week's your biz selfie from barbara susan pozner who owns 4 & 20 pasty company, which is a traditional english or meat or vegetable filled pastry and she sells a whole lot of them. before you go online to taste it, take a selfie of you or your business. no professional pictures. we want this to be a selfie and send it to yourbusiness@msnbc.com or tweet it and use the #yourbizselfie. don't forget to include your name, the name of your business, and your location. thank you so much for joining us today. we would love to hear from you. so if you have anything to tell us, a question, a comment,

anything, just send an e-mail to yourbusiness@msnbc.com. also, please head over to our website, openforum.com/yourbusiness. we put all the segments from today's show up there and a whole lot more. you can connect with us on all of our digital and social media platforms which you can see on the screen. we look forward to seeing you next time. until then, i'm j.j. ramberg. remember, we make your business our business. brought to you by american express open. visit openforum.com for ideas to help you grow your business. penn help you take on a new job, or fill a big order or expand your office and take on whatever comes next.

find out how american express cards and services can help prepare you for growth at open.com. this is the eighth year for art prize. it gets bigger every year. last year some 400,000 people went to it. it's become this huge phenomenon in that part of the country. basically as you can tell, it's an art contest. anybody can enter. they call it a radically open art contest. over the years, thousands have entered it. and what is unique is that they've got a panel of expert art judges that give out one big prize for the best work of art, and it's a big prize, $200,000 for the juried best artwork in the fair.