>> good morning, coming up, on msnbc 80 your business" customers, beloved pets grow so quickly. this business has no employees, no factory, no inventory and no overhead. how this shed designer and manufacturer works with independent contractors. >> that plus what you need to know about hiring freelancers. let's hop to it. next on "your business."

. >> hi, everyone, welcome to "your business." the show dedicated to helping your growing business. think you're seeing double? cuddle clones hope so. they've made an entire business making plush replica of people's pets and customers are scrambling to get one of their own. with growing demand, they had to get outside help, which at first was a complete disaster. we went to louisville, kentucky

to get their tale of caution and success. when one of todd's beloved york kis passed away, he was desperate to find a way to memorialize her. >> it was so realistic that it surprised a lot of people. i had it in a side bedroom when you walked down the hallway. people walking by thought it was a real dog. >> reporter: to it he is referring to is his cuddle carolina it's an exact replica of the pet he loved so much t. idea was the founder of jennifer williams. >> i had a great dane, his name was are yrufuss, it would be co have a plush version of you. >> it was a thought that stuck n. 2011, she pitched the idea of can you do him clones to her classmates in the university of louisville's entrepreneurship program. adam green jumped on the chance

to join forces. >> people either love it or think it's creepy. it's the two reactions. it immediately resonated with me as a pet owner. >> reporter: with about $50,000 in pitch competition winnings, these two entrepreneurs started working to turn it into a reality. they set shop close to home in louisville, kentucky. like so many would be owners, they had a great-and-little in their background to make it happen. >> little of us knew how to do anything. i worked in digital marketing. >> the path to success was littered with failures when it came to hiring and outcourseing. first they hired an agency to build out their website, which needed a lot of customization to handle each customer's order. that turned out to be the wrong decision. >> when we started with the agency, everything was great. but pretty soon after maybe two or three weeks, the project management wasn't there. no matter how much we told them, here is the scope, here is how

much it involves, they kept misreading it. >> reporter: they got a website, it wasn't even close to what they had hoped it would be and the way the site was built made it impossible to make changes on their own. they tried a different agency thinking the first experience was just a fluke. >> it ended up being even worse, if you can imagine that. we were such a small client to them they didn't respond to any questions. they pretty much said, yeah, we got it. went away, delivered something completely wrong. >> jennifer and adam were done. they realized they weren't a big enough of a project to be in a priority list. they needed to invest in a smarter way. >> the benefit of having a ton of employees or contractors you are in contact with a lot is they have the end goal in mind every day. you have the opportunity to touch base with them every day. >> they developed a full time service to develop and maintain the website a. full time videographer was next.

>> it comes down to a discussion around 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 have to hire people. >> reporter: then for the tasks they don't need all the time, they used sites like angelco. >> we needed somebody who knew about 3d modeling. so we found a couple on there. >> they picked up know-how along the way when it comes to working with freelancers, first they always give them a mini test 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 and you can say at the end of the test, oh my go, i liked working with that person. i will now hire them to do a whole bunch more stuff. >> they review the work. >> in this ce it was a

modem of the pet. we had a current 3d designer who we loved critique all the tests. >> they realized contractors aren't mind readers. >> you write good instructions. i think a lot of people assume, you have to almost get to the point where it's tiring writing out exactly what every little mimutia of that deliverable is. >> for now, they found a great balance between investing in full-time employees and freelancers to provide everyone with a cuddle clone with one of their very own. they haven't completely ruled out working with an agency again. >> i think if we were to hire one, it would be something like hey we've raised some more money for this particular expansion project and we feed it done fast. >> today, more than 20,000 cuddle clones have been shipped out to animal lovers living in more than 65 different countries and they say this is just the start. >> pictures are great and what not, because it's something

tangible. you can see if it has a tongue at the side or a goofy expression. we try to represent anything custom that represents that pet. >> cuddle clones fixed out the right balance of freelancers, contractors and employees. but we went to seattle to meet the owner of an outdoor shed business who said he didn't want the hassle of renting space, having payroll and everything else. so 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 designs, like this prototype, which he keeps as a studio in his back yard. his company also distinguishes itself by the unusual way he runs things. >> we don't have a payroll, no. >> modern shed has no employees. >> nor do they have the legal is

that right to treat me as an ploy 8283. >> we're all contractors. >> we have been a virtual company for a long time. >> we are paperless. >> no headquarters. >> we train and carrie zero inventory. we don't order anything until everything is signed off and a down payment has been collected. >> we don't need to have a desk with files in it. we went virtual with everything. because everyone is all over. >> no factories, no warehouse, no employees, that means there is no inventory, no rent, no benefits and almost no overhead. >> we fixed those were all concepts, it didn't make sense. >> if it doesn't quite make sense to you, you have to start talking to tim beck the general manager for modern shed. >> he does all of our processes, our cost sheets, contracts and managing all of our contractors in different ways. >> if you want to meet him, you

will first have to drive 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, although i'm self-employed. >> that's right. tim is the general manager for the company but he's not an employee of the company. he is an independent consultant and modern shed is his primary client. >> i have three or four other clients but the majority of my time is on the shed. >> if you want to see the factory where the sheds are made. you need to talk to aaron johnson. he is three hours north of him. >> aaron does all of our cad drawings. >> my company is johnston services. >> his employees work full time manufacturing modern shed. aaron pays the represent. he pays the workers, he pays tear insurance and he pays the, thats and modern shed, they simply buy the finished product. >> i have to carry insurance to cover my manufacturing process and as soon as you have employees and you have overhead,

you have space, you create liability. mot earn shed as it is now the entity that it is, there is not much liability. >> with all of these costs and liabilities, i might wonder why they wouldn't prefer a weekly paycheck from ryan? >> i want to control my own life my own time, we will work together, in the end we want to be independent. >> i prefer to be a contractor the way i am to maintain that individuality to bring in the jobs that 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 work, you into ed to drive another two hours back south to the edge of pu but puget sound. >> we all take care of ourselves

and we realize we can grow the company and our own ventures and self interest by continuing to work hard and put the time in. myself, won't be successful unless modern shed is successful. >> whats his secret? to serve a common goal and help him grow hig company? >> as a vendor, will you do all you can do to keep your customer. >> and here at mod were shed, each of these managers are both customer and vendor to each other. they say that keeps them working harold tore please each other than if they were merely co-workers was marked for identification by the same boss. >> the independent vendors i think are more motivated than employees. those of white house are self-employed think of it differently, our business is in our head all the time. it's constant, really. we're working on our own business and in this case, we have a common mid-em, which is modern shed. >> i think everybody involved in this process has a sense of ownership. so without being technically owners, i think you have to in order to take pride in the

product that are you creating. >> ryan says there are both advantages and disadvantages to this kind of virtual system. but for him, it works better than what he calls the in-house system. >> the in-house modem has advantages have, it is a very flexible and then on the odds moth model disadvantages the fact that people are further away. but the vajs are the fact thdvat you really have a modern business modem and people can do whatever they need to in their own schedules and people's schedules these days. i think it really adapts to how we're 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 employee. but the hiring process needs to be rigorous.

david lewis is the founder, president and ceo of operations ink, a human resource outsourcing firm. >> good to see you. >> you don't think you can get rid of them at any time, you are paying this person to come no your officer and you want it done well. >> you have to have a complete selection process, it's not that much different from the interview than you would do if you were hiring this person full time. >> let's start with the number one question about your client base. >> it's trying to figure out how this person is going to work with you on the bafrls of how many other clients they vmplt you want to know how they prioritize, how are they going to make sure you are getting the appropriate attention and they're doing the same thing for all these other clients they thaim cla imthey have. >> the follow-up question to that would be how do you split the time? >> how do you smr it the time? what other clients, do you have a client that's dominating you at this point? do you see clients that will go ahead an explode? you want to be sure when you

bring that person on board, they're there to stay and they're committed to you just as many up to their other clients. >> number two, a great direct question, why are you freelancing? >> yeah, this is a big factor in these people's career paths. are they not good enough to be an employee? you want to hear somebody sit there and say, listen, i like the idea of working with different companies. i never felt like being in one place was satisfying enough. i loo tick process of being able to do different things for different people. >> so we talked about this a little bit about prioritizeing, how do you prioritize? of course, they're going to say, get i'll get your work done on time, how do you get beyond that question or thattancer? >> so instead of giving them a question that asks them about their opinions, you ask them to give you a behavioral response. so give me an example hoff how you prioritize, how many clients do you have? how do you make sure that everybody is getting the appropriate level of attention? give them scenarios and ask them to give you responses being.

>> that will get you feeling more comfortable, not just about the answers, how they express themselves, if they're organized or a good manager of their work load. >> the final question is about references, i think it's complicated because people cannot say anything disparaging about somebody that worked for them before. it's illegal, i believe? >> it's the kind of thing will you will get companies that will be reluctant, they fear the person will come after them and sue them. the illegality is less of the issue. it's more about am i putting myself in a position where someone is going to call me and go ahead 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 for my end is about getting their client base to go ahead and tell you what it's like to work with them. and what the experience has been. yes, references are usually really good, rarely bad ones.

you'd be surprised the kind of information you are able to learn from those calls. >> great. thank you so much smr my pleasure. >> the timing might just be right to be a freelancer. tech tools have never been better to stream work flow and work remotely and making your own schedule aren't too bad either. this week we test five sites for freelancers. one sighted. this web-based platform for expense tracking is designed especially for freelancers and independent entrepreneurs. sighted i want greats payment option and givers p & l reports. two build thefire, a mobile site is necessity for freelancers these days, it helps you build out and custom a iz the small business site and keeps with most major apps. 3 due, this digital wallet helps be online payments and

invoiceing system. time tracking and credit card transactions are a breeze. 4, timely. time sheetse up valuable time, better snt building your business. timely is a cross device app that i want greats productivity on your calendar and more that tracks all of your time in one place. and, streak. downlead to extension and track leads and clients and projects all from your inbucs. -- inbox. >> hi, i'm erin borges the gift bag that plumes. i developed go go gift back after a trip to the store with my daughter. when i purchased a gift bag and tissue paper. i realized how much time it was

taking for me to style it. even the open box style styled inside. you have to take it out and restyle it. that's almost doing it twice. so i created a product that is a better way. what it is is a patent pending installation of tissue pre card fated and pre styled for you. all you do is lift, stand and separate it. it gives a full plume of tissue concealing your content effortlessly in seconds. there is nothing else like it. i partnered with ig design group in order to brand the product and commercialize it and they like the designs, they're beautiful. we have a present with gift wrapped company and through ig design group and we also have distribution through hsn. i was recently awarded the customer choice award with hsn and good house keeping.

>> how much are you looking for? >> $250,000 in exchange for 5% equity to scale marketing and have a point of purchase display about the blooming gift bag? i think you are right. it nodes a display. both of you, good job, two number, one to ten, what do you think of the product, then what do you think of the pitch. so i am your customer. right. i am the person who is constantly running around before a birthday party finding any kind of paper in my house i can wrap something in. i have a stack of those, those would be great. >> natalie. >> 9 for the product. 7.5 for the pitch. i am your ideal examiner. i don't have time. i don't have the style to make it that gorgeous. i want to feel useful. i want from the first moment you talk to me to start thinking how can i help this person? that was the only thing really.

>> okay. >> i gave your product an 8. i needed this product a couple days ago. i already know it could have been useful. i didn't gift a 10 because in t store i would think, oh, 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 so 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. wish we could have got to that. >> yes. >> we get this on this show a lot with pitchers who are pitching to customers and not investors. and the idea is that you have a different pitch when you're talking to different people. these people like the product but they're interested in making money off your company. >> yes. >> congratulations. >> thank you. >> good luck with everything. >> thank you. >> i will go stack my closet up with these. >> they'll be available at cost plus world market. >> thank you. >> stick around. we still need you in the show. >> congratulations. >> thank you. any of you out there want to

pitch your business right here in our elevator, can you just send us a video of your one-minute elevator pitch. send it to yourbusiness@msnbc.com. please include a short summary of what your company does, how much money you're trying to raise and what you intend to do with those funds. we look forward to seeing all those pitches. so many of us are focused on growing our business so 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, we want an immediate 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. >> our original intention was just to work with nonprofits and donors and then we realized we were leaving out a huge segment of the marketplace and 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, so we're able to make that leap from being a small small size business to a midsize 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, hey, that's enough staff engagement? so we do things like go-karting, water balloon fights, all that cool stuff. at what point do you make sure

you've got the right staff engagement? >> i would say, jason, this becomes an roi issue. its really the return on your investment. so, this money you're spending for staff engagement, are you getting it out the other side in terms of productivity? i think 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 of brava investments and pia silva who is author of the new book "badass your brand." thank you for your tips. now i'm going to pick your brain a little more. one thing you've learned here somewhat recently, natalie, let's start with you, one thing you've learned that people need 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 cranium. at the time the most popular board game. they tried to figure out where their customers were. instead of selling their games in toy stores they were the first nonrelated coffee product to sell in starbucks. i think the most important thing you can do is spend less time worry being what your competitors are doing and focus and obsess and 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.

so, bottom line is, build a badass brand and it's okay if it's loved -- 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. >> i think it's more they're scared to be polarizing and so they water down their message. to me, that's a brand killer. >> got it. thanks, both of you. one app that i use is 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, processes are obviously very important. so, this app allows us to deliver those processes to the team and effectively manage process. one app that i use is the

exper yan credit tracker. as a small busy need to make sure what my business is doing, how it's trending for a business in order for financial aspects. i don't currently need loans, but if i do, i need to know and make sure what my credit ratings are for the business end and myself in order to successfully get those loans as i start moving forward. i use it to track what we're getting from a credit rating on a continuous basis. >> everything we do in our business is connected through fishbowl, an inventory system, that helps us keep everything on track. you know, you do sales that way, you count your inventory that way. and it's also connected with quickbooks. we use quickbook enterprise and the cloud. ahoy, maties. this week your biz selfie comes from captain. his ship takes customers on a pirated adventure along the jersey shore.

we get fun selfies like these every week. we want to see more. why don't you go walk the plank, take a selfie of you and your business and send it to us yourbusiness@msnbc.com. send your business and location and use #yourbizselfie. thank you for joining us today. we talked a lot on the show today about the people you work with, whether its your employees, contractors or agencies. its important for us all 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 absolutely need to take the time, step back and understand, are all these people on the same page? does everyone believe in the same goals we do. whether they are a contractor, an employee or agency. make sure that you take at least a little bit of time this week

to know are you taking time to pay attention to that. we would love to hear from all of you. if you have any questions or comments about today's show e-mail us at yourbusiness@msnbc.com. you can click on our website, openforum.com/yourbusiness. don't forget to connect with us on all of our digital and social media platforms as well. we look forward to seeing you next time. till then, i'm jj ramberg. 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. so, this was supposed to be the week when arkansas held two back-to-back doubleheader executions. arkansas has not killed any of its prisoners in more than 12 years but they decided they would try to kill eight of them in a row, all in a rush. eight men, eight prisoners, they were going to kill two per night in four different doubleheader executions spread across a week and a half. and the urgency was because one of the drugs they wanted to use is getting close to its sell by date and it will not be