good morning. coming up on msnbc's "your business," how did this company, which makes stuffed animal replicas of customers beloved pets grow so quickly? this business has no employees new york city factory, no inventory and no overhead. how this shed designer works with independent contractors. that, plus what you need to know about hiring freelancers. let's hop to it, next on "your business." will your business be redi- when growth presents its? we can help you take on a new job. or fill a big order.

or expand your office and take on whatever comes next. for those who always find new ways to grow their business, american express open proudly presents "your business" on msnbc. hi, everyone. i'm j.j. ramberg. welcome to "your business," the show dedicated to helping your growing business z. think you are seeing double? cuddle clones hope so. they have made an entire business making plush replicas of people's pets and customers are scrambling to get one of their own. they had to get outside help, which was a complete disaster. we went to louisville, kentucky

to get their tale of caution and success. ♪ >> when one offed to's beloved yorkies passed away, he was desperate to find a way to memorialize her. >> i have it in the side bedroom when you walk down the hallway. people that walk by thought it was a real dog. >> the "it" is his cuddle clone. a stuffed animal that is an exact replica of the pet he loved so much. the idea was the brain child of founder and dog owner, jennifer williams. >> i had a dog owner, rufus. i was laying back on him. i thought it would be cool to have a plush version of you. >> it was a thought that stuck. in 2011, she pitched the idea to her classmates in the university of louisville entrepreneurship

plan. >> he jumped on to join forces. >> people either love it or think it's creepy. it immediately rez naited with me as a pet owner. >> with $50,000 of pitch winnings, they turned the idea boo a reality. they set up shop in louisville, kentucky. they had a great idea and little in their backgrounds to know how to make it happen. >> neither of us know how to manufacture. i worked in digital marketing, but never built a website on my own. >> the path to success was filled with failures when coming to outsourcing. first, they hired an agency that needed customization to handle orders. that turned out to be the wrong decision. >> when we started with the agency, everything was great. after two or three weeks, the project management wasn't there, no matter how much we told them, here is the scope and how much

it involves. they kept misreading it. >> they got a website, but not close to what they hoped it would be. the way it was built, it was hard to make changes on their own. they tried a different agency thinking the first experience wauz fluke. >> it ended up being worse, if you can imagine that. we were just a small client to them. they didn't respond to questions. yeah, we got it, went away, delivered something completely wrong. >> they were done. they realize zed they weren't a big enough project tbe at the top after an agency's priority list. they needed to invest their money in a smarter way to grow their business. >> the benefit of full-time employees that you are in contact with, they have the ingo in mind. >> they hired a full time person to develop and maintain the website. a full-time vid i don't eogfer .

>> hey, do you think we have enough full-time work for someone. if the answer is yes, then i think we probably, at this point will just hire people. >> for the tasks they don't need all the time, they use sites like angel co and up work for dependable freelancers. >> we knew we needed somebody who knew about 3-d modelling. we found a couple on there. >> they picked up some know how along the way. first, they always give potential contractors a minitest job to start. >> see if they can do a small project first, to see everything from their ability to do the work to their communication style to their project management style. you can say at the end of the test, i really liked working with that person. i'm going to hire them to do a bunch of stuff. >> they have people that know the needs of the job to do the

work. >> we had a current 3-d designer creigh teak them. >> they realized contractors aren't mind readers. >> people assume a lot of what you want the delivery to be. you have to get to the point where it's tiring writing out exactly what every minutae of that deliverable is. >> they have a great group to provide everyone who wants a cuddle clone with one of their own. they haven't ruled out working with an agency again. >> i think, if we were to hire one, hey, we have raised money for this particular expansion project and we need it done fast. >> today, more than 20,000 cuddle clones have been shipped to animal lovers living in more than 65 different countries. they say, this is just the start. >> pictures are great. if there's something tangible

you can hug it and see it. a tongue out of the side. we try to get anything custom that represent that is pet. >> they figured out the right balance of freelancers, contractors and employees. we went to seattle to meet the owner of an outdoor shed business who didn't want to deal with any employees, renting space or anything. he outsources all of it. meet ryan smith. he's an architect, designer and the owner of seattle based modern shed. his company manufactures and sells distinctive looking sheds based on his design, like this prototype in his backyard. his company distinguishes itself by the unusual way he runs things. >> we don't have a payroll, no. >> modern shed has no employees.

>> or the legal authority to treat me as an employee. >> we are all independent contractors. >> there is no location. we have been a virtual company. >> we are pabless. we don't get mail. >> we try to carry zero inventory. we don't order anything until everything is signed off and down payment collected. >> we don't need a desk with files in it. we went virtual with everything. everyone is all over it. >> with no factory, no warehouse and no employees, that means there's no inventory, no rent, no benefits and almost no overhead. >> we figured they were all concepts that didn't make sense. >> if this doesn't make sense to you, you have to start by talking to tim. he's the general manager for modern shed. >> he does all our processes, cost sheets, contracts and managing all our contractors in different ways. >> if you want to meet him, you will need to first drive nearly

two hours south of ryan's place in seattle to find him at his home, which is where he works. >> i'm the general manager of modern shed, but self-employed. >> that's right. he is the general manager, but not an employee of the company. he's an independent consultant and modern shed is his primary client. >> i have three or our clients. >> if you want to see the factory where the sheds are made, you need to talk to eric johnston, located more than three hours north of tim. >> eric does all of our c.a.d. drawings and head up fabrication. >> my company is johnston fabricating. >> eric pays the rent on this building and pays the workers, their insurance and he pays the taxes. modern shed, they simply buy the finished products. >> i have to carry insurance to cover my manufacturing process. as soon as you have employees

and you have overhead, you have space, you create liabilities. modern shed, as it is now, the entity that it is, there's not much liability. >> with all the costs and liabilities, you might wonder why they wouldn't prefer a weekly paycheck from ryan. >> i want to control my own life and my own time. i'll work with you, but in the end, i want to be independent. >> i prefer to be a contractor to maintain that individualalty to bring in the jobs i would like to build, the things that make my blood flow. >> myself, i would not be interested in being a corporate employee, ever again. >> to find out how this system of independent contractors works, you need to drive another two hours back south to the edge of puget sound to talk to mike. mike is director of sales for modern shed. >> we are all taking care of ourselves. we realize that we can continue to grow the company as well as

our own ventures and our own self-interest by continuing to work hard and put the time in. myself, i won't be successful unless modern shed is successful. >> what is ryan's secret? how has he persuaded these venders to serve a common goal and help him grow his company. >> as a vendor, you are going to do all you can to keep your customer happy. >> at modern shed, they are customers and vendors to each other. that keeps them working harder to please each other than if they were merely co-workers. >> the independent vendors, i think are more motivated than employees. those of us who are self-employed my of it differently. our business is in our head all the time. it's constant. we are working on our own business. in this case, we have a common model, modern shed. >> everybody involved in this has a sense of ownership.

without tech nickically being owners, you have to take pride. >> there are advantages and disadvantages to this virtual system. for him, it works better than the in-house system. >> the in-house model has advantages are, it is a very flexible. on the other model, i would say disadvantages would be the fact that people are further away. the advantages are the fact that you have a modern business model and people can do whatever they need to on their own schedules. people's schedules are so different these days. it adapts to how we are living more now. hiring freelancers or contractors is a great solution for getting some of the work done in your company that doesn't require a full time position. we have key questions to ask.

david lewis is the founder, president and ceo of operations inc, a human resources sourcing firm. good to see you. >> good to see you. >> you don't think you have to be as rigorous because you can get rid of them but you are paying them to come in and do work and you want it done well. >> you have to have a complete selection process. it's not that different from an interview if you are hiring them full time. >> start with the number one question about your client base. >> trying to figure out how this person is going to work with you on the basis of how many clients they have. you want to know how they prioritize. how are they going to make sure you are getting the appropriate attention and they are doing the same thing for all those other clients they have. >> the follow up question is how do you split your time. >> exactly, how do you split your time, what are the clients you have. do you have a clipt that is dominating you at this point? do you see client that is are going to explode? when you bring that person on

board, you want them there and committed to you and other clients. >> number two, a great direct question, why are you freelancing? >> this is a big factor in their career paths. are they not good enough to be an employee? you want to hear somebody say, listen, i love the idea of working with different companies. i never felt like being in one place was satisfying enough. i like the creative process or the process of being able to do different things for different people. >> we talked about this, prioritizing. how do you prioritize? of course they are going to say i'll get the work done. how do you get beyond that question or beyond that answer. >> instead of asking them about their opinion, ask them to give you a behavioral response. give me an example of how you prioritize. how many clients do you have? how do you make sure everybody is getting the appropriate level of attention? give them scenarios and ask them to give responses back. that will get you feeling more

comfortable about how they express themselves, if they are organized or a manager of their workload. >> the final is about references, which is complicated. people cannot say anything disparaging about someone who worked with them before. it's illegal, i believe. right? >> it's the kind of thing you get the companies that are reluctant to say anything. they fear the person is going to come after them and sue them. am i putting myself in a position where someone is going to call me and say, hey, what do you think of this person? i hated them. now the person who sent you there is going to say, wait a second, i can't believe you misrepresented the facts. i was great for you. >> right. >> the references piece is about getting their client base to go ahead and tell you what it's like to work with them. what the experience has been. yes, references are usually really good, rarely bad ones.

you would be surprised the kind of information you are able to learn from those calls. >> thank you so much. >> my pleasure. the timing just might be right to be a freelancer. tech tools have never been better to streamline work flow and earn more clients. working remotely and making your own schedule aren't too bad, either. we have the best scythes. one, sighted. this web based platform for expense tracking is designed for freelancers and independent prurs. integrated payment hospitalizations and pnl reports. build fire helps you build out and customize your small business mobile site and syncs with most mobile apps. this encrypted wallet helps with online payment and integrates.

time tracking makes digital transactions a breeze. >> four, timely. time sheets take up valuable time better spent building your business. timely is a cross device app that integrates productivity apps, calendar and more to track all your time in one place. five, streak. download it and track leads, clients, partners and projects from your inbox. hi, i'm erin boar guebo gue. i have a gogo gift bag. i developed it after a trip to the store when i purchased a gift bag and tissue paper.

it was taking so much time to style it. the type that are open box style with loose paper, you have to take it out and restyle it. that's almost doing it twice, right? i created a product that is a better way. it's a patent pending installation of tissue that is prestyled for you. all you do is lift, fan and simply separate the ply. this gives a full bloom of tissue, concealing your contents effortlessly in seconds. there's nothing else like it. i partnered with a design group to brand the product and commercialize it. they have helped with the designs you see today. they are beautiful. we have a present with gift wrap company and groups through ig dee zion group and distribution through hsn. i was awarded the customer choice award. >> i don't mean to interrupt.

how much are you looking for? >> $250,000 to scale marketing and have a point of purchase display to educate the consumer. >> perfect. both of you. thank you. good job. i need two numbers, 1-10, what do you think of the product and then what do you think of the pitch. i am your customer. i am the person running around before a birthday party to find any paper in my house to wrap something in. if i had a stack of those, that would be great. let's start with you na. >> nine for the product, and the pitch. i am your ideal customer. i don't have time or the style to make it look that gorgeous. it's a perfect one for me. 7.5 because i don't know what you want from me. how can i help this person. that was the only thing, really.

>> okay. >> i gave your product an eight. i needed this product a couple days ago. i already know it could have been useful. i didn't give it a ten because i'm not sure if, in the store, i would think, in the store i would think i should buy this over bags and tissue paper. i gave the pitch a six because i love everything you explained about why the product was great, but i didn't quite understand the market potential and i didn't have a place for the $250,000 versus the opportunity to make money. >> we with could have got to that, yes. >> we get this on this show a lot with pitchers pitching to customers and not investors. the idea is you have a different pitch talking to different people, and these people like the product but are interested in making money off your company. congratulations. good luck. i will go stack up my closet with these. >> thank you. you stick around. any of you out there want to

pitch your business right here in our elevator, send us a video of your one-minute elevator pitch. or post it to your youtube page and let us know the link. include a summary of what your company does, how much money you're trying to raise and what you intend to do with the funds. we look forward to seeing all the pitches. so many of us are focussed on growing our business. we asked our viewers what they did to make the leap. >> what i've done to grow my small business is to always keep educating myself. always learn new things. learn about marketing. learn about sales. learn about products, and never dismiss something as an opportunity that i might think at first looks too stupid or simple. >> we're an immediate society. everybody wants an immediate answer and text. that was my turning point,

putting somebody in the office so i could focus on the bigger picture and implementing different policies and procedures. so it got me out of working, answering the phones, and actually delegating and developing and building the business. >> original intention was to work with nonprofits and donors. we were leaving out a segment of the marketplace. that's companies and corporations. every company wants to do good and make a social impact. through u vac we worked with companies nonprofits and individuals who we're able to make the leap from a small to a mid size business. >> when we come back, why you should be obsessing over your customers and why you shouldn't be going overboard with that whole fun in the workplace thing.

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. at what point do you turn around and say that's enough staff engagement. we do things like go carting, water balloon fights. at what point do you make sure

that you've got the right staff engagement? >> i would say, jason, this becomes an roi issue. it's return on your investment. the money, are you getting it out the other side in terms of productivity. that's the gauge you have to really maintain. it has to be positive on the roi side in order for you to continue doing things like staff balloon fights. >> we now have the top two tips to help you grow your business. back with us are natalie and pia silva. author of the new book, "bad ass your brand". thank you before for your the tips. now i'll pick your brain more. natalie, one thing you've learned that people need to know to grow their business. >> i think the most important thing and probably the biggest

competitive advantage you can have is being obsessed with your customer, and a lot less concerned with what your competitors are doing. back in early 2000s, i advised cane y cranium. they tried to figure out where their customers were. instead of selling their games in toy stores, they determined their customers were going to starbucks. i think the most important thing you can do is spend less time worrying about your competitors and focus and obsess on understanding your customer. >> all right. great. pia? i suspect it's something about brand? >> of course. it's about being unapologetic about your brand. if you want to be loved by some, you have to be okay with being misunderstood or even disliked by others. if you want a powerful brand that attracts your raving fans, you have to be okay with repelling people who aren't your

ideal clients. bottom line is build a badass brand. you want it to be loved or hated and that's better than being generic and forgettable. >> you do you get feedback from people who get good feedback and polarizing. >> won't water down your messaging. that's a brand killer. one app i use subpoena process street. our team uses that to help us organize processes in the organization. keeping us aligned with the predictable, successful results every single time, propossesses are important. this allows us to deliver those processes to the team effectively. >> one app i use is the

experience credit tracker. i need to know how my business is doing for financial aspects. i don't currently need loans, but if i do, i make sure what my credit ratings are for the business and myself in order to get those loans as i start moving forward. i use it to track what we're getting from a credit rating on a continual basis. >> everything in our business is connected through fish bowl, an inventory system. it helps us keep everything on track. you do sales that way. you count your inventory that way. and it's also connected with quick books. we use quick book enterprise and the cloud. >> this week's your business selfie comes from captain mike miggs who owns a ride in new jersey. his ship takes customers on a pirate adventure along the

jersey shore. we want to see more selfies like this. walk the plank, take a selfie of you and your business and send it to us at yo yourbusiness@asmnbc.com. thank you for joining us today. we talked a lot on the show today about the people you work with, whether it's your employees or contractors or agen. it's important fors a to remember, because we get so busy trying to get customers and get sales and do other things in our business that the people we work with are our most important resource. we need to step back and understand are all these people on the same page? did everyone believe in the same goals we do, whether they are a contractor or employee or agency? make sure that you take at least a little bit of time this week to know that you are taking time

to pay attention to that. we'd love to hear from all of you. if you have any questions or comments about today's show, e-mail us. you can also click on our website. we posted all of the segments from today's show plus more. and don't forget to connect us to on our digital and social media platforms. we look forward to seeing you next time. remember, we make your business our business. 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. ♪ >> good morning. happy easter. and welcome to politicsnation. you know, as a baptist minister, i see this as a religious day. many see it many different ways. many have no religious beliefs, and all of that is fine, but i see it as a day of reflection as well as a day of celebration, whether you're religious or not. as i look at what's going on in the world today from the n